Business Development Unit Investment Promotion: Coega ...coega.co.za/DataRepository/Documents/tUn5m_CDC... · and the Indian market, ... continuous drive towards long-term competitiveness

Investment Promotion: Coega Industrial Development Zone

The Business Development Unit was established in June 2007 as a result

of a merger between the former Enterprise Development business unit

and Metals units. In March 2008, it also incorporated the Nelson Mandela

Bay Logistics Park (NMBLP). The unit is responsible for all investor

attraction to the Industrial Development Zone (IDZ) and NMBLP.

A positive sentiment and an increasing awareness about the investment

location solutions offered by the Coega project have steadily been

generated through the commitment of large investors such as Rio

Tinto Alcan - Canada (deferred for four years) and Straights Chemicals

- Singapore. A further 11 investors have signed lease agreements to

locate to the Coega Industrial Development Zone (IDZ), adding further

momentum to investment promotion.

An increasing global recognition of South Africa and the country’s

position in the African context has resulted in positive interest

being expressed by stakeholders globally. The Coega Development

Corporation (CDC) has received increased attention from potential

investors in Europe, the Americas and in particular from Asian nations

such as India and China.

In the 2007/8 Financial Year, the CDC therefore increased the extent

of focus placed on these key emerging markets. In addition to China

and the Indian market, Brazil has been identified as providing niche

opportunities in particular sectors. Furthermore, the operational date of

the new deepwater port of Ngqura has drawn substantial interest from

stakeholders, both in South Africa and abroad. Several site reservation

agreements have been signed with prospective investors, while one

tenant has already been secured for the speculative warehouse in zone

2 of the IDZ.

Business Development Unit

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K h w e z i T i y a

R u s t u m M o h a m e d( r e s i g n e d M a r c h 2 0 0 8 )

“Several site reservation agreements have been signed with prospective investors...”

Executive Manager: Business Development

Executive Manager: Logistics Park

C O E G A | 2 0 0 8 | A N N U A L R E P O R T

PetroSA Site Visit November 2007

Deputy President Pumzile Mlambo-

Ngcuka visit November 2007

Rainbow Nation Renewable Fuels at

CDC March 2008

During a review of the CDC’s investment strategy,

which was instituted for the first time in the 2007/8

Financial Year, it was determined that 70% of the signed

investors originate from South Africa or have South

African partners. Amongst them is a Black Economic

Empowerment (BEE) compliant manufacturer of

vehicle interiors and a supplier to major Original

Equipment Manufacturers (OEM). In view of this,

an increased amount of focus has been placed on

attracting expansions and investment projects from

South African based entities. At the same time, the

developed markets, as South Africa’s major trading

partners, have continued to be a focus area in respect

of attracting investments.

National road shows were subsequently embarked upon

to reach potential South African investors seeking to

expand to locations such as the Coega IDZ, which offers

better logistics efficiencies and exporting advantages.

The result of these road shows will be seen in the

course of the year and are dependant to some extent

on how fast the following challenges will be addressed:

The perception that services and »buildings in the IDZ ought to be priced

more competitively than elsewhere;

The reliability issues of energy and »inconsistencies in the messages

conveyed to the public by the various

stakeholders; and

The uncertainty created by the delay »in announcing government incentives,

such as the Motor Industry Development

Programme (MIDP). A number of

potential investors have already shelved

their decisions to expand into the IDZ

due to this delay.

In mid-2007 the CDC and the Municipality entered into

negotiations with regards to the handing over of the

management of the Nelson Mandela Bay Logistics Park

(NMBLP) to the CDC. At the end of the 2007/8 Financial

Year, the CDC signed a 50-year lease agreement for the

management of this park, thus confirming the strategic

synergies that exist between the Municipality, the

auto industry in the region and the CDC. This strategic

alignment also makes headway into sustaining the

continuous drive towards long-term competitiveness

of Nelson Mandela Bay (NMB) in the automotive

industry, both nationally and internationally.

The park was developed by the Nelson Mandela Bay

Municipality (NMBM) as a specialised manufacturing

location for the automotive sector in the region.

The park comprises an area of 216.525ha (i.e.

Precinct A comprises 56.1045ha and Precinct B

comprises 160.4200ha) and was developed with the

support of the automotive industry. As a result, a

significant amount of focus is placed on meeting the

requirements of Volkswagen South Africa (Pty) Ltd,

Ford Engines, General Motors South Africa and other

NMB assemblers, specifically with regards to housing

just-in-time and just-in-sequence vehicle component

manufacturers and suppliers.

To date, two component suppliers, namely Rehau and

Faurecia, have committed over R300 million towards

the infrastructure of the Park. Further investments

from two component suppliers are expected during

the 2008/9 Financial Year.

A significant amount of the CDC’s successes can be

attributed to the manner in which it continues to

respond to investor requirements, the partnership-

based approach to developing business solutions and

the ability to execute complex enabling projects that

require the participation of multiple stakeholders.

These investment promotion initiatives have also

been largely enabled by the strengthening of the

CDC’s research capacity. In future, the Research Unit

will continue to play a primary role in ensuring that

potential investors are strategically identified and

pursued in an efficient manner.

In acknowledging the CDC’s efforts, the Chief

Executive Officer of Volkswagen South Africa, David

Powels states that, “Volkswagen may be in a position

to attract fixed investments from international

automotive component manufacturers through its

integrated global network, but national, provincial

and metropolitan governments have to do what

they can to make these investments attractive

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and competitive compared with other global investment destinations. The Coega IDZ has been

of significant benefit in this regard. South Africa needs new suppliers with new technologies”.

Numerous challenges were faced throughout the 2007/8 Financial Year. Notably, on the investment promotion

front. The CDC was able to attract 83% of its anticipated target of signed investors in the IDZ.

In the 2008/9 Financial Year, a significant amount of focus will be placed on integrating the critical challenges and

opportunities presented by the energy crisis.

In spite of the abovementioned challenges faced, the CDC, in the 2007/8 Financial Year, has yielded the following

investment promotion successes:

Five signed projects are at implementation stage with a total investment value of R7.5 »billion. These projects fall within the Logistics, Chemicals, Renewable Energy, Metals and

Business Process Outsourcing sectors. These emanate from diverse countries, including

Singapore, Australia, India and South Africa.

A further five projects are at negotiation stage with investment values ranging from R500 »million to R20 billion. These projects originate from different countries, falling within the

targeted regions of the CDC.

Ultimately the successes achieved in the 2007/8 Financial Year have been instrumental in building momentum

and paving the way for further investment attraction as well as socio-economic development in the Eastern Cape

and South Africa at large.

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Introduction

The Infrastructure Development business unit is responsible for the

construction of the landside infrastructure at the Coega Industrial

Development Zone (IDZ), while the deepwater port of Ngqura is

being completed by Transnet National Ports Authority. The business

unit has over the past two financial years metamorphosed into a unit

not only responsible for the planning and delivery of infrastructure,

but one that has strengthened its reach into the industry through its

focused development intent over construction businesses. The CDC’s

infrastructure development unit manages the rollout of services through

the programmes as elucidated below:

Programme 1: Enabling/Municipal infrastructure (zone infills); »Programme 2: Commercial/Investor-driven infrastructure »(warehouse facilities & buildings);

Programme 3: General/Zone development; »Programme 4: Professional services; and »Programme 5: Five Year Development projects. »

The 2007/8 Financial Year saw substantial effort being put behind

increasing the operational readiness of the area of the IDZ which lies

east beyond the Coega River. As challenging a year as 2007 was, the

unit managed to fully commit the allocated amount of R150 million

into infrastructure purely developed to service signed investors. Within

the limitations of the existing allocation requisite focus on meeting

investor requirements and performed exceptionally in massifying the

number of sustainable construction jobs through the roll-out of its

infrastructure programme. On the building and facilities front, 2007

Infrastructure Development Unit

B r i d g e t t e G a s a

“...the CDC, by providing the necessary support, were able to assist the learners to achieve higher performance levels than anticipated....”

Executive Manager: Infrastructure Development Unit


saw the commencement and completion of the manufacturing facilities for Digistix in zone 1, UTI Sun Couriers

in zone 2 and Cerebos in zone 7. Other achievements included successfully migrating the CDC from its old

headquarters into a brand new CDC Head Office block locatd in the business district of zone 1 in the Coega IDZ

whilst simultaneously extending the CDC Recruitment and Induction Centre and Retro-fitting the Media Centre

to serve as a Call Centre for Absa. On the municipal infrastructure progamme, the business unit completed an

Attenuation pond in zone 3, the Colchester bulk waterline which provides water into the East of the Coega River

area, phases 2 and 3 of municipal infrastructure in the Automotive zone (zone 2), phase 3 bulk infrastructure in

zones 3 and 5 as well as work on the National Road N2 and access roads to zones 6, 7 and 10, to name but a few

projects.

The completion of Expanded Public Works Programme Projects

The 2007/8 Financial Year saw the successful completion of the Expanded Public Works Programme (EPWP)

projects, which were initiated three years ago. Each of the 10 contractors enrolled in the programme completed

their respective R6 million projects. As a result, they stand to graduate in the 2008/9 Financial Year and receive

acknowledgement for their competence through being awarded a Construction Industry Development Board

grading of 4.

The CDC exceeded expectations in its approach to the EPWP projects. Due to the fact that contract values and

the nature of projects were far beyond national recommendations, the CDC, by providing the necessary support,

were able to assist the learners to achieve higher performance levels than anticipated.

The CDC was the first corporation to implement the EPWP in the Eastern Cape and continues to receive awards

of recognition from the Provincial and National Departments of Public Works for effective implementation of the

EPWP principles. The corporation would like to acknowledge MEC Christian Martin and his team for the sustained

support of the projects over the past three years.

The CDC expresses its deepest appreciation for the high level of commitment and tenacity demonstrated by the

learner contractors whilst implementing these projects.

The success of Small, Medium and Macro Enterprise Development

The CDC maintained its commitment to the economic transformation agenda of the government. Over 40% of the

CDC’s spend on infrastructure for the 2007/8 Financial Year went towards Small, Medium and Macro Enterprise

(SMME) development. In addition, the number of SMME’s supported by the CDC increased significantly from 20

to 79 during the 2007/8 Financial Year. The corporation approved an SMME development strategy which, among

other things, culminated in a dedicated development plan for 36 months.

The CDC also broadened the scope of focus of the construction inclined SMME Development Strategy, to include

mentoring and on-site support services. The non-construction related SMME Development Strategy takes into

consideration plant hire and material suppliers amongst other things. A staggering R15 million in contracts were

received by SMME’s in the category of material supplying businesses.

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Coega Office Block

Coega Zone 2 Warehouse

Coega Woman’s Day

Celebration


Meeting socio-economic objectives

Over and above the successes of the CDC in terms of enterprise development opportunities, the Infrastructure

Development business unit ensured meaningful involvement of recently qualified graduates. The business unit

employed a total of 16 interns during the 2007/8 Financial Year as yet another effort towards addressing the

shortage of skills in the industry. A total of 6 out of the 16 were permanently placed with employers in the

consulting and contracting fraternity. In line with the CDC’s strategic objectives of learning and growth, two of

the senior managers and executive of the business unit offer their services (i.e. sharing knowledge and expertise)

through lecturing at the Nelson Mandela Metropolitan University. The executive assists similarly with the

Construction Management Programme run by Stellenbosch University. Lastly, the Infrastructure Development

unit won a prestigious award from the South African Property Owners Association (SAPOA) for the efficient

design of the General Upholsterers/ Acoustex investor warehouse in zone 3 during the year under review. The

business unit also represented the CDC at a Construction Vision 2020 Conference in the United Kingdom in

February 2008 where the theme was around the strategic outputs of construction clients leading up to the year

2020.

In conclusion, the business unit acknowledges that without the concerted efforts of our strategic partners, it

would have been impossible to achieve the successes that 2007 would be remembered for. Those acknowledged

include the South African National Roads Agency Limited (SANRAL), the Construction Industry Development

Board (CIDB) through the partnership on the Eastern Cape Contractor Contact Centers, all our service providers

(DAB, consultants and contractors).

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Introduction

The Operations business unit was established in June 2007 as a result

of the merger between the former Safety, Health, Environmental and

Quality (SHEQ) business unit and the Zone Operations business unit.

The merger was necessitated by internal restructuring, which resulted

in streamlined processes and improved performance, particularly on

the service delivery front. The Operations business unit consists of the

following departments:

Customs and logistics; »Safety, Health, Environmental and Quality (SHEQ) »management;

Investor services; »Commercial; »ICT; and »Facilities/Estates management. »

The following report briefly outlines the highlights for the 2007/8

Financial Year.

Customs And Logistics

During the 2007/8 Financial Year, the Customs and Logistics department

investigated the proposed customs environment for the IDZ, and

compared it with best practice standards at two zones, namely Mauritius

and Dubai.

Operations Business Unit

T h e m b a K o z a

“...The safety of everyone involved in the Coega project continues to be a priority....”

Executive Manager: Operations Business Unit


Primary focus areas at these two zones were found

to be trade facilitation, revenue protection and

border management. The customs administration

process at both zones has, in recent years, undergone

restructuring, while their focus on trade facilitation

and service delivery has also been improved.

Furthermore, both zones engaged in modernisation

and reform programmes to bolster their compliance

with the World Customs Organisation Framework of

Standards.

The investigation highlighted the distinct separation

between the zone operator (CDC and its systems),

customs (South African Revenue Service and its

systems) and the port operator (National Ports

Authority) at the Coega IDZ. It showed that from a

systems viewpoint, the tight integration of these entities

with the other logistics role players (traders, carriers,

agents, etc.), to form a Cargo Community System

(CCS), whilst challenging, is absolutely necessary.

No supporting best practice cases were found for

the operation of the customs controlled area concept

within an IDZ. Therefore, it was concluded that an “open

warehouse” model, generally associated with a “free

trade zone”, as defined by the Kyoto Convention of

General Agreement on Tariffs and Trade, should be the

preferred operational model for the IDZ. Discussions

with SARS regarding this approach are continuing.

Safety, Health, Environmental and Quality Department

The CDC’s ability to monitor the safety, health and

environmental (SHE) performance of contractors and

tenants within the IDZ greatly improved during the

2007 – 2008 financial year with the addition of two

new SHE project managers to the section, bringing

the number of people directly involved with SHE

compliance monitoring to seven.

The safety of everyone involved in the Coega project

continues to be a priority and the CDC recorded a

Disabling Injury Frequency Rate (DIFR) of 0.6 at the end

of the financial year. This is well below the industry

norm of around 2.0 for construction projects of this

nature and can be attributed to the sound health and

safety culture that has been instilled in all contractors

associated with the project.

From an environmental perspective, the area within

the IDZ available for investment purposes increased,

with the receipt of a positive Record of Decision from

the National Department of Environmental Affairs and

Tourism for the ‘remainder of the IDZ’ (the IDZ land

outside of the initial ‘core development area’) thus

paving the way for the development of investments

within the metallurgical and chemical fields.

An exciting occurrence was the discovery of a

breeding colony of Damara Terns (9 adult birds and

three successful nests) within the IDZ. This species

is one of 14 bird species classified as endangered

in the Eskom Red Data Book (Barnes 2000) with less

than 125 pairs estimated to breed in South Africa. As

the main reasons for its decline are disturbance and

urbanization, conservation measures depend on the

protection of its limited breeding habitat. Accordingly

the breeding area is being closely monitored and

measures have been implemented to ensure that

construction does not encroach onto this area.

The success of the IDZ’s HIV and AIDS initiative was

assured during this time period, with contractors

taking ownership of their own programs for HIV and

AIDS prevention and awareness within their areas of

accountability. The creation of an IDZ HIV and AIDS

co-ordination committee amongst the contractors and

the training of one peer educator per thirty contractor

employees by the CDC have had a positive influence

on the level of HIV and AIDS awareness within the IDZ.

The roll-out of the CDC’s Quality Management System

(QMS) began in earnest during this reporting period.

Efforts to train certain employees as Internal Quality

Auditors and to train all employees on the requirements

of a QMS were successful. The initiative has gained

momentum with the successful mapping of a number

of CDC core processes and the development of

Service Level Agreements (SLA) between the various

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Business Units. Further training, with emphasis on

the entrenchment of the core processes within the

organization, is the focus for the immediate future.

The publication of the CDC’s first ever Sustainable

Development Report was a landmark occurrence.

The need for development within the IDZ to occur in

a sustainable manner has always been critical to the

success of the IDZ. The current energy crisis in South

Africa has only strengthened the CDC’s resolve and

sustainability issues continue to be given priority on

agendas within the organization.

Investor Services

During the year the first steps were taken to establish

a One Stop Investor Services Centre (OSISC)

The OSISC is a service management centre with

a mandate to provide a central point of contact for

all stakeholders, particularly investors. The OSISC

eliminates the need for numerous entry points

to information, and ensures that information is

conveniently made available, consolidated and

consistently communicated to investors. As such, the

OSISC is the nerve centre for services provided to

investors located in the Coega IDZ. A common service

desk, with the technological ability to maintain the

identity of customers/investors, will ensure the end-

to-end management of service level expectations. The

OSISC will operate seven days a week, 24 hours a day,

with the primary focus being on incident management

to ensure that services are restored in the shortest

possible time.

Commercial

Due to the increased number of engagements

with potential investors, the Commercial Unit was

expanded during the year. Initially, the primary focus

fell on contractual negotiations in respect of leases

of land to investors with all lease agreements being

negotiated by the Unit. Following the expansion, the

Unit began negotiations with the Nelson Mandela

Bay Municipality (NMBM) for the provision of bulk

services to the IDZ. The negotiations culminated in

the conclusion of an agreement to jointly manage

the supply of electricity to Investors located within

the IDZ. Discussions are continuing in respect of the

provision of other municipal services. The unit also

negotiated the take-over of the Nelson Mandela Bay

Logistics Park (NMBLP) from the NMBM, adding

another dimension to the value proposition of the IDZ.

Furthermore, the property development function was

absorbed into the unit and has assisted a number of

investors with space solutions, particularly in the NMBLP.

ICT Achievements For 2007

During the 2007/8 Financial Year, the ICT Unit achieved

the following:

Relocated to new premises; »Provided Bosun Brick with voice and »data services;

Implemented a data centre for the »provision of shared services;

Implemented a new Labour Management »System (LMS) which streamlines the

labour acquisition and management

processes;

Implemented a Property Management »System which streamlines the invoicing

of tenants in the IDZ; and

Facilitated the establishment of the »ABSA call centre.

Facilities/Estate Management

ABSA Contact Centre

The Facilities Management Department continues to

provide services to the ABSA Contact Centre which

started operating at the Vulindlela Village in January

2008. A number of previously unemployed individuals

were trained as call centre agents, security and cleaning

personnel, and are now employed at the Centre.

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Vulindlela Village

The Vulindlela Village, through effective marketing initiatives, is now 90% occupied. The Village leases

accommodation to private individuals and provides accommodation for employees from outside Port Elizabeth

who are working in the IDZ. A number of private companies have also shown interest in leasing accommodation

in the Village. In addition, the Village is a popular venue for workshops, conferences, functions and training.

Masibambane Community Trust

The Masibambane Community Trust was formed by the Coega 360 community which relocated from the IDZ to

Wells Estate. The Trust employs a total of 24 people from the Coega 360 community. Typically, these individuals

undertake grass-cutting, pavement and street-sweeping, litter-trap maintenance, vegetation control and sidewalk

and verge maintenance at the IDZ.

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Background

During 2006 a decision was taken to respond effectively to the challenge of

skills shortage that would impede the CDC’s ability to attract investment

and to address the employment creation responsibility. The Coega Human

Capital Solutions (Coega HCS) business unit, focuses on development

of the requisite human capital for the Coega Industrial Development

Zone (IDZ), Nelson Mandela Bay (NMB) and the Eastern Cape province.

The core mandate of Coega HCS (CHCS) is to provide competent human

resources thus ensuring a managed labour environment for investors

and local businesses, and to generate revenue thus enabling CDC to

be self sustaining in the long term. The services offered by the unit are

underpinned by an advanced labour management information system

and employment relations framework, specifically suited to support the

management and development of mega projects.

The Coega HCS, in collaboration with the ICT unit, recently completed

the new Labour Management System (LMS). The web-enabled system

has functionalities that allow for the tracking and production of instant

reports about all candidates trained, skills areas and skills level in which

they were trained, employed candidates within the various IDZ projects

and those that have been demobilized. The optimised utilization

of local human capital has therefore been made possible through

the implementation of a proactive Human Resources Development

(HRD) strategy aimed at meeting the short, medium and long-term

requirements of not only investors in the IDZ, but for the external

business environment. The continuously improved and updated

LMS store a repository of information that allows for the effective

recruitment, screening, induction and selection of suitable local job

seekers, as well as monitoring of human capital development. Through

this, Coega HCS has pitched the Coega IDZ on a competitive edge as an

Coega Human Capital Solutions

Z u k o M a p o m a

“...the CHCS has shifted boundaries by ensuring that unemployed job seekers have the opportunity to benefit from government programmes....”

Executive Manager: Human Capital Solutions

Qualifications:• BProc,LLB,LLM,MBA


investment destination of choice through the provision

of adequate human resources and the creation of an

enabling labour environment for investors.

Addressing the Skills Shortage

The innovative business model of the Coega HCS

and projects undertaken are informed by the critical

shortage of skills available countrywide. Although

there is a shortage across all levels, the research

conducted by Coega HCS during the year under review

has stashed that the most critical skills shortages in

NMB are experienced in the electrical/ mechanical

field; construction (civil, building, and piping)

industry; and the manufacturing, engineering and

call centre industry. The skills shortage challenge is

further exacerbated by a lack of available candidates

with maths and science knowledge, the low number

of students undertaking qualifications within these

sectors and a large percentage of unemployed people

with work experience but no formal qualifications.

With a view to addressing these challenges more

effectively, continuous review of the Coega HCS

business model, based on lessons learnt from the

erstwhile Coega Labour Business Management

Services (LBMS) unit, which started operating in

2002 has yielded a focused approach to critical skills.

Coega HCS initiated a process, linked to the Provincial

Growth and Development Plan (PGDP), to determine

how the skills shortage would impact on the CDC,

NMB and the Province. The model is informed

by ample experience in the process and system

management of labour, human resource management

and planning for mega projects within a regulated

environment. This process focuses on the energy;

manufacturing; information, communications and

technology, metals, automotive, chemicals, services,

tourism, agriculture and construction sectors. The

unit makes use of research, analysis and forecasting

on skill types and levels in order to fulfil the

requirements of investors locating to the Coega IDZ,

the NMB and the Eastern Cape Province. Based on

these projections, Coega HCS has managed to strike

strategic partnership with the relevant government

Sector Education Training Authorities (Setas) as

well as the Department of Labour (DoL) and secured

funding for training programmes.

Strategic Partnerships in Human Capital Development

The success of the Coega HCS in the implementation of

Human Resources and Development (HRD) initiatives

have largely been made possible through partnerships

and support of a range of critical stakeholders in the

skills development arena. The Department of Labour,

the Department of Trade and Industry, the Office of

the Premier, the Skills Education Training Authorities

and business chambers, such as the Port Elizabeth

Regional Chamber of Commerce and Industry

(PERCCI), as well as Trade Union movement, have

strong linkages that have been kept alive with the

Coega HCS. As a result of these linkages, a range of

HRD training programmes on critical and scarce skills

have been executed through the provision of grant

funding of over R100 million from government. Other

key strategic partners have been the Nelson Mandela

Bay HRD, EDTA units and public and private training

and educational institutions.

Through our relationship with business formations,

over 180 businesses have assisted Coega HCS

in providing experiential training and workplace

learnings to candidates. Thus, a critical component

of the success of HRD is the establishment of solid

partnerships with stakeholders and key players within

the field and to ensure that the curricula offered by

colleges, institutions and universities address the

labour market requirements. This was also borne out by

a further process of establishing similar partnerships

with Further Education and Training (FET) institutions

in the Buffalo City Municipality region. Among these

are the Eastern Cape based FET Colleges such as East

Cape Midlands; Ikhala College and PE College; various

Sector Education and Training Authorities (SETA); the

Departments of Labour and Education; the Office of the

Premier and the Department of Public Works (DPW).

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A mutual project between the Coega HCS and the Nelson Mandela Bay Municipality (NMBM) involves the

Municipality’s Department of Economic Affairs and Development, and is aimed at ensuring the integration of

support to all investment initiatives in the NMB region, in particular the HRD aspect. The strategy of the project is

informed by NMB and the Province’s economic activities and investment pipeline. It is anticipated that the project

will enable the identification of skills gaps and the requirements necessary to fill those gaps.

Contributions to the Joint Initiative on Priority Skills Acquisition (JIPSA)

The Coega HCS is involved with the Eastern Cape division of the Joint Initiative for Priority Skills Acquisition

(JIPSA) through participation of its management on the Council and Working Group levels respectively. Three

JIPSA-EC Working Groups are focused on maths and science, while skills audits and research are also a priority.

Coupled with this initiative, Coega HCS has conceptualised a Maths and Science teacher development project in

partnership with the Services Seta, and this project will be rolled out in the next financial year.

Human Resources Development Initiatives

Currently there are 750 apprentices funded by the Services SETA and the Foodbev SETA respectively. In addition,

the trade testing of a further 895 candidates will be facilitated while implementing several technical learnerships

in partnership with the Provincial Department of Labour, MERSETA, CHIETA and ESETA.

The HRD initiatives include apprenticeships, learnerships, internships and skills programmes in the engineering

and construction trades, manufacturing and chemical sector trades as well as the Business Process Outsourcing

and Offshoring sector. During the 2007/8 Financial Year, Coega HCS secured contracts for ten projects valued at

over R100 million. These are being rolled out during the 2008/9 Financial Year and will be to the benefit of 6052

learners.

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Sanlam Delegation November 2008

Port of Rotterdam Delegation

November 2007

CDC NMMU Collaboration

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Skills Development Centre and Trade Testing Facilities

In an effort to further the achievement of the set HRD objectives, the CDC initiated the establishment of the

Coega Skills Development Centre, which is anticipated to be fully operational by 2010. The Centre will ensure the

development of skills at all occupational levels within dominant sectors of the Eastern Cape.

In collaboration with the Department of Labour’s Indlela Centre, the trade testing facility, which will also be

incorporated into the centre, which will be the first of its kind in the Eastern Cape, will allow for the trade testing

of all learnership and apprenticeship candidates qualifying for artisan trade testing. The trade testing facilities

will be in accordance with the standards that are set by the Department of Labour’s National Trade Test Centre.

Employment Relations

One of the key successes is management of employment relations with both employer organizations and trade

union movement. This has established and improved upon a labour management policy framework that creates

an enabling environment that is focused on maintaining labour stability and a culture of respect for the dignity

of human life. The Zone Employment Relations Policy and the Zone Labour Agreement remain effective through

the application of a common and consistent labour management approach, both on the Coega IDZ and the Port of

Ngqura. Coega IDZ has recorded the downtime of 0.12% compared to 2.4% in the industry nationally.

Table 1: Learnerships

NQFLevel

2008 / 2009 2009 / 2010 FIVE YEAR TOTAL %

NSF ESETA MERSETA T NSF ESETA MERSETA T NSF ESETA MERSETA TOTAL

1 0 0 0 0 0 0 0 0 0 0 0 0 0%

2 513 15 12 540 0 60 42 102 513 480 696 1689 50%

3 0 105 96 201 219 75 66 360 219 375 342 936 28%

4 0 180 192 372 0 165 192 357 0 345 384 729 22%

TOTAL 513 300 300 1113 219 300 300 819 732 1200 1422 3354 100%

The following table is representative of one of the key successes achieved in the past year, namely the signing of

grants that allow CHCS to roll out the largest apprenticeship project in the Eastern Cape.

The table below presents the various CHCS HRD initiatives which are funded by different partners.

Table 2: Apprenticeships

SETA2008 / 2009 2009 / 2010 TWO YEAR TOTAL %

S28 S13 T S28 S13 T S28 S13 TOTAL

SERVICES 900 600 1500 0 600 600 900 600 1500 100%

FOODBEV 0 150 150 0 150 150 0 150 150 100%

TOTAL 900 750 1650 0 750 750 900 750 1650 100%


HRD Initiatives

KEY STATISTICS MAY 2008

Contracts awarded (Total Coega Project to date) 140

Sub-contracts awarded (Total Coega Project to date) 1 102

Job Seeker Pool 81 172

Labour requisitions processed 1 337

Lost time as a consequence of labour strike action 0.12%

Cumulative man-hours on site to-date 21 083 054

Currently employed 5 350

% Current Employment for residents of Nelson Mandela Metro 83%

% Current Employment for residents from outside Nelson Mandela Metro 17%

Total employment created 24 082

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Background

Coega Development Corporation Services Unit (CDC-S) is a special

purpose vehicle of the CDC, aimed at providing assistance on infrastructure

development to the Eastern Cape provincial government. It focuses

mainly on fast-tracked projects, where rapid delivery is required. The

involvement of the CDC in provincial projects was informed by the fact that:

(a) One of the CDC’s corporate objectives is to advance »socio-economic upliftment in the Eastern Cape. CDC-S

involvement in the provincial projects enables the CDC

to contribute meaningfully in this regard;

(b) The CDC considers its involvement in provincial »projects as a form of contribution towards Corporate

Social Investment (CSI), due to the number of people

who benefit from the projects that it rolls out;

(c) Involvement in the development of critical »infrastructure in the province assists in unlocking and

realising sustained economic development; and

(d) The CDC needs to ensure that there is meaningful »backward integration with the province, which is

enhanced via the provision of basic infrastructure. In

turn, the attractiveness for investments in the province

is improved.

Coega Development Corporation Services Unit

D r M p u m i M a b u l a

“...CDC Services has implemented a number of projects on behalf of the Provincial Government and continues to do so....”

Executive Manager: CDC Services

Qualifications:• ?

Services

(a) Project facilitation, i.e. assisting in conceptualising projects and transforming them into »plans that can be implemented;(b) Acts as implementation agent, where it implements projects on behalf of its clientele, »adopting a cradle-to-grave approach in doing so. This includes planning the infrastructure roll-out, budgeting, procuring services of various service providers, management of these aforementioned service providers and commissioning of infrastructure;(c) Assisting in developing monitoring systems on infrastructure roll-out and to carry out »monitoring and reporting on infrastructure budget expenditure;(d) Facilitate inclusion of socio-economic aspects during the implementation of »infrastructure projects. This includes facilitation of Small and Emerging contractor development; infusion and Expanded Public Works Programme (EPWP) approach on its

projects; and encouraging labour based methods of construction to maximise job creation.

Projects Rolled Out

Since its inception, CDC-S has implemented a number of projects on behalf of the provincial government and

continues to do so. Although CDC-S considers all the projects that it embarks upon as being of utmost importance,

the key projects that CDC-S has been involved in during 2007/08 Financial Year are listed in the table below:

Key Projects

Client Dept Project Name Description of Project Est Contract Value

Department of Health

Upgrading of Cecilia Makiwane Hospital (CMH)

Rebuilding Cecilia Makiwane Hospital in Mdantsane in Mdantsane to a 600 bed Primary Hospital where it would provide Level 1/2 Services

R2.1 billion

Upgrading Frere Hospital Demolishing and rebuilding some parts of Frere Hospital in East London where it would provide Level 2/3 services with 830 beds.

R1.9 billion

Forensic Pathology Laboratories (FPL) (Mortuaries)

Construction of 15 new FPLs in various hospitals grounds and upgrading of 5 FPLs in various SAPS premises around the province

R84 million

Community Health Centre in Mdantsane

Construction of new 40 bed Community Health Centre at NU 17 in Mdantsane

R85 million

Dept of Sports, Recreation, Arts & Culture

Eastern Cape Sports Academy

Development of a new Sports Academy in the Eastern Cape

R20 million

Steynsburg Indoor Sports Centre

Construction of a new Indoor Sports Centre in Steynsburg

R6.9 million

Mt Ayliff Arts & Culture Centre

Construction of a new Arts & Culture Centre in Mt Ayliff

R2.9 million

Mthatha Archives Construction of a new Archives in Mthatha R6.0million

Mt Ayliff Museum Construction of a new museum in Mt Ayliff for the Alfred Nzo District Municipality

R7.2 million

Tsitsikama Museum Construction of a new museum in Tsitsikama R3.3 million

Upgrading of Bayworld Upgrading some parts of Bayworld aquarium in Port Elizabeth

R3.9 million

Dept of Education

51 EPWP Schools Construction of 51 schools under the Expanded Public Works Programme around the eastern part of the Eastern Cape using Learner Contractors

R74 million

National Dept of Environmental Affairs & Tourism

Vusubuntu Cultural Village Construction of a new Cultural Village in Cradock. R13 million

CDC-S managed to create 1900 jobs during the construction of these projects.


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Khoisan Community Centre, Tsitsikamma

Molteno Forensic Pathology Laboratory, May 2008

55


Awards

CDC-S prides itself for winning the following awards and certificates of recognition:

• BestGovernmentEnterpriseDevelopmentProgramme

(EPWP Big News Awards for 2007)

The main objective of this award is to contribute towards the success and impact of SMME’s in South Africa

by rewarding, publicising, documenting and encouraging good practices in Enterprise Development (ED).

It recognises and rewards companies, organisations and individuals who contribute meaningfully towards

strengthening SMME’s.

• EasternCapeEPWPContractorRecognitionAward

An employee of the CDC-S unit received the 2007 Eastern Cape Department of Public Works MEC award which

recognised the efforts of the CDC-S in assisting the Eastern Cape government to implement the EPWP within the

Eastern Cape.

Development of Best Practices

CDC-S conceptualized and developed together with the Construction Industrial Development Board (CIDB) and the

Business Trust Unit that supports the Expanded Public Works Programme (EPWP) the Specification for Social and

Economic Deliverables in Construction Works Contracts. The aim of the specification is to ensure that objectives

of the Millennium Development Goals (MDG), Accelerated and Shared Growth Initiative for South Africa (ASGISA)

and Joint Initiative on Priority Skills Acquisition (JIPSA) are being achieved.

The CDC, via CDC-S, will continue providing the necessary support to the provincial government and state-owned

enterprises, particularly in infrastructure development.

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Corporate Services Unit

Background

The Coega Corporate Services (CS) business unit is tasked with

overseeing human capital and the creation of a work environment that is

conducive to the maximisation of the Coega Development Corporation’s

(CDC) potential to achieve its vision of becoming a preferred investment

destination. The unit offers human resources management, legal

services, office management and travel management services.

Employee Development

A competitive advantage of the CDC is its ability to secure quality human

capital and the efficient management of the available talent pool, which

is a major focus area of the human capital strategy.

The CDC’s commitment to being the leading knowledge-based

organisation in the country is reflected in its investment in human capital

development. During the 2007/8 Financial Year, the CDC provided funding

for employees enrolled in 13 post graduate/honours qualifications, 16

masters degrees and 3 PhD’s. In addition to these individual study

programmes, CS coordinated corporate employee development

programmes in project management (Project Management Body of

Knowledge - PMBOK), voice clinic training, executive personal assistant,

computer training, driver training and investment in excellence.

As a knowledge and service-driven organisation, the CDC’s priority is to

recruit, develop and retain a team of people who can support investors

and tenants across key sectors. As such, employees are encouraged to

further their studies in order to add additional value to the knowledge

and skills base of the organisation. To this end, the CDC provides

financial support towards employee development. Furthermore, as a

“...CDC’s commitment to being the leading knowledge-based organisation in the country is reflected in its investment in human capital development....”

N o m a w a b o M s i z i( r e s i g n e d M a r c h 2 0 0 8 )

Executive Manager: Corporate Services


performance-driven organisation, the CDC recognises and rewards individual excellence and the contribution of

teams to the achievement of the business objectives.

Corporate Research Foundation (CRF)

In the 2007/8 Financial Year, the CDC was once again recognised as one of the best employers in a survey conducted

by Corporate Research Foundation (CRF). Among the key dimensions and focus areas of the survey were the

CDC’s human capital priorities, which placed the organisation among the best in the country.

Best Company To Work For

The CDC is the industry winner among the public sector/utilities companies, which participated in the annual 2007

Deloitte/FM Best Companies To Work For survey. A core aspect of the survey is the measures taken by the company

to attract, develop, motivate and retain its human capital. The purpose of the survey is to enable companies to

understand what motivates and engages employees as well as what hinders them in the workplace. The results of the

survey will assist the organisation in developing retention strategies that contribute to the success of the business.

Corporate Social Investment (CSI)

The CDC places a significant amount of focus on socio-economic growth in South Africa. As such, the CDC, which

is the opperator of the Industrial Development Zone (IDZ), can be classified as a Corporate Social Investment (CSI)

initiative. It is government funded, with the bottom line being the creation of jobs and economic empowerment.

Internally, the CDC has established an internship programme with a corporate target of employing 50 interns

per annum. The ultimate aim of the programme is to increase the employability of the inexperienced graduates,

through experiential learning, mentorship and other training and development initiatives. In the 2007/8 Financial

Year, a total of 63 interns were placed in the programme of which 30 have secured permanent employment.

Apart from the internship programme, the latest CSI programme involves the sponsoring of driver training for

interns and unemployed graduates at various centres around the Eastern Cape. A total of 60 CDC interns and 89

graduates from tertiary institutions throughout the province have received driver training during the first phase,

which took place in the 2007/8 Financial Year.

In addition, the CDC Board approved the establishment of a bursary scheme to provide financial support to high school

learners and tertiary students. CS has secured grants from the Services Sector Education and Training Authority

(SETA) to finance the programme, which will involve the support of high school learners on academic programmes as

well as life skills training. In the 2008/9 Financial Year, this initiative will progress to support students at tertiary level.

Coega Corporate Travel

Corporate Services launched the Coega Corporate Travel (CCT) as a fully licensed travel agency to provide corporate

travel management services to CDC and investors in the IDZ. CCT aims to become a financially independent and

sustainable unit by sourcing business from entities outside of the IDZ. As such, the marketing of CCT will be one

of the priorities of the CS unit in the following Financial Year.

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Coega Corporate Travel Launch

Coega Open day Hellenvale

November 2007

Interns Initiative –

Sinethemba benefit program

I n t h i s s e c t i o n :

_ The Board of Directors & Sub-Committee 63

_ Statement of Responsibility of the Board of Directors 65

_ Attendance Schedule of Board & Sub_Committee Meetings 66

_ Risk Management & Internal Controls 67

_ Certificate by Company Secretary 68

_ Report of the Audit & Finance Sub-Committee 69


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Corporate Governance Statement

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The Board of Directors comprises executive and non-executive directors.

The non-executive directors have a wide range of skills and significant

commercial and other interests that enable them to bring independent

judgement to the Board’s deliberations and decisions.

The roles of Chairperson and Chief Executive Officer do not vest in the

same person. The chairperson is a non executive director. The Board

and its sub-committees meet at least four times a year, and more

frequently if necessary. Decisions on material matters are in the hands

of the Board.

Company Secretary & Professional Advice

All Directors have access to the service of the company Secretary, who

is responsible for ensuring that the Board functions effectively. All

Directors are entitled to seek independent professional advice about

the affairs of the Company at the Company’s expense.

Audit & Finance Sub-committee

The Audit and Finance Sub-committee is chaired by an independent

chartered accountant who is neither a member of the CDC management

nor the Board of Directors. Other members are the three non-executive

directors and an external independent member. The committee is

attended by the Chief Executive Officer and the Chief Financial Officer.

The Audit & Finance Sub-committee functions under the powers and

authority delegated to it by the Board to:

The Board of Directors and Sub-Committees

63


Oversee the internal audits; »

Review the annual financial statements; »

Agree the scope and ensure the independence of the statutory auditors; »

Monitor internal control systems the process of risk management; »

Monitor compliance with the Code of Corporate Governance and the Company’s Code of Ethics; »

Human Resources & Remuneration Sub-Committee

The Human Resources & Remuneration Sub-committee is comprised of four non-executive directors.

The Human Resources & Remuneration Sub-committee’s specific terms of reference include direct authority

for, or consideration of, and recommendation to the Board on matters relating to, inter alia, general staff policy,

remuneration, bonuses, Directors’ remuneration and fees, service contracts and other benefits.

Investment Promotion Sub-committee

The Investment Promotion Sub-committee is fully mandated by the Board. It is composed of five members, two

of whom are independent members and three non-executive directors. Its terms of reference are to:

Review the CDC’s investment policy and strategy »

Ensure compliance with the adopted framework, through which investments can be monitored. »

Ensure that a justifiable process, is aligned to the strategy, is followed. »

The Board is responsible for the preparation, integrity and fair

presentation of the financial statements for the year ended 31 March

2008. The financial statements have been prepared on a going concern

basis, in accordance with International Financial Reporting Standards

and in the manner required by the Companies Act of South Africa. The

directors also prepared the other information included in the annual

report and are also responsible for both its accuracy and its consistency

with the financial statements.

Management has been delegated with the responsibility of implementing

systems of internal control and maintaining accounting and information

systems. These systems are designed to provide reasonable assurance

as to the reliability of the financial statements, safeguarding of assets,

execution and recording of transactions in accordance with generally

accepted business practices and procedures and that the risks of error,

fraud and loss are minimized in a cost-effective manner.

The going concern basis has been adopted in preparing the financial

statements. The directors have no reason to believe that the company

will not be a going concern in the foreseeable future.

The financial statements have been audited by the independent auditing

firm, PriceWaterhouseCoopers Inc, which was given unrestricted

access to all financial records and related data, including minutes of

all meetings of shareholders, the board of directors and committees

of the board. The directors believe that all representations made to the

independent auditors during their audit were valued and appropriate.

Price Waterhouse Coopers Inc’s audit report is presented on page 73.

The financial statements set out on pages 75 to 100 were approved by

the Board and are signed on its behalf:

Chairperson

S ta tement o f Respons ib i l i ty o f the Board o f D i rec tors

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Attendance Schedule of Board & Sub-Committee Meetings

2007 2008

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Board Meeting Attendance

Date 7 13 23

M Ngoasheng (Chair)

P Silinga

M Kwenaite

P Jourdan

J de Bruyn

S Zikode

M Matshamba

S Nondwangu

L Maasdorp

P Ndoni

Investment Promotion Sub-committee meeting attendance

Date 28 13

P Jourdan (Chair)

M Ngoasheng

M Kwenaite

B Rayner

G van Wyk

Human Resources Sub-committee meeting attendance

Date 16 13

J de Bruyn (Chair)

M Ngoasheng

P Jourdan

S Nondwangu

Audit & Finance Sub-committee meeting attendance

Date 28 17 13

X Ncame (Chair)

J de Bruyn

L Maarsdorp

A Mjekula

M Matshamba

Risk Management

The board is accountable for the process of risk management and

effectiveness of the system of internal control and for this reason has

continued to devote considerable efforts to ensuring the practice of

responsible, pro-active and sound risk management.

There is a formally defined risk management policy and »strategy in place designed to ensure that risk management

practices are maintained at best practice levels

There is an ongoing process for identifying, evaluating »and managing the significant risks faced by the company

that has been in place for the year under review

There is an adequate system of internal control in place »to mitigate significant risks faced by the company to an

acceptable level. Such a system is designed to manage,

rather than eliminate, the risk of failure or maximise

opportunities to achieve business objectives.

Internal Audit

The board recognizes the need to oversee internal controls within the

organization. In accordance with the approved Internal Audit Charter,

Internal Audit reviews the systems and management controls to

determine the effectiveness of the process around:

safeguarding of assets; »integrity and reliability of financial and operational »information;

compliance with legislation, and; »the adequacy of the risk management and internal control »process.

R isk Management

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Certificate by Company Secretary

For the year ended 31 March 2008

Declaration by the Company Secretary in terms of Section 268G (D) of

the Companies Act.

The Company has lodged with the Registrar all such returns as are

required of a private company in terms of the Companies Act, and all

such returns are true, correct and up to date.

Miranda Pango

COMPANY SECRETARY

26 June 2008


Report of the Audit and Finance Sub-Committee

The Audit and Finance Sub-Committee has adopted formal terms of reference, which have been approved by the

Board, and has satisfied its responsibilities as set out in the terms of reference.

In performing its responsibilities the Audit and Finance Sub-committee has reviewed the following:

The functioning of the Risk Management internal control system »The functioning of the internal audit department »The risk areas of the entity’s operations to be covered in the scope of the internal and external »auditsFinancial information provided by management »The accounting or auditing concerns identified as a result of the internal or external audits »The entity’s compliance with legal and regulatory provisions »The credibility, independence and objectivity of the external auditors as well as their audit »reports

The Audit and Finance Sub-Committee is satisfied that internal controls and systems have been put in place and

that these controls have generally functioned effectively during the period under review.

The Audit and Finance Sub-Committee considers the company’s internal controls and systems appropriate in all

material respects to:

Reduce the company’s risks to an acceptable level »Meet the business objectives of the company »Ensure the company’s assets are adequately safeguarded »Ensure that the transactions undertaken are recoded in the company’s records. »

The Audit and Finance Sub-Committee has evaluated the annual financial statements of Coega Development

Corporation (Proprietary) Limited for the year ended 31 March 2008 and concluded that they comply, in all

material respects, to the requirements of the Companies Act (Act 61 of 1973, as amended) and International

Financial Reporting Standards.

The Audit and Finance Sub-Committee agrees that the adoption of the going concern premise is appropriate in

preparing the annual financial statements.

The Audit and Finance Sub-Committee has therefore recommended the adoption of the annual financial statements

by the Board of Directors at their meeting on 22 August 2008.

X Ncame

Chairperson: Audit and Finance Sub-Committee

22 August 2008

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I n t h i s s e c t i o n :

_ Independant Auditor’s Report 73

_ Directors’ Report 75

_ Balance Sheet 80

_ Income Sheet 81

_ Statement of Changes in Equity 82

_ Cashflow Statement 83

_ Notes 84


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F i n a n c i a l S t a t e m e n t s>>>

71

Report on the Financial Statements

We have audited the accompanying financial statements of Coega

Development Corporation (Pty) Limited which comprise the balance

sheet as of 31 March 2008 and the income statement, statement of

changes in equity and cash flow statement for the year then ended and

a summary of significant accounting policies and other explanatory

notes as set out on pages 80 to 100.

Director’s Responsibility for the Financial Statements

The Directors are responsible for the preparation and fair presentation

of these financial statements in accordance with International Financial

Reporting Standards, the requirements of the South African Companies

Act and in the manner required by the Public Finance Management Act,

1999 as amended. This responsibility includes: designing, implementing

and maintaining internal control relevant to the preparation and

fair presentation of financial statements that are free from material

misstatement, whether due to fraud or error; selecting and applying

appropriate accounting policies; and making accounting estimates that

are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial

statements based on our audit. We conducted our audit in accordance

with International Standards on Auditing read with General Notice 616

of 2008, issued in the Government Gazette no 31057 of 15 May 2008.

Those Standards require that we comply with ethical requirements and

plan and perform the audit to obtain reasonable assurance whether the

financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence

about the amounts and disclosures in the financial statements. The

procedures selected depend on the auditor’s judgment, including the

Independent Auditors Report To the Minister of Department of Trade and Industry

and Eastern Cape Development Corporation

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not prepared consolidated financial statements.

We concur with the Directors’ decision, as stated

in the Directors Report, not to consolidate Rapid

Infrastructure Development Agency (Pty) Ltd (RIDA)

as the company is dormant and has never traded.

Other Reporting responsibilities

We have audited the performance information as set

out on pages 103 to 115 of the financial statements.

Responsibility of the Board of Directors for performance information

The board members have additional responsibilities

as required by section 40(3)(a) of the Public Finance

and Management Act to ensure that the annual report

and audited financial statements fairly present the

performance against predetermined objectives of the entity.

Responsibility of the Auditors

We conducted our engagement in accordance with

section 13 of the Public Audit Act 2004 read with

General Notice 616 of 2008, issued in the Government

Gazette no. 31057 of 15 May 2008.

In terms of the foregoing our examination included

performing procedures of an audit nature to obtain

sufficient appropriate evidence about the performance

information and related systems, processes and

procedures. The procedures selected depend on the

auditors’ judgement.

We believe the evidence we have obtained is sufficient

and appropriate to report that no significant findings

have been identified as a result of our audit.

PricewaterhouseCoopers Inc

Director: Sakhile Masuku

Registered Auditor, Johannesburg, 10 October 2008

assessment of the risks of material misstatement of

the financial statements, whether due to fraud or

error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s

preparation and fair presentation of the financial

statements in order to design audit procedures that

are appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness

of the entity’s internal control. An audit also includes

evaluating the appropriateness of accounting policies

used and the reasonableness of accounting estimates

made by management, as well as evaluating the

overall presentation of the financial statements.

The audit was also planned and performed to obtain

reasonable assurance that our duties in terms of

section 60 and 61 of the Public Finance Management

Act, 1999, as amended have been complied with.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit

opinion.

Opinion

In our opinion, the accompanying financial statements

present fairly, in all material respects the financial

position of Coega Development Corporation (Pty)

Limited as of 31 March 2008, and of its financial

performance and its cash flows for the year then

ended in accordance with International Financial

Reporting Standards and the requirements of the

South African Companies Act 1973. The transactions

of the company that have come to our attention during

the course of the audit were in all material aspects in

accordance with the mandatory functions of Coega

Development Corporation (Pty) Ltd, as determined

by law or otherwise, in terms of section 61(1) of the

Public Finance Management Act, 1999.

Without qualifying the audit opinion, attention is

drawn to the following matters:

Financial statement presentation

We draw attention to the fact that the company has

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The directors present their annual report which forms part of the

audited financial statements of the company for the year ended 31

March 2008.

General Review

The financial statements on pages 80 to 100 set out fully the financial

position, the results of operations and the cash flows of the company

for the year ended 31 March 2008.

During the year under review, the company continued to extend the

infrastructure of the Coega Industrial Development Zone and develop

systems to service investors.

No dividends were declared or recommended.

Legal Framework and Compliance

The Coega IDZ was designated by Government Gazette on 1 December

2001, and an Operators permit was issued on 7th August 2007.

The CDC has complied with all the laws of the country as well as with

all relevant legislation.

Nelson Mandela Bay Logistics Park

The company entered into an agreement with the Nelson Mandela

Metropolitan Municipality to acquire the Nelson Mandela Bay Logistics

Park (NMBLP), adjacent to the Volkswagen plant, on a 50 year lease at a

nominal rental. It is anticipated that synergies in property management

Directors’ Report For the Year Ended 31 March 2008


will flow from this transaction as well as broadening the product offering that the IDZ has for investors. Currently

the NMBLP has four investors who are first tier suppliers to the automotive industry.

The lease has been valued by management at R30 million and forms part of the revaluation of investment

properties.

Property, Plant and Equipment

Property, plant and equipment increased during the year, due mainly to infrastructure and top structures amounting

to R314 million. This includes the cost of incomplete projects for the provision of access roads and utilities.

The CDC has entered into a contract with the Nelson Mandela Bay Municipality (NMBM) whereby bulk electrical

assets are transferred to the NMBM. The terms of this contract require the NMBM to maintain the electrical

infrastructure and to compensate the CDC over time for value, based on electricity usage within the IDZ.

Investment Property

The effect of the property revaluation has been an increase in the book value of investment properties amounting

to R1 720.5 million. In addition, deferred income of R569 million relating to these properties was released to

income. (2007 gain of R9.3 million)

Funding

Funding for the year under review was provided by the Department of Trade and Industry (DTI) and from Provincial

Treasury. Funds received totaled R658,9 million (2007 R256 million) including funding from Provincial Treasury

of R22,1million). The DTI has allocated further funding to the company for the next three financial years.

Going Concern

The financial statements are prepared on a going concern basis. This basis presumes that funds will be available

to finance future operations and that the realisation of assets and settlement of liabilities will occur in the ordinary

course of business. The ability of the company to continue as a going concern depends on the ability of the

company to obtain continued support from government agencies.

Multi-year Budgeting

Based on a multi-year expenditure framework, the CDC continues to maintain the detailed financial plans required

to ensure that the key elements of the project are fully delivered.