Cape Town Routes - wcpp

ANNUAL REPORT2012/13

Cape Town Routes

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contents

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Annual Report 4. Vision & Mission Statements

6. Overview

10. CTRU’s Service Offering to the Industry

12. Chairperson’s Review

14. Board & Board Sub-Committees

16. Chief Executive Officer’s Review

20. CTRU’s Tourism Industry Partners

22. Tourism Destination Performance

Annual performance Report 28. Programme 1: Organisational Support

29. Programme 2: Integrated Marketing

33. Business Tourism: Conference Bids Secured

34. Leisure Tourism: Joint Marketing Agreements Secured

35. Events Tourism: Events Supported

Annual financial statements 38. Corporate Governance Report

40. Report of the Auditor-General

42. Report of the Audit Committee

44. Statement of Responsibility

46. Materiality and Significance Framework

48. Accounting Authority’s Report

51. Annual Financial Statements: Table of Contents

list of abbreviations 72. List of Abbreviations

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Vision & Mission StatementS

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VisionOur Vision is to be recognised as one of the most dynamic and professionally managed Destination Marketing Organisations in the world.

MissionOur Mission is to market Cape Town and the Western Cape successfully as a desirable tourism destination to as many potential leisure, business and events visitors as possible.

Goals • To position Cape Town and the Western Cape as the premier leisure, events and business tourism destination in Africa. • To contribute to the distribution of the benefits of a thriving tourism industry to all the citizens of the Western Cape. • To contribute towards the attainment of high levels of competitiveness in the industry.• To promote an environmentally and socially responsible tourism industry that will enjoy the benefits of sustained growth.

Core ValuesOur work will be infused and characterised by the following values:

PROFESSIONALISM • INNOVATION • INTEGRITY • PASSION • CONFIDENCE • COMMITMENT

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The transition between CTRU and Wesgro is finalised and reflecting on the past three years the tourism journey was one with many challenges and successes. One of the most significant challenges experienced throughout this period was the world’s economic downturn and the Western Cape was not immune to this misfortune.

Overview

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OverviewDespite these challenges, South Africa successfully hosted one of the world’s most watched sports events - the 2010 FIFA World Cup™ during this period. This event provided the country and, in particular, the Western Cape unprecedented exposure to the rest of the world. Expectations were that tourist arrivals will significantly decrease post World Cup. And therefore concerted efforts were made to mitigate the reducing numbers. CTRU’s marketing campaign ‘Beyond the 90 Minutes’, which aimed to promote the destination, also provided unparalleled awareness to the visitors, that the offerings within the destination are endless. After conducting a survey at the Cape Town International Airport post the World Cup, most first time visitors indicated that they will definitely return to Cape Town and the Western Cape.

Cape Town International Airport was voted the best airport in Africa, and due to the success of the people of the Western Cape post the World Cup, attributed to the achievement in double digit growth figures at the airport. The airport also lost two international direct flights, SAA London and Malaysian Airlines, but gained direct international flights from airlines such as Air France. However in achieving this it was still experienced that Hotels, Guest Houses, B&B’s, etc. were not fully occupied which led to the closure of some of these establishments.

Table Mountain, Cape Town’s iconic World Heritage Site, was confirmed as a new Wonder of Nature and welcomed a record number of visitors during this time which was the highest in 82 years.

Due to the continuous reduction of government funding year on year, the DMO went through a process of optimising available resources and re-alignment of strategic focus. This led to the closure of the Victoria and Alfred Gateway Information office and during the later months the outer lying Gateway offices. CTRU had to leverage its resources and strengthen its partnerships with Cape Town Tourism and other tourism bodies in order to continue to execute its mandate. Shortly after the re-alignment process, there was an announcement that a “merge” among government entities was to take place into one Economic Development Agency. A few months later CTRU and the Investment and Trade Promotion Agency (Wesgro) was to merge. The realisation of the integration between CTRU and Wesgro impacted heavily on the human resource element within the DMO and in the process lost a few very skilled employees. Despite the instability within the organisation and less funding from the Province, CTRU still managed to successfully deliver on all its targets as set out in the Annual Performance Plan.

Despite the apprehension amongst the CTRU staff, the performance in the marketing of the destination continued to be of a very high standard. With a non-competitive marketing budget, the organisation in close collaboration with its industry partners, managed to unlock an estimated R1.78 billion direct traceable return on investment on behalf of the destination.

During this financial year, tourism marketing positioned Cape Town & Western Cape as a preferred leisure, events and business destination, profiling the destination through targeted marketing platforms such as Indaba, ITB, World Travel Market, SAA Explore including SA Tourism Road show in India; media opportunities leveraging off events, marketing partnerships with inbound tour operators, international celebrity engagements and social media opportunities.

In addition, we proactively drive our media and guest relations programme to educate and showcase our destination resulting in printed, online and destination footage. We engaged with travel agents and tour operators covering core, BRICSA and watch list markets securing editorial features from South America, Italy, USA, UK, China, Hong Kong and Australia.

Noteworthy destination exposure and footage secured include the following markets:• USA – Jeopardy! 9 million viewers • UK – Extreme SA Adventure Series (2 episodes in destination) 1 million viewers per episode • UK – UK Food Network Channel (175) • USA – Born to Explore ABC TV

CTRU directly engaged the trade at international tourism platforms and much interest in the destination continues to show at these platforms. This year was no different, five agreements were signed namely from the UK, German and Russian markets with an estimated economic impact of R108.76 million.

Through the marketing efforts of CTRU’s Convention Bureau, Cape Town is ranked 37th as a Convention City according to the International Convention and Conference Association (ICCA). 14 Site Inspections were hosted during the year to showcase the Western Cape’s facilities once a bid has been submitted and the city is shortlisted.

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The Convention Bureau continues to prosper, submitting a staggering 35 bids during the past year. The value of the bids submitted equals an estimated economic value of R784.45 million with the potential of attracting 81 450 delegates to the destination. Nineteen conferences were secured for the period under review, attracting 27 580 delegates with an estimated value of R347.73 million.

CTRU supported 20 events yielding an impressive estimated economic impact of R1.3 billion and attracting 196 600 event goers. This was made possible through the collaboration and support of our tourism industry partners.

The organisation continues their unwavering commitment to the industry’s transformation which remains a key strategic imperative of the tourism marketing strategy. The marketing support programme aimed at emerging, mostly black entrepreneurs, provided assistance to 180 small and medium sized tourism enterprises, which includes youth beneficiaries. The success with this programme is the continuous efforts to collaborate with industry partners to produce innovative marketing platforms to benefit the SMME’s.

The Tourism Marketing Research and Intelligence (MR&I) unit, which amalgamated with the Wesgro IQ Research unit, effective 1st April 2012, conducts various in-house research projects, including but not limited to: four quarterly Western Cape Tourism Barometer reports, a tourism industry perception study (industry reference panel survey), providing imperative and professional industry opinions and perceptions, and a SMME Evaluation Study, which monitors the impact of the marketing efforts attributed to the SMME products supported by CTRU/Wesgro.

Wesgro IQ further gathers key tourism indicators obtained from secondary data released by South African Tourism and STATSSA, and produce four Destination Performance Reports for the Western Cape.

In addition, for the reporting period, two outsourced research projects were conducted, namely an Event Impact Study (Prince Albert Olive Festival 2012) and a Visitor Tracking Study; administered to track key visitor trends and patterns of tourists visiting Cape Town and the Western Cape.

In terms of corporate governance, over the past few years CTRU have much to be proud of. Under the watchful guidance of CTRU Board members, the Board Sub Committee Chairpersons and the unwavering commitment of CTRU’s employees, the organisation managed to attain clean audits. This comes after the Auditor General’s pronouncement of the perilous state of corporate governance in the country. A comparative analysis of National Auditor General, Terence Nombembe’s 2011 report on the state of financial and performance auditing in the Western Cape makes it clear that CTRU is by far one of the Province’s star performers. This is also thanks to our then Board Chairperson, Peter Bacon, whose cautious optimism and strategic guidance always ensured the moral integrity of the organisation.

The consolidation of CTRU and Wesgro commenced on 1 April 2012. The tourism act is expected to be repealed in the coming months and until such time a Memorandum of Agreement has been implemented between the two boards of directors of CTRU and Wesgro. With this agreement Wesgro absorbs the DMO’s entire mandate and will carry forward the responsibility of marketing the Western Cape as the official destination marketing, trade and investment promotion agency of the Western Cape.

This new era is entered into with excitement and optimism. Tourism is a significant economic driver and together with investment and trade promotion we will see increased benefits to all of the Western Cape. This combined structure will serve Tourism well. CTRU successfully marketed Cape Town and the Western Cape as the preferred tourism destination, it is now up to Wesgro to continue and enhance on the successes of CTRU.

The Board of CTRU wishes to thank all its industry partners and wishes Wesgro all the best in marketing the Western Cape as the preferred tourism, trade and investment destination.

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Using Cape Town – a well-established global and local brand – as a hook, we encourage visitors to expand their trip into the rest of our beautiful province and its lesser-known attractions. We do this in partnership with local government, industry, communities, local and regional as well as national tourism organisations.

CTRU’s Service Offering to theindustry

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Cape Town Routes Unlimited is a one-stop destination marketing organisation that provides the following tourism marketing services:1. Up to date information on all tourism products and services across the entire province. We also produce and disseminate tourism research findings and marketing intelligence to industry stakeholders;

2. A complete collection of print and electronic marketing collateral, which is designed, produced and disseminated to tourists, locals, government and the broader tourism industry;

3. A state of the art destination website which is completely aligned with SA Tourism and local tourism organisations;

4. Selective funding and marketing support to new and existing events throughout the province, that match our strategic objectives;

5. Dedicated marketing support to deserving small, medium and micro tourism enterprises;

6. Articulating opinions to the media in respect of strategic tourism matters through arranging media conferences and drafting media releases. Furthermore, the organisation disseminates destination photographs for use by local and international industry players;

7. Hosting of overseas and domestic media, tourism trade and government delegations. The organisation also maintains and utilises a database of domestic and international travel trade and other related role-players;

8. Focused tactical destination marketing campaigns such as esCape to the Cape and the Summer Campaign;

9. A portfolio of online marketing and other communiqués to the industry;

10. An internationally accredited convention bureau with a portfolio of support services to professional conference organisers, destination management companies, incentive houses and international associations. The convention bureau is also instrumental in the preparation and submission of bid documents for international and domestic conferences;

11. Information road shows through all the regions and the province;

12. Strategic advice on tourism marketing matters to local government;

13. Accreditation of all official local tourism organisations;

14. Strategic international and local lobbying on behalf of the local tourism industry;

15. Representation at national and international tourism exhibitions, road shows and other platforms;

16. Joint Marketing Agreements with high profile international and domestic tourism partners – this way we leverage off

our partners and save funds.

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CHAIRPERSON’S REVIEW

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DEONCLOETEWith this report we conclude the final phase of Cape Town Routes Unlimited’s journey and reflect on milestones achieved during the past financial year.

The 2012/13 Annual report is the final report of the Cape Town Routes Unlimited’s Board as the tourism authority of the Western Cape. Wesgro has absorbed the Destination Marketing Organisation’s entire mandate and has carried forward the responsibility of marketing the Western Cape as the official Destination Marketing, Trade and Investment Promotion Agency.

For this reporting period specific business goals included the marketing of Cape Town and the Western Cape as the premier leisure, events and business tourism destination, to distribute the benefits of the tourism industry to all citizens, contribute toward the attainment of high levels of competitiveness in the industry and to promote an environmental, social and economically sustainable tourism industry.

Most notably, on 1 April 2012, all CTRU permanent employees were transferred under the auspices of Wesgro. The repeal of the Western Cape Tourism Act is anticipated during the current financial year.

During the year, five joint marketing agreements worth R108 million were signed with international tourism partners from Russia, the United Kingdom and Germany. These strategic partners are important in assisting with meeting shared goals in a cost-effective way. Business and events tourism benefitted, with 19 bids secured valued at R347 million, thought to bring in some 27 580 delegates. Many of these conferences are in the medical field, unsurprisingly given the Mother City’s many excellent medical schools and hospitals. Some 20 events, valued at R1,3 billion, around the Western Cape were assisted with funding by CTRU in the last financial year. From the Elim Flower Show to the Vodacom Funny Festival, the Pick n Pay Cape Argus Cycle Tour and the Snoek and Patat Fees in Napier, these festivals showcase the diversity of our province and the many activities which are available here. Our people and our produce are two of our best adverts and by supporting these events we are helping grow tourism and the economy.

I would like to thank Minister Alan Winde for his unwavering commitment to the cause, his support, guidance and leadership. I would like to express my sincere gratitude to the tourism industry as a whole for your commitment in growing our destination and improving our service offering. In the words of American essayist Ralph Waldo Emerson, “Be an opener of doors for such as come after thee”. I would like to thank my colleagues on the board as well as the CEO of Wesgro, Nils Flaatten and his team for their unwavering dedication to powering the marketing of Cape Town and the Western Cape to even greater heights, with “professionalism, innovation, integrity, passion, confidence and commitment”.

Deon CloeteChairman

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The Board is the governing body of Cape Town Routes Unlimited. Members are appointed in terms of the Western Cape Tourism Act of 2004. The Board has established four committees.

BOARD & board sub-committees

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BoardMEC for Finance, Economic Development and Tourism, Alan Winde, appointed a new Board effective 23 April 2011 for a period of two years

Board Members

Finance CommitteeBryan Slingers (Chairperson)Esa Yacoob (Board Member)Mangaliso Mdlalo (Board Member)Nils Flaatten (Wesgro Chief Executive Officer)Herman Boneschans (Chief Financial Officer)

Human Resources and Remuneration CommitteeEffective 1 April 2012, all Cape Town Routes Unlimited’s (CTRU) permanent employees were transferred to the Western Cape Investment and Trade promotion Agency (Wesgro) under the Labour Relations Act section 197. The Board members remained appointed and human resources were made available from Wesgro to perform operational duties during the financial period under review.

Audit CommitteeNick Nicholls (Chairperson) (Independent member) Janine Guest (Independent member) Bryan Slingers (Board member) Nils Flaatten (Wesgro Chief Executive Officer)Herman Boneschans (Chief Financial Officer)

Risk Management CommitteeRey Franco (Board member)Herman Boneschans (Chief Financial Officer) Nils Flaatten (Wesgro Chief Executive Officer)

Deon Cloete (Chairperson)

Bryan Slingers (Vice-chairperson)

Vernon Kirsten Rey Franco Annemie Liebenberg

Esa Yacoob

Mangaliso Mdlalo Erica Elk Christelene Brink (Resigned 1/9/12)

Stephen de Vries Grant Pascoe Labeeqah Schuurman (Ex-officio)

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Chief executiveofficer’s REVIEW

The 2012/13 financial year marked the end of a tourism era. The Cape Town Routes Unlimited (CTRU) Board of Directors initiated a strategic decision and requested that the Western Cape Government transfer the destination marketing functions of the Western Cape to Wesgro. The operations, staff and deliverables of CTRU were thus transferred to Wesgro in April 2012. This difficult decision was necessitated by a gradual decline of grant funding from the Shareholder.

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nilsflaattenThe Western Cape Government accepted this request and the Provincial Cabinet endorsed the integration process. A joint working committee was established under the auspices of the Provincial Department of Economic Development and Tourism (DEDAT) and was chaired by its Head of Department, Solly Fourie. Directors from both CTRU and Wesgro participated in this structure and oversaw the planning and execution of the integration plan.

This integration required the Wesgro Chief Executive Officer to report to both the CTRU and Wesgro Boards of Directors as well as their respective Board Sub-Committees.

I am happy to report that these arrangements worked extremely well and that both entities have received clean audits. This achievement is testimony to both sets of Directors who exercised their oversight responsibilities under very unusual conditions.

As part of the integration arrangements, predetermined objectives (or key performance indicators) were audited under the Wesgro programme responsible for Integrated Destination Marketing and are attached in this Annual Report as ‘unaudited results’. Suffice it to say that, due to the fact that the predetermined objectives have already been verified and audited under the Wesgro Annual Report, a second audit was not required and this fact was agreed to by the Auditor-General of South Africa.

The integration process is now complete and it gives me pleasure to share with you the performance highlights for the year under review.

There have been some incredible achievements noted on the tourism front, such as Table Mountain being confirmed as one of the new 7 Wonders of Nature and also experiencing record numbers of visitors during this time. Cape Town and the Western Cape continue to win many accolades. Amongst others, Cape Town International Airport has been voted the Best Airport in Africa, for the third time in a row. The 2010 FIFA World Cup™, attributed to the achievement in double digit growth figures at the airport, despite the loss of direct flights from key source markets.

Despite losing a number of key staff members to national organisations we have managed to appoint competent new staff in the vacant roles; they have embraced the responsibilities required of them.

The Cape Town and Western Cape Convention Bureau represented the destination at a number of key international trade shows such as IMEX Frankfurt, IMEX America in Las Vegas, EIBTM in Barcelona and Meetings Africa in Johannesburg.

The Convention Bureau has secured convention bids for the province worth over R350 million. Although the South African convention industry is experiencing downward pressure on delegate attendance, mainly due to poorer economic conditions globally and us being a long haul destination, Cape Town has been ranked as Africa’s number one Convention Bureau for 2012 . The secured bids range from large conventions (with thousands of attendees) to ones with fewer delegates. The smaller conventions are extremely prestigious in nature and attract a wide variety of global professionals to Cape Town and the Western Cape. These convention delegates are drawn from diverse fields - ranging from medical and finance to the creative economies. A key focus for this unit has been trying to include legacy projects in the bid proposals that they generate.

Our achievements in this sector would not have been possible without team work and support from the National Convention Bureau within SA Tourism, the CTICC and other venue owners, professional conference organisers (PCO’s), accommodation establishments, tourist attractions, tour operators and transport companies.

The Convention Bureau is a member of the BestCities Global Alliance and received a clean external audit from the organisation during the year under review.

Five joint marketing agreements were signed with the UK, German and Russian markets with an estimated economic impact of R108.76 million. In addition to this, we hosted a number of international media groups, including Charley Boorman and Reza Mohamed, who filmed for his African series which was aired on the Food Network Channel.

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Further to this we attended international platforms in collaboration with South African Tourism and the National Department of Tourism. Amongst others, these included World Travel Market in London, SAA Explore in Brazil and Argentina, the Arabian Travel Market and the Moscow International Travel and Trade Show.

Using data supplied by SA Tourism and STATSSA, as well as additional sources, our research team, WesgroIQ, collates and distributes a quarterly tourism barometer, which tracks trends and highlights visitor numbers to our shores. These barometers are valuable to our partners and assist when going to markets.

On the Event Support side of our Agency, we supported 20 events yielding an impressive estimated economic impact of R1.3 billion and attracting 196 600 event goers. Thanks must go to our tourism industry partners for their work in hosting these events, particularly during the out-of-season months as this is crucial to the survival of smaller towns that rely on tourism. Some of these varied and interesting events include the 14th Cape Town International Jazz Festival, the 10th ABSA Cape Epic, the Bergriver Canoe Marathon, the Caledon Country Fair, the Elim Flower Show and the Loeries Advertising Awards.

Success in the tourism sector is determined by partnerships and the Agency would not have easily been able to meet our targets if we did not rely on strong relationships with entities such as SA Tourism (SAT), the Tourism Grading Council of South Africa (TGCSA), the Tourism Business Council of South Africa (TBCSA), South African Association for the Conference Industry (SAACI), the Federated Hospitality Association of Southern Africa (FEDHASA), the Southern Africa Tourism Services Association (SATSA) and others.

During the year under review we learnt very quickly that our clients were represented by hardworking and passionate people in Cape Town Tourism, the other five Regional Tourism Organisations (RTOs), a number of Local Tourism Organisations (LTOs) and all of the Local Tourism Associations (LTAs) across our province. We have developed much better co-ordination and co-operation across these groups and our working relationship is more focussed and professional.

Support from the various spheres of government has been invaluable in helping us achieve our mission. Mayors, Mayco Members and Executive Directors (far too many to mention) have been a consistent source of support.

The Agency would like to extend its gratitude to the Standing Committee on Finance and Economic Development in the Western Cape Provincial Parliament for their understanding and support of the integration process, the legislative amendments and their support at the annual Indaba.Trade Show.

On behalf of the CTRU Board of Directors we would like to thank Premier Helen Zille, MEC Alan Winde, Counsellor Grant Pascoe and the management team in DEDAT.

To our business partners, national and international clients - a big thank you!

In closing, we would like to thank the outgoing CTRU Directors, led first by Peter Bacon and then by Deon Cloete for their guidance, support and determination to see through a successful integration process.

Wesgro undertakes to continue the good work done in the past and we wish to make sure that Cape Town and the Western Cape remains a globally attractive tourism and business destination.

Nils FlaattenChief Executive Officer

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CTRU’s TOURISM industryPARTNERS

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More Tourism Partners• African Travel Centre• Cape West Coast Municipality• Central Karoo District Municipality• Department of Correctional Services• Eastern Cape Tourism• Ecco Tours• Grand Stand Management• Iziko Museums • Legend Tours • National Tourism Department• Old Mutual• Robben Island Museum • Rubens

• SITE • South African Embassy, Argentina • South African Embassy, Berlin• South African Embassy, Portugal • South African Embassy, Stockholm• South African National Biodiversity Institute • South Africa Netherlands Chamber of Commerce• South African Tourism Country Offices • Table Mountain Aerial Cableway Company• Tenikwa Wildlife Awareness Centre• The Next 48 Hours• Tourism, Hospitality and Sports Education and Training Authority• Trailfinders - UK • Wesgro

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Tourism Destination Performance

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Tourism’s Global PerformanceOn a global scale, international tourism has shown a remarkable performance, as predicted by UNWTO, international tourist arrivals increased by 4% in 2012, surpassing the record 1 billion tourists for the first time in history. According to the January 2013 issue of the UNWTO World Tourism Barometer, an additional 39 million tourists were recorded globally, reaching a significant total of 1,035 million in 2012, up from 996 million in 2011.

Despite the on-going economic challenges, international tourist arrivals has shown sustained global growth, forecasts from UNWTO show that arrivals worldwide is expected to continue in 2013 at a similar pace (3 to 4%), aligned to the UNWTO’s long term outlook Tourism Towards 2030.

Global tourism growth was driven by the robust growth from Asia and the Pacific, which achieved the highest (6.8%) growth among all the regions, followed by Africa (6.3%), Americas (3.7%) and Europe (3.3%). The Middle East experienced a year-on-year decline of 4.9% when compared to 2011, largely attributed to the volatile environment and the varying trends across the respective countries.

The international tourism receipts among the top ten destinations saw a significant increase, with the United States, one of the top tourism earners, recording a 10% increase in 2012, followed by Hong Kong (10th largest tourism earner) reflecting an impressive growth of 16%. Germany and the United Kingdom respectively achieved a growth of 6% in receipts, while Spain, France, Italy and Australia recorded an increase ranging from 1 to 4%.

China (world’s 3rd largest tourism spender) and the Russian Federation (7th largest tourism spender), two of the world’s largest emerging markets, was leading international tourism expenditure, with China recording an increase of 42% in expenditure abroad, followed by a growth of 31% for the Russian Federation.

Source: UNWTO 2013

1200

Num

ber

of t

ouri

st a

rriv

als

11

/12

% Change

6.0%

4.0%

1000

800

600

400

200

0

2.0%

0.0%

-2.0%

-4.0%

8.0%

-6.0%World

984 459.7952 487.6996 517.5

1,035 534.83.8%

200920102011201211/12 % Change 3.3%

180.5205.1218.1232.96.8%

139.6150.3156.3162.13.7%

48.149.849.252.36.3%

52.559.255.352.6

-4.9%

Europe Americas Africa Middle East

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South Africa’s PerformanceNationally, tourist arrivals equally portray an upward shift, recording a year-on-year growth of 10.2% in 2012. Between January and December 2012, a total of 9,188,368 tourist arrivals travelled to South Africa, up from the 8,339,354 recorded in 2011, with the largest share of tourists originating from the African region (6,656,458).

The Total Foreign Direct Spend (TFDS) (excluding capital expenditure) was estimated at R76.4 billion in 2012, a 7.6% increase when compared to the R71.0 billion recorded in 2011.

2011 20122011/12 %

Change

International tourist arrivals

8,339,354 9,188,368 10.2%

Domestic tourist arrivals 13.9 million 12.5 million -11%Source: SATourism, 2013

Western Cape’s Performance• TheWestern Cape Province received a total of 1,354,353 tourist arrivals in 2012, representing a 2.7% year-on-year decrease.• TheProvincereachedR18.5billioninTFDS,a1.6%increasefrom2011,andheld16.3millionbednightsin2012.• TheshareofdomestictripstotheWesternCapewas8%,recordingatotalofR2.0milliontripstakentotheprovincein 2012.

Source: SATourism, 2013

300,000

Num

ber

of t

ouri

st a

rriv

als

11

/12

% Change

10.0%

5.0%

250,000

200,000

400,000

350,000

150,000

100,000

50,000

450,000

0

0.0%

-5.0%

-10.0%

-15.0%

15.0%

-20.0%Q1

383,309 374,305379,579 285,913426,348 242,788

12.3% -15.1%

20102011201211/12 % Change

341,628315,527296,451

-6.0%

402,378409,752390,037

-4.8%

Q2 Q4Q3

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ANNUAL performance report

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Programme 1: Organisational SupportProgramme Structure- Board & Sub- - Committees- Office of the CEO- Financial Management- Corporate - Services

Strategic Goals

To market Cape Town and the Western Cape as a premier leisure, events and business tourism destination

To contribute towards the attainment of high levels of competitiveness in the industry

Strategic Objectives

To maintain the highest standards of good corporate governance and management best practices in the administration of the organisation

Programme Performance Indicator

Performance Measures/Service Delivery Indicators

Achieved Performance against Target

Performance IndicatorReporting

PeriodTarget Achieved

Reason for Major Variance

Remedial Action

Number of Board and sub-committee meetings conducted

Quarterly 20 14

Due to the integration of Wesgro and CTRU, the CTRU HR Committee meeting is combined with Wesgro’s. The Risk Committee was combined with the Finance Committee meetings

None required

Number of Strategic Plans

Annual 1 1

Number of approved Annual Performance Plans

Annual 1 1

Audit Opinion rating Annual 1Unqualified Audit Opinion

Number of tourism corporate social responsibility initiatives initiated and completed

Quarterly 4 4

Percentage of posts filled from approved establishment

Quarterly 85% 86%

Due to the integration of Wesgro and CTRU, this function was transferred to Wesgro and will form part of Wesgro’s performance

Number of employees attending human resource development interventions

Quarterly 45 15

Due to the integration of Wesgro and CTRU, this function was transferred to Wesgro and will form part of Wesgro’s performance

A work skills plan has been drafted and roll out is expected in the new financial year

Percentage uptime and mobile mail facility on all ICT infrastructures

Quarterly 99.9% 99.9%

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Programme 2: Integrated marketing

Programme Structure- Business & Events - - Tourism- Leisure Tourism- E-Marketing

Strategic Goals




To enhance and leverage off, a winning brand identity for Cape Town and the Western Cape

To be a major contributor in influencing as many visitors as possible to decide to visit Cape Town and the Western Cape and to encourage the sustained growth of spend and yield







Remedial Action

Number and value of conference bids securedNumber of bid Value of bids

Number of Attendees

Quarterly 16 19

Bid decision process of associations have a 3-4 year timeline cycle

Quarterly R360m R347mThe value of the conference is directly related to the number of attendees

Quarterly 34 000 27 580

The number of delegates attending is directly related to the magnitude of the bids secured.

The delegate numbers are based on the attendance of the previous conference. The global economic status and the fact that the Western Cape is a long haul destination also has an impact on delegation numbers.

Number and value of joint marketing agreements securedNumber of JMA’s Quarterly 5 5

Value of JMA’s Quarterly R42m R108mThe over performance was due to the high yield in the markets

Number and value of Destination Marketing Campaigns

Number of Campaigns Quarterly 4 4

Value of Campaigns Quarterly R25m R243 000

The economic value is not yet calculated due to the statistics that are still in the process of being compiled

We are in constant contact with the campaign organisers with regards to the availability of the stats

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Programme 2: Integrated marketing (cont.)

Programme Structure- Business & Events - - - Tourism- Leisure Tourism- E-Marketing

Strategic Goals




To enhance and leverage off, a winning brand identity for Cape Town and the Western Cape

To be a major contributor in influencing as many visitors as possible to decide to visit Cape Town and the Western Cape and to encourage the sustained growth of spend and yield







Remedial Action

Number and value of events supported

Number of events Quarterly 6 20

More regional events with minimal financial contribution were supported in this financial year

Value of events Quarterly R1bn R1.3bn

The increase in estimated economic value is directly related to the events supported.

Number of page views on the CTRU e-Marketing platform

Quarterly 1.9m 868 622

Due to the merge between CTRU and Wesgro, energies were focussed on a development of a new website.

The performance is expected to increase in the new financial year as the website is fully operational

Percentage growth in product enquiries on the CTRU e-Marketing platform

Quarterly 5.5% -35.4%

Due to the merge between CTRU and Wesgro, a new website was developed which was launched at the end of the 3rd quarter of the financial year under review


Number of unique visitors

Quarterly 375 000 211 768

Due to the merge between CTRU and Wesgro, a new website was developed which was launched at the end of the 3rd quarter of the financial year under review


Number of SMME beneficiaries through support interventions

Marketing activities

Focussing on campaigns

Quarterly 180 251

The achieved results are due to the successful collaboration with tourism partners

Quarterly 4 4

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• conference bids secured

• joint marketing agreements

• events

achievements:

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Business tourism: conference Bids Secured No. Bid Secured Venue

Estimated Delegates and

Bed Nights

Estimated Economic

Value

1ICCA Sector Venues Client/Supplier Business Workshop 2013http://www.iccaworld.com/evps/evresults.cfm?classid=26

CTICC30 Delegates

30 Bed nightsR 180 000

2International Congress of the World Federation of Occupational Therapists 2018http://www.wfot.org/

CTICC2 500 Delegates

7 500 Bed nightsR 30 000 000

3XXXIV’th International Congress of Audiology 2018http://www.audiology.ru


6 000 Bed nightsR 22 500 000

4Congress of the International Society for the Study of Fatty Acids and Lipids 2016http://www.issfal.org/conferences/future-conferences


8 000 Bed nightsR 30 000 000

516th International Congress of Infectious Diseases (ICID) 2014http://www.isid.org/icid/


12 000 Bed nightsR 48 000 000

6International Confederation of Dietetics Association 2020http://www.internationaldietetics.org/Congress/Hosting-a-Congress.aspx


6 000 Bed nightsR 22 500 000

7World Congress of Zoology 2020http://www.globalzoology.org

Southern

Sun Cape

Sun

500 Delegates

1 500 Bed nightsR 6 000 000

845th Congress of International Society of Paediatric Oncology 2015http://www.siop-online.org/


6 000 Bed nightsR 24 000 000

9International Conference of the International Bartenders Association 2014http://www.iba-world.com/

CTICC500 Delegates

2 000 Bed nightsR 7 500 000

10World Congress of Internal Medicine (WCIM) 2018http://www2.kenes.com/wcim/Pages/Home.aspx


14 000 Bed nightsR 52 500 000

11Annual Scientific Meeting - IUGA 2016http://www.iuga.org/?page=2016meeting


6 000 Bed nightsR 24 000 000

12Annual Meeting of the Bioelectromagnetics Society (BEMS) 2014https://www.bems.org/society

CTICC250 Delegates

1 000 Bed nightsR 3 750 000

13Metamorphosis Conference - SAhttp://www.mymetamorphosis.org/

Sea Point

Church

500 Delegates

500 Bed nightsR 3 000 000

142013 World Cancer Leaders Summithttp://www.uicc.org/convening/world-cancer-leaders-summit

CTICC200 Delegates


153rd Creative Economy Conference 2013http://www.animationsa.org/news-and-events/3rd-annual-african-creative-economy-conference

Fringe/

Cape

Peninsula

University

400 Delegates


16Board of Health Care Funders 2013/2014http://www.bhfglobal.com/


4 800 Bed nightsR 18 000 000

17World Association for Disaster and Emergency Medicine 2015http://www.wadem.org/


3 000 Bed nightsR 13 500 000

183rd Global Symposium of Health Systems Researchhttp://www.healthsystemsglobal.org/AboutUs.aspx


3 000 Bed nightsR 13 500 000

192017 ISPO World Congresshttp://www.ispoint.org/events/ispo-world-congress-2017


6 000 Bed nightsR 24 000 000

Total R 347 730 000

34

leisure tourism: Joint Marketing Agreements (JMAs) secured

No. JMAs Secured Brief DescriptionEstimated

Economic Value

1 Ecco Tours, UK

The purpose of the agreement is to increase tourist numbers from the UK and to introduce potential sales from outside of Europe and South America. The key promotion activity is the Annual Travel Academy with a delivery of 54 travel agents from mainly UK, Russia, Germany, Austria and Australia. Ecco Tours have expanded into Prague with a focus on growing the Eastern European and Russian markets. SAA and Emirates are the secured airline partners.

R 42 000 000

2 ITravel Tourism, Russia

This agreement is to position Cape Town & Western Cape as a stand alone destination in the Russian market and to capatalise on South Africa’s entry into the BRICS market. Campaign elements, targets the de lux end of the Russian market with tactical webmail promotions and destination presence in ITravel 2012/13 catalogue.

R 5 740 000

3 Africa Travel Centre, UK

The agreement is to sustain bookings and actively promote the destination in the UK market. Tactical promotion in The Mail features Sunday offers in Cape Winelands, Cape Town, West Coast & Hermanus with extension offers to Garden Route & Klein Karoo. Campaign elements include destination introductory and brand positioning in the annual Tatler Spa guide, targeting top spenders who travel long haul at least once a year.

R 17 920 000

4 Virgin Holidays, UK

Virgin Holidays is one of the largest transatlantic scheduled operators. The agreement revolves around Campaign activity, targeting Virgin Holidays audiences nationwide and sales promotions in Evening Standard during the key booking window. The main element is to integrate SA as a dedicated destination promotion into Virgin Holidays largest campaign of the year. An added benefit to this marketing activity is that the Virgin Holiday SA media drive will reach Virgin Holiday loyalty memberships of 65,000 Frequent Virgin Club and over 250,000 Virgin Holiday’ loyalty members.

R 35 600 000

5Boomerang Reisen, Germany

The agreement with this expanding tour operator, with 12 branches throughout Germany, 1 each in Switzerland and Austria which operates independently from TUI. Campaign marketing mix include destination brand in annual Africa brochure, online offers peak booking window Jun-Aug, exposure at consumer exhibitions and an increase point system in Boomerang ReisenTouren Manuel which is an unique feature in the German market.

R 7 500 000

Total R 108 760 000

35

events tourism: Events Supported No. Event Event Organiser Date

Co-Funding Contribution/Non-Financial

Support

EstimatedEconomic Impact

1 Vodacom Funny Festival Eddy Cassar 11 June - 8 July R 50 000 R 10 450 000

2World Corporate Golf Challenge

Eden District Municipality

3 - 5 May R 300 000 R 20 000 000

3 Snoek & Patat FestivalGoedverwacht Community Development Forum

22 - 23 June R 25 000 R 5 000 000

4 Knysna Oyster Festival World Sports 6 - 15 July R 80 000 R 38 000 000

5Bergrivier Canoe Marathon

World Sports 10 - 14 July R 40 000 R 21 000 000

6Hessequa Nature and Arts Festival

Hessequa Municipality 6 - 9 September R 20 000 R 3 200 000

7 Caledon Country Fair Caledon Tourism 7 - 9 September R 40 000 R 4 500 000

8 Elim Flower Show Cape L’Agulhas Tourism 21 - 24 September R 15 000 R 1 800 000

9 Albertina Aloe Festival Hessequa Mun 28 - 30 September R 20 000 R 3 700 000

10Riebeek Valley Shiraz and Arts Festival

Swartland Tourism 29 - 30 September R 10 000 R 2 200 000

11 Loeries Awards Loeries Company 22 - 23 September R 550 000 R 73 100 000

12 Baby Whale Festival Hessequa Municipality 5 - 6 October R 20 000 R 3 800 000

13Coronation Double Century

Cape Town Cycle Tour Trust

24 November R 0 R 19 200 000

14 FNB Variette FestivalEddy Cassr Public Relations and Promotions

6 - 20 October R 55 500 R 27 300 000

15 J&B Met Worldsports 2 February R 120 000 R 68 000 000

16 Jazz on the Rocks Camissa Solutions28 February -

3 MarchR 150 000 R 30 000 000

17 Design Indaba Interactive Africa 1 - 3 March R 300 000 R 326 900 000

18 Cape Argus Cycle Tour Cape Town Cycle Trust 10 March R 300 000 R 450 000 000

19 Absa Cape EpicGrandstand Management

17 - 24 March R 300 000 R 218 900 000

20 Hangklip Art WeekHangklip - Kleinmond Tourism

16 - 24 March R 40 000 Stats not yet available

Total R 1 170 000 R 1 327 050 000

ANNUAL financial statementsfor the year ended 31 march 2013

38

Cape Town Routes Unlimited (CTRU) has ensured that sound corporate governance structures and processes were implemented from the outset. Despite being a relatively new organisation, it is cognisant of the requirement for state owned enterprises to embrace the principles of good corporate governance.

Due to the dynamic nature of the business and political landscape, these practices are constantly reviewed and adapted to accommodate internal corporate developments and stakeholder expectations and to reflect national and international best practice. Cape Town Routes Unlimited is a Schedule 3C Public Entity as defined in the Public Finance Management Act (Act 1 of 1999). The Western Cape Tourism Act (Act 1 of 2004), is the provincial legislation responsible for the establishment of the Destination Marketing Organisation (DMO) trading as Cape Town Routes Unlimited. Not only does Cape Town Routes Unlimited, comply with the provisions of the Public Finance Management Act, it endorses the principles of the South African Code of Corporate Practices and Conduct as recommended in the second King Report on Corporate Governance (King II). The Board and its sub-committees continue to review and benchmark the organisation’s governance structures and processes. Corporate governance is considered a priority requiring the embracing of its principles rather than merely establishing the steps to be taken to demonstrate compliance with statutory or regulatory requirements. Issues impacting organisational governance will accordingly continue to receive the Board and its committees’ consideration and attention during the year ahead. Responsible corporate citizenship and sound governance practices remain one of the top priorities of executive management.

corporate governancereport

39

The Board Cape Town Routes Unlimited’s enabling legislation, the Western Cape Tourism Act of 2004, provides that the Minister, in consultation with the Executive Mayor, may appoint no more than 15 members to the Board, with sufficient competence in, or knowledge of the tourism industry, or marketing and management expertise, or strategic leadership qualifications in the field of organisational transformation, representing the Province’s broad demographic and geographic composition. In terms of the prevailing legislation, Board members are appointed for a period not exceeding two years. Board members are eligible for reappointment, but may not serve more than three consecutive terms. The Board in turn appoints the Chief Executive Officer on a fixed term performance-linked contract for a period not exceeding five years. An incumbent is eligible for reappointment.

Board Powers and Procedures The powers and duties of the Board are detailed in the Western Cape Tourism Act, aimed at ensuring the attainment of its objectives. In particular, it details the meetings and decisions of the Board, the establishment of an appointment to committees, powers of delegation as well as remuneration.

Financial Governance CTRU is committed to the principles of openness, integrity and accountability and continually reviews processes and practices to ensure compliance with legal obligations and adherence to the principles of good corporate governance. Compliance with the King Report on Corporate Governance and the Public Finance Management Act 1999 (Act no 1), is therefore an integral part of the objectives as approved by the Board.

Income Our core operational functions are funded by grants received for that purpose from the Provincial Government of the Western Cape. These funds are used to create and strengthen operational and technological core competencies and capacity to support the appropriate tourism related initiatives. Additional funds are received in respect of special initiatives and projects, as well as through private sector participation and or contributions.

Annual Financial Statements The CTRU Board and Executive Management are responsible for preparing annual financial statements in a manner that fairly presents the state of affairs and results of the operations of CTRU. These are prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP), the Public Finance Management Act (PFMA) and its associated Treasury Regulations. They are based on appropriate accounting policies and are supported by reasonable and prudent judgements and estimates.

The external auditor is the Auditor-General, who is responsible for carrying out an independent examination of the annual financial statements in accordance with Statements of South African Auditing Standards and reporting its findings thereon.

Internal Controls We maintain internal controls and systems designed to provide reasonable assurance as to the integrity and reliability of the annual financial statements and to adequately safeguard, verify and maintain accountability for its assets. Such controls are based on established policies and procedures and are implemented with appropriate segregation of duties.

A fraud prevention plan has been implemented.

Internal Audit The internal audit function is provided by the Department of Economic Development and Tourism. The internal auditors operate under the direction of the Audit Committee, which approves the scope of the work to be performed. Significant findings are reported to both executive management and the audit committee. Corrective action is taken to address internal control deficiencies identified in the execution of its work. The annual audit plan is based on a comprehensive organisational risk assessment of the key financial and operational risks faced by the organisation. The work programme that gives effect to the plan is regularly reviewed by the Audit Committee, and adapted to take cognisance of unforeseen circumstances where necessary.

Audit Committee CTRU has an Audit Committee which meets regularly and has a clearly defined Charter. The Audit Committee is a sub-committee of the Board and accordingly operates as an extension of its mandate. The purpose of the Audit Committee is to assist the Board in discharging its duties in relation to financial reporting, asset management, risk management, internal control systems, processes and procedures and to measure the quality of both the external and internal audit functions.

The Internal Auditors and External Auditors, as well as certain members of Executive Management and the Board are invited to attend meetings.

Management Reporting on Financial Status Comprehensive management reporting disciplines have been implemented, which include the preparation of annual budgets by all SBU’s. Monthly results and the financial status of operating units are reported against approved budgets and compared to the prior year. Profit projections and cash flow forecasts are updated monthly, while working capital and cash/borrowing levels are monitored on an ongoing basis.

40

REPORT OF THE AUDITOR-GENERAL TO THE WESTERN CAPE PROVINCIAL PARLIAMENT ON THE DESTINATION MARKETING ORGANISATION (TRADING AS CAPE TOWN ROUTES UNLIMITED)

REPORT ON THE FINANCIAL STATEMENTS

Introduction1. I have audited the financial statements of the Destination Marketing Organisation, trading as Cape Town Routes Unlimited (CTRU) set out on pages 52 to 70, which comprise the statement of financial position as at 31 March 2013, the statement of financial performance, statement of changes in net assets and the cash flow statement for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Accounting authority’s responsibility for the financial statements2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA) and section 17(3) of the Western Cape Tourism Act, 2004 (Act No. 1 of 2004), and for such internal control as the accounting officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor-General’s responsibility 3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA), the General Notice issued in terms thereof and International Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. 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 judgement, including the 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

report of the auditor-general

41

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.

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Destination Marketing Organisation as at 31 March 2013, and its financial performance and cash flows for the year then ended in accordance with SA Standards of GRAP, the requirements of the PFMA and the Western Cape Tourism Act, 2004.

Emphasis of matter7. I draw attention to the matter below. My opinion is not modified in respect of this matter.

Events subsequent to reporting date8. As disclosed in note 31 of the financial statements, in December 2011, the CTRU Board, Wesgro Board and the Western Cape Department of Economic Development and Tourism agreed that the destination marketing function performed by CTRU would be incorporated into the Wesgro entity with effect from 1 April 2012. The CTRU Board would remain intact for at least the 2012-13 reporting period, after which time the Western Cape Tourism Act would be repealed. In terms of a memorandum of agreement and service level agreement signed by both Boards, Wesgro has managed and administered the staff, assets, annual performance plan and budget from 1 April 2012. The CEO of Wesgro provided quarterly financial and performance reports to both the CTRU and Wesgro Boards to ensure proper oversight and good corporate governance.

The repeal of the Western Cape Tourism Act is anticipated to occur during the 2013-14 financial year. A memorandum of agreement was signed by both Boards, in which Wesgro undertakes to accept responsibility in respect of CTRU’s operations and board’s responsibilities, with effect from 1 April 2013. Remaining balances in the annual financial statements of CTRU as at 31 March 2013 will be transferred to Wesgro at such time when the Western Cape Tourism Act is repealed. The 2012/13 annual report will be the final report of the Cape Town Routes Unlimited Board as the tourism authority of the Western Cape. Wesgro absorbs the CTRU’s entire mandate and will carry forward the responsibility of marketing the Western Cape as the official Destination Marketing, Trade and Investment Promotion Agency.

Additional matter9. I draw attention to the matter below. My opinion is not modified in respect of this matter.

Unaudited supplementary schedules10. The supplementary information set out on Appendix A on page 71 does not form part of the financial statements and is presented as additional information. I have not audited these schedules and accordingly I do not express an opinion thereon.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS11. In accordance with the PAA and the General Notice issued in terms thereof, I report the following findings relevant to

performance against predetermined objectives, compliance with laws and regulations and internal control, but not for the purpose of expressing an opinion.

Predetermined objectives 12. I performed procedures to obtain evidence about the usefulness and reliability of the information in the annual performance report as set out on pages 28 to 35 of the annual report.

13. The reported performance against predetermined objectives was evaluated against the overall criteria of usefulness and reliability for the programme selected for audit. The usefulness of information in the annual performance report relates to whether it is presented in accordance with the National Treasury annual reporting principles and whether the reported performance is consistent with the planned objectives. The usefulness of information further relates to whether indicators and targets are measurable (i.e. well defined, verifiable, specific, measurable and time bound) and relevant as required by the National Treasury Framework for managing programme performance information.

14. The reliability of the information in respect of the selected programmes is assessed to determine whether it adequately reflects the facts (i.e. whether it is valid, accurate and complete).

15. There were no material findings on the annual performance report concerning the usefulness and reliability of the information.

Additional matter16. Although no material findings concerning the usefulness and reliability of the performance information were identified in the annual performance report, I draw attention to the matter below.

Achievement of planned targets 17. Of the total number of 22 planned targets, eight were not fully achieved during the year under review. This represents 36% of total planned targets that were not fully achieved during the year under review.

18. This was mainly due to the fact that CTRU and Wesgro merged on 1 April 2012 which resulted in a number of targets not being achieved as a result of the change in operations.

Compliance with laws and regulations19. I performed procedures to obtain evidence that the entity has complied with applicable laws and regulations regarding financial matters, financial management and other related matters.

20. I did not identify any instances of material non-compliance with specific matters in key applicable laws and regulations as set out in the General Notice issued in terms of the PAA.

Internal control21. I considered internal control relevant to my audit of the financial statements, the annual performance report and compliance with laws and regulations.

22. I did not identify any deficiencies in internal control which we considered sufficiently significant for inclusion in this report.

Cape Town31 July 2013

Auditing to build public confidence

42

report of the audit committee

43

report of the Audit CommitteeWe are pleased to present our report for the financial year ended 31 March 2013

Audit Committee Members AttendanceThe Audit Committee consists of the members listed hereunder, and meets regularly according to its approved terms of reference. During the current year, four meetings were held.

Name of MemberMeetings Attended

Nick Nicholls (Chairperson

Independent 4

Janine Guest Independent 4

Bryan Slingers Board Representative 4

The report has been prepared according to the Treasury Regulations for public entities issued in terms of the Public Finance Management Act (PFMA), 1999 (Act No.1 of 1999). In terms of the PFMA, Cape Town Routes Unlimited is a Schedule 3C Western Cape Provincial Public Entity.

GovernanceThe Accounting Authority is a Board of non-executive members, which was in place for the full reporting year. This Board developed a strategic annual performance plan and budget to ensure the organisation functions in compliance with its stakeholder’s mandate.

Effective Board Committees were in place for the reporting year.Risk Management Finance and performance was outsourced to Wesgro on a remunerated basis. Governance over these processes was exercised by application of a Memorandum of Understanding and a Service Level Agreement.

Effectiveness of Internal AuditThe Audit Committee approved the Internal Audit annual plan. The year plan for the assignments was focused and custom designed towards a substantive approach in order to react to the administrative functions of the Board. The outsourced functions Internal Audit was related to high risk items, organisation wide governance and financial and performance reporting.

Effectiveness of Internal ControlNo policy or control weaknesses were reported by Internal and External Audit for the reporting year. Our committee reports that governance and supervisory control has been instituted and is effective.

Quarterly ReportingQuarterly reports were structured to meet the reporting requirements of the Accounting Authority and its stakeholders. The Audit Committee reviewed both financial and performance quarterly reporting, and this was found to fairly represent financial and performance achievements. The Audit Committee is satisfied with the quality of quarterly report information prepared and issued by the Accounting Authority during the year under review.

Evaluation of Financial StatementsThe Audit Committee has: • ReviewedanddiscussedtheAnnualFinancialStatementstobeincludedintheAnnualReport.

The Audit Committee concurs and accepts the Annual Financial Statements and has recommended these to the Board for acceptance as ready for the Auditor-General audit.

Nick NichollsChairperson of the Audit Committee: 29 May 2013

44

The Board is responsible for the integrity of the annual financial statements of the organisation and the objectivity of other information presented in the annual report.

statement ofresponsibility

45

statement of responsibilityThe fulfilment of this responsibility is discharged through the establishment and maintenance of sound management and accounting systems. The maintenance of an organisational structure provides for delegation of authority and establishes clear responsibility. This, together with the constant communication and review of operational performance allows for measurement against approved plans and budgets.

Management and employees operate within a framework requiring compliance with all applicable laws and regulations and ensure the highest standards of integrity in the conduct of all operational matters.

The annual financial statements presented on pages 52 to 70 have been prepared in terms of the prescribed Standards of Generally Recognised Accounting Practice (GRAP) and is supported by reasonable and prudent judgements and estimates.

The going concern basis has been adopted in preparing the annual financial statements. Despite the withdrawal of funds from the City of Cape Town, there is no reason to believe that the organisation which merged with Wesgro, will not be a going concern in the foreseeable future based on forecasts and available cash resources.

The annual financial statements have been audited by independent auditors, the Auditor-General of South Africa, in conformity with International Standards on Auditing. The audit report is presented on pages 40 to 41 of the Annual Report.

The Audit Committee meets periodically with the auditors and management to consider organisational risk and related internal accounting controls, auditing and financial reporting matters.

The auditors have unrestricted access to all financial records and related data, including minutes of all meetings of the Board and Management.

The annual financial statements for the year ended 31 March 2013, which appear on pages 52 to 70 were approved by the Board and signed on its behalf by the Chair of the Board and the Chief Executive Officer.

46

Having taken into account the following factors:

• ThenatureofCapeTownRoutesUnlimited’s business; • StatutoryrequirementsaffectingCapeTown Routes Unlimited; • Theinherentandcontrolrisksassociated with Cape Town Routes Unlimited; and • Quantitativeandqualitativeissues

materiality andsignificance framework

47

materiality and significance frameworkThe Authority has assessed the level of materiality and significance to be as follows:

Section of PFMA

Description of materiality and significance Levels of materiality and significance

50(1 )(c)

The Board must on request, disclose to the executive authority responsible for the Board, or to the legislature to which it is accountable, all material facts, including those reasonably discoverable, which in any way may influence the decisions or actions of the executive authority, or that legislature.

The Board will disclose to the executive authority or the legislature, all material facts as requested and all material facts not requested, including those reasonably discoverable, which in any way may influence the decisions or actions of the executive authority or legislature, at the discretion of the Board.

54(2)

Before concluding any of the following transactions, the Board must promptly and in writing inform the relevant treasury of the transaction and submit relevant particulars of the transaction to its executive authority for approval of the transaction: (i) establishment or participation in the establishment of a company; (ii) participation in a significant partnership, trust, unincorporated joint venture or similar arrangement;

(iii) acquisition or disposal of a significant shareholding in a company;

(iv) acquisition or disposal of a significant asset;

(v) commencement or cessation of a significant business activity; and

(vi) a significant change in the nature or extent of its interest in a significant partnership, trust, unincorporated joint venture or similar arrangement.

(i) Each and every instance

(ii) Each and every instance

(iii) Each and every instance

(iv) Above R200 000

(v) Each and every instance

(vi) Each and every instance

55(2)

The annual report and annual financial statements must include particulars of: (i) any material losses through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during the financial year; (ii) any criminal or disciplinary steps taken as a consequence of such losses or irregular expenditure or fruitless and wasteful expenditure;

(iii) any losses recovered or written off; and

(iv) any financial assistance received from the state and commitments made by the state on the Board’s behalf.

(i) All instances will be included in the Board’s Annual Report -amount greater than 0.5% of total operations budget (excluding staff remuneration)

(ii) All instances will be included in the Board’s Annual Report

(iii) All instances will be included in the Board’s Annual Report -amount greater than 0.5% of total operations budget (excluding staff remuneration)

(iv) All instances will be included in the Board’s Annual Report

48

This report addresses the performance of Cape Town Routes Unlimited (CTRU) and its compliance with relevant statutory and regulatory requirements, including but not limited to the Western Cape Tourism Act, 2004 (Act No. 1 of 2004) and the Public Finance Management Act, 1999 (Act no 1 of 1999).

In the opinion of the Board, appointed in terms of the Western Cape Tourism Act, the annual financial statements fairly reflect the financial position of CTRU as at 31 March 2013, and the results of its operations for the year then ended. We have pleasure in submitting to the Provincial Legislature, through the Provincial Minister of Finance, Economic Development and Tourism, this report and the audited annual financial statements of CTRU for the year ended 31 March 2013.

Statutory Basis The Destination Marketing Organisation (DMO) trading as Cape Town Routes Unlimited was established as a statutory body in terms of Western Cape Tourism Act, 2004 (Act No. 1 of 2004). The Organisation is classified as a Schedule 3C Public Entity in terms of the Public Finance Management Act 1999, (Act no 1 of 1999), as amended by Act 29 of 1999.

Mandate Without infringing on the rights of municipalities regarding local tourism, in terms of the Western Cape Tourism Act, CTRU must develop and promote the Province as a tourist destination and in order to do so must pursue the following objectives:

accountingauthority’sreport

49

(a) the managing, planning and directing of the marketing activities of all sectors of the Province’s tourism industry, namely meetings, incentives, conventions, exhibitions, events and leisure marketing; and visitor and support services; (b) the development of new tourism products and destinations throughout the Province; (c) cooperation with other bodies involved in the marketing of the film industry, and of trade and investment in the Province; (d) providing a vehicle which facilitates public and private sector cooperation, participation, decision-making and funding in the context of the Province’s tourism as a whole; (e) aligning marketing activities in all sectors of tourism in the Province, in collaboration with existing entities; (f) facilitating the pursuit of transformation and empowerment goals within all sectors of the Province’s tourism industry; (g) fostering relations and entering into agreements with organisations of all kinds, both public and private, for the purpose of promoting the objectives of the DMO; and (h) fostering close cooperation between the public and private sectors in the pursuit of tourism growth for the benefit of all the people of the Province.

Finances and Control The core business functions of CTRU are funded by monies allocated for that purpose by the Western Cape Provincial Government and administered by the Department of Economic Development and Tourism. The budget allocation, from the Department of Economic Development and Tourism, for the year under review was fully utilised and any surplus is due to accounting transactions within the Accounts payable, Deferred income and Capital commitment balances.

Operational Priorities 2012/2013 For this reporting period our specific business goals have been: • TomarketCapeTownandtheWesternCapeasthepremier leisure, events and business tourism destination • Todistributethebenefitsofthetourismindustrytoall citizens • To contribute toward the attainment of high levels of competitiveness in the industry • Topromoteanenvironmental, socialandeconomically sustainable tourism industry

The above goals are achieved through adherence to the principles underpinning good corporate governance, sustained credibility and partnerships.

Events Subsequent To Reporting Date In 2009, the Premier of the Western Cape and the Minister of Finance, Economic Development and Tourism announced the implementation of the Modernisation Project, which, among other, entailed a review of public entities. A Provincial Task Team was appointed to implement an Economic Development Partnership (EDP) by April 1st, 2012, which will see the

centralisation of the destination marketing, investment, and economic growth and development functions. On April 14th, 2010, the Provincial Cabinet approved in principle the drafting of amendments to the Western Cape Tourism Act of 2004. In December 2011, the CTRU Board, Wesgro Board and Department of Economic Development and Tourism agreed that the destination marketing function hitherto performed by CTRU would be incorporated into the Wesgro entity with effect from April 1st, 2012. The CTRU Board would remain intact for at least the 2012/13 reporting period, after which time the Tourism Act would be repealed. In terms of a Memorandum of Agreement and Service Level Agreement signed by both Boards, Wesgro has managed and administered the staff, assets, APP and budget from April 1st, 2012. The CEO of Wesgro provided quarterly financial and performance reports to both the CTRU and Wesgro Boards to ensure proper oversight and good corporate governance.

The repeal of the Western Cape Tourism Act, which was anticipated to be on or before 1 April 2013, have since been delayed. As a mitigation measure a new Memorandum of Agreement was signed by both Boards, in which Wesgro undertakes to accept responsibility in respect of CTRU’s operations with effect from 1 April 2013. Remaining balances in the Annual Financial Statements of CTRU as at 31 March 2013 will be transferred to Wesgro at such time when the Western Cape Tourism Act is repealed. The 2012/13 Annual report will be the final report of the Destination Marketing Organisation (DMO) as the tourism authority of the Western Cape. Wesgro absorbs the DMO’s entire mandate and will carry forward the responsibility of marketing the Western Cape as the official Destination Marketing, Trade and Investment Promotion Agency.

Management and Control The Board The Board is appointed by the Provincial Minister of Finance, Economic Development and Tourism with the Executive Mayor of the City of Cape Town and organised local government (in practice SALGA Western Cape) after public advertisement for the nomination in terms of the Western Cape Tourism Act, 2004. With the exception of the Chief Executive Officer, all Board members are appointed in a non-executive capacity and comprise the following members: Deon Cloete Appointed 23 April 2009 (Chairperson w.e.f 1 April 2012)Esa Yacoob Appointed 30 May 2007 Stephen de Vries Appointed 30 May 2007 Labeeqah Schuurman Appointed 30 May 2007 Bryan Slingers Appointed 1 July 2008 Christelene Brink Appointed 1 July 2008 (Resigned 1 September 2012)Mangaliso Mdlalo Appointed 23 April 2009 Annemie Liebenberg Appointed 23 April 2009 Vernon Kirsten Appointed 23 April 2009 Erica Elk Appointed 9 April 2010Rey Franco Appointed 9 April 2010Grant Pascoe Appointed 2 September 2011

50

The Board’s tenure ends on 22 April 2013; all mandated responsibilities will be handed over to the Board of directors of Wesgro until such time the Western Cape Tourism Act,2004 is repealed.

Composition of Board Committees The Board has appointed the following sub-committees to act on its behalf and which functions under its direct authority and control:

Finance Committee Responsible for considering and advising the Board on matters with financial or financial management implications. Bryan Slingers (Chairperson) EsaYacoob (Board member) Mangaliso Mdlalo (Board member) Nils Flaatten (Wesgro Chief Executive Officer)Herman Boneschans (Chief Financial Officer)

Audit Committee Responsible for ensuring effective organisational risk management and good corporate governance. Nick Nicholls (Chairperson) (Independent member) Janine Guest (Independent member) Bryan Slingers (Board member) Nils Flaatten (Wesgro Chief Executive Officer)Herman Boneschans (Chief Financial Officer) Human Resources & Remuneration Committee Responsible for considering and advising the Board on all matters relating to human resource, management, development and labour relations.

Effective 1 April 2012, all Cape Town Routes Unlimited’s (CTRU) permanent employees were transferred to the Western Cape Investment and Trade promotion Agency (Wesgro) under the Labour Relations Act section 197. The Board members remained appointed and human resources were made available from Wesgro to perform operational duties during the financial period under review.

Risk Management Committee Rey Franco (Board member)Nils Flaatten (Wesgro Chief Executive Officer)Herman Boneschans (Chief Financial Officer)

Approval of Financial Statements The Board has approved the Annual Financial Statements as set out on pages 52 to 70.

Deon CloeteBoard Chairperson

51

contents

Annual financial statements 52. Statement of Financial Position 52. Statement of Changes in Net Assets 53. Statement of Financial Performance 54. Cash Flow Statement 55. Accounting Policy 58. Notes to the Annual Financial Statements 71. Appendix A

52

STATEMENT OF FINANcial positionAs at 31 March 2013

2013 2012

Notes R’000 R’000

ASSETS

Current assets 49 4 439

Cash and cash equivalents 16 49 2 985

Receivables from exchange transactions 17 - 410

Prepayments 18 - 1 044

Non-Current Assets - 341

Furniture and equipment 19 - 341

Intangible assets 20 - -

Total Assets 49 4 780

LIABILITIES

Current Liabilities - 2 668

Payables from exchange transactions 21 - 2 467

Deferred income 22 - 201

Total Liabilities - 2 668

Total Net Assets 49 2 112

NET ASSETS

Reserves

Accumulated surplus 49 2 112

Net Assets 49 2112

STATEMENTs of changes in net assetsFor the year ended 31 March 2013

AccumulatedSurplus

R’000

Balance at 31 March 2011 1 741

Surplus for the year 371

Balance at 31 March 2012 2 112

Deficit for the year (2 063)

Balance at 31 March 2013 49

53

sTATEMENT OF FINANcial performanceFor the year ended 31 March 2013

2013 2012


REVENUE 25 054 37 176

Non Exchange Revenue 25 000 34 019

Grants 2 25 000 34 019

Exchange Revenue 54 3 157

Programme income 3 - 756

Interest income 4 - 301

Other income 5 54 39

Special projects income 6 - 2 061

EXPENDITURE 27 117 36 805

Administrative expenses 7 27 3 081

Staff costs 8 286 15 994

Programme expenses 9 25 637 10 747

Special projects expenses 10 - 2 061

Audit fees 11 501 770

Other operating expenses 12 666 3 277

Loss on disposal of assets - 25

Depreciation and Impairment 13 - 600

Donations 14 - 250

(DEFICIT)/SURPLUS FOR THE YEAR (2 063) 371

54

cash flow statementFor the year ended 31 March 2013

2013 2012


Cash flows from operating activities

Cash receipts from funding and operating activities 25 452 36 935

Non Exchange Revenue 25 000 34 019

Exchange Revenue 452 13 403

Cash paid to suppliers and employees (28 388) (38 559)

Suppliers (28 102) (22 565)

Employees 8 (286) (15 994)

Cash applied to operating activities 23 (2 936) (1 624)

Cash flows from investing activities - 27

Interest received - 258

Acquisition of furniture and equipment 19 - (296)

Proceeds on disposal of assets - 65

Net decrease in cash and cash equivalents (2 936) (1 597)

Cash and cash equivalents at the beginning of the year 2 985 4 582

Cash and cash equivalents at the end of the year 16 49 2 985

55

accounting policiesFor the year ended 31 March 2013

1. Basis of preparationThe financial statements have been prepared in accordance with the effective Standards of Generally recognised Accounting Practices (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. The financial statements have been specifically been prepared on an going concern basis as the institution will be transferred as such into a new entity in the following year under review.

1.1 Revenue recognitionGovernment grants for core funding are accounted for in the year in which they accrue. Additional government funding is recorded as deferred income when it is received and is recognised as income on a systematic basis over the period necessary to match the assistance with the related costs it is intended to compensate. Funding received for specific purpose is classified as Special Project Income.

Programme income is accounted for as it accrues.

Revenue from the sale of goods is recognised when the entity has transferred to the buyer the significant risks and rewards of ownership of the goods; the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the entity; and the cost incurred or to be incurred in respect of the transaction can be measured reliably.

Interest is recognised on a time proportion basis which takes into account the effective yield on the asset over the period it is expected to be held.

Rental income arising from sub-leases is accounted for on a straight-line basis over the lease termon ongoing leases.

1.2 Government GrantsGovernment grants are assistance by government in the form of transfer of cash resources in return for compliance with conditions related to operating activities. Grants are recognised on a systematic basis over periods necessary to match them with the related costs except for government grants relating to assets. Government grants relating to assets are recognised as a deduction from the cost of the asset.

1.3 Foreign currenciesTransactions in currencies other than the entity reporting currency (Rand) are initially recorded at the rates of exchange ruling on the dates of the transactions. Gains and losses arising from the settlement of such transactions are recognised in the statement of financial performance.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the rates of exchange ruling on the reporting date. Unrealised differences on monetary assets and liabilities are recognised in the statement of financial performance in the period in which they occurred.

1.4 TaxationThe entity is exempt from income tax.

1.5 Furniture and equipmentFurniture and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis so as to write off the cost of the assets over their expected useful lives. The assets are depreciated as follows: Furniture 16.67% Computer equipment 33.33% Equipment 20.00%

The gain or loss arising from the disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in income in the year of disposal.

The residual value, the useful life of an asset and the depreciation method is reviewed annually and any changes are recognised as a change in accounting estimate.

56

accounting policies (cont.)For the year ended 31 March 2013

1.6 Impairment of furniture and equipmentAt each reporting date, the entity reviews the carrying amounts of its furniture and equipment to determine whether there is any indication that those assets may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. If the recoverable value of an asset at the end of its useful life is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are immediately recognised as an expense in the Statement of Financial Performance.

1.7 Intangible AssetsComputer software is acquired by Cape Town Routes Unlimited, which have finite useful lives, and measured at cost less accumulated amortization and accumulated impairment losses.

Subsequent expenditureSubsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.

AmortisationAmortisation is recognised in the Statement of Financial Performance on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The estimated useful lives for the current and comparative years are as follows: Computer software - 2 years

1.8 Operating leaseOffice rentals are classified as operating leases if the lessor effectively retains all the risk and benefits of ownership. Operating lease payments are charged to the statement of financial performance on a straight line basis over the term of the relevant lease. The resulting difference arising from the straight line basis and contractual cash flows is recognised as an operating lease obligation or asset. The contingent rental income and expense is recognised when accrued or incurred.

1.9 Financial instrumentsFinancial instruments, at the Statement of Financial Position date include cash and bank balances, investments, receivables, trade creditors and borrowings. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

1.10 Financial assets and liabilitiesCape Town Routes Unlimited classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting period.

1.10.1 Trade receivablesTrade receivables are recognised initially at fair value and measured at amortised cost using the effective interest rate method, less a provision for impairment. This provision is based on a review of all outstanding amounts at year end and is established when there is objective evidence that the fund will not be able to collect all amounts due according to the original terms. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Bad debts are written off during the year in which they are identified. Subsequent recoveries of amounts previously written off are credited against the relevant revenue stream in the statement of financial performance.

1.10.2 Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables originated by the Cape Town Routes Unlimited are included in non current assets. The portion of loans and receivables that is receivable during the next 12 months is included in current assets.

57

accounting policies (cont.)For the year ended 31 March 2013

1.10.3 Trade payablesTrade payables are recognised initially at fair value and subsequently measured at amortised cost using effective interest method.

1.11 Fruitless and wasteful expenditureFruitless and wasteful expenditure refers to expenditure which was made in vain and could have been avoided had reasonable care been exercised. Such expenditure is recognised as an expense in the statement of financial performance in the year in which it is incurred.

1.12 ProvisionsProvisions are recognised when the entity has a present obligation as a result of a past event at financial year end and it is probable that this will result in an outflow of economic benefits that can be estimated reliably.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using the effective interest rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in provision due to passage of time is recognised as finance charges. 1.13 Comparative figuresWhere necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.

1.14 Cash and cash equivalentsCash and cash equivalents comprises of cash at bank and on hand. The Cash Flow Statement is compiled on the direct method in full compliance with general recognised accounting practice.

1.15 Deferred income Deferred income is initially recognised at fair value and represents funds received from which expenditure was incurred. Deferred income is subsequently recognised as revenue in the statement of financial performance over the periods necessary to match the income with the expenditure incurred.

1.16 Critical accounting estimates and judgmentsCape Town Routes Unlimited makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

1.16.1 Provision for impairment of receivablesAn estimate for the impairment of receivables is made when collection of the full amount is no longer probable. The provision for impairment debt shall be calculated on trade receivables only. The total impairment provision shall be calculated either by individual debtor or at least per risk category.

1.17 Related partiesRelated parties are considered to be related if one party has the ability to control or jointly control the other party or exercise significant influence over the other party in making financial and operating decisions. Key management personnel are also regarded as related parties. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Agency, directly or indirectly.

Related party transactions are those where a transfer of resources or obligations between related parties occurs, regardless of whether or not a price is charged.

58

notes to the annual financial statementsFor the year ended 31 March 2013

2013 2012

R’000 R’000

2 Grants

Provincial department 25 000 34 019

Refer note 26

3 Programme income

Leisure tourism and marketing - 329

Convention bureau - 40

e-Business - 20

Client and business relations - 367

- 756

4 Interest income

Bank deposits - 301

Cash is held with a registered approved and accredited banking institution. Interest is earned at variable interest rates linked to prime on the closing bank balance on a daily basis. Interest earned during the current year was transferred to Wesgro.

5 Other income

Sundry Income

- Management fee (Special Projects) - 22

- Bad debt recovered 37 -

- Other 17 17

54 39

6 Special Projects Income released from Deferred Income

Leisure tourism and marketing - 1 220

- Jazz Festival - 300

- Cape Argus Pick n Pay Cycle Tour - 300

- ABSA Cape Epic - 250

- Design Indaba - 250

- J&B Met - 120

Visitor and membership services - 148

- Gateways - Interns - 148

Destination development - 250

- Indaba - 250

Client and Business Relationship - 443

- Access Destination Workshop - 293

- Sports and Events Tourism Exchange - 150

- 2 061

Special projects income is income received from the private and government sector with specific conditions. All unused funds are deferred for future use. Refer note 10.

59

notes to the annual financial statements (cont.)For the year ended 31 March 2013

Notes 2013 2012

R’000 R’000

7 Administrative expenses

General administrative expenses 17 2 919

Staff training and development - 133

Foreign exchange loss 10 29

27 3 081

8 Staff costs

Board members’ emoluments 25 79 1 305

Salaries

- Basic salaries 207 12 498

- Performance awards - 381

- Temporary staff - 3

- Leave pay released from provision - (108)

Defined contribution provident fund - 1 258

Medical aid - 572

UIF - 72

Other salary related costs - 13

286 15 994

All Cape Town Routes Unlimited’s permanent employees were transferred to the Western Cape Investment and Trade promotion Agency (Wesgro) under the Labour Relations Act section 197 effective 1 April 2012. The Board members remained appointed and human resources were made available from Wesgro to perform operational duties during the financial period under review.

9 Programme expenses

Leisure tourism, marketing & events - 5 136

Convention bureau - 3 116

e-Business - 1 635


Client and business relations 147 495

Tourism destination marketing Appendix A 25 490 -

25 637 10 747

The Tourism destination marketing programme expenses relates to the funding transfer agreement between Cape Town Routes Unlimited and Wesgro. The grant income funding received from the Department of Economic Development and Tourism, was transferred to Wesgro for Leisure tourism, events, Convention Bureau (Business Tourism) and E-Business (e-Marketing).

For further information please refer to Appendix A detailing the income and expenditure regarding Tourism Destination Marketing.

60


2013 2012

R’000 R’000

10 Special Projects expenses incurred

Leisure tourism and marketing - 1 220

- Jazz Festival - 300

- Cape Argus Pick n Pay Cycle Tour - 300

- ABSA Cape Epic - 250

- Design Indaba - 250

- J&B Met - 120

Visitor and membership services

- Assessor Programme - 148

- Gateways - Interns - 148


- Indaba - 250

Client and Business Relationship - 443

- Access Destination Workshop - 293

- Sports and Events Tourism Exchange - 150

- 2 061

Special project expenses incurred relates to funding received from the private and government sector with specific conditions. Refer note 6.

11 Audit fees

Statutory audit - Prior year 501 598

- Current year - 172

501 770

12 Other operating expenses

General operating expenses 177 2 110

- Communications 83 1 190

- Insurance - 310

- Other 94 610

Travel and subsistence - 214

Outsourced service providers 166 717

Maintenance, repairs and running costs - 67

Equipment rental in respect of operating leases 323 169

666 3 277

13 Depreciation and Impairment

Furniture - 155

Computer Equipment - 383

Computer Software – Intangible asset - 38

Equipment - 24

- 600

61


2013 2012

R’000 R’000

14 Donations

Government - 250

Donations relate to assets transferred to respective municipalities and public entities as part of the closing down process of the Visitors and Information gateways centres.

16 Cash and cash equivalents

Cash at bank 49 2 983

Cash on hand - 2

49 2 985

Cash is held with a registered approved and accredited banking institution. Bank balances earn interest at variable interest rates linked to prime. The carrying amount of this asset approximates its fair value Refer note 27.

17 Receivables from exchange transactions

Accounts receivable - 463

Less: Impairment of accounts receivable - (105)

- 358

Interest receivable - 43

Deposits - 8

Staff Loans - 1

- 410

The impairment of accounts receivable has been determined by reference to past default experience and the current economic environment. The carrying amount of this asset approximates its fair value. Refer note 27.

18 Repayments

Repayments - 1 044

- 1 044

62


19 Furniture and equipment

FURNITURE COMPUTER

EQUIPMENT EQUIPMENT TOTAL

R’000 R’000 R’000 R’000

Opening net carrying amount 1 April 2012

58 273 10 341

Gross carrying amount 562 2 370 403 3 335

Accumulated depreciation (504) (2 097) (393) (2 994)

Additions - - - -

Impairment costs - - - -

Transfer at carrying amount (58) (273) (10) (341)

Net carrying amount 31 March 2013 - - - -

Gross carrying amount - - - -

Accumulated depreciation - - - -

Year ended 31 March 2012

Opening net carrying amount 1 April 2011

427 466 48 941

Gross carrying amount 1 165 3 064 532 4 761


Additions 8 288 - 296

Impairment costs (25) (13) - (38)

Disposals at carrying amount (611) (982) (129) (1 722)

Depreciation charge (130) (370) (24) (524)

Depreciation on disposals 389 884 115 1 388

Net carrying amount 31 March 2012 58 273 10 341

Gross carrying amount 562 2 370 403 3 335


Assets with the cost of R1 992 707 has been fully depreciated, but was still in use for the 2012 financial year.

63


2013 2012

R’000 R’000

20 Intangible Assets

Computer software

Opening carrying value - 44

Additions - -

Transfer at cost (541) (22)

Amortisation charge on donation 541 16

Amortisation charge - (38)

Impairment at cost - (415)

Impairment at amortisation - 415

Carrying amount - -

Cost - 541

Accumulated amortisation - (541)

Assets with the cost of R540 747 has been fully depreciated, but was still in use for the 2012 financial year.

21 Payables from Exchange transactions

Accounts payable - 436

Accrual: Building Rental - 742

Accrual: Leave Pay - 226

Accrual: Other - 688

Income received in advance - 375

- 2 467

The carrying amount of this asset approximates its fair value. Refer note 27.

22 Deferred Income

Opening balance 201 801

Income received during the year - 1 483

Utilised – refer note 6 and 10 - (2 061)

Transferred to Wesgro (201)

Management fee recognised - (22)

Closing balance - 201

Deferred Income is funding received from the private sector and government departments which is unspent and retained for future expenditure. Unspent funds were transferred to Wesgro.

64


2013 2012

R’000 R’000

23 Reconciliation of surplus to cash generated by operations

(Deficit)/Surplus (2 063) 371

Adjusted for:

- Depreciation on furniture and equipment - 600

- Loss/(Profit) on disposal of assets - 25

- Donations 341 250

- Interest received - (258)

Operating cash flows before changes in working capital (1 722) 988

Working capital changes (1 214) (2 612)

- Decrease/(increase) in receivables 410 (241)

- Decrease in payables (2 467) (1 771)

- Decrease in deferred income (201) (600)

- Decrease in prepayments 1044 -

Cash applied to operations (2 936) (1 624)

24 Operating lease arrangements

At the reporting date the entity had outstanding commitments under operating rental leases, which fall due as follows:

Up to 1 year - 81

2 to 5 years - 85

- 166

All operating rental leases were transferred to Wesgro

25 Board members and executive management remuneration

Board members’ emoluments:

Executive board member:

C Gilfellan - CEO - 1 136

Non-executive board members:

C Brink (resigned) - 11

B Slingers 10 26

P Bacon (resigned) - 14

S de Vries 5 9

E Yacoob 8 11

D Cloete 13 15

V Kirsten 8 16

J Kotze (resigned) - 1

A Liebenberg 8 16

M Mdlalo 9 23

E Elk 8 16

R Franco 10 11

79 1305

65


26 Related party transactions

During the year the entity entered into the following transactions with related parties:

RELATED PARTYNATURE OF

RELATIONSHIP2013 2013

R’000 R’000

Department of Economic Development and TourismExecutive Authority

- Capital grants received 23 293 31 240

- The lease for premises which are utilised by CTRU for administration purposes. 1 707 2 779

Total (refer note2) 25 000 34 019

Department of Economic Development and TourismExecutive Authority

- Special project funding - 1 420

Western Cape Trade and Promotion AgencyExecutive Authority

- Funding for Tourism Destination Marketing 25 490 -

- Net asset transfers related to the Consolidation of CTRU and Wesgro 939 -

Total 26 429 -

In addition to the above, the following services were granted by the Department of Economic Development and Tourism: Internal Audit and Department of the Premier: Legal Services respectively.

Key management compensation

R Adams – Executive Manager: Marketing and Organisational Support - 205

H Boneschans – Chief Financial Officer - 726

D Frandsen – Executive Manager: International Marketing - 460

I Pooe – Executive Manager: International and Domestic Marketing - 242

- 1 633

Key personnel’s remuneration is included in basic salaries as part of staff costs which are in note 8.

66


27 Financial Risk Management

27.1 Financial risk factors

The management of the entity have overall responsibility for the establishment and monitoring of the risk management policies and procedures which have been established to identify and analyse the risks faced by the entity.

The entity’s activities are exposed to a variety of financial risks, although not significant: market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and interest rate risk.

(a) Market riskMarket risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the entity’s income. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the return.

(i) Foreign exchange riskThe entity has a medium foreign exchange risk for accounts payable as a result of no cover against unfavourable changes in the exchange rate. Foreign exchange risk arises when recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.

(b) Credit riskCredit risk is the risk of financial loss to the entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the entity’s receivables from customers.An allowance for impairment is established based on managements’ estimate of identified incurred losses in respect of specific trade and other receivables. Bad debts identified are written off as they occur.

The entity’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. There is no significant concentration of unsecured credit risk.

Reputable financial institutions are used for investing and cash handling purposes.

(c) Liquidity riskLiquidity risk is the risk that the entity will not be able to meet its financial obligations as they fall due. The entity’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.

The liquidity risk is considered as low, because the entity has adequate funds at their disposal.

(d) Capital managementThe policy of the entity’s management is to maintain a strong capital base so as to maintain public sector confidence and to sustain future development of the entity. There were no changes in the management’s approach to capital management of the entity during the year.

(e) Interest riskThe entity’s exposure to changes in interest rates is on a floating rate basis relating to funds invested with reputable financial institutions.

67


27 Financial Risk Management (continued)

27.2 Financial risk factors (continued)(e) Interest risk (continued)

31 MARCH 2013FLOATING INTEREST

RATE

NON-INTEREST BEARING

TOTAL

R’000 R’000 R’000

ASSETS

Trade receivables and prepayments - - -

Cash and cash equivalents 49 - 49

Total assets 49 - 49

LIABILITIES

Trade payables - - -

Total liabilities - - -

Net financial assets/(liabilities) - - -

A 1 – 2% increase in the interest rate will have the following effect on cash and cash equivalents, R490 and R980 respectively. No interest received.

(f) Financial instruments

(fi) Credit Risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

2013 2012

R’000 R’000

Trade and other receivables - 463

Staff loans - 1

- 464

The ageing of trade receivables at the reporting date was:

Current - 331

30 Days - 15

60 Days - -

60 Days plus - 118

- 464

68


2013 2012

R’000 R’000

27.2 Financial risk factors (continued)

(f) Financial instruments (continued)

(fi) Credit risk (continued)

Fair value of trade and other receivablesTrade and other receivables not past due or impairedThe carrying amounts of fully performing financial assets included in loans and receivables at year end are:

Trade and other receivables not past due nor impaired - 344

Trade and other receivables past due but not impaired - 15

Trade and other receivables not past due or impaired - 105

- 464

Financial assets that are neither past due nor impaired are considered fully performing.

Reconciliation of provision for impairment of trade and other receivables

Opening Balance 105 80

Provision for impairment - 25

Amounts written off as uncollectable (68) -

Amounts recovered (37) -

Closing Balance - 105

(fii) Liquidity risk

The carrying amounts of financial liabilities at the reporting date was:

Trade and other payables - 2 467

The contractual maturities for all borrowings and payables outstanding at 31 March 2013 are 12 months or less.

28 Fair value estimation

The face value of cash, trade receivables and trade payables less any estimated credit adjustments, are the approximate fair values on 31 March 2013, as a result of the short-term maturity of these assets and liabilities.

69


29 Comparison of results with the approved budget

ACTUAL APPROVED

BUDGET VARIANCE

2013 R’000 R’000 R’000

Revenue 25 054 25 054 -

Grants 25 000 25 000 -

Other income 54 54 -

Less: Expenses 27 117 27 473 (356)

Administrative and operating costs 27 30 (3)

Staff costs 286 300 (14)

Programme expenses 25 637 25 589 48

Other operating expenses 666 954 (288)

Audit fees 501 600 (99)

Deficit for the year before depreciation and impairment (2 063) (2 419) 356

Less: Depreciation and impairment - - -

Deficit for the year (2 063) (2 419) 356

The budget was approved by the Board and the Executive Authority in terms of section 53(1) of the PFMA.

The overall positive variance between the actual expenditure and the approved budget for the year relates to savings on operating expenditure as a result of the CTRU and Wesgro consolidation.

30 Contingent Liability

CTRU received a claim amounting to R2,7 million on the 05 June 2009 in respect of defamation of character of the former chief operating officer. This matter is contested in court and will be finalised as a responsibility of the Wesgro board.

31 Events subsequent to reporting date

In 2009, the Premier of the Western Cape and the Minister of Finance, Economic Development and Tourism announced the implementation of the Modernisation Project, which, among other, entailed a review of public entities. A Provincial Task Team was appointed to implement an Economic Development Partnership (EDP) by April 1st, 2012, which will see the centralisation of the destination marketing, investment, and economic growth and development functions. On April 14th, 2010, the Provincial Cabinet approved in principal the drafting of amendments to the Western Cape Tourism Act of 2004. In December 2011, the CTRU Board, Wesgro Board and Department of Economic Development and Tourism agreed that the destination marketing function hitherto performed by CTRU would be incorporated into the Wesgro entity with effect from April 1st, 2012. The CTRU Board would remain intact for at least the 2012/13 reporting period, after which time the Tourism Act would be repealed. In terms of a Memorandum of Agreement and Service Level Agreement signed by both Boards, Wesgro has managed and administered the staff, assets, APP and budget from April 1st, 2012. The CEO of Wesgro provided quarterly financial and performance reports to both the CTRU and Wesgro Boards to ensure proper oversight and good corporate governance.

The repeal of the Western Cape Tourism Act is anticipated to be during the 2013/2014 financial year. A Memorandum of Agreement was signed by both Boards, in which Wesgro undertakes to accept responsibility in respect of CTRU’s operations and board’s responsibilities, with effect from 1 April 2013. Remaining balances in the Annual Financial Statements of CTRU as at 31 March 2013 will be transferred to Wesgro at such time when the Western Cape Tourism Act is repealed. The 2012/13 Annual report will be the final report of the Cape Town Routes Unlimited’s Board as the tourism authority of the Western Cape. Wesgro absorbs the DMO’s entire mandate and will carry forward the responsibility of marketing the Western Cape as the official Destination Marketing, Trade and Investment Promotion Agency.

70


32 Standards and interpretations

At the date of authorisation of the financial statements for the year ended 31 March 2013, the following standards were issued but not yet effective.

Standard

GRAP 18 Segment Reporting

GRAP 20 Related Party Disclosure

GRAP 25 Employee Benefits

GRAP105 Transfer of Functions between Entities Under Common Control

GRAP 106 Transfer of Functions between Entities not Under Common Control

GRAP 107 Mergers

There will be no impact on the financial position, performance or disclosure of Cape Town Routes Unlimited as these standards are not applicable to this entity.

71

appendix awesgro: income and expenditure reportfor tourism destination marketing programmeFor the year ended 31 March 2013

Notes 2013

R’000

REVENUE 9 25 490

Non Exchange Revenue 22 865

Grants 22 865

Exchange Revenue 2 625

DMO Payment transfer: future corporate expenses 827

DMO Performance Bonus – transfer 440

DMO debtor transfer 12

DMO payment transfer: Future programme expenses 1 004

DMO payment transfer: Assets 342

EXPENDITURE 23 040

Leisure Tourism 5 803

Convention bureau and events 7 0 76

E - Business 2 694

Corporate and operational 7 467

FUNDING AVAILABLE AT 31 MARCH 2013 2 450

72

list ofabbreviations

73

ACSA Airports Company South Africa

ACT Accelerate Cape Town

AIME Asia-Pacific Incentives and Meetings Expo

APP Annual Performance Plan

ATA African Travel Association

AVE Advertising Value Equivalent

BARSA Board of Airline Representatives of South Africa

COSATU Congress of South African Trade Unions

CPUT Cape Peninsula University of Technology

CRM Customer Relations Management

CTRU Cape Town Routes Unlimited

DEAT Department of Environmental Affairs and Tourism

DEDAT Department of Economic Development and Tourism

DMIA Destination Marketing International Association

EIBTM European Incentive, Business Travel & Meetings Exhibition

ETEYA Emerging Tourism Entrepreneur of the Year Award

EXSA Exhibition and Event Association of Southern Africa

FEDHASA Federated Hospitality Association of South Africa

GIBTM Gulf Incentive, Business Travel and Meetings Exhibition

GIS Geographical Information Systems

ICCA International Congress and Convention Association

ICT Information and Communication Technology

IGEHO International Exhibition for Hotels, Catering and Extra Domestic Consumption

IMEX Incentive Travel Meetings and Events

IT & ME Incentive Travel and Meetings Executive Show

ITB Internationale Tourisme Bourse

ITDF Integrated Tourism Development Framework

ITESP Integrated Tourism Entrepreneurship Support Programme

JMA Joint Marketing Agreement

JMI Joint Marketing Initiative

KZN KwaZulu-Natal

LED Local Economic Development

LTB Local Tourism Bureau

MAYCO Mayoral Committee

MICE Meetings, Incentives, Conferences and Exhibitions

MIN-MEC Ministerial Meetings with Tourism MECs

MIP-TECH

Ministerial Technical Committee

MOA Memorandum of Agreement

MOU Memorandum of Understanding

PFMA Public Finance Management Act

PGWC Provincial Government of the Western Cape

ROI Return on Investment

RTMF Regional Tourism Marketing Forum

RTO Regional Tourism Organisation

SAACI South African Association for the Conference Industry

SAT South African Tourism

SATSA South African Tourism Services Association

SITE Society of Incentive Travel Executives

SLA Service Level Agreement

SMME Small Micro and Medium Enterprise

TBF Tourism Business Forum

TEP Tourism Enterprise Programme

TSA Tourism Satellite Account

UCI Union Cycling Internationale

UNWTO United Nations World Tourism Organisation

WCTDP Western Cape Tourism Development Partnership

WTM World Travel Market

WCEDA Western Cape Economic Development Agency

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75

notes

Cape Town Routes

PR108/2013 | ISBN: 978-0-621-41766-1

7th Floor, Waldorf Arcade,

80 St George’s Mall, Cape Town, 8001

P.O. Box 1678, Cape Town, 8000, South Africa

Tel: +27 21 487 4800 | Fax: +27 21 424 1377

Email: [email protected]

www.tourismcapetown.co.za

Documents

Cape Town Routes - wcpp