EL IDZ_ Audited Finanical Statements_2011

FINANCIALSTATEMENTSAU

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GENErAL INForMATIoN Country of incorporation and domicile South Africa

Nature of business and principal activities The development of East London’s industrial development zone

Non - Executive Directors N.I. Anderson J.H. Badenhorst M.D. Matika M. Saziwa J. Brown Z.M. Tini D.H. Batidzirai S.E. Mase Registered office Acacia House Palm Square Bonza Bay Road BEACON BAY 5241 Business address Lower Chester Road Sunnyridge EAST LONDON 5201 Postal address P O Box 5458 Greenfields EAST LONDON 5208 Bankers Standard Bank Auditors Auditor General Secretary PriceWaterhouseCoopers Inc Company registration number 2003/012647/07 Type of entity Scheduled 3D Business Enterprise

EL Industrial Development Zone (Pty) Ltd (Registration number 2003/012647/07) Trading as East London Industrial Development Zone (Pty) Ltd Financial Statements for the period ended 31 March 2011

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Annual Financial Statments

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INdEx The reports and statements set out below comprise thefinancial statements presented to the shareholders: Index Page DIRECTORS’ RESPONSIBILITIES & APPROVAL 03

DIRECTORS’ REPORT 04 STATEMENT Of fINANCIAL POSITION 05 STATEMENT Of COMPREHENSIVE INCOME 06 STATEMENT Of CHANGES IN EquITY 07 STATEMENT Of CASH fLOWS 08 NOTES TO THE fINANCIAL STATEMENTS 09 - 30 The following supplementary information does not form part of the financial statements and is unaudited: DETAILED INCOME STATEMENT 31 - 32

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The directors are required by the Companies Act of South Africa, 1973 and the Public finance Management Act, to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and related financial information included in this report. It is their responsibility to ensure that the financial statements fairly present the state of affairs of the company as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with South African Statements of Generally Accepted Accounting Practice. The external auditors are engaged to express an independent opinion on the financial statements.

The financial statements are prepared in accordance with South African Statements of Generally Accepted Accounting Practice and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates. The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the company and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and all employees are required to maintain the highest ethical standards in ensuring the company’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company is on identifying, assessing, managing and monitoring all known forms of risk across the company. While operating risk cannot be fully eliminated, the company endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The directors are of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the company’s cash flow forecast for the year to 31 March 2011 and, in the light of this review and the funding commitment by the Department of Trade and Industry and Department of Economic Development and Environment Affairs , they are satisfied that the company has access to adequate resources to continue in operational existence for the foreseeable future. The external auditors are responsible for independently reviewing and reporting on the company’s financial statements. The financial statements set out on pages 6 to 26, which have been prepared on the going concern basis, were approved by the board of directors on 30 May 2011 and were signed on its behalf by:

Director: Z Tini Director: N Anderson

dIrECTorS’ rESpoNSIbILITIESANd ApprovAL

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Director’s responsibilities and approval

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The directors submit their report for the year ended 31 March 2011.

1. INCORPORATION The company was incorporated on 03 June 2003 and obtained its certificate to commence business on the same day. 2. REVIEW Of ACTIVITIES Main business and operations The company is engaged in the development of East London’s industrial development zone and operates principally in South Africa.

The operating results and state of affairs of the company are fully set out in the attached financial statements and do not in our opinion require any further comment. 3. POST BALANCE SHEET EVENTS The directors are not aware of any matter or circumstance arising since the end of the financial year. 4. AuTHORISED AND ISSuED SHARE CAPITAL There were no changes in the authorised or issued share capital of the company during the year under review. 5. DIVIDENDS No dividends were declared or paid to shareholder during the year.

Since the year end, an ordinary dividend of - cents was declared on date payable to the shareholder registered on that date.

6. DIRECTORS The directors of the company during the year and to the date of this report are as follows: Name Nationality Changes

N.I. Anderson South African -

J.H. Badenhorst South African -

M.D. Matika South African -

Z. M. Tini South African -

J. Brown South African -

M. Saziwa South African -

D.H. Batidzirai South African -

S.E. Mase South African - 7. SECRETARY The secretary of the company is PriceWaterHouseCoopers Inc of: Business and Postal Address Acacia House Palm Square Bonza Bay Road BEACON BAY 5241

8. HOLDING COMPANY The company’s holding company is Eastern Cape Development Corporation. 9. AuDITORS Auditor General is the auditor of the company in terms of section 4(1) of the Public Audit Act 2004 as amended.

dIrECTorS’ rEporT

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Directors’ Report

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Figures in Rand Note(s) 2011 2010 2009 Assets Investment property 4 817,928,917 821,645,410 373,481,162 Property, plant and equipment 5 355,949,110 336,704,680 532,127,274 Deferred tax 6 76,994 64,706 63,118 1,173,955,021 1,158,414,796 905,671,554 Current Assets Other financial Assets 7 1,917,334 1,917,334 - Current tax receivable 541,377 1,883,537 1,883,537 Trade and other receivables 8 12,207,198 10,669,048 20,485,093 Cash and cash equivalents 9 383,496,173 334,065,013 189,154,408 398,162,082 348,534,931 211,523,038 Total Assets 1,572,117,103 1,506,949,728 1,117,194,592 Equity and Liabilities Equity Share capital 10 1,000 1,000 1,000 Reserves 11 8,306,368 8,123,307 8,123,307 Accumulated profit 3 32,194,706 115,877,305 61,015,789 40,502,075 124,001,612 69,140,096 Liabilities Non-current Liabilities Deferred income 12 1,110,732,398 1,025,596,371 496,833,367 Current Liabilities Trade and other payables 13 32,118,684 66,083,930 58,027,142 Deferred income 12 380,297,182 283,664,725 489,877,408 Provisions 14 8,466,764 7,603,089 3,316,579 420,882,630 357,351,744 551,221,129 Total Liabilities 1,531,615,028 1,382,948,115 1,048,054,496 Total Equity and Liabilities 1,572,117,102 1,506,949,727 1,117,194,592

STATEMENT oF FINANCIAL poSITIoN

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Statement of Financial Position

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Figures in Rand Note(s) 2011 2010 Revenue 15 14,673,333 8,310,912 Rental Income 15 23,398,380 18,209,735 Cost of sales (20,851,727) (16,205,395)Gross profit 17,219,985 10,315,252 Other income 130,271,868 128,135,412 Operating expenses (111,700,210) (88,634,020)Operating Profit / (Loss) 35,791,643 49,816,644 finance income 17 175,472 97,273 fair value adjustment (119,662,002) 4,946,011 Profit / (loss) before taxation (83,694,887) 54,859,928

Taxation 18 (12,288) (1,588)

Profit / (Loss) for the period (83,682,598) 54,861,515

STATEMENT oF CoMprEhENSIvE INCoME

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Statement of Com

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Changes in equity Figures in Rand Share capital Other NDR Accumulated profit Total equity Balance at 01 April 2009 1,000 8,123,307 5,580,724 13,705,031 Prior Period Adjustment 55,435,065 55,435,065 Restated Balance at 01 April 2009 1,000 8,123,307 61,015,789 69,140,096 Changes in equity Profit as previously stated (190,460,663) (190,460,663)Prior Period Adjustment 245,322,184 245,322,184 Profit for the year restated - - 54,861,515 54,861,515 Balance as at 31 March 2010 1,000 8,123,307 115,877,305 124,001,612 Balance at 01 April 2010 1,000 8,123,307 (184,879,939) (176,755,632)Prior Period Adjustment 300,757,244 300,757,244 Restated Balance at 01 April 2010 1,000 8,123,307 115,877,305 124,001,612 Changes in equity 183,061 183,061 Profit for the year - - (83,682,598) (83,682,598)Total changes - 183,061 (83,682,598) (83,499,537) Balance at 31 March 2011 1,000 8,306,368 32,194,706 40,502,075 Note(s) 10 11 3

STATEMENT oF ChANGES IN EquITy

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Statement of Changes in Equity

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STATEMENT oF CASh FLow Figures in Rand Note(s) 2011 2010 Cash flows from operating activities

Cash generated from operations 21 201,280,220 407,822,983 Interest income 175,472 97,273 Tax Received 22 1,342,160 - Net cash from operating activities 202,797,852 407,920,257 Cash flows from investing activities

Purchase of property, plant and equipment 5 (65,389,136) (184,064,839)Completion of Investment Property 4 (88,592,155.18) (77,048,738)Proceeds from sale of property, plant and equipment 5 431,540 21,259 Proceeds from sale of financial assets - - Decrease (Increase) in Loans 7 - (1,917,333)Net cash from investing activities (153,549,751) (263,009,651) Cash flows from financing activities

Loans to ELIDZ -VAT relating S21 company 183,061 - Net cash from financing activities 183,061 - Total cash movement for the year 49,431,160 144,910,605 Cash at the beginning of the year 334,065,013 189,154,408 Total cash at end of the year 9 383,496,173 334,065,013

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Statement of Cash Flow

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1. ACCOuNTING POLICIES

1.1 Presentation of Financial Statements The financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice, and the Companies Act of South Africa, 1973 and the Public finance Management Act. The financial statements have been prepared on the historical cost basis except for certain financial instruments recognised at fair value as stated below:

- financial instruments at fair value through profit or loss are measured at fair value

- Investment property is measured at fair value.

The annual financial statements incorporate the principal accounting policies set out below, which are consistent with those adopted in the previous financial year.

1.2 Significant Judgements

In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts represented in the financial statements and related disclosures. use of available information and the application of judgement is inherent in the formation of estimates. Estimates and underlying assumptions are reviewed on an ongoing basis and revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Actual results in the future could differ from these estimates which may be material to the financial statements. Significant judgements include:

Loans and Receivables The company assesses its trade receivables / held to maturity investments

and/or loans and receivables for impairment at each balance sheet date. In determining whether an impairment loss should be recorded in the income statement, the company makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

The impairment for trade receivables / held to maturity investments and/

or loans and receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions

and other indicators present at the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period.

Provisions Provisions were raised and management determined an estimate based on the

information available. Additional disclosure of these estimates of provisions are included in note 15 - Provisions.

Expected manner of realisation for deferred tax Deferred tax is provided for on the fair value adjustments of investment properties based on the expected manner of recovery, i.e. sale or use. This manner of recovery affects the rate used to determine the deferred tax liability. Refer note 6 - Deferred tax liability.

Taxation Judgement is required in determining the provision for income taxes due to

the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The company recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The company recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the company to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the company to realise the net deferred tax assets recorded at the balance sheet date could be impacted.

1.3 Investment Property Investment property is property held either to earn rental income or for capital

appreciation or both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.

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Notes to the Financial Statem

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Investment property is recognised as an asset when, and only when, it is probable that the future economic benefits that are associated with the investment property will flow to the enterprise and the cost of the investment property can be measured reliably. Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or service a property.

Investment property is initially recognised at cost. Transaction costs are included in the initial measurement.

Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or service a property. If a replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised.

Property that is being constructed or developed for future use as investment property is recognised at cost as investment property.

Fair Value Subsequent to initial measurement investment property is measured at fair

value. fair value is determined by independent valuers annually.

A gain or loss arising from a change in fair value is included in profit or loss for the period in which it arises.

Re-classification When the use of investment property changes such that it is reclassified as

property, plant and equipment (PPE), assets reclassified as held for sale and inventory, its fair value at the date of reclassification as property becomes its cost for subsequent accounting.

1.4 Property, Plant and Equipment

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment.

The cost of an item of property, plant and equipment is recognised as an asset

when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. All other costs are recognised in the income statement as an expense as incurred.

The estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment.

The depreciation charge for each period is recognised in profit or loss unless

it is included in the carrying amount of another asset. The depreciation of an asset begins when it is available for use; the depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognised. Therefore, depreciation does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. Land and buildings are separable assets and are accounted for separately, even when they are acquired together. Land has an unlimited useful life and therefore is not depreciated. Buildings have a limited useful life and therefore are depreciable assets. The carrying amount of an item of property, plant and equipment shall be derecognised: on disposal; or when no future economic benefits are expected from its use or disposal.

Depreciation is charged to the income statement on a straight-line basis over the

estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:

Item Average useful life Land Indefinite Infrastructure / Buildings 25 years furniture and fixtures 10 years Motor vehicles 5 years Office equipment 5 years Plant and machinery 5 years Other property, plant and equipment 3 years IT equipment 3 years

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

The gain or loss from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposable proceeds, if any, and the carrying amount of the item.

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When the use of property changes from owner-occupied to investment property, the property is re-measured to fair value and reclassified as investment property. Any gain arising on re-measurement is recognised in profit or loss to the extent the gain reverses a previous impairment loss on the specific property, with any remaining gain recognised in the revaluation reserve directly in equity. Any loss is recognised in the revaluation reserve directly in equity to the extent that an amount is included in equity relating to the specific property, with any remaining loss recognised immediately in profit or loss.

1.5 Financial Instruments

Initial recognition and measurement The company classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the transaction.

Trade and other receivables Trade receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within operating expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against operating expenses in the income statement.

Trade and other receivables are classified as loans and receivables.

Trade and other payables Trade payables are classified as financial liabilities initially measured at fair

value and are subsequently measured at amortised cost, using the effective interest method.

Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value. Bank overdraft and borrowings Bank overdrafts and borrowings are classified as financial liabilities initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method. Any differences between the proceeds (net of transaction cost) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the company’s accounting policy for borrowing costs.

Other financial liabilities are measured initially at fair value and subsequently at amortised cost, using the effective interest rate method.

1.6 Tax Current tax assets and liabilities

Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Deferred tax assets and liabilities A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises from the initial recognition of an asset or liability in a transaction at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

A deferred tax asset is recognised for the carry forward of unused tax losses and

unused STC credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused STC credits can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are

expected to apply to the period when the asset is realised or the liability

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is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.

Tax expenses Current and deferred taxes are recognised as income or an expense and

included in profit or loss for the period, except to the extent that the tax arises from:

- a transaction or event which is recognised, in the same or a different period, directly in equity.

1.7 Impairment of Assets

The company assesses at end of each financial year whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. In assessing whether there is any indication that an asset may be impaired, the company shall consider as a minimum, the following indications; External Sources: Asset market value, technological changes, changes in economic and legal environment, fluctuations in investment rates of return and market interest. Internal Sources: Evidence of obsolence or physical damage, possibility of idleness of the asset, plans to discontinue the operations of the asset or plans to dispose. The company may engage an independent valuer to assess the assets for impairment. The main classes of assets for which impairment is assessed are: Plant and machinery; other property, plant and equipment; infrastructure and buildings; IT equipment; furniture and fittings; motor vehicles; and office equipment.

The recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its

fair value less costs to sell and its value in use.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. Any impairment loss of a revalued asset to the extent that there is a revaluation reserve is treated as a revaluation decrease.

An entity assesses at each reporting date whether there is any indication that

an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exits, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss of assets carried at cost less accumulated

depreciation or amortisation other than goodwill is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase to the extent that it does not reverse a previous write-down recognised in profit and loss.

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event accruing after the impairment loss was recognised. for financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss.

1.8 Employee Benefits Defined contribution plans

The company’s employees belong to a defined contribution benefit plan. Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

1.9 Provisions and Contingencies

Provisions are recognised when:

- the company has a present obligation as a result of a past event; - it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

- a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

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Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount for the provision. Provisions are not recognised for future operating losses.

A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the company recognises any impairment loss on the assets associated with that contract.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 23.

1.10 Government Grants

Government grants are recognised as income over the periods necessary to match them with the related costs that they are intended to compensate.

Grants that compensate the ELIDZ for expenses incurred are recognised in profit or loss on a systematic basis in the same period in which the expense is recognised.

Government grants related to Investment property shall be released from deferred income systematically over their useful life using the income method, whereas government grants related to PPE shall be released to profit and loss systematically over the useful life, using the straight line depreciation method.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs is recognised as income of the period in which it becomes receivable.

Government grants related to assets, including non-monetary grants at fair value, are presented in the statement of financial position by recognising the grant as deferred income.

Repayment of a grant related to income is applied first against any unamortised

deferred credit recognised in respect of the grant. To the extent that the

repayment exceeds any such deferred credit, or where no deferred credit exists, the repayment is recognised immediately as an expense.

Repayment of a grant related to an asset is recorded by reducing the deferred income balance by the amount repayable. The cumulative additional depreciation that would have been recognised to date as an expense in the absence of the grant is recognised immediately as an expense.

Government assistance that is received as an incentive in the form of a rebate on bulk water supply tariff and bulk electricity tariff, from Buffalo City Municipality is disclosed as a related party transaction.

1.11 Revenue Revenue comprises of services rendered to customers. Revenue is stated at the

invoice amount and is exclusive of value added taxation.

Revenue from rendering of services is recognised when all the following conditions have been satisfied:

- the amount of revenue can be measured reliably; - the stage of completion of the transaction at the end of the reporting period can be measured reliably, - it is probable that the economic benefits associated with the transaction will flow to the company; and

- the costs incurred or to be incurred in respect of the transaction can be measured reliably.

When the outcome of the transaction involving the rendering of services can

be estimated reliably, revenue shall be recognised only to the extent of the expenses recognised that are recoverable.

1.12 Research and Development Costs

All research costs are charged to expenses. Development costs are capitalised only after technical and commercial feasibility of the asset for sale or use have been established. This means that the entity must intend and be able to complete the intangible asset and either use it or sell it and be able to demonstrate how the asset will generate future economic benefits.

If an entity cannot distinguish the research phase of an internal project to

create an intangible asset from the development phase, the entity treats the expenditure for that project as if it were incurred in the research phase only.

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1.13 Leases A lease is classified as a finance lease if it transfers substantially all the risks and

rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. The company evaluates leases on substance rather than form.

Operating leases - lessee Operating lease payments are recognised as an expense on a straight-line basis

over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset. This liability is not discounted.

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NoTES To ThE FINANCIAL STATEMENTS - (CoNT)

2. NEW STANDARDS AND INTERPRETATIONS

The following new standards have not been early-adopted by the ELIDZ:

IFRS 9 Financial Instruments The IASB has issued IfRS 9 financial Instruments, which is the first step in its

project to replace IAS 39 financial Instruments: Recognition and measurement, in its entirety. The project has three main phases:

• PhaseI:Classificationandmeasurementoffinancialinstruments;

• PhaseII:amortisedcostandimpairmentoffinancialassets;and

• PhaseIII:Hedgeaccounting. IfRS 9, as currently issued, includes requirements for the classification and

measurement of financial assets and liabilities derecognition requirements and additional disclosure requirements. The main requirements include the following:

• Financialassetsaretobeclassifiedandmeasuredbasedonthebusiness model for managing the financial asset and the cash flow characteristics of the financial asset. There are two measurement approaches, namely fair value and amortised cost.

• Thefinancialassetiscarriedatamortisedcostifitisthebusinessmodelof

the entity to hold that asset for the purpose of collecting contractual cash flows and if those cash flows comprise principal repayments and interest. All other financial assets are carried at fair value.

• Afinancialassetthatwouldotherwisebeatamortisedcostmayonlybe designated as at fair value through profit or loss if such a designation reduces an accounting mismatch.

• Theclassificationandmeasurementoffinancialliabilitiesinclude requirments similar to those contained in the existing standard IAS 39

financial Instruments: recognition and measurement.

• Forfinancialliabilitiesdesignatedasatfairvaluethroughprofitorloss, a further requirement is that all changes in the fair value of financial liabilities attributable to credit risk be transferred to other comprehensive income with no recycling through profit or loss on disposal.

• Therequirementsforderecognitionaresimilartothosecontained in the existing standard IAS 39 financial Instruments: recognition and measurement, with certain additional disclosure requirements. Management does not anticipate these requirements to have a significant

impact on the ELIDZ financial statements. IfRS 9 is effective for the ELIDZ for the year commencing 1 April 2013. However, the IASB adopted a phased

approach for the release of IfRS 9, with the requirements for the classification and measurement of financial assets having been released in

2009 and the requirements for the classification and measurement of financial liabilities and derecognition having been released in 2010.

Accordingly, the requirements released in 2010 cannot be early-adopted without the simultaneous adoption of the 2009 requirements. However,

the requirements released in 2009 may be separately early adopted. The IASB intends to expand IfRS 9 in 2011 to address the requirements for the offsetting of financial assets and financial liabilities, impairment

of financial assets carried at amortised cost and hedge accounting. The implementation of IfRS 9 is anticipated to have a significant impact on the ELIDZ financial statements. The ELIDZ is evaluating the impact of the

standard.

Revised standards The following revisions to IfRS have not been early-adopted by the ELIDZ:

IFRS 7 financial instruments: disclosures

The following amendments were made to this standard during the year:

• Clarificationofcertainqualitativeandquantitativedisclosuresrelatingto the nature and extent of risks. The amendment is effective for the ELIDZ for the year commencing 1 April 2011.

• Additionaldisclosurerequirementsrelatingtothetransferoffinancial assets. This amendment is effective for the ELIDZ for the year commencing

1 April 2012. These amendments address disclosure in the annual financial statements and will therefore not affect the financial position of the ELIDZ.

IAS 12 income taxes The amendment provides a practical approach for measuring deferred tax

liabilities and deferred tax assets when investment property is measured using the fair-value model in IAS 40 Investment property. The amendment is effective for the ELIDZ for the year commencing on or after 1 April 2012 and is expected to have a significant impact on the ELIDZ.

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IAS 24 Related parties The amendment provides exemptions from certain disclosure requirements in

respect of government-related entities and clarifies the definition of a related party. The amendment is effective for the ELIDZ for the year commencing 1 April 2011. This amendment addresses disclosure in the annual financial statements and will therefore not affect the financial position of the ELIDZ. furthermore, the revisions to the disclosures are not expected to have a significant effect on the ELIDZ.

IAS 32 Classification of rights issues’ issued in October 2009.

The amendment applies to annual periods beginning on or after 1 february 2010. Earlier application is permitted. The amendment addresses the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer. Provided certain conditions are met, such rights issues are now classified as equity regardless of the currency in which the exercise price is denominated. Previously, these issues had to be accounted for as derivative liabilities. The amendment applies retrospectively in accordance with IAS 8. Accounting policies, changes in accounting estimates and errors’. The amendment will have no significant impact to the ELIDZ.

Annual improvement project As part of its third annual improvement project the IASB has issued its 2010 edition of annual improvements. The annual improvement project aims to clarify and improve the accounting standards. The improvements include those involving terminology or editorial changes, with minimal effect on recognition and measurement. There are no significant changes in the improvement of the current year that will affect the ELIDZ and the improvement is effective for the ELIDZ commencing 1 April 2011.

IFRIC 19 extinguishing financial liabilities with equity instruments The interpretation addresses divergent accounting by entities issuing equity instruments to extinguish all or part of a financial financial statements. The standard is effective for the ELIDZ for the year commencing 1 April 2011. liability (often referred to as ‘debt for equity swaps’). The interpretation concludes that the issue of equity instruments to extinguish an obligation constitutes consideration paid. The consideration should be measured at the fair value of the equity instruments issued, unless that fair value is not readily determinable, in which case the equity instruments should be measured at the fair value of the obligation extinguished. Any difference between the fair value of the equity instruments issued and the carrying value of the liability extinguished is recognised in profit or loss. If the issue of equity instruments is to settle a portion of a financial liability, the entity should assess whether a part of the consideration relates to a renegotiation of the portion of the liability that remains outstanding. The adoption of this standard is not expected to have a material impact on the ELIDZ’s annual financial statements. The standard is effective for the ELIDZ for the

year commencing 1 April 2011.

IAS 1 (amendment), ‘Presentation of financial statements’. The amendment clarifies that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or noncurrent. By amending the definition of current liability, the amendment permits a liability to be classified as noncurrent (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time.

IAS 36 (amendment), ‘Impairment of assets’, effective 1 January 2010 The amendment clarifies that the largest cash-generating unit (or group of units) to which goodwill should be allocated for the purposes of impairment testing is an operating segment, as defined by paragraph 5 of IfRS 8, ‘Operating segments’ (that is, before the aggregation of segments with similar economic characteristics). The amendments are not relevant to the ELIDZ.

Annual improvement project As part of its second annual improvement project, the IASB issued its 2009

edition of annual improvements. The annual improvement project aimed to clarify and improve the accounting standards. These improvements included those involving terminology or editorial changes with minimal effect on recognition and measurement. No significant changes were made to the ELIDZ’s financial statements for the revisions that were effective for the year commencing 1 April 2010.

IFRIC 9, ‘Reassessment of embedded derivatives and IAS 39, Financial

instruments: Recognition and measurement’, effective 1 July 2009 This amendment to IfRIC 9 requires an entity to assess whether an embedded derivative should be separated from a hostcontract when the entity reclassifies a hybrid financial asset out of the ‘fair value through profit or loss’ category. This assessment is to be made based on circumstances that existed on the later of the date the entity first became a party to the contract and the date of any contract amendments that significantly change the cash flows of the contract. If the entity is unable to make this assessment, the hybrid instrument must remain classified as at fair value through profit or loss in its entirety. The amendments are not relevant to the ELIDZ.

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3. PRIOR PERIOD ADJuSTMENT

The financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice on a basis consistent with the prior year except for the changes in disclosure of land which was previously disclosed as Property, Plant and Equipment (PPE) in prior years and is now disclosed as Investment Property as a result of interpretation of IAS 40. Depreciation charged in the prior years has been reversed, however fair valuation was available as at 31 March 2010, therefore fair value adjustments have been accounted for at this date.

The aggregate effect of the prior period adjustment on the financial statements for the year ended 31 March 2010 is as follows Statement of financial position Investment property Previously stated 364,455,000 Adjustment 457,190,410 821,645,410 Property, plant and equipment Previously stated 573,165,099 Adjustment (236,460,419) 336,704,680 Receivables Previously stated 11,873,850 Adjustment (1,204,802) 10,669,048 Accumulated loss Previously stated 184,879,939 Adjustment (300,757,244) (115,877,305) Deferred income - long term Previously stated (559,746,090) Adjustment (465,850,281) (1,025,596,371) Payables Previously stated (66,895,535) Adjustment 811,605 (66,083,930) Deferred income - short term Previously stated (828,616,754) Adjustment 544,952,029 (283,664,725)

NoTES To ThE FINANCIAL STATEMENTS - (CoNT) fIGuRES IN RAND

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Provisions Previously stated (8,921,792) Adjustment 1,318,703 (7,603,089) Profit/ loss Revenue IAS 39 Previously stated - Adjustment 250,286 250,286 Grant income - investment properties Previously stated - Adjustment (49,004,205) (49,004,205) Finance income IAS 39 Previously stated - Adjustment 4,727,294 4,727,294 Fair value adjustments Previously stated 190,446,458 Adjustment (195,392,469) (4,946,011) Expenditure IAS 39 Previously stated - Adjustment (5,903,086) (5,903,086) Total change on profit/loss - 2010 (245,322,180) Grant income investment property 2007 (7,648,818) 2008 (7,648,818) 2009 (14,799,907) (30,097,543) Depreciation 2007- 2009 (25,337,521) Total change on profit/loss - 2007-09 (55,435,064) Total change on profit/loss - 2007-10 (300,757,244)

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4. INVESTMENT PROPERTY

2011 2010 Cost / Valuation Accumulated Carrying Value Cost / Valuation Accumulated Carrying Value Depreciation DepreciationInvestment property 817,928,917 - 817,928,917 821,645,410 - 821,645,410 Reconciliation of investment property - 2011 Opening Balance Additions Transfers Fair Value Total Adjustments Investment property 821,645,410 88,592,155 27,353,353 (119,662,002) 817,928,917 Reconciliation of investment property - 2010 Opening Balance Additions Transfers Fair Value Total Adjustments Investment property 373,481,162 77,048,738 366,169,500 4,946,011 821,645,410

The valuation of investment property resulted into a loss of R 170,346,191 for the current financial year, as reflected by the above reconciliation. A register containing the information required by paragraph 22(3) of Schedule 4 of the Companies Act is available for inspection at the registered office of the company. Details of valuation The effective date of the revaluations was 31 March 2011. Revaluations were performed by an independent valuer, Mr Johan Henry Boshoff (MIVSA) (NDPV), of MessrsJH Boshoff Valuations. JH Boshoff Valuations are not connected to the company and have recent experience in location and category of the investment property being valued. The method used by the company to valuate the investment property are; the income capitalisation valuation method which was used for all income producing properties, and the compara-tive method of valuation which was applied to all vacant properties. Rental income from investment property 22,065,500 17,975,405 Direct operating expenses from rental generating property 20,851,727 16,205,395 Direct operating expenses from non-rental generating property 96,117,115 83,858,502

NoTES To ThE FINANCIAL STATEMENTS - (CoNT) fIGuRES IN RAND 2011 2010

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5. PROPERTY, PLANT AND EquIPMENT 2011 2010 Cost / Valuation Accumulated Carrying Value Cost / Valuation Accumulated Carrying Value Depreciation DepreciationLand 407,229 - 407,229 487,362 - 487,362 Plant and machinery 356,358 (196,455) 159,903 356,358 (131,953) 224,405 furniture and fixtures 3,598,243 (639,812) 2,958,431 982,031 (452,389) 529,642 Motor vehicles 1,263,896 (315,803) 948,093 1,263,896 (496,856) 767,040 Office equipment 1,095,121 (318,546) 776,575 304,326 (220,907) 83,419 IT equipment 16,805,226 (9,155,749) 7,649,477 8,668,021 (5,768,763) 2,899,259 Infrastructure: Owner Occupied 378,376,452 (47,406,148) 330,970,305 312,645,478 (32,330,433) 280,315,045 Infrastructure: Work in Progress 12,040,660 - 12,040,660 51,340,882 - 51,340,882 Other property, plant & equipment 873,641 (835,205) 38,437 873,641 (816,014) 57,627 Total 414,816,826 (58,867,716) 355,949,110 376,921,995 (40,217,314) 336,704,680

5. PROPERTY, PLANT AND EquIPMENT - PRIOR YEAR 2009 2009 Cost / Valuation Accumulated Carrying Value Depreciation Land 17,649,411 - 17,649,411 Plant and machinery 311,280 (67,444) 243,836 furniture and fixtures 931,454 (349,365) 582,089 Motor vehicles 1,233,330 (283,886) 949,444 Office equipment 284,025 (179,221) 104,804 IT equipment 7,046,505 (3,670,971) 3,375,534 Infrastructure: Owner Occupied 271,389,374 77,880 271,467,254 Infrastructure: Work in Progress 237,754,902 - 237,754,902 Other property, plant & equipment 873,641 (873,641) - Total 537,473,922 (5,346,648) 532,127,274


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5. PROPERTY, PLANT AND EquIPMENT - (continued)

Reconciliation of property, plant and equipment - 2011 Opening Balance Additions Disposal Transfers Revaluations Depreciation Impairment Total

(Loss) / GainLand 487,361 - (80,129) - - 407,232 Plant and machinery 224,404 - (64,510) - 159,894 furniture and fixtures 529,641 2,616,214 (183,948) (3,475) 2,958,432 Motor vehicles 767,039 - (133,429) 314,484 948,094 Office equipment 83,418 790,796 (97,635) - 776,579 IT equipment 2,899,257 8,198,025 (34,400) (3,430,914) 17,504 7,649,473 Infrastructure: Owner Occupied 280,315,045 13,441,447 52,289,530 (15,075,715) 330,970,307 Infrastructure: Work in Progress 51,340,882 40,342,654 (79,642,875) - 12,040,661 Other property, plant & equipment 57,626 - (19,189) - 38,438 336,704,674 65,389,136 (114,529) (27,353,345) - (19,005,340) 328,514 355,949,110

Reconciliation of property, plant and equipment - 2010

Opening Balance Additions Transfers Revaluations Depreciation Impairment Total (Loss) / GainLand 17,649,411 - (17,162,050) - - 487,361 Plant and machinery 243,836 45,077.80 (64,510) - 224,404 furniture and fixtures 582,089 50,577 (96,216) (6,809) 529,641 Motor vehicles 949,444 30,566 17,357 (230,328) - 767,039 Office equipment 104,804 20,300.92 1,040 (42,727) - 83,418 IT equipment 3,375,534 1,621,516 (2,090,967) (6,825) 2,899,257 Infrastructure: Owner Occupied 271,467,254 2,842,199.36 16,861,167 (10,855,572) - 280,315,049 Infrastructure: Work in Progress 237,754,902 179,454,601.61 (365,868,622) - - 51,340,882 Other property, plant & equipment - - 57,626 - 57,626 532,127,274 184,064,839 (366,169,504) 76,023 (13,380,320) (13,634) 336,704,678


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6. DEfERRED TAx

Deferred tax asset (liability)Accelerated capital allowances for tax purposes 76,994 64,706 Reconciliation of deferred tax asset (liability) At beginning of the year 64,706 - Originating temporary differences on tangible fixed assets 12,288 64,706 76,994 64,706

7. OTHER fINANCIAL ASSETS

Loans and receivables Capitalised Debt 1,917,334 1,917,334

This is a result of the company’s customer rescue program, where-in the company has assisted to sustain the operations of its logistics tenant, Co-ordinated Material Handling (Pty) Ltd t/a uTi Material Handling, on 01 March 2010, by Capitalising its Debt of R 1 917 334. This is a result of the tenants’ proven business underperformance directly linked to economic recession.The amount is the consolidated rental account owed by uTi.

8. TRADE AND OTHER RECEIVABLES

Trade receivables 4,083,304 2,707,198 VAT 2,251,960 - Other receivable 2,450,675 BCM Advance 2,791,569 7,740,156 Prepayments 629,689 221,693 12,207,198 10,669,048

At year end the carrying amounts of accounts receivables approximated their fair values due to the short-term maturities of these assets.

9. CASH AND CASH EquIVALENTS

Cash and cash equivalents consist of: Cash on hand 1,997 2,012Bank balances 1,581,212 127,225,235Short-term deposits 381,912,964 206,837,765 383,496,173 334,065,013At year end the carrying amounts of cash and cash equivalents approximated their fair valuesdue to the short-term maturities of these assets.


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10. SHARE CAPITAL

Authorised 1 000 000 Ordinary shares of R0.01 each or par value of 1 cent 10,000 10,000 Reconciliation of number of shares issued: Reported as at 31 March 2011 100,000 100,000 Issued Ordinary 1,000 1,000

11. OTHER NDR

Revaluation at acquisition Balance beginning of period 8,123,307 8,123,307Changes during the year 183,061 - Balance end of period 8,306,368 8,123,307

Other NDR represent the net book value of asset and liabilities transferred from East London Industrial Development Corporation, that was changed to ELIDZ (Pty) Ltd, adjusted for cash received from SARS during the current year.

12. DEfERRED INCOME Balance at beginning of year 1,309,261,097 986,710,775Grant Received - Eastern Cape Development Corporation 135,257,000 127,601,000 - Department of Trade and Industry 198,000,000 373,373,000 - Interest on Grant funding 14,939,051 14,120,946 South African Revenue Services - Output Vat on Grants (40,926,298) (59,987,255)Total Grant Income 1,616,530,849 1,441,818,466 Released to income (89,132,335) (83,553,165)Investment property released from grants (36,368,933) (49,004,205) -125,501,268 -132,557,369 Balance at end of Period 1,491,029,581 1,309,261,097 Non-current liabilities 1,110,732,398 1,025,596,371 Current liabilities 380,297,182 283,664,725 1,491,029,580 1,309,261,096


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The nature and extent of government grants recognised in the financial statements and an indication of other forms of government assistance from which the entity has directly benefited

13. TRADE AND OTHER PAYABLES

Trade payables 25,026,346 52,135,186 VAT - 8,373,651 Payables - IAS 39 (IfRS 7) (261,762) (925,506)Other payables 5,506,751 4,587,557 Other accrued expenses 113,183 676,990 Deposits received 1,734,166 1,236,053 32,118,684 66,083,930 At year end the carrying amounts of accounts payable approximated their fair values due to the short-term maturities of these liabilities.

14. PROVISIONS Reconciliation of provisions - 2011 Opening Balance Additions Utilised during Unused amounts Total the year reversed during the yearLeave pay 2,114,359 1,552,973 (1,376,872) - 2,290,461 Retentions 5,488,730 2,691,562 (2,003,989) - 6,176,303 7,603,089 4,244,535 (3,380,861) - 8,466,764

Reconciliation of provisions - 2010 Opening Balance Additions Utilised during Unused amounts Total the year reversed during the yearLeave pay 1,701,608 3,105,356 (2,692,605) - 2,114,359 Retentions 1,047,961 5,488,728 (1,047,959) - 5,488,730 2,749,569 8,594,084 (3,740,564) - 7,603,089

15. REVENuE

Rendering of services 14,779,984 8,561,198 Rental Income 23,398,380 18,209,735


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16. OPERATING PROfIT Operating profit for the year is stated after accounting for the following:

Operating Lease Charges Premises - Contractual amounts - - Equipment - Contractual amounts 1,135,244 1,143,029 1,135,244 1,143,029 Profit on sale of property, plant and equipment 317,011 21,259 Impairment on property, plant and equipment 328,519 (13,634)Depreciation on property, plant and equipment 19,005,340 13,380,320 Employee costs 36,895,363 32,179,050 Research and development 74,560 24,000 17. fINANCE INCOME

Interest revenue Bank 175,472 97,273 175,472 97,273

18. TAxATION

Major components of the tax income Deferred Originating and reversing temporary differences (12,288) (1,588) The assessed loss carried foward for year 2011 is estimated at R 1 424 578 (2010: R2 344 212)

19. AuDITORS’ REMuNERATION

Audit fees 199,027 122,350 Other 66,880 132,862 265,907 255,212


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20. CASH GENERATED fROM OPERATIONS

Profit / (loss) before taxation (83,694,887) 54,859,928 Adjustments for: Depreciation and amortisation 19,005,340 13,380,323 Profit on sale of non-current assets (317,011) (21,259)Interest received (175,472) (97,273)fair value adjustments 119,662,002 (4,946,011)Impairment reversals (328,514) (62,389)Movements in provisions 863,675 5,605,213 Changes in working capital: Trade and other receivables (1,538,151) 8,611,243 Trade and other payables (33,965,246) 7,942,887 Deferred income 181,768,484 322,550,321 201,280,220 407,822,983 21. TAx fuNDED

Balance at beginning of the year 1,883,537 1,883,537 SARS Refunds (1,342,160) - - (1,883,537)Balance at end of period 541,377 -

22. COMMITMENTS

Authorised capital expenditure Balance on contract work in progress 315,618,347 214,785,880 This commitment expenditure relates to infrastructure and will be financed by grants from the Department of Trade and Industry as well as the Department of Economic Affairs and Tourism - Eastern Cape. The commitments amounts are exclusive of vat.


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23. CONTINGENCIES

2011(i) The performance bonus li ability is estimated at R4 507 865 2010(i) A bid by the company for a security contract has been challenged which might result in a possible loss of R450 000. The company’s attorneys are estimating the probality of this loss occuring to be zero (ii) The performance bonus liability is estimated at R4 328 628

24. RELATED PARTIES

Relationships Holding company Eastern Cape Development Corporation Associates Buffalo City Municipality Members of key management Mr. S. Kondlo Mrs. N.V. Madyibi Mr. T. Zweni Mr. J. Burger Mr. T. Gwintsa

Related party balances Amounts included in Trade receivables Buffalo City Municipality 2,791,569 7,740,156 Amounts included in Trade payables regarding related parties Buffalo City Municipality (916,322) (856,820) Related party transactions Buffalo City Municipality Rates and taxes 2,298,632 2,682,483 Electricity 8,849,289 6,217,053 Water 1,320,918 486,827 Sewerage 297,708 Eastern Cape Development Corporation Total grants received for the year 135,257,000 127,601,000 Compensation to directors and other key management Key management remuneration 8,990,406 7,468,903


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25. DIRECTOR’S EMOLuMENTS

Non-executive 2011 Emoluments Totalfor services as directors 323,423 323,423 2010 Emoluments Totalfor services as directors 263,732 263,732 26. OPERATING LEASES

Operating leases - as lessor (revenue) Leasing arrangements Operating leases relate to the investment property owned by the ELIDZ with lease terms of between 5 to 10 years, with an option to extend for a further 10 years. All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have an option to purchase the property at the expiry of the lease period. Rental income earned by the ELIDZ from its investment properties and direct operating expenses arising on the investment properties for the year are set out in note 4. Minimum lease receipts due - no later than one year 21,844,353 20,389,633 - later than one year and not later than five years 61,581,019 65,000,408 - later than five years 8,876,998 4,517,721 92,302,370 89,907,762 Operating leases - as lessee (expenses) Leasing arrangements Operating leases relate to leases of equipment with lease terms of between 0 and 1 year. The ELIDZ does not have an option to purchase the leased equipment at the expiry of the lease periods.

Minimum lease payments due - no later than one year 75,324 108,226 - later than one year and not later than five years - 17,978 75,324 126,204


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27. RISK MANAGEMENT

Market risk The company has no market risk exposure for the year, as there has been no foreign exchange transactions and financial borrowing during the current financial year. Liquidity risk The company’s risk to liquidity is a result of the funds available to cover future commitments. The company manages liquidity risk through an ongoing review of future commit-ments and funding agreements. Interest rate risk Cash flow interest rate risk Financial instrument Current Due in less Due in one Due in two Due in three Due after Intrest rate than a year or two years or three years or four years five years

Cash in current banking institutions 5.0% 383,494,176 - - - - Credit risk Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade debtors. Trade receivables consist of a large number of customers, spread across diverse industries . Ongoing credit evaluation is performed on the financial condition of accounts receiv-ables. Management evaluated credit risk relating to customers on an ongoing basis. The company only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party. financial assets exposed to credit risk at year end were as follows. Financial instrument 2011 2010Standard Bank 383,494,176 334,065,013 Trade receivables 4,083,304 2,707,198


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28. COMPENSATION TO DIRECTORS AND ExECuTIVE MANAGEMENT

Executive Management Basic Salary Allowances Employer Total Bonus Total Contribution Guaranteed Remuneration to funds Pay

Mr. S. Kondlo 1,081,565 645,318 245,737 1,972,620 454,811 2,427,431 Mrs. N.V. Madyibi 832,080 496,464 194,587 1,523,131 379,053 1,902,184 Mr. T. Zweni 719,155 429,060 166,247 1,314,462 246,856 1,561,318 Mr. J. Burger 704,296 420,216 144,395 1,268,907 261,962 1,530,869 Mr. T. Gwintsa 713,212 425,544 170,214 1,308,970 259,634 1,568,604 4,050,308 2,416,602 921,180 7,388,090 1,602,316 8,990,406 Directors Fees Allowances Total ZM Tini 67,635 19,131 86,766 J Badenhorst 59,450 5,870 65,320 N Anderson 48,910 5,646 54,556 DM Matika 64,808 11,079 75,887 M Saziwa 27,790 13,007 40,797 268,593 54,733 323,326

29. uNAuTHORISED, fRuITLESS AND WASTEfuL ExPENDITuRE

There was no unauthorised, fruitless and wasteful expenditure.

30. CAPITAL

The company manages its capital to ensure that the entity will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the assets and equity balance. The company’s overall strategy remains unchanged. The company is not subject to any externally imposed capital requirements.


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dETAILEd INCoME STATEMENTfigures in Rand Note(s) 2011 2010 Revenue Rendering of services 15 14,779,984 8,561,198 Other revenue - IAS 39 (IfRS 7) (106,651) (250,286) 14,673,333 8,310,912 Rental Income 15 23,398,380 18,209,735 Cost of sales Purchases (20,851,727) (16,205,395)Gross profit 17,219,985 10,315,252 Other income Other income 1,973,170 284,078 finance income 17 175,472 97,273 finance income - IAS 39 (IfRS 7) 2,480,418 (4,727,294)Gains on disposal of assets 317,011 21,259 Government grants 89,132,335 83,553,165 Grants released - Investment property 36,368,933 49,004,205 130,447,340 128,232,685 Expenses (Refer to page 126) (111,700,210) (88,634,020) Operating (loss) profit 35,967,115 49,913,917 fair value adjustments (119,662,002) 4,946,011 (Loss) profit before taxation (83,694,887) 54,859,928 Taxation 18 (12,288) (1,588) Profit/(loss) for the period (83,682,598) 54,861,515

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figures in Rand Note(s) 2011 2010 Operating expensesAdvertising-marketing (4,030,593) (1,974,843)Auditors remuneration (265,907) (255,212)Bad debts (57,105) (749,054)Bank charges (59,026) (61,973)Board expenses (323,423) (263,732)Cell phones (572,356) (539,731)Cleaning (560,143) (184,334)Computer expenses (363,184) (179,394)Consulting and professional fees (14,148,667) (8,718,299)Depreciation (19,005,340) (13,380,323)Amortisation and impairments 328,519 62,389 Development planning and related costs (1,490,510) (205,114)Donations (90,979) (105,673)Employees costs (36,895,363) (32,179,050)Expenditure IAS 39 (IfRS 7) (3,037,511) 5,903,086 Entertainment (408,127) (404,766)Hire of facilities & Services (1,135,244) (1,143,029)Insurance (1,382,780) (754,945)Internship (621,707) - IT expenses (604,054) (461,602)Legal expenses (672,361) (365,146)Marketing- Brand Management (1,293,783) (610,682)Miscellaneous expenses (61,532) (71,721)Non-capitalised equipment (799,456) (322,542)Petrol, Oil and Repairs - MV (48,183) (33,667)Placement fees (556,801) (203,377)Postage (25,533) (61,311)Printing and stationary (211,600) (216,424)Project costs (10,667,402) (22,233,917)Marketing Communications (490,028) (10,271)Repairs and maintenance (2,013,041) (1,584,805)Research and development costs (74,564) (24,000)Security (3,620,331) (2,033,031)Subscriptions (267,463) (409,247)Telephone and fax (252,389) (283,741)Tendering costs - (222,177)Training (1,640,240) (814,466)Travel - local (1,441,268) (2,278,813)Travel - overseas (1,857,681) (1,259,084)utilities - Operating Costs (983,051) - (111,700,210) (88,634,020)

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Documents

EL IDZ_ Audited Finanical Statements_2011