2007 / 2008 Annual Report - Eastern Cape Development Corporation

EASTERN CAPE DEVELOPMENT CORPORATION 2007/083.2 Board CharterThe Board adopted a charter which provides a concise overview of the roles, powers and functions of the Board,individual directors and officials of the Corporation. The charter also provides for the delegation of powers to the Boardcommittees, policies and practices of the Board on matters such as corporate governance, declarations of conflict ofinterests, Board meeting documentation and procedures. Nomination, appointment, induction, training and evaluationof directors and members of Board committees are also provided for in the Board charter. This charter is a guide to thedirectors and is not intended to replace or amend the Articles of Association of the Corporation as contained in theSchedule to its founding legislation.3.3 Governance StructuresThe Board established and / or reinforced the capacity of the following committees:3.3.1 Audit CommitteeThe Audit Committee oversees the audit functions, internal controls and financial reporting processes. The auditcommittee has a good spread of members with the necessary expertise and experience to carry out its duties inline with best practice and accepted corporate governance principles. A new independent Chairperson for the AuditCommittee was appointed during the year. Two independent members to the Audit Committee were also appointed, ofwhom one resigned. The Audit Committee has formal terms of reference adopted by the Board.3.3.2 Remuneration CommitteeThis committee makes recommendations on executive remuneration.3.3.3 Human Resource CommitteeThe committee considers and makes recommendations on Human Resource policies and principles of the Corporation.3.4 AuditorsThe Corporation’s auditors are the Auditor-General.3.5 Financial resultsDue to the moratorium on residential property rental evictions, property sales decreased from R23m to R16m ( R 7mreduction). The corporation has managed to deliver improved performance on the following key areas:• Development Equities increased from R60m to R144m (R84m Growth)• Development Loans increased from R102m to R108m (R6m growth)• Revenues generated increased from R98m to R138m (R40m growth)• Reduced operating loss from R68m to R42m ( R26m reduction)3.6 CapacityThe recruitment of key executives to augment the Corporation’s capacity was completed during the year, including thepositions of Legal Adviser, Human Resources Manager, Executive Managers – Development Investments; DevelopmentProperties; and Development Services. The Executive Managers – Development Properties and Development Servicestook office on 01 April 2008. The management team will focus on addressing policy, strategy and systems challengesfacing the Corporation. The Corporation ensures ongoing development of its staff.3.7 Investment PropertiesThe Corporation currently controls 1933 (2007: 2068) properties. The Corporation continued to improve the integrity ofthe Asset Register by integrating the information from the rental billing system (Nicor) with the fixed asset register. Thefixed property audit, started in the 2006/07 financial year, is still continuing. In response to appeals made by tenantsin Butterworth, the provincial cabinet approved a moratorium on evictions, which presented the Corporation with a riskof being unable to collect rent and disposal of residential properties as planned. The unresolved challenge of propertiessituated in tribal land continues to pose a risk to the Corporation (R32m under tribal land) and the Corporation isaddressing that through engagements with the relevant tribal authorities. Progress has also been made in ensuringcontractual arrangements with tenants and ensuring the physical existence of properties.65