2007 / 2008 Annual Report - Eastern Cape Development Corporation

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EASTERN CAPE DEVELOPMENT CORPORATION 2007/08NOTES TO THECONSOLIDATED ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 200828 ContingenciesThe Corporation has exposure to litigation of R 1.3 million (2007: R 1.2 million) against it. The legal claims are expectedto be settled in the course of the next twelve months.29 CommitmentsAuthorised capital expenditureAlready contracted for but not provided for• Purchase of sharesTranskei Share Investment Company• Loans approved not yet disbursedThis committed expenditure will be financed from existing cash resources.2008R’0001,29128,608Group2007R’0001,29512,5222008R’000Corporation1,29128,6082007R’0001,29512,522Operating leases - as lessee (expense)Minimum lease payments due• within one year• in second to fifth year inclusive3,0508,0031,4758262,5997,5901,024-11,053 2,301 10,189 1,024Operating lease payments represent rentals payable by the group for certain of its office properties, office equipmentand cellular phones. Leases related to office properties and office equipment are negotiated for an average term of fiveyears. Leases related to cellular phones are negotiated for an average term of two years. All rentals are incurred undernon cancellable operating leases. No contingent rent is payable.30 Comparative figuresCertain comparative figures have been reclassified to conform with changes in presentation in the current year. Theeffects of the reclassification are as follows:Balance sheetDeferred tax assetInvestments in associatesLoans to subsidaries and associatesInventoriesTrade and other receivablesCurrent tax receivableCash and cash equivalentsRetirement benefit obligationDeferred income - non-current liabilityDeferred tax liabilityCurrent tax payableTrade and other payablesDeferred income - current liability-------------1,194(287)35(88)(611)5942(9,656)(534,190)(1,152)34810,956534,190--------------------------Income statementRevenueInvestment incomeOther incomeGrant incomeOperating expenses-----(10,687)10,233557(557)(386)-----(10,233)10,233(150)150-96
EASTERN CAPE DEVELOPMENT CORPORATION 2007/0831 Prior period errorsGrant incomeA subsidiary, East London Industrial Development Zone, incorrectly accounted for interest on grant funds as income.The grant agreement specifies that interest earned on these funds may only be used for the purposes of the grant andthese amounts should consequently be accounted for in the same manner as the underlying grant. This resulted in anincrease of R 6,477,817 (2006: R 9,273,299) in deferred income for the year ended 31 March 2007 and a decrease ofR 3,078,913 (2006: R Nil) in tax expense for the same period. Further, a reduction in minority interest of R 535,384resulted from the above adjustments for the year ended 31 March 2007.Property, plant and equipmentDuring the year, the Corporation performed a comprehensive revision of its equipment registers. This resulted in adecrease in depreciation expense of R 1,260,100 for the year ended 31 March 2007 and the derecognition of certainequipment amounting to R 2,728,138 for the year ended 31 March 2006.Investments in associatesDuring the previous financial year, the Group accounted for its investment in a hotel group based on limited financialinformation. Additional information became available during the current financial year and resulted in an increase ofR 1,908,700 (2006: R 351,330) in investments in associates and income from equity-accounted investments.Interest revenueIn accordance with the accounting policy, the Corporation recognises income only to the extent that an inflow ofeconomic benefits is probable. Interest revenue of R 10,233,000 was incorrectly recognised on impaired rental debtorsfor the year ended 31 March 2007. Consequently, interest revenue of R 10,233,000 was derecognised for that period.The consolidated annual financial statements have been restated to correct the effects of these errors. This resulted inthe following adjustments.Balance sheetInvestment propertyProperty, plant and equipmentInvestment in associatesTrade and other receivablesAccumulated lossMinority interestDeferred tax liabilityCurrent tax payableTrade and other payablesDeferred incomeEffect on 2007Effect on periods priorto 2007Effect on 2007Effect on periods priorto 2007R’000 R’000 R’000 R’000-1,2601,909(1,641)-535(105)3,097(45)(6,477)1,000(2,728)351-(1,000)---(317)(9,273)-1,260---------(2,728)--------Decrease /(increase) in accumulated loss (1,467) (11,967) 1,260 (2,728)Income statementRevenueOther incomeDepreciation expenseOperating expensesIncome from equity accounted investmentsIncome tax expenseMinority interest expense10,2336,477(1,260)(8,547)(1,909)(2,992)(535)-9,273-3,045(351)--10,233-(1,260)(10,233)---(Decrease) /increase in accumulated loss 1,467 11,967 (1,260) 2,728---2,728---97
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HUMAN RESOURCES MANAGEMENT2007/08 A
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PHOTOGRAPH: Alicedale, home to the
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INVESTMENT PROMOTION2007/08 ANNUAL
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PHOTOGRAPH: The Mercedes Benz South
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PHOTOGRAPH: Citrus, chicory, vegeta
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Page 49 and 50: DEVELOPMENT SUPPORT SERVICES2007/08
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2007 / 2008 Annual Report - Eastern Cape Development Corporation

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