APPROVAL OF ANNUAL REPORT 2016 / 17 - East …

1 ANNUAL REPORT2016 / 17 EAST LONDON INDUSTRIAL DEVELOPMENT ZONE SOC LtdPART A: General Information2 APPROVAL OF ANNUAL REPORT 2016 / 17 APPROVED NAME: Professor MakalimaDESIGNATION: Chairperson ELIDZ Board of DirectorsPREPARED BYNAME: Ms A. RamncwanaDESIGNATION: Manager: Office of the CEOENDORSED BY NAME: Mr G. Matengambiri DESIGNATION: Chief Financial OfficerRECOMMENDED NAME: Mr S. N. KondloDESIGNATION: Chief Executive OfficerSUPPORTEDNAME: Mr A. KananaDESIGNATION: Chairperson: Audit and Risk CommitteeEAST LONDON INDUSTRIAL DEVELOPMENT ZONE SOC LtdPART A: General InformationANNUAL REPORT2016 / 173 CONTENTS1. PART A: GENERAL INFORMATION ELIDZ General Information List of Acronyms/Abbreviations Foreword by Chairperson Chief Executive Officer s Overview 14 Financial Overview of the ELIDZ 14 Capacity Constraints and Challenges 15 facing the institution Policy related constraints 15 Changes in the ELIDZ Mandate 15 (Discontinuing Activities) Financial Management and Compliance Statement of responsibility and confirmation 17 of the accuracy of the ANNUAL REPORT Strategic Overview Legislative Mandate Organisational Structure 21 2.

2 PART B: PERFORMANCE INFORMATION Auditor-General s REPORT : Situational Analysis 28 Service Delivery Environment 28 Organisational Environment 28 Key policy developments and 29 legislative changes Strategic Outcome Oriented Goals Performance information by Programme 34 Programme 1: Operations 34 Programme 2: Institutional Support 37 Strategies to overcome areas of 39 underperformance Performance linked to budget. Revenue Collection Capital Investment 40 3. PART C: GOVERNANCE Introduction Portfolio Committees Executive Authority The Board of Directors 44 Board Charter 47 Composition of the Board 47 Changes in the Board Composition 49 in 2016/17 FY Committees 49 Remuneration of Board Members Risk Management Company Secretary ELIDZ Social and Ethical Responsibility 54 Good Corporate Citizenship 55 Social and Economic Transformation 58 Broad Based Black Economic 58 Empowerment Enterprise and Skills Development Audit Committee REPORT 59 Audit and Risk Committee 59 Members and Attendance Audit committee responsibility 59 Effectiveness of Internal Control 59 Evaluation of Financial Statements 60 Auditor-General 604.

3 PART D: HUMAN RESOURCE MANAGEMENT Introduction Human Resources Oversight Statistics 63 Personnel cost by programme 63 Personnel cost by salary band 64 Performance rewards 64 Training costs 65 Employment and Vacancies 65 Employment changes 66 Reasons for staff leaving 66 Labour relations 66 Employment equity 67 Foreign workers 67 PART E: FINANCIAL INFORMATION 69 ANNUAL REPORT2016 / 17 EAST LONDON INDUSTRIAL DEVELOPMENT ZONE SOC LtdPART A: General Information4 HARBOUR ARTERIAL ROADHARBOUR ARTERIAL ROADCOLLECTALL WASTE MANAGEMENTBW3 - LINDE+WIEMANNASSEMBLIESBW1 & BW2 - ILB HELIOSAW9 - TI FUEL SYSTEMSAW6 - MC SYNCRO - MOLAN PINO - TI AUTOMOTIVE SYSTEMS (PIPES)MARICULTURE/WATER RESERVOIRELIDZ HORTICULTURECENTREELIDZ HOUSINGPROJECTLEACHES BAYSUB-STATIONZONE 1 BRSCREINFORCED STEELMILLTRANSBIG FOOTFOXTEC IKWEZIZONE 1 DENTRANCE GATESETTLERSWAYMILITARY ROADDE WET STREETMILLARD ROADGIBAUD CRESGIBAUD CRESPYOT CLSETTLERSWAYCHESTER ROAD> TO ELIDZ ZONE 1A & HEAD OFDFICEZONE 1 DZONE 1 FAERIAL MAP OF THEEAST LONDON INDUSTRIALDEVELOPMENT ZONEEAST LONDON INDUSTRIAL DEVELOPMENT ZONE SOC LtdPART A.

4 General InformationANNUAL REPORT2016 / 175 ELIDZ HEAD OFFICEELIDZ MAIN GATES& ADMIN BUILDINGSMAINTENANCE STOREOCEANWISEIKHALA ROAD SOUTHIKHALA ROAD SOUTHIKHALA ROAD SOUTHIKHALA ROAD NORTHHARBOUR ARTERIAL ROADIKHALA ROAD NORTHIKHALA ROAD EASTMKHOKHOKHO ROADCHESTER ROADUMSIMBITHI ROADMSC STORAGEFROTEKBOYSENVDS VEHICLE STORAGEELIDZ INVESTMENT CENTRE / TRANSPORTATION BUILDINGRG BROSESUNDALEDIARYAUTOMOULDAE1 - FELTEX TRIMAE4 - IAC FELTEXAE6 - FELTEX CARAVELLEAE6 - FELTEX FEHRERBE2 - DSVBE6 - DSV DISTRIBUTIONCE1 - LINDE+WIEMANN MSTCE1 - SEDA CONSTRUCTION INCUBATORC2 - YANFENG AUTOMOTIVEINTERIORSELIDZ CONFERENCE CENTRE / CANTEENCW1 - voestalpine STAMPTECPURE OCEANELIDZ SEA WATER PUMPSTATIONELIDZ STPZONE 1 CZONE 1 AZONE 1 EANNUAL REPORT2016 / 17 EAST LONDON INDUSTRIAL DEVELOPMENT ZONE SOC LtdPART A: General Information6 SOUTH AFRICAGERMANYUNITED KINGDOMBELGIUMI TA LYSWITZERLANDUNITED STATESOF AMERICATAIWANCHINASPAINMC Synchro The company assembles tyres and rims for supply to Mercedes Benz South Africa Feltex Autmotive TrimA leading supplier of a wide range of quality automotive acoustic and trim component which include moulded carpets, sound insulators, sun visors, wheel house liners, boot packages for Original Equipment Manufacturers (OEM).

5 Feltex FehrerProduces seat pads and head rests for Mercedes Benz South FuturisManufactures tuffed carpets for supply to sister companies, Feltex Trim and Caravelle Carpets, who supply Mercedes Benz South CaravelleManufactures loose-lay carpets for supply to OEMs including Mercedes-Benz South Africa, VW and high volume Forged non-ferrous products for automotive and engineering HeliosSpanish company producing solar panels units Yanfeng Automotive InteriorsProduces Cockpits, Overhead Systems and Door panels for the Automotive +WiemannManufacture and supply seat frames, seat slides, height adjusters, recliner mechanisms, as well as metal surface treatment in the automotive DairyEstablished in 1981, Sundale Dairy produces dairy products such as milk, maas, cheese and yoghurt for distribution throughout the Eastern Cape Province. Reinforcing Steel ContractorsRSC provides reinforcing solutions to the building, civil, mining and engineering markets, including the supply, cut, bend, delivery and fixing of reinforcing steel.

6 Ocean WiseLand based marine aquaculture operation specialising in FinFish farming and Ocean AquacultureFinfish farm and hatcheryMediterranean Shipping Company (MSC) Depots (Pty) LtdResponsible for container handling facilities in Southern Africa. The depot is responsible for the movement and storage of empty and full MSC BROSEG erman Based company manufacturing door systems for MBSA develops and manufactures exhaust manifolds, catalytic converter silencers and exhaust (Pty) LtdAUTOMOULD specialises in high quality technical plastic injection moulding and ancillary operations for the Motor Industry and other OEM sTI Brake and Fuel PipesAssembles brake and fuel pipes for Mercedes Benz South Automotive Fuel SystemsAssembly of fuel tanks for Mercedes Benz South cold-formed structural parts and assemblies for the automotive industryDSVL ogistics and supply chain management Delivery ServiceVDS utilises the East London IDZ state of the art Vehicle Storage Centre. The facility has the capacity to store2 500 vehicles under cover and a further 1154 in open PinoManufacturers of polypropylene foam components, cold cured polyurethane components and cut foams for is one of the leading competitors in the freight transport industry.

7 The company has a fleet of 28 trucks and 78 Express FreightAn independent express distribution company offering distribution and fulfilment solutions to clients throughout the major centres of South of plastic products for the automotive and ICT sectorsINTERNATIONAL FOOTPRINTAND CUSTOMERS EAST LONDON INDUSTRIAL DEVELOPMENT ZONE SOC LtdPART A: General InformationANNUAL REPORT2016 / 177 ANNUAL REPORT2016 / 17 EAST LONDON INDUSTRIAL DEVELOPMENT ZONE SOC LtdPART A: General Information8 GENERALINFORMATIONREGISTERED NAME: East London Industrial Development Zone SOC LtdREGISTRATION NUMBER: 2003/012647/30 PHYSICAL ADDRESS: Lower Chester Road, Sunnyridge, East London, 5201 POSTAL ADDRESS: Box 5458, Greenfields, East London, 5208, TELEPHONE NUMBER/S: +27 43 702 8200 FAX NUMBER: +27 43 702 8251 EMAIL ADDRESS: WEBSITE ADDRESS: AUDITORS: Auditor-General South AfricaBANKERS: Standard Bank COMPANY SECRETARY: Jo-Anne PalmerEAST LONDON INDUSTRIAL DEVELOPMENT ZONE SOC LtdPART A.

8 General InformationANNUAL REPORT2016 / 179 LIST OFACRONYMS / ABBREVIATIONSBBBEE Broad-Based Black Economic Empowerment BCMMB uffalo City Metropolitan MunicipalityCEOC hief Executive OfficerCFO Chief Financial Officer CSIC orporate Social InvestmentDEDEATD epartment of Economic Development, Environmental Affairs and TourismDTID epartment of Trade and IndustryECDCE astern Cape Development CorporationELIDZEast London Industrial Development ZoneGAAPG enerally Accepted Accounting PracticeIDZI ndustrial Development ZonePFMAP ublic Finance Management ActTR Treasury Regulations MBSAM ercedes-Benz South Africa MEC Member of Executive Council MTEFM edium Term Expenditure Framework SEZ Special Economic ZoneSMMES mall, Medium and Micro EnterprisesSCMS upply Chain ManagementANNUAL REPORT2016 / 17 EAST LONDON INDUSTRIAL DEVELOPMENT ZONE SOC LtdPART A: General Information10 Professor Makalima ELIDZ Board ChairpersonANNUALISED INCREASEIN EMPLOYMENT35,8%FOREWORDBY CHAIRPERSON The ELIDZ s product and services value offering is designed to attract the interest of strategically targeted industrial investors, facilitate their positive decision-making to locate and invest into the SEZ and support their establishment and operation as SEZ enterprises.

9 These outcomes are targeted through the provision of sector-customised industrial complex infrastructure, facilities and services that promote industrial productivity and that seek to lift the competitiveness and rates of growth of SEZ industries as suppliers of value-added products into domestic and global the close of the financial year under review, the ELIDZ had been successful in maturing and locating 28 operational investors across a range of its strategically targeted industrial sectors. Beyond the effects of its direct services delivery, the ELIDZ entity s overall performance as an economic development tool is reflected in the enhanced level of economic activity that the ELIDZ investor community has generated into the local and national economy. In the year under review, this was reported in an independent survey undertaken by Statistics South Africa (StatsSA). The survey the second of its kind following a 2013 survey was undertaken in 2016 and analysed the published 2015 company financial results of ELIDZ s operational industries.

10 The survey highlighted the following summary of performance achievements: Manufacturing and, to a lesser extent, non-manufacturing activities undertaken by ELIDZ-located industries served to inject in excess of R8bn of expenditure into the economy in 2015. Surveyed changes between the 2013 and the 2015 Statistics South Africa Surveys of the ELIDZ s economic impact show impressive annualised rates of growth in relation to principal measured performance statistics and notably in relation to 35,8% annualised increase in employment, 200,3% annualised expenditure growth on new assets and 91,5% annualised growth in salaries and wages by zone Delivery Constraints and Corrective MeasuresWhile performance outcomes reflected in the StatsSA survey have been gratifying (and in some respects exceed initially projected delivery expectations), there are extensive restrictive factors at work that undermine the achievement of potential performance outcomes and that the ELIDZ recognises are having an impact and need collective government moving to replace the former Industrial Development Zone (IDZ)