ANNUAL REPORT

l e a d i n g e a r t h - s c i e n c e s o l u t i o n s

OF THE COUNCIL FOR GEOSCIENCE2008/09

Vision: Leading earth-science solutions

Mission:To provide expert earth-science information andservices to improve the management of natural resources and the environment for a better qual-ity of life for all

Values: • Innovate and create through teamwork • Excel through quality and performance • Value diversity through trust and respect • Invest in its people

Thrusts: • Mineral Resources Development • Geoscience Mapping • Water Resources Assessment and Protection • Engineering Geoscience and Physical

Geohazards • Environmental Geoscience and Chemical

Geohazards • Information and Outreach

FocusAreas: • Growth • Africa Development • Innovation • Rural Development and Poverty Eradication • Regulatory Systems and Stakeholder

Compliance • Transformation • Skills Development

Management Board 4

ReviewReview byby thethe ChairpersonChairperson ofof thethe BoardBoard

and the Chief Executive Officer 6

Abridged Board Charter as per PFMA and Protocol

on Corporate Governance 9

Statement of Responsibility 10

Executive Report 12

Performance Objectives 20

Report of the Audit and Risk Committee 24

Report of the Auditor-General 26

Financial Statements 30

Highlights of Activities 64

Publications 82

Global Geoscience Footprint 91

Social Responsibility 93

Future Outlook 96

Sustainability Report 98

Management 100

contents

Council for Geoscience280 Pretoria StreetSilverton, Pretoria

+27 (0)12 841 1911

www.geoscience.org.za

Publication Date: August 2009

Editing and Layout:Information and Collections Management Unit,Council for Geoscience

Printing:Black X Trading Cc

ANNUAL REPORTOF THE COUNCIL FOR GEOSCIENCE

2008/09

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Management Board 4

Review by the Chairperson of the Board and the Chief Executive Officer 6

Abridged Board Charter as per PFMA and Protocol on Corporate Governance 9

Statement of Responsibility 10

Executive Report 12

Performance Objectives 20

Report of the Audit and Risk Committee 24

Report of the Auditor-General 26

Financial Statements 30

Statement of Financial Position 31

Statement of Financial Performance 32

Statement of Changes in Net Assets 33

Cash Flow Statement 34

Notes to the Financial Statements 35

1 Accounting policies 35

1.1 Basis of preparation 35

1.2 Revenue recognition 36

1.2.1 Recognition of income 36

1.2.2 Government grant 36

1.2.3 Recognition of income from contracts 36

1.3 Interest received 36

1.4 Property and equipment 36

1.5 Intangible assets 37

1.6 Translation of foreign currencies 37

1.7 Research and development 38

1.8 Deferred income 38

1.9 Retirement benefit costs 38

1.10 Provisions 39

1.11 Financial instruments 39

1.12 Operating leases 40

1.13 Impairment 40

1.14 Critical accounting estimates and judgements 41

contents

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1.15 Sources of estimation uncertainty 41

2 Property and equipment 42

3 Intangible assets 43

4 Retirement benefit 44

4.1 Medical-aid scheme 44

4.2 Pension and provident fund benefits 45

5 Trade and other receivables 46

6 Cash and cash equivalents 46

7 Government grant 46

8 Trade and other payables 47

9 Deferred income 47

10 Accruals 50

11 Surplus from operations 50

12 Interest received 54

13 Finance cost 54

14 Reconciliation of net surplus for the year to cash generated from operations 54

15 Acquisition of: 55

15.1 Property and equipment 55

15.2 Intangible assets 55

16 Contingent liability 55

17 Taxation 56

18 Operating lease commitments 56

18.1 EVN Africa 56

18.2 Minolta South Africa 56

18.3 Xerox/Bytes Technology 57

19 Financial instruments 57

19.1 Credit risk 57

19.2 Interest rate risk 58

19.3 Foreign currency risk 58

19.4 Airborne operations risk 58

19.5 Fair value of financial instruments 59

20 Capital commitments 59

21 Foreign currency exposure 59

21.1 Trade receivables 59

21.2 Banks 60

22 Related-party transactions 60

23 Change in accounting estimate 61

24 Impairment 62

Value Added Statement 63

Highlights of Activities 64

Publications 82

Global Geoscience Footprint 91

Social Responsibility 93

Future Outlook 96

Sustainability Report 98

Management 100

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of the council for geoscienceof the council for geoscienceof the council for geoscience

management board

Mr K HodgesMr K HodgesDr D G ClarkeDr D G Clarke

Dr T RamontjaDr T RamontjaChief Executive Officer

Prof. P E NgoepeProf. P E NgoepeChairperson of the Board

Ms T R MbassaMs T R Mbassa

Ms T XasoMs T XasoVice-Chairperson

of the Board

5

Mr R W HieberMr R W Hieber

Prof. J M Barton JrProf. J M Barton Jr

Alternate Members

Mr M RibaAlternate to Dr D G Clarke

Mr M SmithAlternate to Mr R W Hieber

Mr A P NkunaMr A P Nkuna

Ms L McCourt Ms L McCourt Mr M MabuzaMr M Mabuza

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chairperson of the board and the chief executive officer ofchairperson of the board and the chief executive officer ofchairperson of the board and the chief executive officer ofchairperson of the board and the chief executive officer ofchairperson of the board and the chief executive officer ofchairperson of the board and the chief executive officer ofthe council for geosciencethe council for geosciencethe council for geoscience

review

The Council for Geoscience (CGS) has been successful in The Council for Geoscience (CGS) has been successful in several of its operational areas despite a significant worse-ning of the global economy. Although the CGS is a public entity tasked to develop and provide geoscience knowledge for the country, it has, nonetheless, by the necessity of earn-ing a substantial portion of its operational costs through commercial activities, continued to function in a global eco-nomic environment that has seen a sharp decrease in mine-ral prices, a sudden halt to the so-called mineral boom and the consequent drastic curtailment of mineral exploration.

Despite the difficulties and challenges of an increasingly uncertain operational environment, Management is most pleased to report that the CGS has completed the annual technical programme to a high level for the 2008/09 period. This programme represents the core mandate by which the CGS generates new geoscience information by way of map-ping, publication of geoscience maps and related explana-tions, local and internationally published research, and the collection, storage and archiving of geoscience knowledge into its databases. The annual technical programme also represents the key vehicle by which young geoscientists can gain experience in geoscience research in a non-com-petitive business environment. Two of the annual technical programmes, namely geochemical and geophysical surveys, have produced remarkable scientific information in respect of potential new mineral occurrences. Of further significance is the fact that the successful completion of the programme has been accomplished against the backdrop of the CGS improving on its commercial income.

During the reporting period, the CGS has continued to play an active role in the training of young geoscientists through, amongst others, scholarships and several in-house training programmes such as the School of Geological Mapping. With regard to the scholarship programme, over 90 per cent of the CGS’s bursary holders are from the previously disadvantaged

Prof. P E Ngoepe

Dr T Ramontja

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groups. In addition, the organisation continued to play an active role in the training of geoscientists from other African countries through placement programmes and a partnership programme with the University of the Witwatersrand and Pennsylvania State University in the USA. The CGS has also implemented a mentorship training programme to fast-track the career development, expertise and know ledge acquisi-tion of new and young geoscientists joining the organisation.

The CGS, as the leading party, and in collaboration with other institutions, successfully hosted the General Assembly of the International Association of Seismology and Physics of the Earth’s Interior in Cape Town. Three hundred and forty seven delegates from all over the world attended this event, the first of its kind in Africa. As part of the assembly, a Summer School was held to train 27 African geoscientists in selected disciplines of seismology.

The CGS, in collaboration with the Department of Minerals and Energy, the Geological Society of South Africa and the South African Committee of the International Union of Geological Sciences succeeded in winning the bid in Oslo, Norway, to hold the International Geological Congress (IGC) in Cape Town in 2016. The IGC is the largest general geologi-cal congress in the world and is held every four years. The fact that South Africa will host this prestigious event repre-sents an important vote of confidence by the international geological community in South Africa and the continent as a whole. As part of the congress, a capacity-building initiative for African geoscientists is currently being formulated.

The CGS has continued to play a prominent role in the develop ment of the geosciences in Africa, through the activi ties of the Organisation of African Geological Surveys. In this regard, during the reporting period, a comprehensive report outlining the role of geological surveys in respect of the mine rals development of the continent was produced. In addition, a detailed strategy on the future of the organisa-tion is being developed by member countries.

The CGS was privileged to have the Honourable Minister of Minerals and Energy launch the new state-of-the-art near-shore vessel, GeoManzi. This vessel represents a dedicated survey platform and is equipped with ultramodern geo-physical equipment that will allow it to survey the sea bed in very high resolution. The information obtained from these surveys will be of importance to the location of offshore mine rals, the identification and understanding of nearshore reefs for fishery management, the monitoring of harbour entrances, and to assist with the placement of nearshore infrastructure, such as pipelines, telecommunication cables and anchorage points, amongst others. It also marks the first ‘small step’ for the commencement of the mapping of South Africa’s offshore territory.

The CGS continues to provide technical support and skills to other organs of state, such as Eskom, as part of its nuclear-build programme. The CGS dedicates many of its most expe-rienced geoscientists to this project and, in doing so, has contributed towards providing a solid baseline of license applications for anticipated nuclear-power stations. The CGS expects to continue in providing its services to Eskom in what is regarded as a strategically important national infrastruc-tural development programme. An important part of this programme is to group young geoscientists with more expe-rienced senior geologists in the various projects in order to transfer knowledge and build capacity in this important field of specialisation.

The CGS continues to provide technical support to the Department of Minerals and Energy in addressing the envi-ronmental issues of mining-related contamination. Mining-related contamination, be it of the water, soil or air, is a sig-nificant challenge for the country because of its long mining legacy. In this regard, various research programmes are at an advanced stage of completion.

Excellent progress was made on several large international projects that are funded by multinational organisations (e.g. the World Bank and European Union) and foreign govern-ments. These include geological mapping in Ghana, Gabon and Madagascar and geophysical airborne surveys in Gabon. The projects are a demonstration of the high regard that the international geoscience community has for the CGS.

There has been continuing collaboration with a number of countries on a variety of geoscience research projects. These include collaboration with JOGMEC (Japan Oil, Gas and Metals National Corporation) on rare-earth element-related research and a coal-assessment project with Botswana and South Africa. These projects are being used to develop South Africa’s scientists in high-technology mineral assessment and utilisation. In addition, collaboration with India on Karoo coal resources and research linked the metallogeny and tectonics of southeast Africa with Peninsular India.

The CGS continues to play a vitally important role in advan cing South Africa’s geoscience knowledge in research on global warming. In this regard, the CGS is compiling a carbon stor-age atlas for South Africa in collaboration with the National Energy Research Institute (SANERI). This project is reviewing the geology of South Africa with the objective of locating suitable aquifers or underground storage regions into which carbon dioxide can be stored as part of South Africa’s contri-bution to reducing the impact of climate change. The location of the storage areas is not a trivial matter as these areas must not only fulfil important geologically related storage criteria, but should also be located relatively close to the main sources of carbon dioxide being produced in the country.

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The CGS has completed an important project to ensure the safety of people living in the vicinity of abandoned pits, shafts and diggings related to gold mining in the Witwatersrand area. An inventory of these openings was completed and those that pose a danger to the communities were identi-fied. Some 108 holes have been rendered permanently safe. As a long-term strategy to reduce future costs for the closing of these holes, the CGS has initiated a research project which will lead to the development of new cost-effective techno-logy for hole closure.

Income generated for the year amounted to R254,108 mil-lion, a 14,1 per cent growth in comparison with the previous financial year. Though the CGS has increased its revenue, the financial statements reflect a surplus reduced to R1,5 mil-lion when compared with the previous year. This can mostly be attributed to extraordinary and nonrecurring cost items incurred during the period under review; viz. the IASPEI incurred during the period under review; viz. the IASPEI Scientific Assembly and Summer School at a net cost of R3,3 million and the 2016 International Geological Congress Bid at a cost of R1,2 million. The organisation also incurred costs of R2,2 million on the write-off of helicopter components. These components are only allowed to be used for a spe-cific duration of time. There was also a significant increase in operational costs. Overall personnel costs increased by R20,3 million. This is due mostly to the increased staff com-plement, i.e. from 335 to 357, resulting dominantly from the conversion of temporary staff to permanent status. Over and above this, an annual salary increase of 9,5 per cent was

Prof. P E NgoepeChairperson: Management Board of the CGS

Dr T Ramontja Chief Executive Officer

also implemented across the CGS. Unlike the previous year, where there was a net foreign currency gain to the amount of R13,1 million, the year under review reflects a net foreign currency loss of R2,683 million, resulting in a surplus reduc-tion of R21 million in comparison.

The financial statements of the organisation also reflect a significant cash outflow of R57,7 million. This is mainly the transfer of the small-scale mining project funds of R55,7 million to the Industrial Development Corporation in accor-dance with the directive of the Department of Minerals and Energy, the project sponsor.

The Board and the Executive Management of the CGS are highly appreciative of the staff for their dedication and commitment to the organisation and are convinced that with the caliber of CGS staff, the organisation will grow from strength to strength in its endeavours to serve the from strength to strength in its endeavours to serve the people of South Africa.

The Board and Management of the CGS would like to thank the Ministers and staff of the Departments of Minerals and Energy and of Science and Technology for their strong support and the many inputs they have made during the past financial year and look forward to strengthening their relationships with these departments, as well as other organs of state.

Note: Post balance-sheet date, the CGS reports to theDepartment of Mineral Resources.

Prof. P E Ngoepe

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as per pfma and protocol on corporate governanceas per pfma and protocol on corporate governanceas per pfma and protocol on corporate governanceas per pfma and protocol on corporate governanceas per pfma and protocol on corporate governanceas per pfma and protocol on corporate governance

abridged board charter

Board Charter

A Board Charter, which sets out the responsibilities of the Board, was developed and established for the Management Board of the Council for Geoscience, and includes the Board’s code of conduct. The Board is fully committed to maintaining the standards of integrity, accountability and openness required to achieve effective corporate governance.

The charter confirms the Board’s

• accountability; • fiduciary duties and responsibilities;• appointment of committees; • governance and meeting procedures;• duty to declare conflict of interests; • responsibility for adoption of strategic plans;• monitoring of the operational performance and management; • determination of policy and processes to ensure the integrity of the Council for Geoscience’s risk management and

internal controls; • communications policy; and • director selection, orientation and evaluation.

The Board Charter is reviewed when necessary to ensure that it remains relevant to the business objectives of the Council for Geoscience.

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council for geosciencecouncil for geosciencecouncil for geosciencemanagement board’s responsibility for the annual financial statements management board’s responsibility for the annual financial statements management board’s responsibility for the annual financial statements management board’s responsibility for the annual financial statements management board’s responsibility for the annual financial statements management board’s responsibility for the annual financial statements

statement of responsibility

The Board Members are responsible for the monitoring, preparation and the integrity of the financial statements and related information included in this annual report.

For the Board to discharge its responsibilities, Management has developed and continues to maintain a system of internal controls. The Board has the ultimate responsibility for the system of internal controls and reviews its operation primarily through management structures.

The internal controls include a risk-based system of internal accounting and administrative controls designed to provide reasonable, but not absolute assurance that assets are safeguarded and that transactions are executed and recorded in accordance with generally accepted business practices and the Council for Geoscience’s policies and procedures. These controls are implemented by trained, skilled personnel with an appropriate segregation of duties and are monitored by Management. These include a comprehensive budgeting and reporting system operating within strict deadlines and an appropriate control framework.

The Board is accountable for the process of risk management and the system of internal controls in the Council for Geoscience. This is regularly reviewed for effectiveness and for establishing appropriate risk and control policies and communicating these throughout the organisation. There is an ongoing process for identifying, evaluating and managing the significant risks faced by the organisation. It has been in place for the year under review, up to the date of approval of the annual report and financial statements.

There is an adequate system of internal controls in place to mitigate any significant risk faced by the organisation to an acceptable level. This system is designed to manage, rather than eliminate, the risk of failure and to maximise the opportuni-ties to achieve business objectives.

There is a documented and tested process in place that will allow the organisation to continue its critical business processes in the event of a disastrous incident impacting on its activities.

The external auditors are responsible for reporting on the financial statements. These financial statements are prepared in accordance with South African Statements of Generally Accepted Accounting Practices and Generally Recognised Accounting Practices and incorporate disclosure in line with the accounting philosophy of the company. The financial statements are based on appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates.

The Board Members believe that the organisation will be a going concern in the year ahead. For this reason they continue to adopt the going-concern basis in preparing the financial statements of the Council for Geoscience.

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The Board Members are not aware of any matter or circumstance arising since the end of the financial year, not otherwise dealt with in the Council for Geoscience’s annual financial statements, that would affect the operations of the Council for Geoscience or the results of its operations significantly.

The annual financial statements for the year ended 31 March 2009 were approved by the Accounting Authority in terms of section 51(1)(f) of the Public Finance Management Act on 31 July 2009 and are signed on its behalf by:

Prof. P E NgoepeProf. P E NgoepeChairperson: Management Board of the CGS

Ms T R Mbassa Ms T R Mbassa Member: Management Board of the CGS

31 July 2009 Pretoria

Prof. P E NgoepeProf. P E Ngoepe

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executive report

Mandate of the Council for Geoscience

The Council for Geoscience (CGS) is mandated to gather, compile, interpret and disseminate geoscience knowledge for South Africa, as provided for by the Geoscience Act (Act No. 100 of 1993). This mandate includes the following:

a) The systematic reconnaissance and documentation of the geology of the earth’s surface and continental crust, including all offshore areas within the territorial boundaries of South Africa.

b) The compilation of all geoscience data and informa-tion, particularly the geological, geophysical, geo-chemical and engineering-geological data in the form of maps and documents, which are placed in the public domain.

c) Basic geoscience research into the nature and origin of rocks, ores, minerals, geological formations, the his-tory and evolution of life and the formation of the earth with a view to understanding the geological processes of both the past and present and to compile and publish such research findings nationally and internationally to contribute to the understanding of the earth, its evolu-tion and its resources.

d) The collection and curation of all geoscience data and knowledge on South Africa in the National Geoscience Repository. This repository houses a large and growing collection of geoscience information on all the coun-tries of the African continent. This information also includes data that were received from mining compa-nies, universities and research institutions worldwide. Public access to all geoscience information is subject to

existing legislation, arranged through the mandate of existing legislation, arranged through the mandate of the CGS.

e) The rendering of geoscience knowledge services and advice to the State to enable informed and scientifi-cally based decisions on the use of the earth’s surface and the earth’s resources, within the territory of South Africa.

f) The management of a number of national geoscience facilities on behalf of the country. These include the National Seismograph Network, an Infrasound Observatory, the National Borehole-Core Repository, the National Geoscience Museum, and the National Geoscience Library.

g) As part of its seismological monitoring function, the CGS contributes to the verification of global com-pliance to the ban on underground, underwater and upper atmospheric nuclear explosions in terms of the Comprehensive Nuclear-Test-Ban Treaty (CTBT), by making data available from stations located on South African territory.

h) Provide geoscience data and products to external clients, both nationally and internationally. These ser-vices are to be rendered on a full cost-recovery basis.

Legislative and Corporate Governance Requirements

The CGS was established in terms of the Geoscience Act (Act No. 100 of 1993). This Act also established the mandate and national responsibilities of the CGS. The CGS was listed as a schedule 3A Public Entity in terms of the Public Finance Management Act (Act No. 1 of 1999), as amended by Act No. 29 of 1999.

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Overview of Business Operations During the past year the CGS has continued to execute both its statutory and commercial programmes. The management of the national geoscience facilities on behalf of the State is included in the statutory programme.

An area of particular growth in the CGS has been the for-mulation of and involvement in various partnerships, both at a national and an international level. Some of the successes the CGS has experienced in this arena is best reflected by the hosting of the first-ever General Assembly of the International Association of Seismology and Physics of the Earth’s Interior (IASPEI) on the African continent, in Cape Town, and the successful bid to host the International Geological Congress (IGC) in 2016.

The CGS has remained active in building Africa’s geophys-ics capacity in order to create a workforce of highly trained scientists to meet the long-term manpower requirements of the continent’s natural-resource sector and to reverse the continuous loss of Africa’s best and highly skilled scientists.

In strengthening the building of capacity in Africa, the CGS is a key role player in the Organisation of African Geological Surveys (OAGS) (a NEPAD initiative). The mandate of this organisation is to foster and sustain government-supported geoscience endeavours and excellence on the African conti-nent. The ultimate purpose of this endeavour is socio-eco-nomic development and poverty alleviation, with special reference to capacity building in the geo sciences, mineral-resource assessment, sustainable land use and develop-ment, hazard mitigation and environmental protection. The specific aims of the organisation include, but are not limited to:

1. Creating regional and continent-wide promotional maps, documents and publications that inform decision makers in government and industry on matters relating to applied geosciences

2. Enhancing the capacity of geological surveys in Africa3. Sharing knowledge and expertise in geosciences, tech-

nologies, management and opportunities4. Advancing the training of African geoscientists5. Jointly addressing African geoscience issues of common

interest and promoting the contribution of geosciences to African affairs

6. Assisting African decision makers to obtain technical advice from the members of the OAGS

7. Providing a geoscience network between the geologi-cal surveys

8. Ensuring the financial sustainability of the organisation9. Supporting the programmes and objectives of the

African Mining Partnership and the African Union.

The CGS recognises the importance of minable rare-earth resources. Strong international ties are being forged to sup-port research and the discovery of rare-earth mineral com-modities in South Africa. This will enable the country to be catapulted into the role of a producer of rare-earth oxides, thereby aiding in the growth of the country’s economy.

The energy crisis experienced in 2008 clearly demonstrated that coal remains a major part of the energy supply in South Africa, exacerbating the urgency for an updated coal resources and reserves assessment.

It is critical for South Africa to develop a competent energy resources and reserves policy for the long-term interest of the country in terms of future energy supply, as well as infra-structure development. By 2018 South Africa will require 200 million tonnes per annum (Mt/a) of coal for electricity generation, and currently faces a supply shortfall of 11 Mt/a. For this reason an assessment is being undertaken to ascer-tain the remaining national coal resources and reserves of South Africa and neighbouring SADC countries. The main objective is to develop an appropriate energy policy in order to promote optimal utilisation of the energy resources of South Africa and the SADC community in these participating countries’ best interests.

In parallel, the CGS is undertaking the assessment of the car-bon-dioxide storage potential of South Africa in all onshore and offshore basins. Knowledge of the geological storage capacity of CO

2 is of vital importance in formulating future energy policies; with this capacity South Africa will be able to render its fossil fuels cleaner by implementing zero emis-sion practices.

A substantial part of the commercial commitment of the CGS still resides with its international mapping projects, procured through the Economic Development Fund of the European Union and the World Bank. One such project is the geologi-cal mapping of Madagascar, part of which is co-funded by the Department of Science and Technology. The bulk of statutory funding is still utilised for geoscience mapping. The CGS increases its capacity in geological mapping by way of a rigorous training programme for its young recruits during a year-long field school. The current statutory funding levels fall short of enabling the CGS to meet its mandate. Hence, the commercial projects that the CGS is undertaking are crucial for the organisation to effectively support its annual technical programme, as part of its statutory commitment, as well as sustaining the growth taking place in the organisation. Although the organi-sation has been successful in sourcing commercial projects, an increased demand on its resources, as a result of having to service these commercial projects, has led to a situation

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where the best resources must often be allocated to com-mercial work. There is also the realisation that this situation is perpetuating an increased risk in the CGS of strategic drift of its core business.

Consequently, the CGS Management, in 2006/07, developed a national strategy to transform the CGS into a geoscience organisation that focuses on national growth issues. The need for this strategy document was based on the realisa-tion that the CGS was facing critical challenges with regard to its operations and its ability to contribute to the country’s economy. Therefore serious and urgent interventions were needed if the CGS was to remain relevant to the needs of the country. In order to meet the requirements of its mandate of producing geoscience knowledge and infrastructure, and of developing geoscience-related solutions that address the growth challenges facing the country, the CGS developed longer-term strategies by which it is engaging Government to secure additional funding through the Medium-Term Expenditure Framework process. However, so far, the organi-sation has experienced limited success with this approach. Geoscience mapping and research programmes of the CGS, which are financed by State funds appropriated by Parliament, have made good progress in terms of achiev-ing targets and improving performance. In this regard, the technical performance of the CGS for the past year was 91,9 per cent.

Strategic Objectives The evolution of the CGS as an organisation has been charac-terised by a number of key successes, some of which are:

• The CGS has accumulated an extensive body of know-ledge by the systematic geoscience mapping of South Africa, and has published information, data and results thereof.

• The CGS has contributed broadly to poverty eradication by participating in the programme to develop small-scale mining operations.

• The CGS has become a financially viable institution. • Through its commercial, regional and international

commitments, the CGS has been able to establish a reputation of professionalism, is globally competitive and able to meet its commitments.

• The CGS has systematically improved its infrastructural resource base to allow it to deliver on its mandate.

In realising the urgent need for the CGS to address the national imperatives, its technical and social programmes address the following focus areas of the organisation as defined in its strategy: • Growth of the CGS (ensuring that the CGS grows as an

organisation and also contributes to economic deve-lopment – people, science and finances)

Highlights of Financial Results

2009R’000

2008 R’000

Government grant – core funding 122,672 107,755

Grant – earmarked funding - -

Government grant recognised 3,336 2,756

Contracting revenue 110,602 89,070

Publication revenue 919 760

Other operating income 16,579 22,374

Total revenue 254,108 222,715

Total expenses 252,591 200,167

Surplus for the year 1,517 22,548

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• Regulatory systems and stakeholder compliance (ensuring CGS compliance with legislative require-ments, development of CGS regulatory systems and alignment with national mandates)

• Rural development and poverty eradication (ensur-ing that the CGS contributes to the development of the ‘second economy’)

• Innovation (development of products, systems and services)

• Africa development (CGS assistance in the develop-ment of Africa and its people, by upgrading the conti-nent’s geoscience infrastructure)

• Skills development (building capacity in respect of scientific, administrative and managerial/leadership skills)

• Transformation (business and people). The objectives of the CGS are achieved by continuously improving and enhancing the quality of its geoscience research, products and services. The strategic research prio-rities of the CGS are based on the following six scientific and business thrusts:

• Geoscience research and mapping• Geoscience applicable to the engineering and con-

struction industries, and the mitigation of geoscience-related physical and chemical hazards

• Geoscience applicable to water• Information management and outreach initiatives• Mineral- and energy-resources development and pov-

erty eradication• Geoscience research applicable to the environment

and chemical hazards. The successful achievement of the above is highly depen-dent on critical success factors, which are essential for the CGS to achieve long-term sustainable success.

The critical success factors are:

• Adequate and competent scientists• A happy workforce (high staff morale)• The transfer of knowledge, skills and expertise to young

scientists• An integrated approach to service delivery• The retention of experienced scientists • Appropriate financial backing • A workable balance between statutory and commercial

work• A structure that supports its strategy• A strategic place/brand within the national priorities

framework.

Board of the Council for Geoscience The Management Board of the CGS approves the mission, strategies, goals, operating policies and priorities of the organisation and monitors compliance with the policies and achievements with respect to the scientific, administrative and financial objectives. The Management Board is appointed by the Minister in accor-dance with the provisions of Section 4 of the Geoscience Act (Act No. 100 of 1993). Other than the Chief Executive Officer, all Board Members are non-executive members. The Board Members are continuously and actively involved in, and bring independent counsel and judgement to bear on all Board dis-cussions and decisions. Board Members are fully conversant with their fiduciary duties as are outlined in Section 50 of the Public Finance Management Act (PFMA), which, amongst others, require them to declare their interests when a poten-tial conflict of interest may arise. The Board meets quarterly, in February, May, August and November. The Board has the following active Committees: • Audit and Risk Committee• Finance Committee• Technical Committee• Personnel, Remuneration and Transformation Com-

mittee. The composition of the Board during the 2008/09 financial year is given below: Prof. P E Ngoepe (Chairperson)University of Limpopo Re-appointed on 1 October 2006 Ms T Xaso (Vice-Chairperson)South African Revenue Service Re-appointed on 1 October 2006

Dr T Ramontja(Chief Executive Officer – ExOfficio) Re-appointed on 1 November 2008

Prof. J M Barton JrGeological Society of South Africa Re-appointed on 1 October 2006 Dr D G ClarkeDepartment of Land Affairs Re-appointed on 1 October 2006

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Mr R W HieberChamber of Mines Appointed on 1 October 2006

Mr K HodgesIndustrial Development Corporation Appointed on 1 October 2006

Mr M Mabuza Department of Minerals and Energy Appointed on 1 June 2008

Ms T R MbassaDepartment of Water Affairs and Forestry Appointed on 1 October 2006

Ms L McCourtDepartment of Environmental Affairs and Tourism Appointed on 1 August 2008 Mr A P NkunaMineworkers Investment Company Re-appointed on 1 October 2006

Board Meetings 1 April 2008 – 31 March 2009

BOARD MEMBERS2008 2009

Meetings attended

Meetings not

attended29 May 17 June 29 July 25 September 20 November 12 March

Prof. P E Ngoepe Present Apology Present Present Present Present 5 1

Ms T Xaso Present Apology Present Present Apology Present 4 2

Dr T Ramontja Present Present Present Present Present Present 6 0

Prof. J M Barton Jr Present Present Present Present Present Present 6 0

Dr D G Clarke Apology Apology Present Present Apology Apology 2 4

Mr R W Hieber Apology Present Present Apology Present Present 4 2

Mr K Hodges Present Present Present Present Present Present 6 0

Mr M Mabuza Not a member Apology Apology Present Present Present 3 2

Ms T R Mbassa Apology Apology Present Apology Apology Apology 1 5

Ms L McCourt Not a member

Not a member

Not a member Apology Apology Present 1 2

Mr A P Nkuna Apology Present Present Apology Apology Present 3 3

Mr M Riba(alternate to Dr D G Clarke)

Apology ApologyMain

member present

Main member present

Apology Apology 0 4

Mr M Smith(alternate to Mr R W Hieber)

PresentMain

member present

Main member present

PresentMain

member present

Main member present

2 0

Alternate Members

Mr M RibaDepartment of Land AffairsAlternate to Dr D G Clarke Appointed on 1 October 2006

Mr M SmithChamber of MinesAlternate to Mr R W Hieber Appointed on 1 October 2006

17

Audit and Risk Committee The Audit and Risk Committee of the CGS evaluates the annual internal and external audit plans, the internal and external audit reports and the financial statements. The Audit and Risk Committee also assesses the effectiveness of the internal audit function and the risk mitigation proce-dures, which are in place. In addition, the Audit and Risk Committee, from time to time, assesses its mandate and charter in order to deal with emerging risks.

The composition of the Audit and Risk Committee as at 31 March 2009 was: Mr B M Hawksworth (Chairperson)Mr R W HieberMs N G Jiyane Ms S J Mbongo

Audit and Risk Committee Meetings 1 April 2008 – 31 March 2009

MEMBERS2008 2009 Meetings

attended

Meetings not

attended22 May 22 July 14 August 19 November 18 February

Mr B M Hawksworth Present Present Present Present Present 5 0

Mr R W Hieber Present Apology Present Present Apology 3 2

Ms N G Jiyane Present Present Present Present Present 5 0

Ms S J Mbongo Present Present Present Apology Present 4 1

Mr M Smith(alternate to Mr R W Hieber)

Main member present

ApologyMain

member present

Main member present

Apology 0 2

Finance Committee The Finance Committee of the CGS deals with a range of cor-porate financial issues of the CGS, such as the recommenda-tion for the approval of the Budget, the recommendation for major capital expenditure, the writing off of bad debts and assets and any other financial matters as are referred to it by the Board for recommendations.

The composition of the Finance Committee as at 31 March 2009 was: Dr D G Clarke (Chairperson)Dr T RamontjaMr M Smith

Finance Committee Meetings 1 April 2008 – 31 March 2009

MEMBERS 22 May 2008 Meetings attended Meetings not attended

Dr D G Clarke Present 1 0

Dr T Ramontja Present 1 0

Mr M Smith Present 1 0

Mr M Riba(alternate to Dr D G Clarke)

Main member present

0 0

18

Technical Committee The Technical Committee of the CGS deals with the annual scientific and technical programme of the CGS, evaluates the scientific and technical output, oversees the annual techni-cal audit and recommends on such scientific and technical matters as are referred to it by the Board.

Technical Committee Meetings 1 April 2008 – 31 March 2009

MEMBERS2008 2009 Meetings

attendedMeetings not

attended22 May 16 September 18 February

Prof. J M Barton Jr Present Present Present 3 0

Dr C Gauert Apology Apology Present 1 2

Mr K Hodges Apology Present Apology 1 2

Ms T R Mbassa Apology Apology Apology 0 3

Dr K Pietersen Apology Present Present 2 1

Dr T Ramontja Present Present Present 3 0

The composition of the Technical Committee as at 31 March 2009 was: Prof. J M Barton Jr (Chairperson)Dr C GauertMr K HodgesMs T R MbassaDr K PietersenDr T Ramontja

Personnel, Remuneration and Transformation Committee The Personnel, Remuneration and Transformation Committee determines the human resources strategies and policies of the CGS. The Committee approves the remuneration struc-ture and salary changes in the CGS and evaluates and makes recommendations on the payment of performance bonuses. The Committee also decides upon the remuneration of the Executive Management.

Personnel, Remuneration and Transformation Committee Meetings 1 April 2008 – 31 March 2009

MEMBERS2008 2009 Meetings

attendedMeetings not

attended22 May 16 September 28 October 18 February

Mr A P Nkuna Apology Present Present Apology 2 2

Prof. J M Barton Jr Present Present Present Present 4 0

Mr L L Makibinyane (Joined 01/01/2008) Present Present Present Present 4 0

The composition of the Personnel, Remuneration and Transformation Committee as at 31 March 2009 was: Mr A P Nkuna (Chairperson)Prof. J M Barton JrMr L L Makibinyane

19

Financial and Operational Factors

Post-balance-sheet events No material facts or circumstances have arisen, between the date of the balance sheet and the production of this report, which will affect the financial position of the CGS as is reflected in the financial statements.

Major changes in respect of fixed assets An amount of R4,2m was invested in the acquisition of new aircraft components. Scientific equipment that was acquired amounted to R15,2m, computer software and hardware to R8,2m, and R1,8m was invested in a boat for the Marine Geoscience Unit.

Losses Incurred or Recovered

Material losses incurred The Management Board of the CGS has developed a Materiality and Significance Framework for the CGS. The Board has approved that any expenditure in excess of approximately 1 per cent of the annual operating expendi-ture budget, which is an amount of R1,000,000 for 2008/09, and/or the writing off and disposal of any asset in excess of approximately 2 per cent of the value of total assets as indi-cated in the annual financial statements of the year 2006/07, which is an amount of R7,900,000 individually or in aggre-gate, would be deemed material and significant. The CGS has thus accepted the above-mentioned threshold figures of materiality for its financial framework.

20

performance objectives

Performance Management Criteria and Performance Targets of the Council for Geoscience

The Council for Geoscience (CGS) has developed a number of measures that are used to evaluate the performance of the organisation against a set of predetermined targets. These measures were designed as a means to evaluate the perfor-mance of the CGS with respect to three levels of account-ability. These include the measurement of:

• Collective scientific and technical output during a spe-cific financial year

• The performance of the different business units • Corporate performance.

The overall evaluation of corporate performance is based on aspects such as business growth, investment into organisa-tional excellence, customer and client relationships, opera-tional best practices, investing into people and stakeholder interaction. The above performance targets are set annually by the CGS and are, at the end of the financial year, audited by a team of external auditors.

In line with the new strategy developed by the CGS In line with the new strategy developed by the CGS Management, the organisation has adopted a Balanced Scorecard (BSC) approach to its performance measurement. The corporate BSC, which measures the performance of the organisation at corporate, business unit and individual level was approved and accepted by the Management Board of the CGS. The BSC incorporates the current performance measures into the following evaluation perspectives:

• Stakeholder and customer satisfaction• Economic growth• Organisational systems• Scientific excellence and human capital development.

Corporate Performance Targets of the Council for Geoscience

In order to evaluate the corporate performance of the CGS, the organisation has developed a range of perfor-mance indicators, which cover the entire spectrum of activities within the CGS. The range of performance indica-tors, together with the performance targets for the period 2008/09 are summarised in the following table.

21

Corporate Scorecard for 2008/09

Market (Stakeholder/Customer) Perspective To drive stakeholder and customer satisfaction by the development of world-class products and services

Objectives Measures Target2008/09

Performance2008/09

To Serve our Stakeholders and Customers

- % Completion of Annual Technical Programme

- % Satisfied Customers

- No. of Maps and Publications published1

- No. of Small-Scale Mining Investigations completed

- No. of Rural Development Projects2

- No. of Regional and African Development Projects3

85%

80%

35

35

20

15

91,9%

88,2%

117

34

43

32

Economic/Financial Growth To achieve sustainable reve-nue and profit growth

Objectives Measures Target2008/09

Performance2008/09

To Generate Revenue - Total Revenue (Rands)

- Government Grant

- Contract Revenue (Rands)

- Sundry Income

- Commercial Surplus

- Ratio of Contract Revenue to Total Revenue

- Ratio of External Revenue to Total Revenue

R229m

R123m

R100m

R6,5m

R19,6m

44%

47%

R254,1m

R122,6m

R110,6m

R20,9m

R1,57m

43,5%

51,7%

Overhead Efficiency - Ratio of Overheads to Total Cost

- Ratio of Personnel Cost to Total Cost

45,0%

53,1%

57,1%

51,9%

Effective Systems (Organisational) To develop and maintain effective and streamlined processes, using appropriate tools and methodologies

Objectives Measures Target2008/09

Performance2008/09

To Develop and Implement Effective Policies and Procedures

- % ISO Implementation in Accordance with Reference Report

25% 18,8%

To Drive Preferential Procurement

- Preferential Procurement as a % of Total Procure ment 35% 42,5%

To Implement Corporate Planning and Reporting

- No. of Audit Qualifications 0 0

22

Corporate Scorecard for 2008/09 (continued)

World-Class People Perspective To develop a world-class geoscience organisation where our people can grow and perform

Objectives Measures Target2008/09

Performance2008/09

To Attract and Retain a Skilled Workforce

- Nett Staff Turnover

- No. of Staff and Students enrolled for MSc and PhD

Degrees4

- No. of Papers and Articles published5

- Proportion of Researchers to Total Staff

- % of Scientific Staff with PhD and MSc Degrees

- No. of Projects with External Collaborators6

- % Satisfied Protégées

7%

23

60

40%

50%

30

50%

6,6%

33

109

40,1%

47,6%

62

59%

To Build a Positive Organisational Culture

- % Satisfied Staff Members7 55% 71,3%

To Reflect and Embrace RSA Diversity

- % Overall EE Targets in the CGS (W-B)

- % Overall EE Targets in the CGS (M-F)

48:52

57:43

42:58

59:41

Notes to the Corporate Scorecard

The following notes clarify instances where the variance between the expected target and observed performance, pertaining to operational measures, exceed 10 per cent:

1. Number of maps and publications published

The performance under this measure is dominated by the mapping programme in Madagascar that came to an end in the 2008/09 financial year. The project was funded by the World Bank and the Department of Science and Technology. A total of 95 maps were produced by the CGS under this pro-ject. The initial projection of the targets under this measure did not take this work into consideration.

2. Number of rural development projects

The higher number of rural development projects is directly linked to the strategy of the CGS to focus more on rural development and poverty eradication. A larger number of projects regarding rural development were included in the

Annual Technical Programme in the past year. These pro-jects comprised geological mapping, mineral-occurrence investigations, groundwater studies and structure plans for municipal areas.

3. Number of regional and African develop-ment projects

The CGS has continued to experience a remarkable success rate on projects in Africa. Many projects in countries such as Ghana, Gabon, Madagascar, Mauritania and Mozambique continued in 2008/09 and some of them were also extended in scope. The CGS has, through AfricaArray, increased its par-ticipation in seismological projects in many different parts of the continent. The success of the CGS in regional and African development projects is ascribed to the increasing role the CGS is playing regionally and on the continent.

4. Number of staff and students enrolled for MSc and PhD degrees

The CGS has continued to focus on skills development and attaining higher qualifications for its staff in 2008/09. Initial

23

targets were set from a lower baseline, hence the perfor-mance under this measure has outstripped the expectation. Further studies are increasingly being promoted and are linked directly, in many instances, to either statutory or com-mercial projects. The role of the Young Science Forum by way of encouraging the young geoscientists in the CGS to gain fur-ther qualifications is also a contributing factor in the increased number of staff enrolling for MSc and PhD degrees.

5. Number of papers and articles published

The higher number of papers is ascribed to the large number of oral presentations made, which form part of conference proceedings. In particular, the CGS did not predict the effect of some local conferences, such as the IASPEI 2009 General Assembly, which drew a significant amount of interest from its staff and the increased number of papers. The CGS may also be experiencing the effect of its policy of recognising staff members who publish by way of awarding funding to the individual for work-related expenditure such as the attendance of scientific conferences, purchase of software and hardware, etc.

6. Number of projects with external collaborators

The sharp increase in the number of projects with external collaborators can be linked to the increase in local and inter-national commercial projects as well as a renewed focus on joint research and skills development. A direct spin-off is the large number of papers and articles published with outside collaborators.

7. Percentage satisfied staff members

The following measures were put in place to enhance staff morale and to facilitate communication:1. Quarterly staff meetings held to improve communication2. Diversity programme3. Employee Assistance Programme (EAP).

24

report of the audit and risk committee

Responsibilities

The Management Board of the Council for Geoscience has the overall responsibility to ensure that the organisation has and maintains effective, efficient and transparent systems of risk management and internal controls. The responsibility to ensure the adequacy and effectiveness of these systems is delegated to the Audit and Risk Committee. The Audit and Risk Committee is an advisory committee of the Board, operating as overseer with an independent and objective stance.

The Audit and Risk Committee has adopted formal terms of reference, which have been confirmed by the Board, as its char-ter, and is satisfied that it has discharged its duties and responsibilities as set out in the Charter. In performing its responsibili-ties the Audit and Risk Committee has reviewed the following:• The functioning of the internal control systems• The functioning of the internal audit programme• The risk areas of the entity’s operations to be covered in the scope of the internal and external audits• The reliability and accuracy of the financial information provided to Management and other users• The accounting or auditing concerns identified as a result of the internal or external audits• The entity’s compliance with legal and regulatory provisions.

Governance

The Board appointed the following members of the Audit and Risk Committee:

Mr B M Hawksworth (Chairperson)Mr R W HieberMs N G Jiyane Ms S J Mbongo

The Audit and Risk Committee met five times during the period under review.

Internal Control Systems

The members of the Audit and Risk Committee believe that the system of internal controls is adequately designed to cover organisational risks, financial risks and operational risks. The control system provides reasonable, but not absolute, assurance that the organisation’s assets are safeguarded, transactions are authorised and recorded properly, and that material errors and irregularities are either prevented or detected timeously. These controls are monitored throughout the organisation by Management and employees with the necessary segregation of authority and duties.