selective empowerment annual reportannual report 2017/2018 selective empowerment investments 1...
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ANNUAL REPORT2017/2018
SELECTIVE EMPOWERMENT INVESTMENTS 1 LIMITEDRegistration Number 2007/033697/06
Suite 401 Lougardia Building, 1262 Embankment Road, Centurion, 0157Tel: 012 942 0038 | Fax: 086 416 8457 | Email: [email protected] |Web: www.seinvest.co.za
Selective Empowerment Investments 1 Limited Annual Report 2017/18
The reports and statements set out below comprise the annual financial statements presented to
the shareholders:
Directorate
Foreword
3 - 5
2
Report Of The Chairperson
Report Of The Managing Director
General Information
Directors' Responsibilities and Approval
6
8
9
7
Directors' Report
10 - 11
Report on
Corporate
Governance
12 - 18
Report of the Audit and
Risk
Committee
19 - 20
Report of the Social and
Ethics
Committee
21 - 23
Company Secretary's Certification
23
Independent Auditor's
Report
23 - 27
Statement of Financial Position
28
Statement of Comprehensive Income
29
Statement of Changes in Equity
30
Statement of Cash Flows 31
Accounting Policies
32 - 41
Notes to the Annual
Financial
Statements
42 - 62
Detailed Income Statement 63
65
-
-
64
77
78 - 126
Notice Of Seventh Annual General Meeting
Memorandum of Incoporation
INDEX
FOREWORD
Selective Empowerment Investments 1 Limited (“SEI1”) has over the past few years faced with challenges which needed to be corrected with urgency. The Board of Directors (“Board”) and management over the 2017/18 financial period wasted no time in resolving these organisational challenges. To give perspective, the organisation was faced with compliance and performance challenges, with the Companies and Intellectual Property Commission (“CIPC”) having historically issued various compliance notices mostly emanating from the auditors reported Reportable Irregularities. The current audit opinion offers a glimpse of the positive work done to date.
The Board on its 2nd August 2018 sitting, approved a strategy aimed at turning around the fortunes of the company with a primary focus on building governance and achieving the following with the investment portfolio:
While the strengthening of governance is a continuing process, stakeholder management primarily Shareholder engagements through roadshows is planned and should see progressive discussions aimed at growing the organisation between the Shareholders, Board and Management.
The Board and Management of SEI1 look forward to the completion of the 2019 financial period where outcomes such as the listing of SEI1 shares, full compliance and positive performance are targeted.
Best WishesSEI1 - Board and Management of SEI1
Capital Preservation research indicates that the company mandate was not dynamic enough to address the JSE's downturn experience over the past few years, with company funds having been invested only in equities targeted at achieving high returns by taking high risk. This approach and mandate were revised and included for approval by shareholders as part of this annual report.
Asset Growth in challenging economic times, every investor seeks marginal asset growth and/or alpha. SEI1 is no different, with management resolute on containing costs to achieve marginal gains, it is hoped that the revised investment strategy will yield targeted performance.
Liquidity is aimed at providing the organisation with working capital necessary to fulfil its short-term commitments
Annual Report 2017/18Selective Empowerment Investments 1 Limited 2
Annual Report 2017/18Selective Empowerment Investments 1 Limited 3
TOP ROW:
MIDDLE ROW:
1 / M MAJA
4 / DR SS SIBIYA
2 / MM TSHISHONGA
3 / NT SINDANE
BOTTOM ROW:
5 / MS TSIE
6 / T MOTLOGELOA
7 / Z NCEMANE
7 /7 /
DIRECTORATE
Annual Report 2017/18Selective Empowerment Investments 1 Limited 4
DIRECTORATE
M MAJAExecutive director (marketing)BSc (Eng) Wits, PPM (SBL), STDipl (MCE)
Mos holds an industrial engineering degree in addition to a teaching diploma (technical) in mechanical engineering from the University of the Witwatersrand. He has previously worked as a maths and science teacher for the Department of Education and Training, as an operations engineer professional officer, a planning and control manager and depot manager for rolling stock. He has consulted extensively for a number of businesses in the real estate, investments and health sectors. Currently, Mos is a director of Math-Plus Proprietary Limited which provides mathematics tutoring and offers consulting services via his business BestMark Solutions.
MM TSHISHONGAActing CEO;Chairman of the boardBluris
Mike holds diplomas in business management and human rights and was previously employed by the Department of Justice as a clerk of the court and later promoted to public prosecutor, magistrate, law advisor and directorgeneral in the former Venda Department of Justice. He was also previously appointed as the deputy director-general of the Department of Justice in Pretoria and held the position until 2005. Currently, Mike is the chairperson of BBBEE company, Amber Peek Proprietary Limited and of OK Bazaars Venda Limited. He is the author of a book entitled Whistleblower, which encourages people to take a stand against fraud and corruption. Mike is also a consultant and public speaker.
NT SINDANENon-executive directorLLB (University of Natal),BProc (University of Natal)
Nonkululeko is a qualified attorney having served her articles with a firm of attorneys, Shepstone &
Wylie, Durban until she was admitted as an attorney and later conveyancer. She previously served as director-general of the Department of Justice and Constitutional Development, discharging responsibilities of the accounting officer. She also held the positions of deputy director-general in the Depar tment o f Transpor t and Publ ic Enterprises responsible for policy and regulatory development and implementation. Nonkululeko worked as a legal and risk manager for Umgeni Water. Her other appointments have been in governance positions as company secretary forArmscor and Eskom. She also served as the chairperson of International Air Licensing Council and chairperson of the Search and Rescue Entity. She is currently the chairperson and CEO of UWP Consulting, a majority blackowned South African engineering company. She is also responsible for the governance of UWP group of companies locally and internationally, which she chairs or is a member of their boards.
DR SS SIBIYANon-executive directorPhD (IT) – DUT;MSc (Computer Science),BSc (Hons) (Computer Science),BSc (Computer Science)
Sihle previously worked for both the private and public sectors where he held positions such as: candidate technologist, engineer, knowledge applicator, database developer, systems developer, ICT manager, chief eng ineer, sen ior manager : bus iness development and executive: systems integration. He has a solid track record of using advanced research, analysis, strategic planning, leadership, conflict management and negotiation skills to successfully develop business initiatives while maximising profit, minimising cost and driving continuous change. He is a professional strategist and is a founder of a company called Top-Up SolutionsTrading and Projects (TUSTP).
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DIRECTORATE
MS TSIENon-executive directorBSc (Actuarial Science andMathematical Statistics),BSc (Hons) (Actuarial Science)University of Witwatersrand.
Solly has previous experience in investments, including investment management, investment consulting, investment operations and client services. He has worked for large, medium and small financial services firms where he assumed various roles spanning from technical investment to client and business management roles. He also has experience in providing actuarial services to retirement funds and long-term insurance companies.
T MOTLOGELOANon-executive directorBCom (Statistics) University of Pretoria
Tiro was previously employed at Absa as an economist in the group economic research division. He then spent time at Investec Private Bank, followed by a move to Standard Bank, where he joined the card division working as an
analyst. Tiro rose through the credit ranks and was instrumental in building a provisioning model for the card credit division, which also included Diners Club. He was executive assistant to both the chief executive and head of credit for personal markets at Standard Bank. He has an entrepreneurial nature having started various businesses.
Z NCEMANEManaging DirectorMBA and Bcom – NMUImpact Investing – UCT GSBPGDip Accounting - UNISA
Zuko is a registered professional accountant with the South African Institute of Professional Accountants (SAIPA), over the years he diversified his career and experience within the finance, business management, investment and strategy environment. In so doing, he has been executing various leadership roles enabling him to gain insight in driving successful strategies in his areas of interest. He has founded Folex AS and holds directorship roles a in various other entities.
REPORT OF THE CHAIRPERSON
It has been about a year since we were invited to join the Selective Empowerment Investments 1 Limited (“SEI1”) and along with fellow Board of Directors, were formally appointed by shareholders on the 30th April 2018. Between the acceptance of our invitation and this report, it has indeed felt like a roller coaster ride. Our rude awakening was on realisation that as a Board, we have a bigger task than we anticipated.
The Companies and Intellectual Property Commission (“CIPC”) issued notices of non-compliance with the prescripts of the Companies Act to SEI1. The company external auditor issued to the Independent Regulatory Board for Auditors (“IRBA”) reportable irregularities which are subsequently sent to the CIPC, which supported certain non-compliance to the Companies Act. These all related to legacy issues and the most serious can be summarised as:
Ÿ Company not holding AGMs within the prescribed timeframes per Companies Act;Ÿ Audit and Risk Committee not constituted, holding and retaining meeting minutes as required by
the Companies Act; Ÿ Marketability of company shares; andŸ Liquidity and solvency.
In providing oversight and collaborating with management, the Board can report that the irregularities reported by the auditor have been reported to IRBA and CIPC as no longer continuing and the company has an approved budget used as a tool to monitor liquidity and solvency. This indicates the commitment and work that the Board has executed towards achieving full compliance with the Act.
The AGM was held on the 30th April 2018. Management is currently overseeing a listing project which will ensure that company shares are traded in a stock exchange.
The Board continues to support and monitor management in the quest to turn the company around towards growth and sustainability. The role of the Board is to ensure that good corporate governance principles are in place by guiding management toward the design and implementation of a control and risk management environment.
Although not yet finalised and confirmed, the Board anticipate that the company will have a Special Shareholders meeting soon to propose certain approval to necessitate good governance and compliance with the prescripts of the law.
On behalf of the Board of Directors of SEI1, we are pleased with the direction and progress made to date and are focused on achieving good governance, growth and sustainability for the company.
Report of the chairpersonCorporate governance as a foundation for success
Yours in LeadershipNonkululeko Sindane
CORPORATE GOVERNANCE AS A FOUNDATION FOR SUCCESS
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REPORT OF THE MANAGING DIRECTOR
My appointment by the Selective Empowerment Investments 1 Ltd (“SEI1”) coincided with the period of the Annual General Meeting (“AGM”), which offered a perspective of what the shareholders expect from the company. The shareholder expectations are understood to be the need for:
1. Positive company performance supported by a dividend pay-out;2. Tradability of shares; and3. Cohesion and knowledge sharing between SEI1 and its shareholders.
Since the AGM on 30 April 2018, management have worked towards a plan that can deliver on the expectations of shareholders, while building the company from within to enable organic growth and sustainability. As a result, management presented to the Board of Directors (“Board”) of SEI1 with a corporate strategy integrating company and shareholder needs. The strategy identified the turnaround period as most critical in the immediate to position the company for growth and sustainability and in implementing it with the blessing of the Board, there were some low hanging fruits to be targeted through a structured approach. The following is in motion:
Ÿ The implementation of a stakeholder management plan aimed at creating the necessary cohesion and knowledge sharing between the company and its shareholders;
Ÿ Listing the company shares on a stock exchange to enable shareholders to realise value from trading their shares;
Ÿ Revision of the key primary inputs necessary for revenue generation and costs management; and
Ÿ Capacitating the organisation with desired skills to grow and sustain the organisation, through the implementation of the approved strategy, laying the foundation for good governance and the performance management as a basis for monitoring progress.
As management we're proud to say that we're making progress towards the fulfilment of the strategy. We however remain challenged by multiple unexpected distractions in our approach to streamline the business along with our Board resulting from legacy issues, through legal challenges from stakeholders who among others require full compliance from the company with applicable South African regulations, others claiming to have rights to company assets and various labour matters. Ours it to resolve these as promptly as possible, by laying the right foundation for achieving good governance and not repeat the mistakes of the past.
As the Confucius Chinese proverb says “The best time to plant trees is 10 years ago, the second-best time is now. Our journey is still long together, a working relationship is of primary importance as we look forward to engaging with the SEI1 shareholders through the planned road shows across the country. We are intent on building strong relations and sharing details of company activities with all shareholders.
Best WishesZuko Ncemane
FOCUSING ON ORGANIC GROWTH AND SUSTAINABILITY OF SELECTIVE EMPOWERMENT INVESTMENTS 1 LIMITED
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GENERAL INFORMATION
Country Of Incorporation And Domicile South Africa
Nature Of Business And Principal Activities Investment
Directors M Maja (Appointed 17 August 2017) T Motlogeloa (Appointed 17 August 2017) SS Sibiya (Appointed 17 August 2017) TN Sindane (Appointed 17 August 2017) MS Tsie (Appointed 17 August 2017) MM Tshishonga (Resigned 30 April 2018)
Business Address Suite 401 Lougardia Building 1262 Embankment Road Centurion, 0157
Registered Office PO Box 11379 Die Hoewes 1 Centurion 0163
Bankers Absa Bank Limited
Auditors MKIVA Incorporated 299 Pendoring Street 1 Pendoring Office Park Blackheath 2195
Company Secretary Imbokodvo Bethany Governance & Statutory Compliance
Company Registration Number 2007/033697/06
Tax Reference Number 9593154165
Level Of Assurance These annual financial statements have been audited in compliance with the applicable requirements of the Companies Act 71 of 2008.
Preparer Eduard Stander, B Com Law, B Compt, Professional Accountant (SA)
Selective Empowerment Investments 1 Limited Annual Report 2017/18Selective Empowerment Investments 1 Limited 8
DIRECTORS' RESPONSIBILITIES AND APPROVAL
The directors are required by the South African Companies Act to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements satisfy the financial reporting standards as to form and content and present fairly the statement of financial position, results of operations and business of the company, and explain the transactions and financial position of the business of the company at the end of the financial year. The annual financial statements are based upon appropriate accounting policies consistently applied throughout the company and supported by reasonable and prudent judgements 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 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 and the external auditors, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. The going-concern basis has been adopted in preparing the financial statements. Based on forecasts and available cash resources the directors have no reason to believe that the company will not be a going concern in the foreseeable future. The annual financial statements support the viability of the company.
The annual financial statements have been audited by the independent auditing firm, MKIVA Incorporated, who have been given unrestricted access to all financial records and related data, including minutes of all meetings of the shareholders the board of directors and committees of the board. The directors believe that all representations made to the independent auditor during the audit were valid and appropriate. The external auditors' reports are presented on pages 21 to 25.
The annual financial statements as set out on pages 26 to 60 were approved by the board on 30 October 2018 and were signed on their behalf by:
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 9
DIRECTORS' REPORT
The directors present their report for the year ended 30 June 2018.
1. Review of activities
Main business and operationsThe principal activity of the company is investment and there were no major changes herein during the year.
The operating results and statement of financial position of the company are fully set out in the attached financial statements and do not in our opinion require any further comment.
2. Going concern
The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
The company's Net Asset Value at the reporting date was R145 056 597 and the Net Current Asset Value was R1.07.
3. Events after reporting date
All events subsequent to the date of the annual financial statements and for which the applicable financial reporting framework require adjustment or disclosure have been adjusted or disclosed.
The Directors became aware of various claims against the company; Further details regarding the case are presented in note 12 of the Directors report.
4. Directors' interest in contracts
To our knowledge none of the directors had any interest in contracts entered into during the year under review.
5. Authorised and issued share capital
No changes were approved or made to the authorised or issued share capital of the company during the year under review.
6. Borrowing limitations
In terms of the Memorandum of Incorporation of the company, the directors may exercise all the powers of the company to borrow money, as they consider appropriate.
7. Dividends
No dividends were declared or paid to shareholders during the year.
8. Directors
The directors of the company during the year and to the date of this report are as follows:
M. MajaT. Motlogeloa (Appointed 17 August 2017) SS. Sibiya (Appointed 17 August 2017) TN Sindane (Appointed 17 August 2017) M S Tsie (Appointed 17 August 2017)MM. Tshishonga (Resigned 30 April 2018)
9. Secretary
The company's designated secretary is Imbokodvo Bethany Governance & Statutory Compliance. Company secretaries address:501 Rooihuiskraal Road Kosmodal Ext13 Centurion, 0157
10. Independent Auditors
MKIVA Incorporated were reappointed as i n d e p e n d e n t a u d i t o r s o f S e l e c t i v e Empowerment Investments 1 Limited.
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DIRECTORS' REPORT
On the 4th of September 2018, the Company became aware of the filing of a purported class action complaint in the High Court of South Africa by the Companies and Intellectual Property Commission (CIPC) against the Company and certain of the Company's current and former directors for alleged violations of Companies Act Of South Africa laws. The complaint alleged that the Company's financial statements and certain disclosures and corporate governance between 16 March 2016 and 28 August 2018 were not complied with, as a result of the Company's alleged failure to report on a timely basis. The complaint seeks declare the board delinquent. The Company believes that the allegations are without merit and in the process of filing a motion to oppose the complaint.
11. Preparation of consolidated annual financial statements
The directors resolved during the year under review to utilise the exception allowed under IFRS 10:4(a) not to present consolidated annual financial statements.
12. Contingent liabilities
On the 4th of June 2018 a claim in the amount of R500,000.00 for defamation was instituted by the former Chief Executive Officer Mr Goosen. Summons have not been issued and as such the outcome is unclear. In addition; a claim in the amount of R4,090,909.00 for potential loss of income was instituted by the former Chief Executive Officer Mr Goosen. Summons have not been issued and as such the outcome is unclear.
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CORPORATE GOVERNANCE REPORT
Selective Empowerment Investments 1 Limited (“SEI1”) complies with applicable statutes, regulatory requirements and other authoritative directives regulating its conduct. The principal applicable frameworks including the Companies Act 71 of 2008, as amended, by the Companies Amendment Act 3 of 2011 (the Companies Act), and the Regulations promulgated thereunder (the Companies Regulations) came into effect on 1 May 2011.
GOVERNANCE FRAMEWORK
SEI1 through its Board of Directors established the following committees during the year under review in line with Good Governance and requirements of the Companies Act.Ÿ Audit & Risk CommitteeŸ Investment CommitteeŸ Social & Ethics CommitteeŸ Remuneration & Nominations Committee
BOARD COMPOSITION
The board comprises of the appropriate balance of knowledge, ski l ls , exper ience, and independence to discharge its governance role and responsibilities objectively and collectively. The Board comprises of 5 Directors, majority of whom are Independent Non-Executive Directors and 1 Executive director.
Board of DirectorsŸ Mr MM Tshishonga – Executive Chairman
(retired at the AGM 30 April 2018)Ÿ Mr M Maja – Executive Director (appointed –
28 November 2013)Ÿ Mrs TN Sindane – Independent Non-
Executive Directors (appointed - 17 August 2017)
Ÿ Mr MS Tsie - Independent Non-Executive Directors (appointed – 17 August 2017)
Ÿ Mr T Motlogeloa - Independent Non-Executive Directors (appointed – 17 August 2017)
Ÿ Dr SS Sibiya - Independent Non-Executive Directors (appointed – 17 August 2017)
INDEPENDENCE
The Independent Non-Executive Directors are highly experienced and have the skills, background and knowledge to fulfil their responsibilities. The Board believes that the Independent Non-executive Directors of SEI1 are of the appropriate calibre and the members of the committees of the board are Non-executive Directors.
The classification of Independent Non-executive Directors is determined by the Board on the recommendation of the Remuneration and Nomination Committee in accordance with the guidelines set out in King IV. In accordance with the independence requirements of King IV, none of the Independent Non-executive Directors participate in any share incentive scheme of SEI1.
KING IV COMPLIANCE
SEI1 recognises and supports the principles and practices set out in King IV. SEI1 will continue to implement compliance to ensure that it applies the principles set out in King IV, monitoring and reporting to the appropriate governance structures. Ongoing progress reports in this regard will be presented to the Audit and Risk Committee.
Adhering to the highest standards of corporate governance is fundamental to the sustainability of SEI1's business. SEI1's business practices are conducted in good faith, in the interests of SEI1 and all its stakeholders, with due observance of the principles of good corporate governance. The Board is the foundation of SEI1's corporate governance system and is accountable and responsible for SEI1's performance. The Board retains effective control of the business of SEI1 through a clear governance structure and has established sub-committees to assist it in accordance with the provisions of SEI1's Board Charter. The Board recognises that delegating authority does not
Annual Report 2017/18Selective Empowerment Investments 1 Limited 12
CORPORATE GOVERNANCE REPORT
reduce the responsibility of Directors to discharge their statutory and common law fiduciary duties. The Board continues to review its governance structures to ensure that they support effective decision-making, provide robust controls and are aligned to evolving local and global best practice.
BOARD CHARTER
The Board Charter was adopted by the Board on 28 September 2017 to ensure compliance with King IV and the Companies Act. The Board Charter sets forth the Board's role and responsibilities as well as the requirements for its composition and meeting procedures, noting that SEI1 is subject to the corporate governance and the requirements of the Companies Act.The roles and responsibilities of the Board as set out in the Board Charter include the following:Ÿ act as the focal point for, and custodian of,
corporate governance by managing its re lat ionship wi th management , the shareholders and other stakeholders of SEI1 to build and maintain stakeholders' trust and confidence in SEI1 aligned to sound corporate governance principles. In this regard, the Board will be expected to:
Ÿ acqu i re a work ing knowledge and understanding of SEI1's business and the laws, regulations and processes that govern its activities;
Ÿ be able to make sound business decisions and recommendations;
Ÿ exercise judgement independently; and exercise stewardship at all times and uphold the highest degree of ethics in all forms of conduct;
Ÿ appreciate that strategy, risk, performance and sustainability are inseparable and to give effect to this by:Ÿ contributing to and approving the
strategy;Ÿ satisfying itself that the strategy and
business plans do not give rise to risks that have not been thoroughly assessed by management;
Ÿ identifying key performance and risk areas, which includes the responsibility of setting SEI1's level of risk tolerance and limits for its risk appetite on an annual bas is and mon i to r ing the same accordingly;
Ÿ ensuring that the strategy will result in sustainable outcomes; and
Ÿ considering sustainability as a business opportuni ty that guides strategy formulation;
Ÿ provide effective leadership on an ethical foundation;
Ÿ ensure that SEI1 is and is seen to be a responsible corporate citizen by having regard to not only the financial aspects of the business of SEI1 but also the impact that b u s i n e s s o p e r a t i o n s h a v e o n t h e environment and the society within which it operates;
Ÿ ensure that SEI1's ethics are managed effectively;
Ÿ ensure that SEI1 has an effective and independent audit and risk committee;
Ÿ be responsible for the governance of risk;Ÿ be responsible for IT governance, which
includes ensuring that information assets are identified, managed and treated as important business assets;
Ÿ ensure that SEI1 complies with applicable laws and considers adherence to non- binding rules and standards;
Ÿ ensure that there is an effective risk-based internal audit for approaching the control environment which must be aligned with the risk assessment process;
Ÿ appreciate that stakeholder's perceptions affect SEI1's reputation;
Ÿ ensure the integrity of SEI1's integrated report;
Ÿ act in the best interests of SEI1 by ensuring that individual directors:Ÿ adhere to legal standards of conduct;Ÿ are permitted to take outside or other
independent advice as i t deems necessary in connection with their duties following an agreed procedure;
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CORPORATE GOVERNANCE REPORT
Directors appointed by the Board between annual general meetings, either to fill a casual vacancy or as an addition to the existing Board, hold office only until the next annual general meeting and are eligible for election (but are not included in determining the number of Directors who are to retire by rotation). When appointing Directors upon the recommendation of the Remuneration and Nomination Committee, the Board considers, inter alia, whether the candidates have the necessary skills and experience.
With effect from 17 August 2017, Mrs TN Sindane, Mr MS Tsie, Mr T Motlogeloa, Dr SS Sibiya were affected as directors. The directors' appointment was confirmed by the shareholders at the Annual General Meeting held on 30 April 2018.
Mr MM Tshishonga retired at the Annual General Meeting as a Non-executive Director of SEI1 with effect from 30 April 2018.
Induction and continuing educationAll newly-appointed Directors received a comprehensive information pack, including the Memorandum of Incorporation, the Board Charter, Terms of Reference of the Committees of the Board, Board policies and other documents relating to SEI1; key legislation and regulations; as well as corporate governance, financial and reporting documents, including minutes and documents of an administrative nature.
Directors are encouraged to attend courses providing information and training relating to their duties, responsibilities, powers and potential liabilities. Regulatory and legislative updates are provided regularly.
SuccessionThe Board is committed to put a succession plan in place for Executive Directors and senior management , wh ich prov ides fo r the sustainability of the business of SEI1.
AssessmentThe Board is committed to transparency in assessing the performance of the Board, its Committees and individual Directors as well as the governance processes that support Board activities. The effectiveness of the Board and its Committees will be assessed annually.
Independent external advisers will assist the Remuneration and Nomination Committee with the evaluation of the Board as a whole and individually together with its Committees.
The Board is of the view that the involvement of independent external advisors assists to ensure a rigorous and impartial evaluation process.
Matters to be considered in the assessments will focus on the effectiveness of the Board, including:Ÿ Board compositionŸ Board meetings and contentŸ Roles of the ChairmanŸ Board accountabilityŸ Appointment, induction and training and
succession planningŸ Performance evaluation and remunerationŸ Board CommitteesŸ Interaction: communication andŸ relationshipsŸ Board dynamics and leadershipŸ Board focus and function: strategy and
complianceŸ Risk management and internal controlsŸ Information Technology governanceŸ Accounting and auditŸ Non-financial (sustainability) performanceŸ Balance of power and authorityŸ Ethics
BOARD MEETINGS
The Board meets to consider the business and strategy of SEI1. The Board reviews reports from the committees and independent advisors.
Agendas for Board meetings are prepared by SEI1 Secretary in consultation with the
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BOARD
MEETING
AUDIT AND
RISK
COMMITTEE
INVESTMENT
COMMITTEE
REMUNERATION
AND
NOMINATIONCOMMITTEE
SOCIAL AND
ETHICS
COMMITTEE
NUMBER OF MEETINGS
PER YEAR
6
3
1
2 1
MM
Tshishonga
(Chairperson)*
3
2
1
- 1
M
Maja
(Executive director)
6
3
1
- 1
SS Sibiya 6 3 1 2 1
MS Tsie 6 3 1 2 -
TN Sindane** 5 2 - - 1
T Motlogeloa 6 3 1 2 -
CORPORATE GOVERNANCE REPORT
the Managing Director and Chairpersons of the Committees. Meeting materials are delivered to every Director prior to each meeting.
ADVICE AND INFORMATION
No restriction is placed on the Directors' access to Company information, records, documents and property. Non-executive Directors have access to management and regular interaction
is encouraged. The Board is entitled to seek independent professional advice concerning the affairs of SEI1 at its expense. The Managing Director and Marketing Director attend the Board sub-committee meetings by invitation.
Meeting attendanceThe 2017/2018 meeting attendance summary is shown below:
BOARD COMMITTEES
The Board has established sub-committees to assist it with fulfilling its responsibilities in accordance with the provisions of SEI1's Board Charter. The Board acknowledges that the delegation of authority to its Committees does not detract from the Board's responsibility to discharge its fiduciary duties to SEI1.
The Committees have Terms of Reference, which will be reviewed annually. They set out the Committees' roles and responsibil i t ies, functions, scope of authority and composition. The annual review will take into account amendments to applicable legislation and developments in international best practices. Committees report to the Board at each Board meeting and make recommendations in accordance with their Terms of Reference.
The membership of the Board Committees currently consists solely of Non-executive Directors. Each Committee is chaired by an Independent Non-execu t i ve D i rec to r. Attendance schedules for Committee meetings held in the financial year 2017/2018 are included in the meeting attendance summary above.The Committee Chairpersons will attend annual general meetings of shareholders to answer any questions.
The Board has established the following Committees: Audit and Risk Committee, Investment Committee, Remuneration and Nomination Committee, and Social and Ethics Committee.
* Retired as a Non-Executive Chairman on 30 April 2018. | ** Appointed Interim Chair after 30 April 2018.
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CORPORATE GOVERNANCE REPORT
THE AUDIT AND RISK COMMITTEE
Members:Mr MS Tsie – ChairpersonMr T MotlogeloaDr SS Sibiya
The Audit and Risk Committee is constituted as a statutory committee of the Board in terms of Section 94 of the Companies Act and its composition complies with the provisions of that section.
The Audit and Risk Committee comprises four Independent Non-executive Directors, each of whom has extensive relevant experience. In accordance with the guidelines in King IV, the Audit and Risk Committee Chairperson is an Independent Non-executive Director and the Executive Officers attends Audit and Risk Committee meetings at the Committee's request. Following the retirement of Mr MM Tshishonga, Mrs TN Sindane was nominated an acting chairperson of the board and the committee was left with three Independent Non-Executive Directors.
The Audit and Risk Committee Terms of Reference were adopted by the Board on 19 January 2018. No amendments were made.
Based on the Terms of Reference, acomprehensive agenda framework workplan will be prepared to ensure that all tasks assigned to the Audit and Risk Committee are considered at least once a year.
The primary objective of the Audit and Risk Committee is to assist the Board in discharging its duties relating to the operation of adequate systems, internal controls and control processes; and the preparation of accurate financial reports and statements in compliance with all applicable legal requirements, corporate governance and accounting standards, as well as enhancing the reliability, integrity, objectivity and fair presentation of the affairs of SEI1. It also oversees financial and other risks in conjunction
with the Social and Ethics Committee. In fulfilling its oversight responsibilities, the Audit and Risk Committee reviews and discusses the audited financial statements with management and the external auditors of SEI1.
The Audit and Risk Committee has oversight of SEI1's financial reporting process on behalf of the Board . Management has p r imary responsibility for the financial statements and for maintaining effective internal control over financial reporting and for assessing the effectiveness of internal control of such reporting.
The Audit and Risk Committee, after due considerat ion, is of the v iew that the independent registered audit firm, which is responsible for expressing an opinion on the conformity of the audited financial statements wi th Internat ional Financial Report ing Standards (IFRS) and the requirements of the Companies Act, is independent of SEI1 and its management.
Upon the recommendation of the Audit and Risk Committee at the Annual General Meeting, shareholders were requested to appoint Mkiva Incorporated as external auditors of SEI1. Mr Unathi Mkiva is the audit partner. He is an experienced assurance partner with significant experience in auditing.
The Audit and Risk Committee meets with the external auditors on a regular basis to discuss the results of their examinations, their evaluation of SEI1's internal controls and the overall quality of SEI1's financial reporting. The Committee also discusses the overall scope and plans for the respective audits of SEI1's internal and external auditors. The external auditors are invited to attend Audit and Risk Committee meetings.
The Audit and Risk Committee acts as a forum for communication between the Board, management and the external auditors.
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 16
CORPORATE GOVERNANCE REPORT
INVESTMENT COMMITTEE
Members:Mr T Motlogeloa – Chairperson Dr SS SibiyaMr MS Tsie
The Investment Committee comprises three Independent Non-executive Directors. The role of the Committee is to assist the Board to:Ÿ review SEI1's investment policy annually;Ÿ consider all transactions for the acquisition
or disposal of assets in accordance with SEI1's investment policy;
Ÿ assess al l investment opportunit ies presented to SEI1 by its management company and other advisors; and
Ÿ review the performance of individual assets within the Companies portfolio of assets and make recommendations in respect of such assets.
Ÿ The Committee in carrying out its duties under these terms of reference
Ÿ The Committee does not assume the functions of management, which remain the responsibility of the executive directors, officers and other members of senior management.
The Terms of Reference of the Investment Committee were adopted on 23 March 2018. No changes were made during the year.
REMUNERATION AND NOMINATION COMMITTEE
Members:Dr SS Sibiya – Chairperson Mr MS TsieMr T Motlogeloa
The Board of SEI1 acknowledged the need for a Remuneration and Nomination Committee as recommended in the King IV Report on Corporate Governance.
The role of the Committee is to assist the Board by:Ÿ making recommendations regarding the
appointment of new executive, non-executive and independent non-executive directors, for its consideration and final approval;
Ÿ nominating successors to key positions in SEI1 as part of ensuring that a formal management succession plan is in place;
Ÿ ensuring that the Board has the appropriate composition for it to execute its duties effectively and to comply with the Code, the Companies Act, the Listings Requirements and other applicable legislation;
Ÿ ensuring that directors are appointed through a formal and transparent process;
Ÿ determining whether the services of any director should be terminated;
Ÿ ensuring that induction and ongoing training and development of directors take place; and
Ÿ carrying out such other functions as the Board may request from time to time.
The Remuneration and Nomination Committee terms of reference were adopted by the Board on 19 January 2018.
In terms of the Terms of Reference of the Nomination Committee at least one meeting must be held per year.
THE SOCIAL AND ETHICS COMMITTEE
Members:Mrs TN Sindane – Chairperson Dr SS Sibiya
The purpose of the Social and Ethics Committee is to monitor SEI1's sustainability philosophy which is underpinned by the realisation that there is a need to turn wealth into sustainable economic growth and development. Through its business endeavours, SEI1 seeks to make a lasting and important social, economic and environmental contribution to the regions in which SEI1 operates.The Social and Ethics Committee's Terms of Reference were adopted by the committee on 9 December 2017 in compliance with King IV.
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 17
CORPORATE GOVERNANCE REPORT
The Social and Ethics Committee performs all the functions as are necessary to fulfil its role as stated above and including the following:Ÿ Drawing matters within its scope to the
attention of the Board as occasion requires;Ÿ Reporting, through one of its members, to the
shareholders of SEI1 at SEI1's annual general meeting on the matters within its scope;
Ÿ Monitoring the activities of SEI1, having regard to any relevant legislation, other legal requirements or prevailing codes of best practice, with regard to matters relating to social and economic development, including SEI1's standing in terms of the goals and purposes of:(i) support and respect the protection of internationally proclaimed human rights;(ii) ensure that SEI1 is not complicit in human rights abuses;(iii) uphold the freedom of association and the effective recognition of the rights to collective bargaining;(iv) the elimination of all forms of forced and compulsory labour;(v) the effective abolition of child labour;(vi) the elimination of discrimination in respect of employment and occupation;(vii) support a precautionary approach to environmental challenges;(viii) undertake initiatives to promote environmental responsibility;(ix) encourage the development anddiffusion of environmentally friendlytechnologies; and(x) work against corruption in all its forms, including extortion and bribery;
Ÿ The Organisation of Economic Co-operation and Development (OECD)recommendations regarding corruption;
Ÿ Good corporate citizenship, including SEI1's:
Ÿ Promotion of equality, prevention of unfair discrimination, and reduction of corruption;
Ÿ Contr ibut ion to development of the communities in which its activities are predominantly conducted or within which its
products or services are predominantly marketed; and
Ÿ Record of sponsorship, donations and charitable giving; and
Ÿ The environment, health and public safety, including the impact of SEI1's activities and of its products or services;
The Social and Ethics Committee's Terms of Reference provide that the Committee must have a minimum of three members, the majority of whom must be Independent Non-executive Directors. Currently, the Social and Ethics Committee comprises two Non-executive Directors, all of whom are independent. 1 Executive director attends the committee meetings on invitation.
AD HOC BOARD COMMITTEESThe Board has the right to appoint and authorise special ad hoc Board Committees, comprising the appropriate Board members, to perform specific tasks as required.
EXECUTIVE COMMITTEESEI1 has the Executive Committee and is chaired by the Managing Director (Mr Zuko Ncemane). Standard items on the agenda include investment projects reports. The Executive Committee comprises of senior management.
INVESTOR RELATIONS ANDCOMMUNICATION WITH STAKEHOLDERSSEI1 is committed to transparent,comprehensive and objective communication with its stakeholders. SEI1 maintains a website, which provides information regarding its operations, financial performance and other information. Shareholders are encouraged to attend the Annual General Meeting and to use it as an opportunity to engage with the Board and senior management. Summaries of the results of decisions taken at shareholders' meetings are disclosed on SEI1's website following the meetings.The development of a stakeholder engagement plan is in progress
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 18
AUDIT & RISK COMMITTEE REPORT
1. Audit and Risk Committee ("the Committee) Report
The Committee is constituted as a statutory committee in respect of its statutory duties in terms of section 94(7) of the Companies Act, 2008 and a sub-committee of the board of directors (“board�) in respect of all other duties
assigned to it by the board. The committee assists the board in carrying out its functions relating to the safeguarding of assets, the operation of adequate risk management and control processes and the preparation of
financial statements in compliance with all applicable legislation and regulations, and the oversight of the audit appointments and function.
Committee members and meetings held
During the period under review, the committee consisted of four independent non-executive directors who are all suitably skilled and experienced. The table below shows members of the committee and committee meetings held during the period under review.
3. Annual Financial Statements
The committee has evaluated the financial statements of the company for the year ended 30 June 2018 and, to the best of its knowledge and belief, considers that the company complies, in all material respects, with the requirements of the Companies Act and International Financial Reporting Standards. The Committee accordingly recommended the financial statements to the board for approval.
4. Accounting practices and internal control
The committee:Ÿ Reviewed the effectiveness of the
2. External auditors
During the period under review, the committee re-appointed MKIVA Incorporated as external auditors of the Company. The committee has satisfied itself through enquiry that the external auditors are independent as defined by the Companies Act 71 of 2008 and as per the standards stipulated by the auditing profession. The committee agreed to the terms of engagement. The audit fee paid to the external auditors has been considered and approved taking into consideration factors such as timing of the audit, the extent of the work required and the scope. The committee is satisfied that MKIVA Incorporated is independent of the Company.
Selective Empowerment Investments 1 Limited Annual Report 2017/18
Member Name Role Attendance
9-Dec-17 18-Jan-18 6-Mar-18 M Maja* Member By invitation By invitation By invitation
S Tsie**
Chairperson
Yes
Yes
Yes
M Motlogeloa**
Member
Yes
Yes
Yes N Sindane** Member Yes Yes Apology received
S Sibiya**
Member
Yes
Yes
Yes
*Effective 1 July 2017, M Maja has been included in the committee meetings by invitation to ensure smooth transition.
** S Tsie, T Motlogeloa, N Sindane and S Sibiya were co-opted as independent non-executive directors of the company effective 17 August 2017 and appointed as members of the committee on 6 October 2017. These members have since had their appointments as independent non-executive directors and committee members ratified by shareholders during the Shareholders' Annual General Meeting held on 30 April 2018.
The Acting Chief Executive Officer, Marketing Director, Accountant and representatives of the external auditors attend the meeting by invitation.
Annual Report 2017/18Selective Empowerment Investments 1 Limited 19
AUDIT & RISK COMMITTEE REPORT
Ÿ company's system of internal financial controls, including receiving assurance from the management company and the external auditors.
Ÿ Reviewed policies and procedures for detecting and preventing fraud.
Ÿ Considered regulatory and accounting standard compliance by the company.
To the best of its knowledge and based on the information and explanations provided by the management company, as well as discussions with the independent external auditors on the results of their audit, the audit committee is satisfied that there was no material breakdown
in internal accounting controls during the financial year under review.
On behalf of the Audit & Risk Committee;
S TsieChairman Audit & Risk Committee Centurion30 October 2018
Selective Empowerment Investments 1 Limited Annual Report 2017/18
Annual Report 2017/18Selective Empowerment Investments 1 Limited 20
SOCIAL AND ETHICS COMMITTEE REPORT
issues impacting the company, some of which are dealt with below.The Commit tee is conscious that our stakeholders especially the shareholders, regulatory authorities and employees have had issues which needed to be addressed as a matter of urgency. The Committee mainly focused on improving human relations to prepare ground for better engagements with ourstakeholders in future.
On regulatory compliance some of the issues raised by the CIPC were as follows:Ÿ F ina l i s ing financ ia l s ta tements fo r
2015/2016 financial year,Ÿ holding Annual General Meetings,Ÿ ensuring that the company had a tradability
system in place to enable shareholders to sell their shares amongst themselves should they wish to so.
The Shareholder concerns included the fact that:Ÿ they are not receiving dividends,Ÿ they are not able to sell their shares,Ÿ the Company is not communicating
adequately with them.
The auditors had raised the fo l lowing governance issues:Ÿ the absence of the statutory committees,Ÿ failure to hold committee meetings,Ÿ failure to sign the minutes for statutory
committees.
The employee issues included:Ÿ stability at the leadership level,Ÿ appointment of the Managing DirectorŸ employee salaries and other conditions of
service.
I am happy to indicate that most of these issues have been addressed while others are work in progress and therefore our future reports will focus on progress with the implementation of the strategies towards a sustainable company.
1. Social and Ethics Committee Report
We are pleased to present the inaugural report of the Social and Ethics Committee (the Committee) which is a committee established in terms of Regulation 43 promulgated in terms of Section 72 of the Companies Act. The Committee was established by the Board to fulfil the requirements of legislation as well as drive the company towards socially responsible performance. The company is expected to and has identified key stakeholders for which specific strategies are being developed and implemented to meet the needs of our stakeholders. These strategies are reported more specifically under the Directors report.
2. Members of the Committee
The Board is very small therefore each committee has a minimum number of directors. Consequently, the Board appointed Dr Sihle Sibiya as a member and Ms Nonkululeko Sindane to chair the Committee. Other directors are encouraged to attend the meetings of the Committee from time to time as will appear from the minutes.
3. Governance of the Committee
The Committee's Terms of Reference were approved by the Board. The Committee approved its work plan which is not limited to the first year of establishment. The Committee had 2 (two) meetings during the year under review. In addition, the Chairperson, as mandated by the Board, had working sessions with the two Executive Directors to calm the tensions between them. The Executive Directors were the Acting CEO (MM Tshishonga) and the Marketing Director (M Maja), who were both members of the Board and the only two directors who had been in the Company prior to the current Board. These tensions affected the governance of the Company, and it became necessary to calm them down in order for the Board and its Committees to focus on urgent
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 21
SOCIAL AND ETHICS COMMITTEE REPORT
4. Code of Good Conduct
The Board, employees and stakeholders are expected to conduct themselves ethically and guard against fraud and corruption as defined in the legislation as well as ensuring that the rights of everyone are observed and respected. The Company has a Code of Conduct in place. Management will populate the Code of Conduct in the Company so that everyone understands and abides by it.
The Committee's first responsibility was to address the tensions between the two Executive Directors. The tensions arose from issues that had gone on for years without resolution. These tensions negatively impacted on the members of staff.
The two Executive Directors made allegations and counter allegation of fraud, corruption against each other and for acting contrary to the values of the Company. The Committee resolved that the affected directors provide the new Board space to attend to the most pressing compliance issues as set out above.
5. Legal and governance compliance
The Company has dealt with legal compliance issues whether it is holding AGM, appointing Board Committees as reported above and under the Chairperson's report.
6. Social and Economic Development
The Company was established by investors with the purpose of giving investors opportunities to invest in listed assets. Individually these investors felt that they would not have had the exposure to invest in listed companies. While the Company has not paid dividends to the shareholders, it is anticipated that after addressing the legacy issues, the Company will start performing in line with the recently approved strategy which will enable the Board to put realistic targets on when it expects to pay dividends to the shareholders. This is important
because the investors must realise the economic impact of being investors and shareholders. The Company is a Broad-Based Economic Empowerment Scheme with the majority of its investors being black South African people.
The Board continues to challenge committees to look for opportunities of a developmental nature for our shareholders. The investment modelscurrently under consideration, take into account the developmental aspect of the shareholders. More work is being done in this regard.
7. Investigations of Fraud and Corruption
The Committee recommended to the Board and the board resolved that given that most of the urgent compl iance issues have been addressed, the investigations of the allegations and counter-allegations of fraud and corruption between the two Executive Directors be referred to the Remunerations and Nominations Committee for investigation. The details of this work will be reported to the Board at appropriate intervals.
8. Employment Equity
The Company has put in place strategies to ensure that it is gender and disability sensitive. Some progress is being noted with the recent appointment of female employees, however more focus will be put on employment equity in the company
9. Environment, Health and Safety
Work still needs to be done in this area and the Committee will be monitoring whether policies are put in place to address these areas of work.
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 22
SOCIAL AND ETHICS COMMITTEE REPORT
10. Stakeholders Relationships
The stakeholder's engagement strategy is being developed, and Board has resolved that m a n a g e m e n t s h o u l d e n s u r e t h a t communication to our shareholders must be done at least in two languages to ensure that our investors understand the reports being presented to them. Management continues to engage with the shareholders and a specific plan will be put in place for structured stakeholders' engagements. The Board and management have been engaging with the Compan ies and In te l lec tua l Proper ty Commission to ensure that the Company is compliant with the regulatory requirements. This is work in progress and is being monitored closely.
11. Labour Relations
The Company handles employee issues on an ongoing basis. With the appointment of the Managing Director, the Company has started developing policies to address employee career incidences including employee development in the company.
12. Reporting
The Committee has been providing reports to the Board on progress on the issues being handled. Equally, the Committee has informed the shareholders on the above issues the Annual General Meeting for 2016/2017 financial year end in 30 April 2018.
Company Secretary's Certification
Declaration by the Group secretary in respect of Section 88(2)(e) of the Companies Act
In terms of Section 88(2)(e) of the Companies Act 71 of 2008, as amended, I certify that the group has lodged with the Commissioner all such returns as are required of a public company in terms of the Companies Act and that all such returns are true, correct and up to date.
Imbokodvo Bethany Governance & Statutory Compliance Company SecretaryPretoria30 October 2018
Selective Empowerment Investments 1 Limited Annual Report 2017/18Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 23
Report to the shareholders of Selective Empowerment Investments 1
Opinion
We have audited the financial statements of Selective Empowerment Investments 1 Limited (the Company), which comprise the statement of financial position as at June 30, 2018, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and the requirements of the Companies Act, No.71 of 2008 of South Africa.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are f u r t h e r d e s c r i b e d i n t h e A u d i t o r ' s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in South Africa, and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.In accordance with our responsibilities in terms of sections 44(2) and 44(3) of the Auditing Profession Act, responsibilities beyond those required under the International Standards on Auditing, we have not identified the matters to report as a reportable irregularity in terms of the Auditing Profession Act.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the company financial statements of the current period. These matters were addressed in the context of our audit of the company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
1. Bank Balances
The rights and existence of the balance of R131 000 could not be verified, this amount relates to a deposit made into a lawyers trust account.
Other Information
The directors are responsible for the other information. The other information comprises information included in the Annual Report which includes the Directors Report, the Audit Commi t tee Repor t and the Company Secretary's Certificate as required by the Companies Act of South Africa. The other information does not include the company financial statements and our auditor's report thereon.
299 Pendoring Road 1 Pendoring Office
Park
Blackheath
Telephone:+27(0)114776843Facsimile:+27(0)862625283
Email: [email protected]: www.mkiva.co.za
MKIVA Incorporated Registration number: 2014/110005/21
Practise number: 933244
The company’s registered address is 23 Koelenhof Road, Northcliff, Johannesburg where a list of directors’ names is available for inspection. MKIVA
African company.
Incorporated is a South
INDEPENDENT AUDITOR'S REPORT
Our opinion on the company financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the company financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the company financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the company financial statements
The directors are responsible for the preparation and fair presentation of the company financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as thedirectors determine is necessary to enable the preparation of company financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the company financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the company financial statements
Our objectives are to obtain reasonable assurance about whether the company financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these company financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:Ÿ Identify and assess the risks of material
misstatement of the company financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, f o r g e r y , i n t e n t i o n a l o m i s s i o n s , misrepresentations, or the override of internal control.
Ÿ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control.
Ÿ Evaluate the appropriateness of accounting policies used and the reasonableness of accoun t i ng es t ima tes and re la ted
299 Pendoring Road 1 Pendoring Office
Park
Blackheath
Telephone:+27(0)114776843Facsimile:+27(0)862625283
Email: [email protected]: www.mkiva.co.za
MKIVA Incorporated Registration number: 2014/110005/21
Practise number: 933244
The company’s registered address is 23 Koelenhof Road, Northcliff, Johannesburg where a list of directors’ names is available for inspection. MKIVA
African company.
Incorporated is a South
disclosures made by the directors.Ÿ Conclude on the appropriateness of the
directors' use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the company financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the group to cease to continue as a going concern.
Ÿ Evaluate the overall presentation, structure and content of the company financial statements, including the disclosures, and whether the company financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the company financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other reports required by the Companies Act
As part of our audit of the annual financial statements for the year ended June 30, 2018, we have read the Directors' Report for the purpose of identifying whether there are material inconsistencies between this report and the audited annual financial statements. The Directors' Report is the responsibility of the directors. Based on reading the Directors' Report we have not identified material inconsistencies between this report and the audited annual financial statements. However, we have not audited the Directors' Report and accordingly do not express an opinion thereon.
Report on Other Legal and Regulatory Requirements
In accordance with our responsibilities in terms of sections 44(2) and 44(3) of the Auditing Profession Act, we report that we have not identified unlawful acts or omissions committed by persons responsible for the management of the Company which constitute reportable irregularities in terms of the Auditing Profession Act, and have not reported any matter to the Independent Regulatory Board for Auditors.
Non-compliance with the Companies Act of South Africa
As required by the Companies Act, 2008 of South Africa, we have nothing to report on material instances of non-compliance with the requirements of the Companies Act of South Africa as amended as nothing has come to our attention during the course of our audit
Audit tenure
In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that MKIVA
299 Pendoring Road 1 Pendoring Office
Park
Blackheath
Telephone:+27(0)114776843Facsimile:+27(0)862625283
Email: [email protected]: www.mkiva.co.za
MKIVA Incorporated Registration number: 2014/110005/21
Practise number: 933244
The company’s registered address is 23 Koelenhof Road, Northcliff, Johannesburg where a list of directors’ names is available for inspection. MKIVA
African company.
Incorporated is a South
Incorporated has been the auditor of Selective Empowerment Investments 1 Ltd for 1 years.The engagement partner on the audit resulting in this independent auditors report is Unathi Mkiva.
MKIVA Incorporated Registered Auditors Chartered Accountants (SA) Per: Unathi Mkiva
30 October 2018
299 Pendoring Road 1 Pendoring Office
Park
Blackheath
Telephone:+27(0)114776843Facsimile:+27(0)862625283
Email: [email protected]: www.mkiva.co.za
MKIVA Incorporated Registration number: 2014/110005/21
Practise number: 933244
The company’s registered address is 23 Koelenhof Road, Northcliff, Johannesburg where a list of directors’ names is available for inspection. MKIVA
African company.
Incorporated is a South
STATEMENT OF FINANCIAL POSITION
Figures in R
Note(s)
2018 2017
Assets
Non-Current Assets
Property, plant and equipment
6
403 352 441 068
Interest in unconsolidated structured entities
7
100 100
Investments
8
152 475 205 144 967 119
Deferred taxation assets
14
326 455 -
153 205 112 145 408 287
Current Assets
Current taxation asset
16
1 010 844 1 248 437
Loan to group company
9
- -
Trade and other receivables
10
202 564 250 913
Cash and cash equivalents
11
1 893 503 7 427 132
3 106 911 8 926 482
Total Assets
156 312 023 154 334 769
Equity and
Liabilities Equity
Stated capital
12
112 123 493 112 123 493
Fair value adjustment assets-available-for-sale reserve
13 28 606 363 25 281 071
Retained earnings
4 326 741 9 737 182
145 056 597 147 141 746
Non-Current Liabilities
Deferred taxation
14
8 341 388 5 795 082
Current Liabilities
Trade and other payables 15 1 378 337 152 290
Other financial liabilities 17 1 535 701 1 245 651
2 914 038 1 397 941
Total Equity and Liabilities 156 312 023 154 334 769
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 28
STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME Figures in R
Note(s)
2018 2017
Revenue
18
4 820 279 6 047 812
Other income
19
1 493 623 13 336 276
Operating costs
(11 977 669) (8 993 527)
Operating (loss)/profit
21
(5 663 767) 10 390 561
Finance costs
22
(73 129) (59 317)
(Loss)/profit before taxation
(5 736 896) 10 331 244
Taxation expense
23
326 455 (2 409 758)(Loss)/profit for the year
(5 410 441) 7 921 486
Gross amount of Available-for-sale financial assets adjustments
5 871 598 (12 657 544)
Tax amount of Available-for-sale financial assets
adjustments
(2 546 306) 2 360 378
Total other comprehensive income
3 325 292 (10 297 166)
Total comprehensive loss for the year
__(2 085 149) (2 375 680)
Earnings per share
Basic (cents)
(3.90) 5.33
Selective Empowerment Investments 1 Limited Annual Report 2017/18Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 29
STATEMENT
OF CHANGES IN EQUITY
Fair value
adjustment
assets-
available-for-
Retained
Figures in R
Share capital
sale reserve
earnings
Total
Balance at 1 July 2016
112 123 493
35 578 237
1 815 696 149 517 426
income for
the year
Profit for the year
-
-
7 921 486 7 921 486
Total other comprehensive income
-
(10 297 166)
-
(10 297 166)Total comprehensive income for
the year
-
(10 297 166)
7 921 486 (2 375 680)
Balance at 30 June 2017
112 123 493
25 281 071
9 737 182 147 141 746
Balance at 1 July 2017
112 123 493
25 281 071
9 737 182 147 141 746
Total comprehensive income for
the year
Loss for the year
-
-
(5 410 441) (5 410 441)
Total other
comprehensive income
-
3 325 292
-
3 325 292Total comprehensive income for
the year
-
3 325 292
(5 410 441) (2 085 149)
Balance at 30 June 2018
112 123 493
28 606
363
4 326
741 145 056 597
Notes
12
13
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 30
STATEMENT OF CASH FLOWS
Figures in R
Note(s)
2018
2017
Cash flows from operating activities
(Loss)/profit for the year
(5 410 441) 7 921 486
Adjustments for:
Finance costs
73 129 59 317
Income tax
(326 455) 2 409 758
Depreciation of Property, plant and equipment
199 786 175 577
Profit on disposal of investments
(1 181 422) (12 747 095)Operating cash flow before working capital
changes
(6 645 403) (2 180 957)
Working capital changes
Decrease/(increase) in trade and other receivables
48 348 (28 694)
Decrease short-term loans
1 -
Increase/(decrease) in trade and other payables
1 516 097 (184 940)
Decrease in operating lease liabilities
- (1 004)
Cash utilised in operating activities
(5 080 957) (2 395 595)
Finance costs
(73 129) (59 317)
Income tax paid
237 593 (4 995 711)Net cash from operating activities
(4 916 493) (7 450 623)
Cash flows from investing activities
Property, plant and equipment acquired
6
(188 134) (51 684)Investment acquired
8
(30 017 215) (4 113 787)
Proceeds on disposals of property, plant and
equipment6
26 064 1
Proceeds on disposals of investments 29 562 149 7 337 568
Proceeds from settlements of loan to subsidiary - 6 186 245
Net cash (utilised in) / generated by investing (617 136) 9 358 343activities
(Decrease)/increase in cash and cash equivalents (5 533 629) 1 907 720
Cash and cash equivalents at beginning of the year
7 427 132 5 519 412
Cash and cash equivalents at end of the year 11 1 893 503 7 427 132
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 31
1. General information
The annual financial statements have been prepared in accordance with all applicable International Financial Reporting Standards (IFRS), which includes all applicable IFRSs, International Accounting Standards (IASs) and I n t e r p r e t a t i o n s i s s u e d b y t h e I F R S I n t e r p r e t a t i o n s C o m m i t t e e a n d t h e requirements of the Companies Act of South Africa. A summary of significant accounting policies is set out in note 3.
2. Basis of preparation
The annual financial statements of the company have been prepared in accordance with all applicable International Financial Reporting Standards (IFRSs) and the requirements of the Companies Act of South Africa. The annual financial statements have been prepared under the historical cost convention, as modified by the revaluation of land and buildings, available-for-sale financial assets, and financial assets and financial l iabil i t ies (including derivative instruments) at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the annual financial statements are disclosed in note 4.
3. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these annual financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
3.1 Business combinations
Subsidiaries are all entities (including structured entities) over which the company has control. The company controls an entity when the company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully from the date on which control is transferred to the company. They are de from the date that control ceases.
The company applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
3.1.1 Acquisition-related costs are expensed as incurred
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.
Any contingent consideration to be transferred by the company is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss
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Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 32
or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
3.1.2 Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non- controlling interests are also recorded in equity.
3.1.3 Disposal of subsidiaries
When the company ceases to have control any retained interest in the entity is re- measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the company had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
3.2 Property, Plant and Equipment
Land and buildings comprise owner occupied property. Land and buildings are shown at fair value, based on valuations by external independent valuers, less subsequent depreciation for buildings. Valuations are
performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only 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. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within 'Other income' in the statement of comprehensive income. When revalued assets are sold, the amounts included in other reserves are transferred to retained earnings.
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Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 33
The assets' residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end.
Depreciation is provided on the straight-line basis which, it is estimated, will reduce the carrying amount of the property, plant and equipment to their residual values at the end of their useful lives. Items of property, plant and equipment are depreciated from the date that they are installed and available for use. Land is not depreciated as it is deemed to have an indefinite life. Where an item of property, plant and equipment comprises major components with different useful lives, the components are accounted for as separate items of property, plant and equipment.
The major categories of property, plant and equipment are depreciated at the following rates:
Motor vehicles 25% per annumOffice furniture 7,5% to 20% per annumComputer equipment 33,3% per annumLeasehold property 20% per annumFurniture and fittings 10% to 33,3% per annum
3.3 Leases
A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. Determining whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an assessment of whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
Leases of assets are classified as finance leases when the leases transfer substantially all
risks and rewards incidental to ownership of the assets to the company. All other leases are classified as operating leases.
3.3.1 Operating leases as lessee
Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term. The payments made on acquiring land held under an operating lease are recognised in the statement of financial position as lease premium for land.
Contingent rents are charged as an expense in the periods in which they are incurred.
3.4 Investments
Investments are recognised and derecognised on the trade date when the company commits itself to purchase or sell an asset and are initially measured at fair value plus, in the case of investments other than trading securities, transaction costs. At each statement of financial position date, the company assesses whether there is any objective evidence that an investment or company of investments is impaired. Investments are further categorised into the following classifications for the measurement after initial recognition.
3.4.1 Available-for-sale financial assets
Investments other than those held for trading and held to maturity are classified as available-for-sale financial assets and are stated in the statement of financial position at fair value. Gain or loss on the fair value changes of available-for-sale financial assets is recognised directly in equity in the fair value reserves, except for impairment losses and, in the case of monetary items such as debt securities, foreign exchange gains and losses which are recognised directly in profit or loss.
ACCOUNTING POLICIES
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 34
When the available-for-sale financial assets are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in profit or loss. Where the available-for-sale financial assets are interest-bearing, interest calculated using the effective interest rate method is recognised in profit or loss.
When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is removed from equity and recognised in profit or loss even though the financial asset has not been derecognised.
The amount of the cumulative loss that is removed from equity and recognised in profit or loss is the difference between the acquisition cost (net of any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale are not reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, with the amount of the reversal recognised in profit or loss.
3.4.2 Fair value
Fair value of an investment on initial recognition is normally the transaction price, unless it is estimated by using a valuation technique when part of the consideration given or received is for something other than the investments.
After initial recognition, the fair value of an investment quoted in an active market is based on the current bid price and, for investments not quoted in an active market; the company establishes the fair value of such investment by using a valuation technique.
Valuation techniques include using recent arm's l eng th marke t t r ansac t i ons be tween knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models.
3.5 Derivative financial instruments
Derivative financial instruments are initially recognised at fair value and the fair value is re-measured at each statement of financial position date. Gain or loss on the fair value changes are recognised in surplus or loss.
3.6 Financial assets
3.6.1 Classification
The company classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
3.6.2 Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term.
Derivatives are also categorised as held for
ACCOUNTING POLICIES
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 35
trading unless they are designated as hedges.
Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.
3.6.3 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The company's loans and receivables comprise 'trade and other receivables' and 'cash and cash equivalents' in the statement of financial position.
3.6.4 Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.3.6.5 Recognition and measurement
Regular purchases and sales of financial assets are recognised on the trade-date – the date on which the company commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.
Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the investments have
expired or have been transferred and the company has transferred substantially all risks and rewards of ownership. Available- for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest rate method.
Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category is presented in the statement of comprehensive income within 'Other (losses)/gains – net' in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of other income when the company's right to receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognised in other comprehensive income.
When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the statement of comprehensive income as 'Gains and losses from investment securities'.
Interest on available-for-sale securities calculated using the effective interest rate method is recognised in the statement of comprehensive income as part of other income. Dividends on avai lable-for-sale equity instruments are recognised in the statement of comprehensive income as part of other income when the company's right to receive payments is established.
3.6.6 Offsetting financial instruments
Financial assets and liabilities are offset, and the
ACCOUNTING POLICIES
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net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
3.6.7 Impairment of financial assets
a. Assets carried at amortised cost
The company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired.
A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
For loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the
statement of comprehensive income. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the company may measure impairment on the basis of an instrument's fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases, and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the statement of comprehensive income.
b. Assets classified as available for sale
The company assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the company uses the criteria referred to in (a) above. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for avai lable-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss. Impairment losses recognised in the statement of comprehensive income on equity instruments are not reversed through the statement of comprehensive income.
If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the
ACCOUNTING POLICIES
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impairment loss was recognised in profit or loss, the impairment loss is reversed through the statement of comprehensive income.
3.6.8 Trade and other receivables
Trade and other receivables are initially measured at fair value and, after initial recognition, at amortised cost less impairment losses for bad and doubtful debts, if any, except for the following receivables:
Ÿ Interest-free loans made to related parties without any fixed repayment terms or the effect of discounting being immaterial, that are measured at cost less impairment losses for bad and doubtful debt, if any; and
Ÿ Short-term receivables with no stated interest rate and the effect of discounting being immaterial, that are measured at their original invoice amount less impairment losses for bad and doubtful debt, if any.
At each reporting date, the company assesses whether there is any objective evidence that a receivable or company of receivables is impaired. Impairment losses on trade and other receivables are recognised in profit or loss when there is objective evidence that an impairment loss has been incurred and are measured as the difference between the receivable's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at its original effective interest rate, i.e. the effective interest rate computed at initial recognition. The impairment loss is reversed if, in a subsequent period, the amount of the impairment loss decreases, and the decrease can be related objectively to an event occurring after the impairment was recognised.
3.6.9 Cash and cash equivalents
Cash comprises cash on hand and at bank and
demand deposits with bank. Cash equivalents are short- term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purpose of statement of cash flows, bank overdrafts which are repayable on demand form an integral part of the company's cash management are included as a component of cash and cash equivalents.
3.6.10 Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or are not classified in any of the above categories of financial assets. Avai lable-for-sale financial assets are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt ins t ruments , a re recogn ised in o ther comprehensive income and presented in the fair value reserve in reserves. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.
Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss. Changes in the cumulative impairment losses attributable to the application of the effective interest rate method are reflected as a component of interest income. If, in a subsequent period, the fair value
ACCOUNTING POLICIES
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of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of the impaired available-for-sale equity security is recognised in other comprehensive income.
3.6.11 Impairment of financial assets
A financial asset not classified as at fair value through profit or loss is assessed at each reporting date to determine whether there us objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the company on terms that the company would consider otherwise, indications that a debtor or issuer will enter into bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for security.
The company considers evidence of impairment for financial assets measured at amortised cost (loans and receivables and held-to-maturity investment securities) at both a specific asset and collective level. All individually significant assets are assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment by companying together assets with similar risk characteristics.
In assessing collective impairment, the company uses historical trends if the probability
of default, the timing of recoveries and the amount of loss incurred, adjusted for management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.
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 cash flows discounted at the assets original effective interest rate. Deficits are recognised in profit or loss and reflected in an allowance account against loans and receivables or held-to-maturity investment securities. Interest on the impaired asset continues to be recognised. when an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
3.7 Financial liabilities
3.7.1 Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.
3.7.2 Share capital
a. Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.
ACCOUNTING POLICIES
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3.8 Post-employment benefits and short-term employee benefits
3.8.1 Short-term employee benefits
The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service on an undiscounted basis.
Accruals for employee entitlement to annual leave represents the present obligation, which the company has to pay as a result of employees' services, provided to the reporting date. The accruals have been calculated at undiscounted amounts based on current salary rates.
A liability is recognised for the amount expected to be paid under short term bonuses in the company as the company has a present legal constructive obligation to pay the amount as a result of past service provided by the employee, and the obligation can be estimated reliably.
3.9 Income tax
Income tax for the year includes current tax and deferred tax. Current tax and deferred tax are recognised in profit or loss, except to the extent that the tax arises from a transaction or event which is recognised directly in equity. In the case if the tax relates to items that are recognised directly to equity, current tax and deferred tax are also recognised directly to equity.
Current tax liabilities and assets are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the statement of financial position date. Current tax is the amount of income taxes payable or recoverable in respect of the taxable profit or loss for a period.
Deferred tax assets and liabilities arise from deductible and taxable temporary differences
respectively. Temporary differences are the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.
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 is not a business combination; and 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, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
At each statement of financial position date, the company reviews and assesses the recognised and unrecognised deferred tax assets and the future taxable profit to determine whether any recognised deferred tax assets should be derecognised and any unrecognised deferred tax assets should be recognised.
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 is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the statement of financial position date. Deferred tax assets and liabilities are not discounted.
3.10 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably
ACCOUNTING POLICIES
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measured. Revenue is measured at fair value of the consideration received or receivable and represents amounts receivable or received for services provided and goods delivered, net of discounts and Value Added Tax (VAT) and where there is reasonable expectation that the income will be received, and all attaching conditions will be complied with.
3.11 Dividends
Dividend income is recognised when the shareholder's right to receive payment is established.
3.12 Interest income
Interest income is recognised using the effective interest rate method. When a loan and receivable is impaired, the company reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument and continues unwinding the discount as interest income. Interest income on impaired loan and receivables is recognised using the original effective interest rate.
3.13 Related parties
For the purposes of these financial statements, a party is considered to be related to the company if:
4. Critical accounting judgements and key sources of estimation uncertainty
T h e c o m p a n y ' s m a n a g e m e n t m a k e s assumptions, estimates and judgements in the process of applying the company's accounting policies that affect the assets, liabilities, income and expenses in the annual financial statements prepared in accordance with IFRSs. The assumptions, estimates and judgements are based on historical experience and other factors that are believed to be reasonable under the circumstances. While the management reviews their judgements, estimates and assumptions
continuously, the actual results will seldom equal to the estimates.
The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision policy affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
4.1 Key assumption and other key sources of estimation uncertainty
Certain key assumptions and risk factors in respect of the financial risk management are set out in note 29. Other key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out as follows:
5. Changes in accounting policies and disclosures
5 . 1 A d o p t i o n o f n e w a n d r e v i s e d pronouncements
There were no changes in accounting policies and disclosures, and no adoption of new and revised pronouncements adopted in the current year nor selected for adoption in the future.
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63)
104 1
93
267 9
86
(158 4
92)
109 4
94
Com
pute
r so
ftw
are
21 0
93
(352)
20 7
41
--
-
1 1
25 0
39
(721 6
87)
403 3
52
93
69
04
(49
58
36
)4
41
06
8
The c
arr
ying
am
ounts
of pro
pert
y, p
lant and e
quip
ment ca
n b
e r
eco
nci
led a
s fo
llow
s:
Carr
ying
valu
e a
t
beg
innin
g
of
2018
Carr
yin
g
valu
e a
t end
of
year
Additi
ons
Dis
posa
ls
Depre
ciation
year
Ow
ned a
sse
ts
Lease
hold
Impro
vem
ents
11
26
81
- -
(62
19
0)
50
49
1
Moto
r ve
hic
les
100 5
21
-(1
)(3
76
95
)62 8
25
Furn
iture
and fi
ttin
gs
118 3
72
120 6
71
(26
06
3)
(47
87
8)
165 1
02
IT e
quip
ment
109 4
94
46 3
70
-(5
16
71
)104 1
93
Com
pute
r so
ftw
are
-21 0
93
-(3
52
)20 7
41
441 0
68
188 1
34
(26
06
4)
(19
97
86
)403 3
52
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
43
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
F
igure
s in
R
2018
2017
Carr
ying
valu
e a
t
beg
innin
g
of
2017
Carr
yin
g
valu
e a
t end
of
year
Additi
ons
Dis
posals
Depre
ciation
year
Ow
ned a
sse
ts
Lease
hold
Im
pro
vem
ents
174 8
72
-
(1)
(62
19
0)
112 6
81
Moto
r ve
hic
les
138 2
16
-
-
(37
69
5)
100 5
21
Furn
iture
and fi
ttin
gs
116 8
28
15 0
93
-
(13
54
9)
118 3
72
IT e
quip
ment
135 0
46
36 5
91
-
(62
14
3)
109 4
94
564 9
62
51 6
84
(1)
(17
5
57
7)
441 0
68
7.
Inte
rest
in u
nco
nso
lid
ate
d s
tru
ctu
red
en
titi
es
Cost
of in
vest
ment
in B
est
cut D
istr
ibuto
rs (
Pty
) Ltd
100
100
Inte
rest
in u
nco
nso
lid
ate
d s
tru
ctu
red
en
titi
es
Nam
e o
f en
tity
Co
un
try o
f in
co
rpo
rat
ion
an
d
pri
ncip
al
pla
ce o
f b
usin
ess
Natu
re
Pri
ncip
al acti
vit
ies
Siz
e R
Fin
an
cin
g
Best
cut D
istr
ibuto
rs (
Pty
) Ltd
RS
AIn
vest
ments
Inve
stm
ent
act
ivitie
s100
-
The c
om
pany
did
not pre
pare
conso
lidate
d fi
nanci
al s
tate
ments
for
the g
roup a
s th
e e
ffect th
ere
of w
ill b
e im
mate
rial.
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
N
OT
ES
TO
TH
E A
NN
UA
L F
INA
NC
IAL
STA
TE
ME
NT
S
Fig
ure
s in
R
20
18
20
17
8.
Inve
stm
en
ts
Lis
ted
sh
are
s a
t fa
ir m
ark
et
valu
e
10
2 0
13
10
48
7 4
30
54
8
Un
liste
d s
ha
res
at fa
ir m
ark
et va
lue
20
79
7 6
90
27
54
3 0
41
Un
it tr
usts
at
fair m
ark
et
valu
e
29
66
4 4
112
9 9
93
53
0
15
2 4
75
20
51
44
96
7 1
19
Fa
ir v
alu
e i
nfo
rmati
on
Fa
ir v
alu
e i
s b
ase
d o
n p
ub
lish
ed
ma
rke
t va
lue
s f
or
all
inve
stm
en
t ty
pe
s lis
ted
ab
ove
. A
ll o
f th
e u
nlis
ted
in
ve
stm
en
t va
lua
tio
n is
linke
d a
nd b
ase
d o
nm
ark
et
va
lue
s w
ith
th
e e
xce
pti
on
of
the
MT
N Z
akh
ele
Fu
thi
sh
are
s w
hic
h a
re m
ea
su
red
at
co
st.
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
44
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Fig
ure
s in
R
2
01
82
01
7
9.
Lo
an
to
gro
up
co
mp
an
y
B
estc
ut D
istr
ibuto
rs
(Pty
)
Ltd
1 8
28
19
81
54
55
41
Imp
airm
en
t -
Lo
an
s to
sub
sid
iary
- S
ho
rt
term
(18
28
19
8)
(1 5
45
54
1)
- -
Th
e lo
an
is u
nse
cure
d,
inte
rest
fre
e a
nd
has
no r
ep
aym
en
t te
rms.
Re
co
nc
ilia
tio
n o
f p
rovis
ion
fo
r im
pair
me
nt
of
loa
ns
to
su
bs
idia
ry
Op
en
ing
ba
lan
ce
1 5
45
54
11
78
93
04
Re
vers
al o
f
imp
airm
en
t
- (2
43
76
3)
Incre
ase
in
imp
airm
en
t
28
26
57
1 8
28
19
81
54
55
41
Du
rin
g t
he
pre
vio
us
fin
an
cia
l ye
ar,
th
e r
em
ain
ing
lo
an f
rom
Be
stc
ut
Dis
trib
uto
rs (
Pty
) L
td w
as im
pa
ire
d in
fu
ll, a
s th
e c
arr
yin
g a
mo
un
t
of
the
lo
an
be
fore
im
pa
irm
en
t e
xce
ed
ed t
he
re
co
ve
rab
le a
mo
un
t o
f th
e lo
an
. In
pre
vio
us
fin
an
cia
l ye
ars
, th
e c
om
pa
ny
inve
ste
d n
ew
fun
ds
into
th
e B
estc
ut D
istr
ibu
tors
(P
ty)
Ltd
in
ord
er
to e
na
ble
Be
stc
ut
Dis
trib
uto
rs (
Pty
) L
td t
o i
nve
st
in l
ow
ris
k ta
xa
ble
inte
rest-
be
ari
ng
asse
ts i
n o
rde
r fo
r B
estc
ut
Dis
trib
uto
rs (
Pty
) L
td to
u
tilis
e i
ts t
ax
losse
s.
Th
e r
eco
ve
rab
le
am
ou
nt
of
the l
oa
n in
cre
ase
d,
pro
mp
tin
g a
re
vers
alo
f p
art
of
the lo
an t
ha
t w
as
imp
air
ed
in t
he
pa
st.
Du
rin
g t
he
ye
ar,
th
e c
om
pa
ny
ha
d t
o m
ake
pro
vis
ion
fo
r p
aym
en
ts t
o t
he
So
uth
Afr
ica
n R
eve
nu
e S
erv
ice
in
ord
er
to s
ett
leB
estc
ut
Dis
trib
uto
rs' in
co
me
tax
de
bt.
Sin
ce
the
co
mp
an
yh
as
no
fore
se
ea
ble
pro
sp
ect
toco
llect
this
loa
n,
the
loa
nh
as
be
en
imp
air
ed
in
full.
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
45
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R
20
18
20
17
10.
Tra
de
an
d o
the
r re
ceiv
ab
les
Tra
de
de
bto
rs
(1)
52
54
8
Sta
ff lo
an
s
14
50
71
0 3
07
De
po
sits
18
8 0
58
18
8 0
58
20
2 5
64
25
0 9
13
Th
e c
arr
yin
g a
mo
un
t of
tra
de
an
d o
ther
rece
iva
ble
s a
pp
roxi
ma
tes
the
ir fa
ir v
alu
e.
11.
Ca
sh
an
d c
as
h e
qu
iva
len
ts
Fa
vo
ura
ble
ca
sh
bala
nc
es
Te
rm d
ep
osi
ts
1 3
54
31
91
57
2 2
43
Ca
sh o
n h
an
d
10
60
16
01
Ba
nk
ba
lan
ces
52
8 5
83
5 8
54
28
8
1 8
93
50
37
42
7 1
32
Ca
sh
an
d c
ash
eq
uiv
ale
nts
co
mp
rise
ca
sh h
eld
. T
he
ca
rryin
ga
mo
un
t o
fth
ese
asse
ts a
pp
roxim
ate
s th
eir f
air
va
lue
. In
tere
st
at
va
ria
ble
ra
tes l
inke
d t
o t
he
pri
me
len
din
gra
teis
ea
rne
do
nth
ese
ba
lan
ce
s.
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
46
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
F
igure
s in
R
2018
2017
12
.
Sh
are
cap
ital
A
uth
ori
sed
2,0
00,0
00,0
00 o
rdin
ary
share
s of no p
ar
valu
e
2 0
00 0
00 0
00
2 0
00 0
00 0
00
Issu
ed
138,7
84,1
19 o
rdin
ary
share
s o
f no p
ar
valu
e
112 1
23 4
93
112 1
23 4
93
112 1
23 4
93
112 1
23 4
93
Sh
are
reco
ncilia
tio
n
Openin
g b
ala
nce
138 7
84 1
19
138 6
91 8
93
Share
s is
sued
-92 2
26
Clo
sin
g b
ala
nce
138 7
84 1
19
138 7
84 1
19
13
.
Fair
valu
e a
dju
stm
en
t assets
-avail
ab
le-f
or-
sale
reserv
e
Fa
ir v
alu
ea
dju
stm
en
tasse
ts-a
va
ilab
le-f
or-
sa
lere
se
rve
28
60
63
63
25 2
81
07
1
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
47
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R
2018
2017
14
.
Defe
rred
taxati
on
B
ala
nce a
t beg
innin
g o
f ye
ar
(5 7
95 0
82)
(7 4
64 0
76)
Move
ments
consis
ting o
f:
Orig
inatin
g t
em
pora
ry d
iffere
nce
s on r
eva
luatio
n o
f in
vest
ments
-
move
ment
thro
ug
h o
ther
com
pre
hensiv
e in
com
e
(2 5
46 3
06)
2 3
60 3
78
Capita
l tax
losses for
set off
ag
ain
st f
utu
re c
apita
l gain
s
-(6
91 3
84)
Incr
ease
/(d
ecr
ease)
in tax
losses
ava
ilable
for
set off
ag
ain
st fu
ture
taxa
ble
inco
me
326 4
55
-
Bala
nce
at end o
f ye
ar
(8 0
14 9
33)
(5 7
95 0
82)
The d
efe
rred t
axa
tion lia
bili
ty a
rise
s f
rom
the follo
win
g tem
pora
ry d
iffere
nce
s:
Defe
rred tax
on f
air v
alu
e a
dju
stm
ents
on a
vaila
ble
-for-
sale
financia
l ass
ets
(8 3
41 3
88)
(5 7
95 0
82)
Defe
rred tax
on t
ax
losse
s a
vaila
ble
for
set
off
ag
ain
st fu
ture
taxa
ble
inco
me
326 4
55
-
(8 0
14 9
33)
(5 7
95 0
82)
Defe
rred tax
liabili
ty
(8 3
41 3
88)
(5 7
95 0
82)
Defe
rred tax
asset
326 4
55
-
(8 0
14 9
33)
(5 7
95 0
82)
Use a
nd
sale
s r
ate
Th
e d
efe
rre
d ta
x r
ate
ap
plie
d t
o t
he f
air
va
lue a
dju
stm
en
ts o
f fin
an
cia
l a
sse
ts i
s d
ete
rmin
ed
by
the e
xp
ecte
d m
an
ne
r of
reco
very
.
Wh
ere
the e
xp
ecte
dre
co
ve
ry o
f th
e fi
na
ncia
l asse
t is
thro
ug
h s
ale
, th
e c
ap
ita
l ga
ins
tax ra
te is
18
.66
% (
20
17
: 1
8.6
6%
) If
th
e e
xp
ecte
d
ma
nn
er
of
reco
ve
ry is t
hro
ug
hin
de
fin
ite
use
,th
en
orm
al
tax
rate
of
28
%(2
01
7:
28
%)
isu
se
d.
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
48
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
F
igure
s in
R
2018
2017
15
.
Tra
de a
nd
oth
er
payab
les
Tra
de c
redito
rs
467 6
89
152 2
90
Acc
rued li
abili
ties
907 8
74
-
Oth
er
credito
rs
2 7
74
-
1 3
78 3
37
152 2
90
Cre
dito
rs a
nd a
ccru
als
pri
ncip
ally
co
mp
rise a
mo
un
ts o
uts
tan
din
g f
or
tra
de p
urc
ha
se
s a
nd o
ng
oin
g c
osts
. T
he c
arr
yin
g a
mo
un
ts
ap
pro
xim
ate
fa
ir v
alu
e.
16
.
Inco
me t
axati
on
in
th
e s
tate
men
t o
f fi
nan
cia
l p
osit
ion
Curr
ent ta
xation in
the S
tate
ment of
Fin
anci
al P
osi
tion r
epre
sents
:
Openin
g b
ala
nce
1248 4
37
(2028 9
00)
Pro
visi
on f
or
taxa
tion for
the y
ear
-2 1
60 3
91
Pro
visi
onal ta
xatio
n p
aid
51 3
39
2 8
35 3
20
Refu
nd r
ece
ived
(288 9
32)
-1010 8
44
1248 4
37
17
.O
ther
fin
an
cia
l liab
ilit
ies
Se
lecti
ve E
mp
ow
erm
en
t In
ve
stm
en
ts 2
Lim
ite
d1 5
35
70
11 2
45
65
1T
he lo
an is
unse
cure
d, bears
inte
rest
at 5%
per
annum
com
pounded m
onth
ly a
nd is
paya
ble
on d
em
and. D
ue t
o it
s sh
ort
-term
natu
re, th
e o
ther
financia
l lia
bili
ties
reflect
their fair v
alu
e.
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
49
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
F
igure
s in
R
2018
2017
18.
Reven
ue
A
n a
naly
sis
of re
venue is
as
follo
ws:
D
ivid
ends r
ece
ived
3 7
25 1
51
4 6
09 7
67
Inte
rest
rece
ived
1 0
95 1
28
1 4
38 0
45
4 8
20 2
79
6 0
47 8
12
19.
Oth
er
Inco
me
Adm
in / m
anag
em
ent fe
es
rece
ived
312 2
01
262 8
93
Impairm
ent re
vers
al
-326 2
88
Pro
fit on s
ale
of
inve
stm
ents
1 1
81 4
22
12 7
47 0
95
1 4
93 6
23
13 3
36 2
76
20.
Pro
fit
befo
re t
axati
on
The f
ollo
win
g it
em
s have
been r
eco
gnis
ed a
s exp
ense
s (incom
e)
in
dete
rmin
ing p
rofit
befo
re t
axa
tion:
Depre
ciation -
Tang
ible
ass
ets
199 7
86
175 5
77
Impairm
ents
of
rela
ted p
art
y lo
an
282 6
57
82 5
26
482 4
43
258 1
03
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
50
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
73
12
95
9 3
17
Fig
ure
s in
R
20
18
20
17
21
. O
pe
rati
ng
pro
fit
Op
era
tin
g p
rofit is
arr
ive
d a
t aft
er
takin
g in
to a
cco
un
t th
e f
ollo
win
g it
em
s:
Inco
me
Pro
fit o
n s
ale
of
inve
stm
en
ts
1
18
1 4
22
12
74
7 0
95
Ad
min
istr
atio
n f
ee
s
31
2 2
01
26
2 8
93
1 4
93
62
31
3 0
09
98
8
De
pre
cia
tio
n a
nd
imp
airm
en
ts
Ow
ne
d a
sse
ts
Le
ase
ho
ld I
mp
rove
me
nts
62
19
06
2 1
90
Mo
tor
veh
icle
s
37
69
53
7 6
95
Fu
rnitu
re a
nd
fitt
ing
s
47
87
81
3 5
49
IT e
qu
ipm
ent
51
67
16
2 1
43
Co
mp
ute
r soft
wa
re
35
2-
19
9 7
86
17
5 5
77
Au
dito
rs' r
em
un
era
tio
n
Au
dit
fee
s
-cu
rre
nt
19
6 1
26
72
26
3
22
.F
ina
nc
e c
osts
Lo
an
fro
m r
ela
ted p
art
y7
3 1
29
59
31
7
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
51
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R
20
18
20
17
23
.In
co
me t
axati
on
exp
en
se
Curr
ent ta
xation
Defe
rred taxa
tion
Mo
vem
ent
in tem
pora
ry d
iffere
nce
s
-
(326 4
55)
1 7
18
37
4
69
13
84
Inco
me t
axa
tion for
the y
ear
(3
26 4
55)
2 4
09 7
58
Reco
nci
liation o
f ta
xation
R
R
South
Afr
ican n
orm
al t
axa
tion
(1 6
06 3
31)
2 8
92 7
48
Adju
sted for:
D
isallo
wed e
xpense
s
2 5
87 5
57
2 4
93 4
39
Non-t
axa
ble
inco
me
(1 0
43 0
32)
(1 2
90 7
35)
Capita
l (g
ain
s)/
loss
es
at
capita
l gain
s ta
x ra
te
(264 6
49)
(1 6
85 6
94)
Net re
duct
ion
1 2
79 8
76
(482 9
90)
Eff
ect
ive taxa
tion
(326 4
55)
2 4
09 7
58
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
52
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R2018
2017
24.
Dir
ecto
rs' em
olu
men
ts
2018
Nam
e
Fees
paid
to d
irect
or
for
serv
ices
Fees
paid
for
acc
epta
nce
of
offi
ce
Sala
ry
Bonuse
s
and
perf
orm
ance
rela
ted
paym
ents
Exp
ense
allo
wance
Contr
ibutions
paid
under
pensi
on
schem
eP
ensi
ons
Tota
ls
M.
Maja
--
497 8
68
-1
92
90
9-
-6
90
77
7
MM
. T
shis
hong
a-
-604 5
26
--
68 8
14
-6
73
33
9
T. M
otlo
gelo
a366 0
12
34 8
33
--
--
40
08
45
SS
. S
ibiy
a43 1
67
34 8
33
--
--
-7
80
00
TN
Sin
dane
51 4
29
34 8
33
--
--
-8
62
62
MS
Tsi
e76 3
64
34 8
33
--
--
-111
19
7
536 9
71
139 3
32
1 1
02 3
94
-1
92
90
968 8
14
-2 0
40
42
0
No
tes
to
th
e A
nn
ua
l F
ina
nc
ial S
tate
me
nts
Fig
ure
s in
R2018
2017
20
17
Na
me
Fe
es
pa
id
to d
ire
cto
r
for
serv
ice
s
Fe
es
pa
id
for
acc
ep
tan
ce
of
offi
ce
Sala
ry
Bo
nu
ses
an
d
pe
rform
an
ce
rela
ted
pa
yme
nts
Exp
en
se
allo
wa
nce
Co
ntr
ibu
tion
s
pa
id u
nd
er
pe
nsio
n
sch
em
e
Pe
nsio
ns
Tota
ls
M.
Ma
ja-
-
5
75
9
38
-
- -
-
57
59
38
MM
. T
shis
ho
ng
a-
-
6
31
3
00
-
- -
-
63
13
00
--
1 2
07
23
8-
--
-1
20
72
38
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
53
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R
20
18
20
17
25
.
Co
nti
ng
en
t li
ab
ilit
ies
On t
he 4
th o
f Ju
ne 2
01
8 a
cla
im i
n t
he a
mo
un
t R
50
0,0
00
.00 f
or
de
fam
ati
on w
as
institu
ted b
y th
e f
orm
er
Ch
ief
Exe
cu
tive O
ffice
r M
r
Go
ose
n.
Su
mm
on
s h
ave n
ot b
ee
n is
su
ed
an
d a
s s
uch t
he o
utc
om
e i
s u
ncle
ar
an
d in
ad
ditio
n;
a c
laim
in t
he a
mo
un
t of
R4
, 0
90
,
90
9.0
0 f
or
po
ten
tia
l lo
ss o
f in
co
me
wa
s
institu
ted
by
the
form
er
Ch
ief
Exe
cu
tive
Offi
ce
r
Mr
Go
ose
n.
Su
mm
on
sh
ave
no
tb
ee
n
issu
ed
an
d
as
su
ch
the
ou
tco
me
is
un
cle
ar.
On t
he 4
th o
f S
ep
tem
be
r 2
01
8,
the C
om
pa
ny
be
ca
me a
wa
re o
f
the fi
ling
of
a p
urp
ort
ed
cla
ss
actio
n c
om
pla
int
in t
he
Hig
h C
ou
rt o
f
So
uth
Afr
ica
by
the C
om
pa
nie
s a
nd I
nte
llectu
al P
rop
ert
y C
om
mis
sio
n (
CIP
C)
ag
ain
st
the C
om
pa
ny
an
d c
ert
ain
of
the
Co
mp
an
y’s
cu
rre
nt
an
d f
orm
er
dir
ecto
rs f
or
alle
ge
d v
iola
tio
ns
of
Co
mp
an
ies
Act
Of
So
uth
Afr
ica l
aw
s. T
he c
om
pla
int a
lleg
ed t
ha
t th
e C
om
pa
ny’s
fin
an
cia
l sta
tem
en
ts a
nd c
ert
ain
dis
clo
su
res a
nd
co
rpo
rate
go
ve
rna
nce b
etw
ee
n 1
6 M
arc
h 2
01
6 a
nd
28 A
ug
ust
20
18
we
re n
ot
co
mp
lied w
ith,
as
a r
esu
lt
of
the C
om
pa
ny’s
a
lle
ge
d f
ailu
re t
o r
ep
ort
on a
tim
ely
ba
sis
. T
he c
om
pla
int
se
eks
de
cla
re t
he
bo
ard
de
linq
ue
nt.
Th
e C
om
pa
ny
be
lieve
s th
at th
e a
lle
ga
tio
ns a
re w
ith
ou
t m
eri
t a
nd i
n th
e
pro
ce
ss
of
filin
g a
mo
tio
nto
op
po
se
the
co
mp
lain
t.
26
.
Even
t aft
er
the b
ala
nce s
heet
date
No o
the
r e
ve
nts
o
ccu
rre
d b
etw
ee
n 3
0 J
un
e 2
01
8 a
nd t
he d
ate
th
e d
ire
cto
rs a
pp
rove
d t
he fi
na
ncia
l sta
tem
en
ts t
ha
t w
ou
ld h
ave a
ma
teri
al
imp
act
on
the r
esu
lts
as
dis
clo
se
d i
n t
he
fin
an
cia
l sta
tem
en
ts a
s se
t o
ut o
n p
ag
es
26 t
o 6
0 o
r th
e c
on
tin
ue
d e
xis
ten
ce o
f
the
co
mp
an
y a
s a g
oin
gco
nce
rn.
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
54
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R2
01
82
01
7
2
7.
Lis
t o
f su
bsid
iari
es
Inte
rest held
Inte
rest held
Share
cost
Share
cost
Nam
e
2018
2017
2018
2017
Best
Cut D
istr
ibuto
rs
(Pty
)
Ltd
10
0.0
0%
10
0.0
0%
- -
28
.
Rela
ted
part
y t
ran
sacti
on
s
T
ransactions
Am
ounts
ow
ed (
to)
/ by
the
rela
ted p
art
y at ye
ar-
end
Nam
e
Rela
tio
nsh
ip
Tra
nsacti
on
s
2018
2017
2018
2017
Best
Cut D
istr
ibuto
rs
Subsi
dia
ry
Opera
tional
-
6 1
86
24
5
--
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
2
Lim
ited
Ass
oci
ate
of
key
Opera
tional
(29
0
05
0)
18
4
96
9
(15
35
70
1)
(1 2
45
65
1)
manag
em
ent
Skill
s S
quare
d S
olu
tions
(Pty
) Ltd
Com
mon
Direct
ors
hip
-11
38
10
--
Com
pany
Mr
Robert
Pre
ller
Non-
exe
cutive
-3
02
00
--
direct
or
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
55
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R
2018
2017
29.
Fin
an
cia
l in
str
um
en
ts
Th
e c
om
pa
ny h
as
cla
ss
ifie
d i
ts fi
na
nc
ial
as
sets
in
th
e f
oll
ow
ing
cate
go
rie
s:
Fa
ir v
alu
e
thro
ug
h p
rofit
loss
(h
eld
fo
r
He
ld-t
o-
ma
turity
L
oa
ns
an
d
A
vaila
ble
-fo
r-
sale
fin
an
cia
l
20
18
No
n-c
urr
en
t fi
na
ncia
l as
se
ts
Inte
rest
in u
nco
nso
lida
ted
str
uct
ure
d e
ntit
ies
(refe
r n
ote
7)
Inve
stm
ents
(re
fer
no
te
8)
Cu
rre
nt
fin
an
cia
l
as
se
ts
Tra
de
an
d o
ther
rece
iva
ble
s (r
efe
r n
ote
10
)
Ca
sh a
nd
ca
sh e
qu
iva
len
ts (
refe
r n
ote
11)
20
17
No
n-c
urr
en
t fi
na
ncia
l as
se
ts
Inte
rest
in u
nco
nso
lida
ted
str
uct
ure
d e
ntit
ies
(refe
r n
ote
7)
Inve
stm
ents
(re
fer
no
te 8
)
tra
din
g)
inve
stm
en
ts
rece
iva
ble
s
ass
ets
Tota
l
- 1
00
- -
10
0
-
-
-
15
2 4
75
20
5
15
2 4
75
20
5
- -
20
2 5
64
-
20
2 5
64
-
-
1 8
93
50
3
-
1 8
93
50
3
- -
10
0-
10
0
--
14
4 9
67
11
9-
14
4 9
67
11
9
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
56
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R
2018
2017
Cu
rren
t fi
nan
cia
l assets
T
rade a
nd o
ther
rece
ivable
s (r
efe
r note
10)
-
-
25
0
91
3
-
25
09
13
Cash a
nd c
ash
eq
uiv
ale
nts
(re
fer
note
11)
-
-
7 4
27
13
2
-
7 4
27
13
2
Th
e c
om
pan
y h
as c
lassifi
ed
its
fin
an
cia
l liab
ilit
ies in
th
e f
ollo
win
g
cate
go
ries
Fair v
alu
e
thro
ug
h
pro
fit
/ lo
ss
Am
ort
ised
cost
Tota
l2018
No
n-c
urr
en
t fi
nan
cia
l liab
ilit
ies
C
urr
en
t fi
nan
cia
l liab
ilit
ies
T
rade a
nd o
ther
paya
ble
s (
refe
r note
15)
-
1 3
78
33
7
1 3
78 3
37
Oth
er
financia
l lia
bili
ties
(refe
r note
17)
-
1 5
35
70
1
1 5
35 7
01
2017
No
n-c
urr
en
t fi
nan
cia
l liab
ilit
ies
Cu
rren
t fi
nan
cia
l liab
ilit
ies
Tra
de a
nd o
ther
paya
ble
s (
refe
r note
15)
-1
52
29
0152 2
90
Oth
er
financi
al l
iabili
ties
(refe
r note
17)
-1 2
45
65
11 2
45 6
51
The c
om
pany
is e
xpose
d to c
redit
risk
and li
quid
ity r
isk
ari
sing in
the n
orm
al c
ours
e o
f its
busin
ess a
nd fi
nancia
l instr
um
ents
. The c
om
pany'
s
risk
manag
em
ent
obje
ctiv
es,
polic
ies
and p
roce
sses
main
ly f
ocus o
n m
inim
izin
g t
he p
ote
ntia
l adve
rse e
ffect
s o
f th
ese r
isks o
nits fi
nanci
al
perf
orm
ance a
nd p
ositi
on b
y cl
ose
ly m
onitoring
the in
div
idua
l exp
osu
re.
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
57
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R
20
18
20
17
29.1
Cre
dit
ris
k
Cre
dit r
isk d
eri
ve
s m
ain
ly f
rom
ca
sh
de
po
sits
an
d
ca
sh e
qu
iva
len
ts.
Th
e c
om
pa
ny
on
ly d
ep
osits c
ash
w
ith
ma
jor
ba
nks w
ith
hig
h
qu
alit
y
cre
dit
sta
nd
ing
an
d
limits
exp
osu
re
to
an
y
on
e
co
un
ter-
pa
rty.
Su
mm
ary
qu
an
tita
tive
da
ta
AB
SA
Ba
nk L
imite
d
32
9 2
76
4 4
81
97
0
Ne
db
an
k L
imite
d
20
0 2
82
611
16
3In
vest
ec
Ba
nk
Lim
ited
1 3
53
34
41
55
8 7
73
At
3
0 J
un
e
20
18
, th
e c
om
pa
ny
ha
s n
o c
on
ce
ntr
atio
n o
f ri
sk
an
d t
he
ma
xim
um
exp
osu
re t
o c
red
it r
isk is r
ep
rese
nte
d b
y t
he
ca
rryin
g
am
ou
nt
of
e
ach
fin
an
cia
l
asse
t.
29.2
Liq
uid
ity r
isk
Th
e c
om
pa
ny
is e
xp
ose
d t
o li
qu
idity
risk o
n fi
na
ncia
l lia
bili
tie
s.
It m
an
ag
es its
fu
nd
s c
on
se
rva
tive
ly b
y m
ain
tain
ing
a c
om
fort
ab
le le
ve
l
of
ca
sh
an
d c
ash
eq
uiv
ale
nts
in
ord
er
to
me
et
co
nti
nu
ou
s
op
era
tio
na
l
ne
ed
.
29.3
Fa
ir v
alu
e o
f fi
na
nc
ial
ins
tru
me
nt
Th
e e
stim
ate
d f
air v
alu
es o
f fin
an
cia
l a
ssets
and
fin
an
cia
l lia
bili
ties a
s a
t 3
0 J
un
e 2
01
8 h
ave
be
en
de
term
ine
d u
sin
g a
vaila
ble
ma
rket
info
rmatio
n a
nd a
ppro
pria
te v
alu
atio
n m
eth
od
olo
gie
s.
Th
e f
air v
alu
e o
f a
lmo
st a
ll fin
an
cia
l in
str
um
en
ts e
qu
als
th
eir c
arr
yin
g v
alu
e,
eith
er
be
cau
se o
f th
e s
hort
-term
natu
re a
nd
norm
al t
rad
e t
erm
s th
ere
of, o
r th
e m
ark
et-
rela
ted in
tere
st r
ate
s a
ttach
ed
to
it.
29.4
Inte
rest
rate
ris
k
Th
e c
om
pa
ny
exp
osu
re o
n f
air
va
lue
in
tere
st
rate
ris
k m
ain
ly a
rise
s fr
om
its
fixe
d d
ep
osit
s w
ith
ba
nks a
nd
in
ve
stm
en
ts i
n fi
xe
d r
ate
de
bt
se
cu
ritie
s, w
hic
h a
re c
lassifi
ed
as
he
ld-t
o-m
atu
rity
in
ve
stm
en
ts a
nd
ava
ilab
le-f
or-
sa
le fi
na
ncia
l a
sse
ts.
It a
lso
ha
s e
xp
osu
re o
n
ca
sh
flo
w i
nte
rest
rate
ris
k
w
hic
h i
s m
ain
ly a
risin
g f
rom
its
de
po
sits
with
ba
nks a
nd in
tere
st-
be
ari
ng
bo
rro
win
gs
with
th
e b
an
ks.
It
is a
co
mm
on
pra
ctice
in
So
uth
Afr
ica
to
ha
ve
flo
atin
g r
ate
bo
rro
win
gs
with
th
e
ba
nks.
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
58
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R
2018
Th
e c
om
pa
ny
ma
inly
ho
lds
fixe
d d
ep
osit
s w
ith b
an
ks w
ith m
atu
rity
with
in 1
mo
nth
an
d t
he e
xp
osu
re i
s co
nsid
ere
d
als
o i
nve
sts
su
rplu
s f
un
ds
in fi
xe
d r
ate
de
bt
se
cu
riti
es
on
ly a
nd s
uch i
nve
stm
en
ts a
re n
ot
no
rma
lly
ma
teri
al.
ma
teri
al e
xp
osu
re o
n f
air
va
lue i
nte
rest
rate
ris
k is
exp
ecte
d.
Eve
n t
ha
t, t
he
co
mp
an
y clo
se
ly m
on
ito
rs t
he f
air
inve
stm
en
ts a
nd d
isp
ose
s of
the
m in c
ase o
f sig
nifi
ca
nt
incre
ase
in in
tere
st
rate
is
fore
se
en
.
In o
rder
to m
anag
e t
he c
ash fl
ow
inte
rest
rate
ris
k, t
he c
om
pany
will
repay
the c
orr
esp
ondin
g b
orr
ow
ing
s w
hen it
has
surp
lus f
unds.
Su
mm
ary
qu
an
tita
tive d
ata
Cash
at bank (
note
11)
408 1
16
Deposi
ts w
ith b
anks
(note
11)
1 3
54 3
19
Sen
sit
ivit
y a
naly
sis
At
30 J
un
e 2
01
8,
if i
nte
rest
rate
s a
t th
at
da
te h
ad b
ee
n [1
00
] b
asis
po
ints
lo
we
r w
ith
all
oth
er
va
ria
ble
s h
eld
co
nsta
nt,
loss
for
the y
ea
r a
nd
reta
ine
d
ea
rnin
gs
wo
uld
ha
ve
be
en
R1
7,6
24
(201
7:
R7
4,2
71
)
hig
he
r.
At
30 J
un
e 2
01
8,
if
inte
rest
rate
s a
t th
at
da
te h
ad b
ee
n
[10
0]
ba
sis
po
ints
hig
he
r w
ith a
ll o
the
r va
ria
ble
s h
eld
pro
fit
for
the
ye
ar
an
d
reta
ine
d
ea
rnin
gs
wo
uld
ha
ve
be
en
R1
7,6
24
(20
17
:
R7
4,2
71
)
low
er.
Th
e s
en
sitiv
ity
an
aly
sis
ha
s b
ee
n p
rep
are
d w
ith t
he a
ssu
mp
tio
n t
ha
t th
e c
ha
ng
e i
n in
tere
st
rate
s h
ad o
ccu
rre
d
da
te a
nd h
ad
b
ee
n
a
pp
lie
d t
o t
he e
xp
osu
re t
o i
nte
rest
rate
ris
k fo
r th
e r
ele
va
nt fin
an
cia
l in
str
um
en
ts
in e
xis
ten
ce
ch
an
ge
s
in in
tere
st ra
te
rep
rese
nt
ma
na
ge
me
nt’
s a
sse
ssm
en
t of
a r
ea
so
na
bly
po
ssib
le c
ha
ng
e i
n in
tere
st
rate
s
pe
rio
d u
ntil th
e n
ext
an
nu
al b
ala
nce
sh
ee
t
da
te.
The a
naly
sis is
pre
pare
d o
n t
he s
am
e b
asis
for
2017.
2017
no
t sig
nifi
ca
nt.
It
In c
on
se
qu
en
ce
, n
o
va
lue fl
uctu
atio
n o
f th
e
5 8
24 8
89
1 5
72 2
43
the c
om
pa
ny
co
nsta
nt,
th
e c
om
pa
ny
at
the b
ala
nce s
he
et
at
tha
t d
ate
. T
he
at th
at d
ate
ove
r th
e
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
59
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R
20
18
20
17
29
.5
Eq
uit
y p
ric
e r
isk
Th
e in
vest
me
nts
in e
qu
ity s
ecu
ritie
s c
lass
ifie
d a
s a
vaila
ble
-for-
sale
fin
an
cia
l ass
ets
exp
ose
th
e c
om
pa
ny
to p
rice
ris
k.
Su
mm
ary
qu
an
tita
tive
da
ta
Ava
ilab
le-f
or-
sale
fin
an
cia
l ass
ets
, at
fair v
alu
e
-
Un
liste
d e
qu
ity s
ecu
ritie
s
20
79
7 6
90
27
54
3 0
41
-
Un
it tr
usts
29
66
4 4
112
9 9
93
53
0-
Lis
ted e
qu
ity s
ecu
ritie
s in
So
uth
Afr
ica
10
2 0
13
10
48
7 4
30
54
8
Se
ns
itiv
ity a
na
lys
is
A 1
0%
in
cre
ase
in
sto
ck p
rice
s a
t 3
0 J
un
e 2
01
8 w
ith
all
oth
er
va
ria
ble
s h
eld
co
nsta
nt
wo
uld
ha
ve
in
cre
ase
d u
nre
alis
ed p
rofit fo
r th
e
ye
ar
by
R1
0.2
mill
ion
(2
01
7:
R8
.7 m
illio
n).
Co
nve
rse
ly, i
f a
10
% d
ecre
ase
in
sto
ck
pri
ce
s a
t 3
0 J
un
e 2
01
8 w
ith
all
oth
er
va
ria
ble
s h
eld
co
nsta
nt w
ou
ld h
ave
de
cre
ase
d
pro
fit
for
the
ye
ar
by
R1
0.2
mill
ion
(20
17
:
R8
.7
mill
ion
).
Th
e s
en
sitiv
ity
an
aly
sis
ha
s b
ee
n p
rep
are
d w
ith
th
e a
ssu
mp
tio
n t
ha
t th
e c
ha
ng
e i
n
eq
uity
pri
ce
ha
d o
ccu
rre
da
t th
e b
ala
nce s
he
et
da
te a
nd
ha
d
be
en
ap
plie
d t
o t
he
exp
osu
re t
o e
qu
ity
pri
ce
ris
k f
or th
e r
ele
va
nt fin
an
cia
l in
str
um
en
ts
in e
xis
ten
ce
at
tha
t d
ate
. T
he
ch
an
ge
s
in
eq
uity
p
rice
re
pre
se
nt
ma
na
ge
me
nt’s
asse
ssm
en
t o
f a
re
aso
na
bly
p
ossib
le c
ha
ng
e i
n e
qu
ity
p
rice
at
tha
t d
ate
ove
r th
e
pe
rio
d u
ntil th
e n
ext
an
nu
al b
ala
nce
sh
ee
t
da
te.
T
he a
na
lysi
s is
pre
pa
red o
n t
he
sam
e b
asi
s fo
r 20
17
.
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
60
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R
20
18
20
17
30.
Fa
ir v
alu
e h
iera
rch
y o
f fi
na
ncia
l in
str
um
en
ts
Fin
an
cia
l asse
ts a
nd lia
bili
tie
s
me
asu
red
at
fair
va
lue
in
th
e
ba
lan
ce
sh
ee
t a
re c
ate
go
rise
d in
its
en
tire
ty in
to t
he
fo
llow
ing
th
ree
leve
ls o
f th
e f
air
v
alu
e
hie
rarc
hy
ba
se
d
on
the
ba
sis
of
the
low
est
leve
l
inp
ut
tha
t
is
sig
nifi
ca
nt
to
the
fair
va
lue
me
asu
rem
en
tin
its
en
tire
ty:
Le
vel 1
: L
iste
d in
vest
men
ts;
Le
vel 2
: L
iste
d B
EE
In
vest
me
nts
; a
nd
Le
vel 3
: U
nlis
ted
BE
E in
vest
me
nts
.
Fin
an
cia
l asse
ts m
ea
sure
d a
t fa
ir v
alu
e
Ava
ilab
le-f
or-
sale
fin
an
cia
l ass
ets
-
Un
liste
d s
ecu
ritie
s
20
79
76
90
27
54
3 0
41
-
Un
it tr
ust
s
29
66
4 4
112
9 9
93
53
0
-
Lis
ted e
qu
ity s
ecuri
ties
in S
ou
th A
fric
a
10
2 0
13
10
48
7 4
30
54
8
Du
rin
g t
he y
ea
r, th
e c
om
pa
ny
ha
d n
o s
ign
ifica
nt
tra
nsf
ers
be
twe
en
instr
um
en
ts in
Le
vel 1
an
d L
eve
l 2
.
Du
rin
g t
he y
ea
r, t
he
co
mp
an
y h
ad
no
sig
nifi
can
t tr
an
sfe
rs o
f in
stru
me
nts
into
or
out
of
Le
vel 3
.
Th
ere
are
no
fin
an
cia
l a
sse
ts t
ha
t ch
an
gin
g o
ne
or
mo
re o
f th
e in
pu
ts t
o r
ea
so
na
bly
po
ssib
le a
lte
rna
tive
me
asu
rem
en
ts w
ou
ld c
ha
ng
e t
he
ir f
air
va
lue
sig
nifi
ca
ntl
y.
a
ssu
mptio
ns in
the
ir f
air v
alu
e
31.
G
oin
g C
on
ce
rn
T
he d
ire
cto
rs b
elie
ve t
ha
t th
e c
om
pa
ny
will
be
a g
oin
g c
once
rn in
th
e y
ea
r a
he
ad
. F
or
this
rea
so
n,
w
e c
on
tinu
e t
o a
do
pt th
e g
oin
g c
on
cern
ba
sis
in p
rep
ari
ng
th
e a
nn
ua
l fin
an
cia
l sta
tem
ents
.
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
61
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
32.
Ap
pro
val
of
an
nu
al
fin
an
cia
l sta
tem
en
ts
These
financi
al s
tate
ments
were
appro
ved b
y th
e b
oard
of
direct
ors
and a
uth
orised for
issu
e o
n 3
0 O
cto
ber
2018.
Sele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
62
S
ele
ctiv
e E
mpow
erm
ent In
vest
ments
1 L
imite
d
Ann
ua
l Re
po
rt 2
01
7/1
8
Annual R
eport
2017/1
8
Fig
ure
s in
R
20
18
20
17
NO
TE
S T
O T
HE
AN
NU
AL
FIN
AN
CIA
L S
TA
TE
ME
NT
S
Figures in R
Note(s)
2018
2017
Gross Revenue
Dividends received
3 725 151 4 609 767
Interest received
1
095 128 1 438 045
4 820 279 6 047 812
Other Income
Admin / management fees received
312 201 262 893
Bad debts recovered
- 326 288
Profit on sale of investments
1 181 422 12 747 095
1 493 623 13 336 276
6 313 902 19 384 088
Expenditure
Accounting fees
457 105 508 955
Auditors' remuneration
196 126 72 263
Bank charges
14 451 9 784
Computer expenses
79 913 113 977
Consulting fees
848 206 459 703
Depreciation -
Tangible assets
199 786 175 577
Emoluments -
Directors
24
139 333 -
Finance costs
73 129 59 317
Fines and penalties
62 033 -
Other impairments
282 657 82 526
Insurance
23 055 20 338
Lease rental on operating lease
730 795 439 590
Legal expense
685 268 2 657 719
Motor vehicle expense
65 950 23 114
Portfolio management fees 985 982 870 683
Shareholder communication 1 497 481 322 368
Courier and Postage 276 928 1 091
Printing and stationery 109 411 62 431
Repairs and maintenance
- 2 557
Salaries 3 415 584 1 917 836
Secretarial fees 315 959 953 713
Staff welfare 58 762 16 667
Subscriptions 15 012
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 63
DETAILED INCOME STATEMENT
(Loss)/profit before taxation
(5 736 896) 10 331 244
Taxation
326 455 (2 409 758)
(Loss)/profit for the year
(5 410 441) 7 921 486
-
Telephone and fax 277 497 166 987
Training 365 361 -
Travel - local 875 014 115 64812 050 798 9 052 844
Selective Empowerment Investments 1 Limited Annual Report 2017/18Annual Report 2017/18Selective Empowerment Investments 1 Limited 64
The supplementary information presented does not form part of the annual financial statements and is unaudited: