south african nuclear energy corporation soc …

2020

INTEGRATED ANNUAL REPORT

SOUTH AFRICAN NUCLEAR ENERGY CORPORATION SOC LIMITED

NECSA INTEGRATED ANNUAL REPORT 2020 1

Contents

Abbreviations and acronyms 1

1. General information 2

1.1 Necsa's origins 3

1.2. Necsa strategy 4

1.3 Organisational structure 5

2. Foreword of the Chairperson 6

3. Group CEO’s overview 8

4. Highlights of the 2019/2020 financial year 11

5. Key performance information 13

5.1 Statement of responsibility for performance information 13

5.2 Auditor-General’s Report: Predetermined Objectives 14

5.3 Overview of public entity’s performance 15

5.4 Strategic outcome orientated goals 16

5.5 Performance information by programme cluster 18

5.6 PELCHEM 19

5.7 NTP Group 20

6. Necsa divisions and key subsidiaries 24

6.1 Group functions 25

6.2 Chief Technology Office 27

6.3 Research & Technology Development 33

6.4 Nuclear compliance and services 43

6.5 Pelindaba Enterprises 43

6.6 Business Development and Innovation 47

6.7 Finance Department 48

6.8 Pelchem SOC Ltd 52

7. Human Resources and Real Estate Management 56

7.1 Overview 57

7.2 Employment statistics 58

7.3 Staff financial statistics 59

7.4 Staff social statistics 60

7.5 Labour relations 62

7.6 Knowledge management section 67

7.7 Real Estate Asset Management 68

8. Governance structures 70

8.1 Board of Directors 71

8.2 Risk Management 83

9. Sustainability report 84

9.1 Economic sustainability 85

9.2 Social sustainability 86

9.3 Environmental sustainability 87

10. Financial report 88

11. Knowledge dissemination 220

AGSA Auditor-General of South Africa

ALARA As Low As Reasonably Achievable

AMI African Management Initiative

ANSTO Australian Nuclear Science and Technology Organisation

API Active Pharmaceutical Ingredient

ARPL Artisan Recognition of Prior Learning

ASME American Society for Mechanical Engineers

B-BBEE Broad-Based Black Economic Empowerment

BBS Behaviour-Based Safety

CAL Calibration Laboratories

cGMP current Good manufacturing practices

CHIETA Chemical Industries Education and Training Authority

CNO Chief Nuclear Officer

CTBTO Comprehensive Nuclear-Test-Ban Treaty Organization

D&D Stage 1 Decontamination, Decommissioning and Waste Management of Disused Historical Nuclear Facilities

D&D Stage 2 Decontamination, Decommissioning and Waste Management of Operating Nuclear Facilities

DIIR Disabling Injury Incidence Rate

DMRE Department of Mineral Resources and Energy

DST Department of Science and Technology

Dti Department of Trade and Industry

EAP Employee Assistance Programme

EE Employment Equity

EXCO Executive Committee

GDE Gauteng Department of Education

GMP Good Manufacturing Practice

HF Hydrogen fluoride

IAEA MSSP International Atomic Energy Agency Membership Support Programme

IAEA International Atomic Energy Agency

IDC Industrial Development Corporation

ITG Isotope Technologies Garching

ISI International Scientific Indexing

ISO 9001 Quality Management Systems - Requirements

KPI Key Performance Indicator

LEU Low Enriched Uranium

MAPEP Mixed Analyte Performance Evaluation Program

MDS Marketing and Development Services

MeASURe Metrological and Applied Sciences University Research

Molybdenum-99 A radioactive isotope of molybdenum

MPR Multipurpose Reactor

MTEF Medium Term Expenditure Framework

Necsa South African Nuclear Energy Corporation SOC Limited

NEHAWU National Education, Health and Allied Workers Union

NFP Nuclear Forensics Programme

NIASA Nuclear Industry Association of South Africa

NKP National Key Point

NNR National Nuclear Regulator

NQF National Qualifications Framework

NRF National Research Foundation

NRWDI National Radioactive Waste Disposal Institute

NTeMBI Nuclear Technologies in Medicine and the Biosciences Initiative

NuMeRI Nuclear Medicine Research Infrastructure

NVC Necsa Visitor Centre

OSCAR Overall System for the Calculation of Reactors

PAL Pelindaba Analytical Laboratories

PET Position Emission Tomography

PFMA Public Finance Management Act

PSMA Prostate-specific membrane antigen

PSIF Public Safety Information Forum

RA Radio Analysis

R&D Research & Development

R&TD Research & Technology Development

RPTC Radiation Protection Training Centre

SAFARI-1 South African Fundamental Atomic Research Installation

SAHPRA South African Health Products Regulatory Authority

SAIW The South African Institute of Welding

SANS South African National Standard

TIA Technology Innovation Agency

Abbreviations and acronyms

2020

INTEGRATED ANNUAL REPORT

SOUTH AFRICAN NUCLEAR ENERGY CORPORATION SOC LIMITED

NECSA INTEGRATED ANNUAL REPORT 2020 3NECSA INTEGRATED ANNUAL REPORT 2020 2

01 General information

1.1 Necsa's origins

General information

1948South Africa’s Atomic Energy Board (AEB) was established primarily to regulate and control uranium production and sales

1957An inter-governmental bilateral agreement between SA and the USA on the civilian uses of atomic energy was signed in Washington, providing for the procurement of a research reactor from the USA

1959Government approved the creation of a nuclear research and development mandate

1960 to mid-1970sEra of research and development Uranium enrichment

1965SAFARI-1 materials testing reactor constructed and went critical on 18 MarchReactor research Accelerator and plasma research

1970UCOR (Uranium Enrichment Corporation) was established

Mid-1970s to early 1990sStrategic era Nuclear weapons programmePWR fuel programme

1982The Nuclear Energy Act made the Atomic Energy Corporation, AEC, formerly AEB, responsible for all nuclear matters

1985UCOR and NUCOR (Nuclear Development Corporation) were incorporated into AEC

Early 1990sCommercial era Mo-99 programmeCommercialisation of fluorine and related productsAEC established

1999The Nuclear Energy Act of 1999 transitioned AEC to the South African Nuclear Energy Corporation – Necsa

The South African Nuclear Energy Corporation, trading as Necsa, is a state-owned company (SOC). Registration number: 2000/003735/06

Holding company: Department of Mineral Resources and EnergyCountry of Incorporation and Domicile: South Africa Physical and Business Address: Elias Motsoaledi Street Extension Formerly Church Street West) R104 Pelindaba, Brits Magisterial District, Madibeng Municipality, North West, 0240 Postal Address: PO Box 582, Pretoria, 0001 South Africa

Telephone Number: +27 12 305 4911 Fax Number: +27 12 305 3111

Email: [email protected] Website: www.necsa.co.za

External Auditors: Auditor-General of South Africa 300 Middel Street, New Muckleneuk, Pretoria

Bankers: Nedbank Limited, 135 Rivonia Road, Sandown, Sandton

Company Secretary: Mongezi Jantjie +27 12 305 4497 [email protected]

Enquiries regarding this report: Group Chief Financial Officer: Telephone: +27 12 305 5563 or [email protected]

SECTION


Our strategyThe long-term strategy of the Necsa Group builds on its core research and technology development mandate to ensure sustainability and growth of the Group while meeting South Africa’s nuclear-related needs. The reality of constrained government funding, challenging commercial operating conditions and its transformation imperatives were incorporated into the current strategy.

Seven key impact areas from which Necsa derives most of its value were identified as:

¢ Industrial applications ¢ Medical diagnostics and therapy ¢ Materials beneficiation ¢ Nuclear waste ¢ Non-proliferation of nuclear materials ¢ Nuclear manufacturing ¢ Clean energy.

Legislative mandate

The South African Nuclear Energy Corporation is listed as a major Public Entity in PFMA Schedule 2. The company’s legislative mandate in terms of Section 13 of the Nuclear Energy Act, No. 46 of 1999, is to:

¢ Undertake and promote research and development in the field of

nuclear energy and radiation sciences and technology and, subject to the Safeguards Agreement, to make these generally available.

¢ Process source material, special nuclear material and restricted material, and to reprocess and enrich source and nuclear material.

¢ Cooperate with any person or institution in matters falling within these functions, subject to the approval of the Minister.

According to Section 14 of the Act, Necsa must execute institutional responsibilities on behalf of government, which include operation and utilisation of SAFARI-1, decommissioning and waste management, and international obligations. The South African Nuclear Energy Policy of 2008 directs Necsa to:

¢ Investigate the entire nuclear fuel cycle with the aim of re-establishing viable fuel cycle facilities.

¢ Serve as the anchor for nuclear energy research, development and innovation in South Africa.

In October 2019, Cabinet approved the Integrated Resource Plan 2019 (IRP 2019). The IRP 2019 supports a diversified energy mix and includes a future additional nuclear capacity of 2 500MW as a no-regret option. This IRP proposes that the nuclear power programme must be implemented at an affordable pace and modular scale (as opposed to a fleet approach) and take into account technological developments in the nuclear space. In November 2016, Cabinet confirmed Necsa as the owner, operator and procurer for the nuclear fuel cycle and multipurpose research reactor.

Our valuesFoundational values

Business values

People values

Integrity, Respect, and Accountability

Excellence, Innovation, and Stakeholder Orientation

Trust and People Orientation

1.2 Necsa strategy

Our vision

The Necsa Group is a world-leading nuclear technology organisation that adds significant value to the economy and quality of life of citizens.

Our mission

To develop and utilise nuclear technologies to make socio-economic impact through materials beneficiation and commercialisation of technologies and through environmentally responsible application of core nuclear and related technologies.

Organisational structure

Business modelNecsa’s business model leverages the Group’s knowledge base, legacy infrastructure investment and ongoing R&D in the fulfilment of the state’s nuclear obligations and pursuit of commercial ventures. Necsa is significantly repurposing its strategic legacy investment to the benefit of South Africa and the global market. This includes use of its core facilities such as the SAFARI-1 Research Reactor for research and radioisotope production. Necsa receives financial resources through a government grant and commercial income to sustain the company’s activities. These activities aim to fulfil country nuclear obligations on nuclear waste management, nuclear safeguards, proliferation prevention as well as education and training.

Necsa generates income through dividends and recouping costs of services rendered to its subsidiaries, NTP Radioisotopes SOC Ltd, which produces a range of radiation-based products and services for healthcare, life sciences and industry; Pelchem SOC Ltd, which supplies fluorine-based products into various industries; and Necsa division, Pelindaba Enterprises, which provides commercial nuclear engineering and manufacturing services.

In terms of the Integrated Reporting Framework, the outcomes effected by this model improve the country’s stock of human and intellectual capital, preserve the country’s natural capital, the health of its human capital, and enable manufactured capitals in industry. The fulfilment of nuclear obligations builds relationship capital in the form of international goodwill.

Necsa is the only South African entity legally allowed to process nuclear materials, with NTP overseeing an integrated radioisotope supply chain from source material and processing through to waste management.

Future opportunities for Necsa include: product expansion by the subsidiaries, the design and construction of a replacement multipurpose research reactor for SAFARI-1 (MPR project), innovation and technology development from its R&D capabilities, opportunities arising from the nuclear new build programme, and the growing international market for nuclear decontamination and waste management services. The risks affecting Necsa’s business model include ageing of facilities such as the SAFARI-1 Research Reactor, a declining government grant, a poor performing economy, loss of critical skills and competitive dynamics in its commercial markets.

INTERNAL AUDIT

CORPORATE COMMUNICATION

LEGAL SERVICES

Group Manager Finance

General Manager: HR

General Manager: R&D

General Manager: Business

Development

Pelchem

General Manager: NFC

General Manager: Marketing

General Manager: OPS

General Manager: NIA

General Manager: REAM

Senior Manager Supply Chain

Chief Information

Officer

Senior Manager Investment

STRATEGY & PERFORMANCE

RISK MANAGEMENT

TECHNOLOGY DEVELOPMENT

Group Financial Officer

Group Executive Human

Resources and Real Estate

Management

Group Executive

Technology and Chief Technical

Officer

Group Executive

Business and Development

and Innovation

Group Executive Nuclear

Compliance and Services

Group Executive Pelindaba

Subsidiaries

NECSA

GROUP CEO COMPANY SECRETARIAT

NTP


Foreword of the Chairperson

Introduction

The Necsa Group is a world-leading nuclear, radiation and related technologies organisation that continues to add significant value to South Africa and globally through the environmentally responsible application of a range of these technologies. The Necsa Integrated Annual Report for the fiscal year ended 31 March 2020, is presented to all our stakeholders against a backdrop of significant challenges, mainly of a financial nature, faced by the organisation.

Overview It is important to note that the current Necsa Board was appointed by the Minister of Mineral Resources and Energy in January 2020 and has only effectively been in place for the last two months of the period under consideration.

Necsa’s primary long-standing challenge relating to its financial sustainability remains a key issue that the current Board is committed to resolving. To this end, the Board together with executive management, is finalising a comprehensive turnaround strategy for the organisation that is designed to guide the organisation to a place of financial stability and ultimately, profitability. This journey is a challenging and uncomfortable

one, but one that we believe is essential if we are to transform Necsa into a world-class, leading nuclear, radiation and related technologies company.

The new Board has set the following priorities for Necsa:

¢ To bring its subsidiaries, Pelchem and NTP, back to profitability so that enough money is generated to support the entire Necsa Group.

¢ To diversify Pelchem and NTP product mixes to strengthen and widen their market presence.

¢ To ensure future sustainability by managing current R&D projects to commercial fruition, while also dealing with infrastructure sustainability through programmes such as replacement of the SAFARI-1 Research Reactor.

The Board has committed to enhancing our corporate governance practices and ensuring that the Group's business is conducted with absolute integrity. A disciplined reporting structure, which ensures that suitable governance practices are applied and that the holding company Board is kept informed of all relevant and key decisions and progress, will be a particular focus.

Going forward, the Board will also be required to deal with rationalisation of the Necsa Group in line with President Ramaphosa’s announcement during his February 2020 State of the Nation address that, “In consultation with the Presidential SOE Council, we will undertake a process of rationalisation of our state-owned enterprises and ensure that they serve strategic economic or developmental purposes.”

The Necsa turnaround strategy under development, will focus on growing the organisation to profitability and sustainability through achieving the following outcomes:

¢ Expansion and diversification of the NTP and Pelchem business portfolios.

¢ Identifying and exploiting income generation opportunities. ¢ A revised R&D business model. ¢ A revised Pelindaba Manufacturing business approach. ¢ Strategic cooperation and collaborations. ¢ Infrastructure development initiatives.

Overall performance

Necsa continued to provide for South Africa’s nuclear obligations in terms of international safeguards and nuclear waste management without incident, thereby maintaining South Africa’s excellent safety record in the international nuclear industry.

The Group’s financial performance was less than satisfactory with disappointing performance by NTP with a net loss of (R60.1m) against a budgeted net profit of R39m. This was mainly attributable to production volumes and related sales lower than budget. The budget was lower than expected due to demand from the market following the recent disruption to our ability to supply over the last period. As a world leader in the field of nuclear medicine, we are setting ambitious expansion goals to consolidate our dominance even further.

Necsa corporate external sales were still below target by R137.1m.

The Pelchem subsidiary recorded a loss of (R18.5m) even after once-off adjustments, attributable to compromised plant availability. Certain Pelchem products are also produced at an uncompetitive scale in some markets. Necsa is currently carrying out an examination of the consolidation and expansion of Pelchem activities, which includes an assessment of the capital that is required to upgrade ailing infrastructure.

The overall Necsa Group loss, while unsustainable in the longer term, was reduced from a budgeted (R149.1m) to an actual (unaudited) loss of (R121.7m) by very robust management actions which will be continued into the future.

Necsa continued to carry out valuable scientific investigations and developments in support of a range of nuclear applications. Research papers were published internationally and Necsa specialists contributed to international conferences and study groups, thereby laying the foundation for future product ranges.

Something to be proud of is the highly skilled artisan training provided by Necsa. No nuclear technology can progress without the valuable input of a cadre of skilled artisans. Necsa is acutely aware of this and is concentrating on these activities to provide suitable skills for nuclear power development. Necsa has continued to make progress on its transformation journey and this matter remains a key issue that the Board will continue to focus on.

Strategic relationships

A network of key strategic relationships in the nuclear and related technology domains is of vital importance. Necsa has continued to support the National System of Innovation through initiatives such as its partnership with iThemba LABS and NTeMBI. Involvement was also fostered in strategic international collaborative programmes relating to the application of nuclear and radiation science and technology.

Challenges

The Board recognises that Necsa has been experiencing increasing pressure on its financial, human and infrastructure resources due to historical financial challenges, thus impacting on its sustainability. This is further exacerbated by the combined effect of rising operating costs, a declining government grant in real terms and pressure on its non-grant revenue streams.

OutlookWe anticipate that global conditions will continue to be fluid. Such a state of affairs provides challenges, but it also provides good potential growth opportunities. The Board will continue to urge expansion into available markets while exercising the necessary caution.

Necsa actively continues to work towards fulfilling its role in nuclear power development, which will contribute to national growth, infrastructure development and job creation at all levels. Work on the multipurpose research reactor project to replace the SAFARI-1 Research Reactor will continue.

It is also anticipated that the COVID-19 pandemic will have serious global and domestic economic effects that are likely to impact Necsa’s performance.

AcknowledgementsDespite significant economic challenges, Necsa has grown stronger as a company, thanks in large part to the dedication of its people at all levels of the organisation.

On behalf of the Board, I also wish to express our sincere appreciation to the Acting Group CEO, Mr Ayanda Myoli and his executive team for their continued stewardship of the Necsa Group during this past year.

The Board acknowledges the support and guidance from our executive authority, the Department of Mineral Resources and Energy. The Board also acknowledges the role that organised labour has and continues to play in ensuring that we continue to prioritise workers’ interests in a manner that is in the best interests of the organisation.

Conclusion The South African nuclear industry is on the brink of a new era of development. The Necsa Group remains ready to tackle the demands to be placed on it. Necsa is also moving towards the development and expansion of new opportunities and markets internationally.

Mr David NichollsNecsa Board Chairperson


¢ Nuclear new build programme in which Necsa will be

instrumental in domesticating small modular reactors (SMR)

technology.

¢ The multipurpose research reactor (MPR) project to replace

SAFARI-1.

¢ Pelchem’s continued progress with product line

rationalisation, plant refurbishments, the Thuthukani project

and the Ketlaphela project.

¢ NTP’s Sustainable Return to Service programme, new NTP

production capacity and business initiatives.

¢ Expansion of the NTeMBI network and radiopharmaceutical

clinical trials.

¢ Further leveraging Necsa’s intellectual property portfolio.

Acknowledgements

I wish to express my sincere gratitude to the entire Necsa

Group staff for their efforts, the Office of the CEO for unfailing

support, members of EXCO for their commitment, and the

Necsa Board for its sound guidance.

Conclusion

The South African Nuclear Energy Corporation will continue

on its challenging but exciting mission to bring the benefits of

nuclear technologies and nuclear power to the people of our

country.

Mr A Myoli

Acting Group Chief Executive Officer

some of its products. However, prospects to rationalise offerings and exploit new growth opportunities continue to be pursued. Pelchem has initiated Project Thuthukani, which entails the construction of appropriately scaled fluorochemicals plants in alignment with government policy to increase beneficiation of local fluorspar. Pelchem also intends entering the domestic pharmaceutical market to supply essential medicines for HIV/AIDS, TB and malaria through its subsidiary, Ketlaphela SOC Ltd, in partnership with the Dti and Department of Health.

Radiation Products and Services Programme Cluster

The NTP Group operating loss was R60.1m, 254% below budget. This was mainly attributable to production volumes and related sales. NTP progressively continues to grow orders following its previous prolonged stoppage.

The Security of Supply of Fuel and Target Plates programme for the sustained operation of SAFARI-1 and NTP Radioisotopes remains in progress.

Execution of the DST NuMeRI (Nuclear Medicine Research Infrastructure) programme, as managed by Necsa, is approaching its final stages. The BSL-3 containerised laboratory, to complete the infrastructure of the preclinical imaging facility at Necsa, has been delivered, but hot commissioning had to be postponed due to the COVID-19 lockdown.

Necsa as Host of Nuclear Programmes Cluster

Performance on the execution of the Stage 1 Decommissioning and Decontamination programme was not satisfactory with an achievement of only 88.7% of the planned activities for the year.

Necsa’s safety performance improved in comparison to the previous financial year with a disabling incident injury rate of 0.56 being achieved.

A total of 59 inspections were performed at various facilities under the Comprehensive Safeguards Agreement and the additional protocol during the reporting period. All inspections carried out were conclusive and met the safeguards requirements.

Group CEO’s overview

Necsa Corporate Sales were not achieved with actual performance falling R137.1m short of budget.

Publication of refereed research publications again exceeded target, as did innovation disclosures.

Technical staff as a percentage of total staff fell below target, but Black technical staff continued their upward trajectory, reaching 66.95% of all technical staff.

Necsa continued to produce a pipeline of skills for South Africa across the spectrum from artisans to graduates and post-doctoral candidates.

Necsa entered into a strategic partnership with the Gauteng Department of Education that resulted in the launch of four nuclear technology schools of specialisation. It is important to note that these schools achieved a matric pass rate of more than 95%.

International collaboration continued through participation in a variety of IAEA meetings, expert missions and technical cooperation programmes.

Outlook The COVID-19 pandemic is set to have serious global and local economic repercussions that will further batter the already fragile pre-COVID South African economy. Availability of government resources will be far more constrained. In addition, political and legal challenges to the growth of the South African nuclear industry will need to be navigated.

Highlights of future plans and projectsThe Necsa Group’s primary focus going forward is for all businesses and functions to operate sustainably. Specific growth prospects for the near future include:

Introduction During the reporting period, the local manufacturing sector continued to reflect the global economic malaise with specific impacts on Pelindaba Enterprises and Pelchem. This aggravated the severe financial constraints on the Necsa Group due to its comparatively high fixed cost base.

The most noteworthy successes include innovation disclosures, research publications, the very low public radiation dose impact, and the increase in Black technical staff. Three of the performance indicators missed relate to the financial performance of NTP Pelchem and Necsa corporate.

The Necsa turnaround strategy, which is under development, will focus on growing the organisation to profitability and sustainability.

Achievements by programme clustersNuclear Energy Programme Cluster

While Pelchem is the Necsa Group custodian of fluorine technology vital to the re-establishment of the nuclear fuel cycle, its operating loss of R18.5m remains concerning. This is attributable to unreliable plant, as well as declining demand for

Necsa annual wellness day


3 The next generation of the in-house developed OSCAR-5 reactor simulation and analysis package was released at an international workshop hosted by Necsa in April 2019, with participants from 12 countries and 18 nuclear institutions in attendance. The OSCAR code system is the primary analysis system for modelling SAFARI-1 and is used internationally under licence for modelling various research reactors, supporting various R&D projects and training students. This latest release expands the code system to a multi-physics, multi-code platform ready for use in modelling research reactors, power reactors and small modular reactor designs at various levels of fidelity.

04 Highlights of the 2019/2020 financial year 2 ACS Laboratories supported law enforcement investigations in two cases involving illicit nuclear

materials starting from chain of custody management through to laboratory analysis and the preparation of the forensic analysis reports. The investigations involved materials confiscated and brought to Necsa nuclear forensic laboratories by the Department of Mineral Resources and Energy (DMRE). DMRE wanted to establish the processes and physical origins of the source materials. The second forensic assignment involved illicit nuclear material confiscated by the Hawks in the Klerksdorp area and delivered to the laboratories for forensic analysis.

4 The micro-focus X-ray facility was fully operational, with 23 postgraduate students, 16 researchers and five commercial clients who benefitted from its use during this reporting period. It remained fully operational, even during the COVID-19 lockdown period when it was used to conduct 3D scanning of ventilator parts to enable 3D printing of these parts by the Central University of Technology, North-West University and Vaal University of Technology consortium. The collaboration project aims at delivering a revived version of the Bird Mechanical Ventilator (developed in the early 80s) with a novel South African innovation. The micro-focus X-ray team at Necsa supported this effort through 3D tomography scanning in order to render the internal components and mechanical features, especially all the hidden channels and its features, visible Figure 2 on page 35..

5 Necsa R&TD obtained funding for a pilot mass insect rearing facility, geared to rear 250 000 sterile male mosquitoes per week, which is the next important step in the overall project. The establishment of the pilot insectary (funded by DSI) on the National Institute for Communicable Disease (NICD) site at Modderfontein by a project team from Pelindaba Enterprises has been successfully completed. This facility is now operational and is the first mosquito mass rearing facility in southern Africa. It plans to release mosquitoes near Jozini in KwaZulu-Natal, as part of a field trial to prove the sterile insect technique (SIT) concept locally. The launch of the facility (originally planned for February 2020) was postponed.

6 A new non-invasive therapeutic for skin cancer is to be produced locally for the African market. Rhenium-SCT® (skin cancer therapy) is a specialised state-of-the-art skin brachytherapy that utilises the beta-emitter Rhenium-188. It is indicated for the treatment of basal cell and squamous cell carcinoma. Rhenium-SCT is a single session, non-invasive, outpatient treatment provided by Oncobeta GmbH (Germany), a pioneer and innovator in the epidermal radioisotope sector. They currently supply Rhenium-SCT to the European, Australian and South African markets. To investigate the feasibility of having a production site in the southern hemisphere, Oncobeta signed a contract with Necsa for the sample production of Rhenium-SCT for supply to customers in Africa. The technology transfer took place over three months and the first patient dose was successfully manufactured and shipped to Steve Biko Academic Hospital for treatment of a patient.

SECTION 1 2019 saw the first commercial production run of (Lutetium) Lu-177 n.c.a. by NTP to supply the South African market.

¢ The NTP Lu-177 n.c.a. production facility successfully passed an Isotope Technologies Garching (ITG) current Good Manufacturing Practice (cGMP) Quality audit which was a prerequisite to supply Internationally to ITG.

¢ Three Technology Transfer runs were successfully completed and supplied to ITG. The data from these runs was submitted by ITG to the European Medicines Agency (EMA) to obtain regulatory approval to utilise NTP’s Lu-177 n.c.a. At the end of the 2019-2020 financial year, we were still awaiting a response form the EMA.


05 Key performance information

5.1 STATEMENT OF RESPONSIBILITY FOR PERFORMANCE INFORMATION The Board, as Accounting Authority, is responsible for implementing a system of internal controls to provide reasonable assurance as to the integrity of the performance information, human resources information and the annual financial statements.

The Chief Executive Officer (Accounting Officer) is responsible for the preparation of Necsa’s performance information and for the judgements made in this information.

This Annual Report has been prepared in accordance with the guidelines issued by National Treasury. The annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).

The Auditor-General of South Africa has examined the company’s annual financial statements and predetermined objectives for the year ended 31 March 2020 and their report is presented on page 103 to 113.

In our opinion, the Annual Report fairly reflects the operations, performance information, human resources information and the financial affairs of Necsa for the financial year ended 31 March 2020.

Yours faithfully

Mr A B Myoli Mr D R NichollsActing Group Chief Executive Officer Chairperson of the Board

Date: 31 March 2021 Date: 31 March 2021

Performance measurement facilitates accountability by enabling governance stakeholders, parliament and members of the public to track Necsa’s progress. There is alignment in terms of Necsa’s strategic outcome orientated goals and performance indicators across the shareholder compact with the DMRE, corporate plan and estimates of expenditure.

SECTION


5.3 OVERVIEW OF PUBLIC ENTITY’S PERFORMANCE

5.3.1 SERVICE DELIVERY ENVIRONMENT

Given Necsa’s mandates relating to research and development and national nuclear obligations, the company is not directly involved in service delivery to the public.

Prevailing economic conditions affected Necsa significantly, both limiting support from the fiscus as well as commercial revenues. Pelchem suffered from plant reliability issues. Pelindaba Enterprises was impacted by continued weakness in the local manufacturing sector, although ageing-related replacement of equipment at the Koeberg Nuclear Power Station is providing opportunity. After a prolonged series of shutdowns NTP’s radiochemical processing facility was returned to service under the Sustainable Return to Service programme and was able to successfully complete production and international despatching, albeit at a lower level, due to slow return of previous customer contract levels.

5.2 AUDITOR-GENERAL’S REPORT: PREDETERMINED OBJECTIVES The Auditor-General of South Africa currently performs the necessary audit procedures on the performance information to provide reasonable assurance in the form of an audit opinion. The audit opinion on the performance against predetermined objectives is included in the report to management, with material findings being reported under the predetermined objectives heading in this report.

Refer to page 103 of this report for the Independent Auditor’s Report on Predetermined Objectives (Section 10).

Key performance information

5.3.2 ORGANISATIONAL ENVIRONMENT

The most significant internal organisational challenges continue to be loss of skills and financial constraints. A loss was recorded at group level with Pelchem owing Necsa more than R200m.

The remaining four members of the Necsa Board resigned on 14 January 2020. The Minister appointed seven new members to the Board on 21 January 2020 chaired by Mr David Nicholls, and including the chairs of the NTP and Pelchem subsidiaries.

The updated Integrated Resource Plan (IRP2019), which details the country’s future energy needs, was gazetted on 18 October 2019 and supports preparations for a nuclear build programme to the extent of 2 500MW.

A Necsa project team completed a project initiation report for the multipurpose research reactor in March 2020 under the auspices of the DMRE-led inter-ministerial task team.

On 26 February 2020, the Finance Minister announced the intention to reduce the public sector wage bill significantly.

Necsa Environment & Safety Day Necsa SAFARI-1 Reactor Core Layout


¢ Various sections of the Applied Chemistry Department will provide R&D support to the Nuclear Power Cluster, specifically relating to uranium chemistry required for the fuel cycle, fluorine chemistry and fluorochemical product development, waste management and materials science. Further work on the recovery of enriched uranium from Mo-99 production process residue will enjoy high priority. The Radiation Science Department will contribute reactor physics and computational support.

In addition to positioning for opportunities presented by the planned South African nuclear energy expansion programme, Necsa continues to explore opportunities for future partnerships and access to relevant markets.

Radiation Science and Applications ClusterThis cluster includes radiation sciences research and services, as well as products based on the SAFARI-1 reactor and Necsa’s other radiation infrastructure and expertise. The key strategic objectives for this cluster for the term of this corporate plan include:

¢ To maintain full operational capability of SAFARI-1 and implement the reactor’s ageing management programme.

¢ To expand SAFARI-1 R&D facilities and outputs. ¢ To develop and implement the project for security of supply of LEU, LEU

fuel and LEU target plates. ¢ To grow the portfolio of radioisotope and radiopharmaceutical products

that may be commercialised. ¢ Demonstration of the laboratory-scale process for the recovery of

enriched uranium from Mo-99 production residue and from target plate and LEU fuel manufacturing scrap.

¢ To secure core strategic capability through the replacement of SAFARI-1 by a multipurpose research reactor before it reaches the end of its operational lifetime.

Necsa as Host of Nuclear Programmes ClusterThis cluster refers to Necsa’s capacity to house nuclear programmes due to its unique integrated SHEQ system, licensed nuclear infrastructure and specialised supporting capabilities. The key strategic objectives for this cluster for the term of this corporate plan include:

¢ Increasing Necsa’s research, development and innovation outputs. ¢ Constantly improving SHEQ management performance. ¢ Improving predisposal waste management activities. ¢ Maintaining infrastructure at a suitable level.

5.4 STRATEGIC OUTCOME ORIENTATED GOALS The long-term strategy of the Necsa Group builds on its core research and development mandate to ensure sustainability and growth while meeting the nuclear-related needs of South Africa.

Necsa’s vision:

In terms of Necsa’s long-term strategy, in 2027 Necsa envisages itself as a highly profitable, world-class organisation that boasts a substantive and successfully commercialised portfolio of intellectual property and the capability to manufacture nuclear products and components. Having introduced a new multipurpose research reactor, the company owes its success to its world-class technological capability, R&D programmes and increased national competence in terms of design, quality management, project management and architect engineering. Its robust incentive schemes (for workers and suppliers) have resulted in sustainable income streams with positive impacts on society and key stakeholder groups.

Necsa intends deriving value through the following key impact areas:

¢ Industrial Applications ¢ Medical Diagnostics and Therapy ¢ Materials Beneficiation ¢ Nuclear Waste Handling ¢ Non-proliferation of Nuclear Materials ¢ Nuclear Manufacturing ¢ Clean Energy.

Necsa’s objectives are grouped into three strategic clusters:

Nuclear Power ClusterThis cluster refers to Necsa’s nuclear fuel development and production programmes, as well as projects to support the South African nuclear power programme. The key strategic objectives for this cluster for the term of this corporate plan are:

¢ To assess the viability of a future nuclear fuel cycle (front-end) services industry in South Africa and to progress towards the development or demonstration of required processes and technologies.

¢ To prove the viability of Pelindaba Enterprises (Pelindaba Manufacturing, Pelindaba Engineering Services, and Pelindaba Consulting Services).

¢ To ensure the retention of the fluorine capability through securing Pelchem’s strategy for growth and sustainability.

5.5 PERFORMANCE INFORMATION BY PROGRAMME CLUSTER Performance against planned indicators and targets as contracted in the shareholder compact – 2019/20 between Necsa and the Minister of Mineral Resources and Energy, is presented in a tabular format below:

5.5.1 NUCLEAR ENERGY PROGRAMME CLUSTER

The purpose and strategic objectives relating to this programme are described in the preceding section. During the year under review there were no amendments to the planned targets.

TABLE 1: NUCLEAR ENERGY PROGRAMME CLUSTER: PERFORMANCE INDICATORS, PLANNED TARGETS AND ACTUAL ACHIEVEMENTS

Key performance

area

Key performance

indicator

Actual achievement 2018/2019

Planned target 2019/2020

Actual achievement2019/2020

Deviation from planned target

2019/2020Comment on

deviation

Pelchem Group financials

Net profit after tax

(R83.2m) (R55.6m) (R18.5m) R37.1 - Low demand from export customers for

AHF and low plant availability.

- Unplanned plant breakdowns and

delayed shipments due to lockdown.

- R36.6m overstated provision adjustment.

- Deferred tax asset adjustment of R12m.

5.5.2 RADIATION PRODUCTS AND SERVICES PROGRAMME CLUSTER


TABLE 2: RADIATION PRODUCTS AND SERVICES PROGRAMME CLUSTER: PERFORMANCE INDICATORS, PLANNED TARGETS AND ACTUAL ACHIEVEMENTS

Key performance

area

Key performance

indicator





2019/2020Comment on

deviation

NTP Group financials

Net profit after tax

(R146.52m) R39.0m (R60.1m) (R99.1m) - Reduced sales emanating from

reduced production.

- Lower-than-expected demand from the

market.

SAFARI-1 operation

Operational availability (days

per year)

267.1 days 287 days 302.87 days 15.87 days Target exceeded.

Establish sustainable

supply of LEU fuel and target

plates

Achievement of project

objectives - fuel plates

Inspection of dummy and LEU

test plates at NCCP underway.

Qualification of new external

suppliers of fuel plates.

- On target

- On schedule

Remainder of qualification

process.

Target met.

Achievement of project objectives

- target plates

Technical exchanges on

RFI in progress with NCCP.

Qualification of new external

suppliers of target plates.

Project placed on hold.

Remainder of qualification

process.

Target not met. Project placed on hold.

Achievement of project

objectives - local target plate

manufacture

28% complete. Complete full feasibility

study for local manufacturing of

target plates.

Project completed.

Target met.

Necsa SAFARI-1 building


5.5.3 NECSA AS HOST OF NUCLEAR PROGRAMMES CLUSTER


TABLE 3: NECSA AS HOST OF NUCLEAR PROGRAMMES CLUSTER: PERFORMANCE INDICATORS, PLANNED TARGETS AND ACTUAL ACHIEVEMENTS

Key performance

area

Key performance

indicator





2019/2020Comment on

deviation

D&D programme execution (Stage 1)

Execution of Annual Plan of Action as submitted and approved by DoE (% achievement)

85.15% 100 % 88.67% (11.33%) - Regular mechanical breakdown of ventilation

and other systems at Decontamination Facility.

- Slow progress with drum verification at

Predisposal Operations and breakdown of IQ3

scanner.

- New decommissioning projects added in July 2019 in pre-planning.

Compliance to SHEQ licence and other regulatory requirements

Disabling injury incidence rate (DIIR)

0.68 <0.7 0.56 (20%) Target exceeded.

Public dose impact (expressed as % of allowable limit)

1.086% <20% 1.596% (92%) Target exceeded.

5.5.4 CROSS-CUTTING PERFORMANCE INDICATORS, PLANNED TARGETS AND ACTUAL ACHIEVEMENTS

The purpose of this programme is to manage activities of a cross-cutting nature not readily classified into the three preceding clusters. During the year under review there were no amendments to the planned targets.

TABLE 4: CROSS-CUTTING PERFORMANCE INDICATORS, PLANNED TARGETS AND ACTUAL ACHIEVEMENTS

Key performance

area

Key performance

indicator





2019/2020Comment on

deviation

Necsa Corporate financials

External sales (including

intragroup sales)

R402.4m R541.3m R419.4m (R129.9m) - Lower local sales volume in various divisions, and

lower intragroup sales to NTP and Pelchem.

Innovation value chain

Number of innovation

disclosures

10 6 8 2 Target exceeded.

Research outputs Number of refereed research

publications

38 26 32 6 Target exceeded.

Staff composition Technical staff as % of total staff

44.95% 46.5% 44.87% (1.63%) Proportionally fewer technical staff

appointments and more technical staff

terminations.

Black technical staff as % of all

technical staff

64.87% 62% 66.95% 4.95% Target exceeded.

5.6 PELCHEM 5.6.1 SUMMARY OF FACTS

The purpose of this report is to provide the corporate predetermined objectives (PDOs) for the financial year ending March 2020 in line with the requirements of the Public Finance Management Act (PFMA). The PDOs are key performance indicators (KPIs) and summary of the organisation’s corporate plan targets in terms of Section 52 of the PFMA. The Pelchem Corporate Plan was compiled in line with national strategy guidelines and includes components as defined in Practice Note 4 of 2009/10 where the KPIs need to be aligned with the indicators and targets used in the shareholders’ compact. With reference to the PDOs results, the table below provides a breakdown explanation of each of the KPIs.

TABLE 5: BREAKDOWN EXPLANATION OF EACH OF THE KPIS

KPA KPI Wt. Annual target Actual Comments

Revenue and Finance Revenue 15% R214.6m R142.7m This was mainly due to the short-term projects and plant refurbishment that did not materialise as a result of the inability

to draw down on the IDC loan.

Net profit/(loss) after tax

15% (R55.6m) (R44.3m) The electricity billed by Necsa in the past was incorrect. After consolidation

of prior financial years, it was discovered that Necsa has been overcharging

Pelchem. As a result the costs need to be recovered. These were included in the

financials.

Customer satisfaction rating

3% Customer satisfaction rating of

≥ 90%

71% The missed target is mainly attributed to fluorination services business unit

complaints due to unfavourable access to site and breakdowns. This is an

improvement on the 53% achieved in 2018/19.

Operations Weighted average plant availability

15% >79.4% 67.9% The target was set on the basis of having the plant refurbishments executed

within the financial year, which did not materialise due to the inability to draw

down on the IDC loan.

Weighted average plant utilisation

15% >89% 48.3% This missed target was due to lack of raw material availability, unreliable utilities

and process blockages.

Delivery of new critical projects

¢ Tube trailers ¢ Electronic grade

HF

5% 100% 35.3% The projects were started in anticipation of the IDC loan which did not materialise and the completion target of 100% was

missed.

Safety and Health Disabling injury incidence rate (DIIR)

5% ≤2 3.08 The decline in performance was due to four disabling incidents that took place

between June 2019 and December 2019.

Health Total injury rate (TIR) ≤6 6.14 The total incidents are a combination of the disabling incidents above and other

minor reported incidents for the year.

Compliance Process safety ¢ Fires ¢ Loss of process

containment/spills (LOPCSs) (> 159l)

Lifting of relief valves

5% 0 1 LOPC incident In terms of process safety, the target was achieved. There were no fires and lifting

of relief valves, and only one spill incident of sulphuric acid.

Financial audit 5% Unqualified audit Pending The unqualified audit opinion for the financial audit remains pending as the

AG audit was delayed to August due to extension granted by National Treasury.

Licence to Operate 5% 100% compliance within threshold

limit

75% The LTO comprises of stack discharge emissions (limit of 5mg/m3) and

groundwater contamination of fluorides (limit of 40mg/l). The stack discharge

emissions were within the limit all year round while the groundwater

contamination of fluorides targets was achieved only 50% of the year. The aggregated percentage was 75%.


5.6.2 CONCLUSION The organisation did not achieve most of its targets mainly due to lack of investment into the production infrastructure, which impacted financial, operational and regularity performance in the 2019/20 financial year. A funding plan is in for the new financial year to invest in refurbishment of production infrastructure to enable the company to reach targets.

5.7 NTP GROUP TABLE 6: NTP RADIOISOTOPES

Strategic objectiveKey performance

indicator (KPI) Annual target Actual performance Comments

1. Production, processes, systems

and risk compliance

1. Operational dissolver cells

Two operational dissolver cells

Cell 20A and Cell 19 are fully operational cells

producing Mo-99

Target achieved

1.1 Composite SHEQ index

1 1.17 Target achieved

2. Customer and stakeholder

management

2.1 Non-Mo-99 revenue per customer spread

10% increase y-o-y 12% Target achieved

2.2 Customer/stakeholder satisfaction index

80 87.8 Target achieved and exceeded

3. Organisational and people performance

4.1 Cranfield aviation safety culture audit

index

≤4 Not measured The Cranfield survey was planned to be done by end March. Due

to COVID-19 pandemic this was postponed until resumption of full

employment

Human resource productivity index

3.1 2.49:1 Target not achieved due to low Mo-99 production runs

B-BBEE Scorecard index indicator

Level 4 Level 8 B-BBEE Contributor

Target not achieved: NTP financial position impacts on B-BBEE

spending

Employment target: 75% of all new recruits ≥ C4 are Black

100% Target achieved and exceeded: Two appointments on this level

during Q4 (both Black)



4. Financial Sustainability

4.1 Group revenue R1,276m R761.957m Target not achieved: Production volumes and related sales lower than budget due to lower-than-

expected demand from the market

4.2 Group Net Profit after Tax (NPAT)

R38m -R73.911m Target not achieved: Production volumes and related sales lower than budget due to lower-than-

expected demand from the market

4.3 Audit Report Unqualified Audit Report 2019 AFS unqualified Awaiting results:2020 AFS submission date

extended to 31 July 2020 and finalisation of AFS extended to 30

September 2020

TABLE 7: NTP LOGISTICS



1. Increased SHEQ visibility and drive

1.1. Number of injuries on duty during the year

Less than two injuries on duty

Zero incidents Target achieved and exceeded

2. Ensure customer retention

and business sustainability

2.1. Increase in turnover and customer base

2.1.1. R29.744m R25.076m Target not achieved:New and existing business did not

materialise as envisaged.

2.1.2. Top nine customers (more than R500k

per year) where four will be external to

Necsa Group

Retained all five internal customers and external customers viz. Eskom, Beckman, HAMC, and

IThemba LABS

Target achieved

3. Ensure a sustainable supply of key skills

3.1. Sustainable supply of key skills

Retain 80% of core skills Retained 95% of core skills

Target achieved and exceeded

4. Profitability and Financial Sustainability

4.1. Positive PBT R8.324m R2.256m Target not achieved: ¢ Business envisaged did not

materialise ¢ Fraud and bad debt provision

¢ Unbudgeted legal cost

4.2. Achieve or exceed a return on equity (Net

income after tax ÷ shareholders’ equity)

4.2.1. 12.58% 3.98% Target not achieved

5. Improve and maintain

organisational compliance with

relevant legislation

5.1 Operational compliance with

B-BBEE.

5.1.1. 100% compliant with licences

100% compliant with licences

Target achieved

5.1.2. Level 1 B-BBEE score every year

(in terms of the Forwarding and

Clearing Subsector codes for B-BBEE

as Gazetted 21 August 2009)

Level 1 B-BBEE as Gazetted 21 August 2009

Target achieved

KPA KPI Wt. Annual target Actual Comments

Human Capital Management

Talent Management

5% 1-Approved succession plans

for critical positions 2- 20%

improvement on morale (staff

satisfaction index)

1- Not achieved2- Not achieved

Talent Management KPI was not achieved as there are no approved succession plans in place and the

implementation of the staff satisfaction index to improve staff morale by 20%

was not achieved.

Training and Development

5% 1-Training done as per WSP/ training matrix to CHIETA2-Fluorochemical

centre of excellence up and running

3-Reimbursement of mandatory grants (2% of salary spent

on training)

1-Achieved 2-Partially achieved

3-Not achieved

Only a third of the training and development measures could be

completely achieved. Training was done as per the WSP/training matrix to

CHIETA.

The fluorochemical centre of excellence implementation delayed due to delays in

Project Thuthukani. Funding commitment made by Services SETA.

Business Transformation Achieve B-BBEE level

2% 4 Pending Awaiting audit report from Empowerdex.

Legend

Target met

Target partially met (>70%)

Information pending

Target totally missed (<70%)


TABLE 9: GAMMATEC

Strategic objective Outcome KPIBaseline 2018/19

Target 2019/20

Year end 2020

Achieved/not achieved Comments

Establish and maintain a

safe working environment, using hazard

identification and risk management

strategies to prevent personal

injury, ill health or property damage and to safeguard the environment

Healthy and productive,

injury-free work environment

Safety – Total injury rate

(measured on a rolling 12-month

period)Target ≤2

1.74 ≤2 0.72 Achieved The single injury in October 2019

as recorded against the

OSHA man-hours incident

reporting formula results in this

outcome.

Ensure business continuity

Operational business sustainability

Target: Maintain top

10 customers

Maintain top 10 customers

Maintain top 10 customers

Target achieved

Achieved The rolling method of client retention allows for identification

of clients who fall out of the

retention criteria and to address

the problem.

Ensure an efficient and effective HR

enterprise resource planning

(ERP) platform for managing, planning and

reporting on all HR and B-BBEE

related topics

Retain core skills and develop new

personnel

Achieve a B-BBEE score

of 5 or better Target ≤5

5 Achieve a B-BBEE score

of 4 or better

Achieved = 4 Achieved Assessment will be done annually.

Improve company profitability

Achieve or exceed a predetermined

return on equity as a percentage of

turnover as reflected in the financial report. (NPAT/

Shareholder funds)

Target ≥7.18%PDO: 8%

10.47% 7.18% 11.35% Achieved The value of the Rand contributed

to the outperformance.

Maintaining all compliance structures for reporting and transparency

Comply with relevant licences thereby ensuring

that all aspects of the product cycle, including delivery

to customers, are according to

regulatory approvals and no unplanned

non-deliveries occur because of non-compliance

and other regulatory compliance

Target:100%

compliance against

compliance register

100% compliance

against compliance

register

100% compliance

against compliance

register

100% compliant

against the register

Achieved The register continues to

be reviewed to ensure no items

are missed.



6. Diversify the service offering and market

for NTPL

6.1. Additional revenue from new markets

and new customers

R4.500m R3.256m Target not achieved: ¢ Sales specialist position was

not filled ¢ Sales targets not achieved

6.2. Revenue from additional innovative

services

R0.400m R0.287m Target not achieved: New and existing business that did

not materialise as envisaged.

TABLE 8: AEC-AMERSHAM



1. Increased SHEQ visibility and drive

Number of injuries on duty ≤ Two disabling injuries on duty per year

Zero injuries during the year

Target achieved

2. Grow AEC-Amersham business

Organic and new business growth

≥8% sales growth year-on-year

Negative sales growth year-on-year, actual

growth -4.6%

Target not achieved: Slower sales as a result of

1. Supply interruptions – various manufacturers

2. SAA route cancellations and flight cancellations due to

COVID-19 during month of March

3. Tc99m generator sales did not recover since Mo-99 plant shut-

down. Only 1 211 sold instead of ±2 400 as per budget.

4. Product launch that did not materialise.

3. Ensure business continuity

Operational business sustainability – AEC-Amersham business

to continue operating and able to sustain its

operations

3.1. Retain top four operational licences

All four operational licences were retained

Target achieved

3.2. Level 5 B-BBEE Level 4 B-BBEE Target achieved (certificate expires July 2020)

4. Improve company financial

performance

4.1 Quick ratio ≥2.3:1 1.55:1 Target not achieved due to lower sales

4.2 GP% 23% 17.30% Target not achieved due to sales mix ratio not being achieved and

freight cost higher than budgeted.

4.3. Indirect overheads on sales

18% 25.1% Target not achieved due to lower sales

5. Ensure a sustainable supply of key skills

Retain core skills that will sustain the business

Retain 90% of core skills 100% retained Target achieved


06 Necsa divisions and key subsidiaries

6.1 GROUP FUNCTIONS 6.1.1 COMPANY SECRETARIAT

Functions performed by the Necsa Group Company Secretariat include preparing the annual Board schedule of meetings, timeous distribution of correspondence, record keeping, preparing resolutions for meetings, and preparing draft Board and Board committee minutes. The returns required by the Companies Act were completed and lodged on time. The use of the external service provider ended during the 2018/19 financial year, and the function is currently performed by Necsa Company Secretariat.

6.1.2 LEGAL SERVICES

The Necsa Legal Services department is responsible for rendering legal advisory services with respect to contracting and statutory compliance issues while liaising with external parties as required. In addition, the department manages Necsa’s litigation matters and submits quarterly litigation reports.

6.1.3 INTERNAL AUDIT

As part of Necsa’s internal control function, Internal Audit evaluates the effectiveness of the Necsa Group’s risk management process and internal control systems, including financial internal controls, governance and ethics-related processes. Assurance and consulting services regarding these matters are provided to the Board Audit and Risk Committee.

The key activities of Internal Audit include the continuous evaluation of risks associated with the integrity of financial and operational information, resource utilisation, asset management as well as compliance with legal requirements. In addition, consultation services are provided to the Necsa Group for improving performance and applying corporate governance best practices.

Planned and ad hoc audit projects are carried out in accordance with both an Annual Plan and a Three-Year Rolling Plan approved by the Audit and Risk Committees. A risk-based approach to audit projects is followed and the following audit focus areas are included with the results reported to the Audit and Risk Committees on a quarterly basis:

¢ Systems and Compliance Audit ¢ Corporate Governance and Ethics-related Audit ¢ Risk-based Performance Audit ¢ Predetermined Objectives Audit ¢ Information Technology Audit ¢ Ad hoc Audits and Special Investigations.

6.1.4 STRATEGY AND PERFORMANCE

The Strategy and Performance department is responsible for advising on a coherent strategy to achieve the Necsa Group’s business, social and environmental objectives. Performance is evaluated against predetermined objectives and key indicators in accordance with the compact between the Minister of Mineral Resources and Energy and Necsa. The department supports the Necsa Group in the following areas:

¢ Integrated business planning (corporate plan) and performance monitoring (quarterly reports).

¢ Organisational competency in project management. ¢ Organisational competency for quality. ¢ Ad hoc matters assigned by the Acting Group CEO.

The Strategy and Performance department is responsible for business planning and reporting performance in terms of predetermined goals and objectives, as reflected under Performance Information by Programme. All required performance reports were prepared and submitted to the Necsa Board and the DMRE.

6.1.5 CORPORATE COMMUNICATION AND STAKEHOLDER RELATIONS (CCSR)

The key role of CCSR is to position the Necsa Group as a reputable organisation regionally, nationally and internationally through different communication platforms. The unit consists of Communication (Internal and External), Media, and Stakeholder Relations. Some of the functions within CCSR include hosting media briefings, strategic events, outreach programmes and corporate social investment activities.

6.1.5.1 Stakeholder engagements, events and outreach programmes

The NVC was established as a tool to increase public knowledge and change perceptions around nuclear technology. The NVC is a world-class exhibition centre consisting of models that are suitable for young and old people from all walks of life, to broaden their perspective about nuclear technology.

During the 2019-2020 financial year just over 9 000 people visited the Necsa Visitor Centre (NVC). The public was reached via print, broadcast and social media, outreach programmes, expos and exhibitions.

Besides the guided tours, the NVC offers several workshop venues that are used for activities such as presentations, training, workshops and conferences. An outdoor amphitheatre is also available for use by larger groups.

During the year under review, Stakeholder Relations conducted several events relating to stakeholder engagement, corporate social investment, exhibitions, outreach programmes, in-house programmes, on-site visits and international relations.

Figure 2 Necsa Visitor Centre categorised

2019/2020 visitors by type

Government

Learners

Educators

Students

Public

Researchers

Media

SECTION


¢ 12 March 2020

6.1.5.2 Media liaison

Necsa social media statistics

Necsa’s social media following continues to grow gradually. The social media platforms are mainly used to communicate information relating to important milestones, and engaging the public on topical scientific issues. These remain important in creating awareness and educating the public on different applications of nuclear technology. Social media also plays a crucial role in marketing and preserving the positive image of the Necsa brand. Growth in Necsa’s social media statistics is shown below:

Year Facebook followers

Twitter followers

LinkedIn followers

2018/19 3 045 1 024 3 856

2019/20 4 989 1 529 4 663

The graph below shows trends in media interviews, statements and enquiries:

0

5

32 2

8

4

14

7

15

20

7

10

0

5

10

15

20

25

Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19` Jan 20 Feb 20 Mar 20

MEDIA INTERVIEWS, STATEMENTS AND ENQUIRIES

6.1 GROUP FUNCTIONS (continued)Figure 3: Graph reflecting the number of National Science Week visitors over the past three years

0

1000

2000

3000

4000

2017 2018 2019

NSW for 3-year comparison

Public Safety Information Forum (PSIF)

PSIFs are conducted in accordance with the requirements of the National Nuclear Act No.47 of 1999 that obligates Necsa as a holder of a nuclear licence to establish the PSIF. These meetings are held on a quarterly basis with members of the community that live within a 5km radius of the SAFARI-1 Research Reactor, but Necsa also extends invitations to neighbouring residents, such as Atteridgeville, which is 15km away. The Chairperson and Deputy Chairperson are independently appointed by the National Nuclear Regulator (NNR), with Necsa as licence holder providing the secretariat services for the meeting.

The main objective of this forum is to facilitate interaction with community members and keep stakeholders informed on safety matters. Four meetings were successfully held during this reporting period and were attended by an average of 20 members of the public per meeting. Meetings are advertised in two local newspapers, Tshwane Sun and Kormorant, as well as on social media platforms. The dates of the Pelindaba PSIF meetings during the past financial year were:

¢ 8 June 2019 ¢ 3 August 2019 ¢ 9 November 2019 ¢ 7 March 2020

The Vaalputs PSIF also continues to take place on a quarterly basis. The meeting dates during the past financial year were:

¢ 6 June 2019 ¢ 12 September 2019 ¢ 6 December 2019

6.2 CHIEF TECHNOLOGY OFFICE 6.2.1 SAFARI-1

The SAFARI-1 Research Reactor is one of Necsa’s key nuclear facilities. Its main application is the commercial production of radioisotopes and rendering of irradiation services. SAFARI-1 provides the basis for Necsa’s radioisotope business through its subsidiary, NTP Radioisotopes SOC Ltd. Other commercial products include neutron transmutation doping of silicon. Neutron beamlines and irradiation positions are also used by the Research & Technology Development Unit for research and training. Specialised services such as neutron diffraction, neutron radiography and neutron activation are also provided.

The SAFARI-1 Research Reactor performed well throughout the financial year under review and maintained its record of 100% safe a service to users since its first criticality in March 1965.

6.2.1.1 Operational schedule

The reactor operational availability was 302.9 days against the target of 287 days, which represents an operational availability of 105.55% of planned operation during 2019/20 at an average reactor power of 19.77MW. Reactor engineering supported core and fuel management and reactor safety performed well during this year.

The reactor vessel assessment has been completed and indications are that the vessel and components are still in a good condition with regards to mechanical strength and material condition considering neutron irradiation effects. The plant health assessment on selected structures, components and system is also in progress. This provides valuable information that can be used to infer the remaining service life of the reactor.

6.2.1.2 SAFARI – 15 years operational performance

Reactor maintenance and refurbishment

The identified projects under the ageing management programme did not progress as expected during the year under review. This is due to a lack of resources in project management and engineering support as a result of the austerity measures. The projects are also impacted by a lack of project management infrastructure and the slow regulatory processes for the approval of technical submissions before implementation of the project

installation and commissioning can commence. The refurbishment project of the ventilation systems was completed and commissioning indicated a well-functioning system. All routine maintenance programme tasks were completed as scheduled.

The plant health assessment project will support the justification for operation beyond 2021. It aims to ensure safe operation of the reactor until at least 2030 or beyond. This project is progressing well and is scheduled to be completed by January 2022. The SAFARI-1 reactor engineering team is currently working to ensure continuous safe operation of the reactor. Several submissions were made to the NNR for review, which included the report on the operating limits and conditions to address the adjustment of the total reactor vessel neutron fluence and the engineering report addressing the reactor vessel structural integrity assessment for acceptance and/or authorisation.

Technical collaboration

A technical collaboration meeting was held between SAFARI-1, HFR and Pallas (NRG – Petten, Netherlands) and the OPAL reactor (ANSTO, Australia) in November 2019 in South Africa. Valuable information was shared on topics relating to reactor operations, engineering and SHEQ. Furthermore, the assistance provided during the year between operational and safety matters of the three reactors regarding the newly planned Pallas reactor were fruitful. These related in particular to ageing management and operational assessment performed at HFR Petten reactor. The parties also received the results of the HFR vessel assessment which was used for benchmarking purposes of SAFARI-1, which was a significant contribution. The information was used to justify the safety margin on the revised accumulated power limit of the SAFARI-1 reactor vessel for continuous safe operation until 2030 or beyond.

Quality Safety and Environmental Management

The SAFARI-1 Research Reactor received certification to the new standards for IISO 9001:2015 and ISO 14001:2015, and also maintained its occupational health and safety OHSAS 18001 certification. The SAFARI-1 safety indicators showed a total injury rate and disabling injury incidence rate of zero which were maintained for more than 500 000 man-hours. The SAFARI-1 safety culture programme achieved a 71% result, indicative of a good safety culture among SAFARI-1 employees. A safety culture continuous improvement programme has been implemented.


¢ Six personnel received training in several fields of interest to Necsa, including nuclear forensics, CTBTO, and applied analytical techniques through joint projects with the previously mentioned organisations.

¢ Four personnel members were sponsored to attend international scientific conferences and topical meetings.

¢ Ten TUT students benefitted from the ongoing gamma spectrometer training offered by ACS scientists in collaboration with TUT academics. ACS hosted three NRF internship programme students.

6.2.2.1.2 Innovation and capacity building

The ACS established an Innovation and Business Growth Services (IBS) team comprising senior scientists within (MDS) marketing and development services and spearheaded new product development and growth of existing business services. The team has coordinated the development and implementation of a roadmap for new product and services development, as well as best practices for managing existing technical capabilities and services in support of the need to achieve breakeven from the current financial deficit. Some new business ideas in the broad areas of food and agriculture, chemical forensics, health and safety, and environmental management have been prepared and gone through the review processes. During the reporting period, ACS developed five business concept proposals, one feasibility study, and three market studies reports, and commercialised one project.

Examples of innovation projects completed during the reporting period include:

¢ Design and commissioning of a special source holder/tool that is used to calibrate fixed area monitors in the nuclear facilities where the monitors are installed and cannot be brought physically to the laboratory. The facilities include iThemba LABS, and SAFARI-1. Previously these monitors were not calibrated due to challenges relating to transportation of the sources.

¢ Development of a neutralisation method for carboys (acid waste resulting from laboratory activities) which took four years, but has now been submitted to the NNR for final endorsement.

6.2.2.1.3 Technical support to law enforcement agencies

ACS Laboratories supported law enforcement investigations of two cases involving illicit nuclear materials starting from chain of custody management through laboratory analysis and the preparation of the forensic analysis reports. The investigations involved materials confiscated and brought to Necsa nuclear forensic laboratories by the DMRE. The department wanted to establish the processes and physical origins of the source materials. The second forensic assignment involved illicit nuclear material confiscated by the Hawks in the Klerksdorp area and delivered to the laboratories for forensics analysis.

6.2.2.1.4 Accreditations

Three out of four laboratories, namely Radio-Analysis Laboratories (RA), PAL and Calibration Laboratories (CAL), are SANAS accredited in terms of ISO/IEC 17025 requirements and a process to accredit the remaining lab (NFP) is underway. An internal audit was conducted for Nuclear Forensics Programme (NFP) using an external consultant. The outcome of this audit indicates that NFP meets 88% of the prescribed requirements.

6.2.2 ANALYTICAL AND CALIBRATION SERVICES (ACS)

ACS operates Necsa’s Laboratories, providing analytical, calibration, nuclear forensics and radiation protection consultancy services to internal and external customers. Its main function is to provide third party quality assurance for products and services and verification of compliance to regulatory requirements on behalf of its customers. ACS is running four state-of-the-art laboratories namely (1) Radio-Analysis Laboratories (RA), (2) Pelindaba Analytical Laboratories (PAL), (3) Calibration Laboratories (CAL) and (4) Nuclear Forensics Laboratories (NFL), using proven technologies and an experienced scientist and technicians. The Marketing and Development Support (MDS) group is responsible for new services and products development and support the laboratories with expansion of scope of existing services, quality and safety management projects. The scope of services includes:

¢ Measurement of natural and man-made radionuclides using laboratory techniques based on the emission of ionising radiation using gross alpha/beta counting, instrumental neutron activation analysis, gamma spectrometry and alpha spectrometry.

¢ Analysis of the chemistry of materials using instrumental techniques such as gas chromatography, liquid chromatography, inductively coupled plasma mass spectrometry and X-ray fluorescence spectrometry. Services are supplied typically for testing of drinking water, environmental wastewater, testing of urine for uranium take-up, heavy metals in food and beverages, testing of raw materials and products against specifications, analysis of moisture content and purity of gases (medical and refrigerant gases).

¢ Calibration and metrology of radiation protection monitoring instruments and equipment, as well as the provision of radiation protection services which include conducting radiation surveys, site clearances, inspections and sampling.

¢ Supporting the non-proliferation and law enforcement agencies with criminal investigations involving nuclear materials found to be out of regulatory control. The temporary storage of SAPS nuclear material evidence, the building of a national nuclear forensics database library at Necsa.

¢ The innovation and development of new commercially viable products and services; marketing of existing products and services; acquiring external funding for services improvements and scope expansion projects; responding to applicable tenders and quotations for non-routine client-requested services; supervising scientists and guiding of non-routine sample analysis; and troubleshooting malfunctioning instruments and maintaining of equipment.

The markets serviced include agriculture and food testing, water and environment analyses, nuclear forensics analyses, material and product testing, calibration and metrology.

6.2.2.1 Highlights

6.2.2.1.1 Partnerships with international and national institutions

ACS has standing partnerships to perform specialist analytical methods development with international scientific organisations such as the International Atomic Energy Agency (IAEA), USA Lawrence Livermore and Los Alamos National Laboratories, and Japan Atomic Energy Agency (JAEA). In addition, ACS collaborated with the TUT, the University of Pretoria (UP), and UJ in the training and hands-on skills development in nuclear research and technology. Some of the benefits accrued from these partnerships are:

¢ Scientists received an IAEA cooperation research programme grant for nuclear technology development.

¢ A gamma spectrometer and accessories, and spare parts for an inductively coupled plasma mass spectrometer (ICP MS) were donated by the USA Department of Energy National Nuclear Security Administration.

6.2.2.1.5 Proficiency test scheme

The laboratories participated in various annual international and national proficiency test schemes, of which the results are summarised in Table 10.

TABLE 10: TEST SCHEME % COMPLIANCE OF RESULTS

Laboratory Proficiency scheme 2019/ 2020 2018/ 2019 Status

RA Laboratories CTBTO Proficiency Test Exercise 100% 100% (a)

IAEA-ALMERA Proficiency Test on the Determination of Radionuclides 73% 77% (b)

US Department of Energy’s IARMA 100% 84%

Procorad Radio-toxicological inter-comparison 95% 74%

MAPEP 2019 90%

(c)NPL 2018 67%

Ad hoc 2019 75%

Pelindaba Analytical Laboratories

SABS Group 1 analysis of heavy metals in water (including uranium) 33% 100% (d)

SABS Group 2 analysis of nutrients in water 100% 100%

SABS Group 3 analysis of major constituents in water 100% 86%

Nuclear Forensics Laboratory SABS Group 1: uranium analysis and heavy metals in water 45% 70% (e)

Calibration Laboratory PT Report for ILC 137 (PTCal0231-01) Artefact Electra Survey meter 60% 100% (f)

(a) The 100% reported results for 2018-19 were later amended by the CTBTO after submission for the Annual Report. The results could therefore not be changed to avoid inconsistent reporting.

(b) A senior scientist has been tasked to retrain technicians and the scientist on this method and type of matrix to improve competency.

(c) First-time participation – no previous results available.

(d) The ICP MS 7700 instrument was faulty during two of the three proficiency batches for the period.

(e) The results are currently inconsistent due to the heavy metals method that is in progress for development and has been tested in the PT scheme. NFP is awaiting the results.

(f) An external consultant is being sourced to retrain scientists and technicians.

A metrologist calibrating a radiation monitoring instrument


A total number of 163 batches that originated from the A-26 facility and the Quarantine storage facility were processed in the Decontamination Facility.

A liabilities assessment for the historical strategic facilities was completed in 2019. The Area 16 Cylinder Storage facility is operational. All UF6 cylinders on the Necsa site will be consolidated in this store.

6.2.3.3 Management of nuclear waste

Solid waste management

Nuclear waste from various points of origin was collected and safely stored at Necsa during the review period as shown in Table 11 below:

Type Origin Storage area Waste quantity received Total at 31 March 2020

Drums Facilities on Necsa site and external clients

Pelstore and Area 21 1 295(received)36 concrete drums (6 shipments)408 metal drums (Transported to and disposed of at Vaalputs)

71 547 (received)6 574 (Transport to and disposed of at Vaalputs)

Spent fuel elements SAFARI-1 storage pool Thabana Pipe Store 82 1060

Spent sealed radioactive sources Clients throughout SA, specifically the healthcare sector

Area-24 Source Store 394 11 113

Smoke detectors Clients throughout SA Area-24 Source Store 866 30 345

Thirty-six concrete waste packages and 408 metal waste packages were transported and disposed of at Vaalputs. The cumulative total number of waste packages transported and disposed of at Vaalputs was 6 574 as at 31 March 2020. Area 24 Disused Source Storage Facility received sources from across the country. These sources are characterised, conditioned and safely stored in the facility. During the financial year April 2019 to March 2020, a total number of 151 (about 394 DSRS were received but only 151 were characterised and conditioned) disused sealed radioactive sources were characterised and conditioned.

No disused sealed radioactive sources were repatriated for the reporting financial year. Waste characterisation is conducted on a continuous basis for safeguards (IAEA) and final disposal purposes. A total of 1 627 and 1 756 drums have been measured using the IQ3 scanner and BNFL segmented drum scanner. The contents of 2 080 drums have been physically verified and registered on the Waste Tracking System.

6.2.4 LIQUID EFFLUENT MANAGEMENT SERVICES (LEMS) LEMS’ core business is to receive, treat and dispose of all industrial, low, and medium activity radioactive effluent generated on the Pelindaba site. A comprehensive laundry service for work wear and personal protective equipment (PPE) is also provided to Pelindaba facilities, as well as other ad hoc services to the NNR. The facility’s main priority is to operate in compliance with strict regulations and authorisations from relevant authorities.

During the reporting period, LEMS provided uninterrupted services to generators, and all effluent releases were authorised based on regulatory limits. In addition to budgetary constraints and unfilled critical vacancies, ageing facilities requiring extensive maintenance remain a growing concern.

Plant maintenance is under pressure due to unavailability of critical spares and alternative solutions are being pursued.

Table 12: Key performance indicators for LEMS for the period 2019/20

Key performance indicators for LEMS for the period 2019/20

Key Performance Area Target Actual

Limit environmental impact Annual dose ≤ 150 µSv 3.490 µSv

All releases to Crocodile River authorised and within regulatory requirements 100% releases authorised 100%

Limit releases to Crocodile RiverAnnual releases ≤

250 000m3 81 354m3

Zero downtime to customers 100% plant availability 100% (365 days)

The (MA) Medium active effluent compressor and gearbox system was successfully reassembled and commissioned at the beginning of this reporting period. The electrical motor of the circulation pump on the evaporator was also replaced successfully.

Solidification of MA concentrates for final disposal at Vaalputs continued, but the procurement of solidification drums presented technical difficulties. The solidification of MA concentrate is becoming a potential bottleneck and could result in the MA evaporation process being stopped.

6.2.4.1 Nuclear waste projects

The Volume Reduction Facility is aimed at reducing nuclear liability at Necsa by a process of compacting waste drums, thereby reducing their volume and placing a series of four to five of these compacted drums into a single uncompressed drum prior to shipment for off-site disposal.

Construction and cold commissioning was successfully completed and accepted by the NNR. NNR authorisation to perform hot commissioning was granted on 23 June 2017. Hot commissioning was performed according to the requirements, but was stopped due to excess liquid in the drums compacted. Hot commissioning resumed during May 2018 but was again stopped due to liquid in a waste drum. All waste drums needed to complete hot commissioning have been inspected to verify that they are free of liquid. A population of 130 “safe” waste drums were verified and set aside for hot commissioning so that

6.2.2.1.6 Comprehensive Nuclear Test-Ban Treaty Organisation (CTBTO)

The CTBTO finally accepted the close-out of findings that were raised in the previous reporting period in November 2019. CTBTO sent a notification to Necsa officially certifying the Radionuclide Laboratory (RL)14 on 13 December 2019. RL14 received three samples from the CTBTO in quarter four of FY19/20, however, it could not further receive samples due to the COVID-19 pandemic impact.

6.2.2.1.7 Improvement projects

ACS has identified laboratory processes that can be optimised or improved, as well as new services, for example test methods for food and agricultural samples, water quality samples and forensic samples, which can be added to existing scope in order to increase revenue. The other aim was to optimise sample throughput and increase profit margins through improved infrastructure, updated business strategic planning and more cost-effective marketing and sales processes. Nine key projects were identified and three were completed during the reporting period.

6.2.3 NUCLEAR WASTE AND LIABILITIES MANAGEMENT (NWLM)

6.2.3.1 Decommissioning services

Decommissioning activities during the financial year focused mainly on the following projects:

¢ Phase 2 decommissioning of Area 14 oil basement: Cutting of the oil pipes into smaller sections progressed well and the project target set for 2019/20 financial year was achieved.

¢ The de-heeling of UF6 cylinders in Area 27: This project is progressing slowly due to the slow cylinder washing process, challenges experienced with the delivery of nitrogen gas, ageing equipment and related infrastructure.

¢ Phase 2 decommissioning of the Conversion Facility: Comments were received from the NNR for the submission of the hazard assessment and decommissioning strategy with regard to the collection of all loose material (pre-decommissioning activities). These comments necessitated the revision of the project schedule and a new strategy is being developed on the use of localised ventilation in decommissioning the facility.

¢ Care and maintenance: Various facilities, including Beva evaporation pans, (previously radiologically contaminated) on the Necsa site entered care and maintenance. These facilities (all under NNR authorisation) are inspected and radiologically monitored as scheduled.

6.2.3.2 Decontamination services

The Decontamination Facility consists of a Wet Decontamination section where chemical or metallurgical decontamination techniques are used to recover nuclear materials. Dry Decontamination is where nuclear materials are physically and mechanically removed to recover nuclear materials.

Necsa Lab accredited by CTBTO


Uruguay, Philippines, Costa Rica and Brazil. Necsa signed the MoU/contract with the IAEA which expired. The latest contract was drafted and is awaiting approval from the IAEA.

No mobile hot cell (MHC) operations were undertaken for the reporting period. A contract between Necsa and the IAEA to perform the MHC operations has not been concluded yet.

External projects KNPS

Eskom appointed the Nuclear Liability Management department through Necsa in February 2019 to perform various pioneering studies regarding the disposal of six original steam generators (OGS). These generators are in operation at the Koeberg Nuclear Power Station and Eskom plans to replace them in the near future.

International best practice study visits were undertaken to the CSA and CIRES disposal sites in France and El Cabril disposal site in Spain. The visit to Spain included a tour of the José Cabrera NPP, which is undergoing decommissioning. A best practice study report was submitted to Eskom and accepted. The report details the options on the disposal of OSGs and reactor pressure vessel heads (RPVHs) in line with international best practices.

Following the submission of the best practice study, more task orders were issued on the revision of the Vaalputs post-closure safety assessment (PCSA), compilation of Waste Management Plan using the best available technology not entailing excessive costs (BATNEEC) principle, and shielding studies for transient storage at Koeberg. The waste management and the shielding studies for transient storage at Koeberg were submitted and accepted by Eskom.

Eskom has already issued Necsa with task orders to the value of R6m to provide support services for interim storage and disposal of metallic waste at Vaalputs.

this activity can continue in parallel with the identification of the verification technology. A request to continue hot commissioning in January 2019 was submitted to the NNR on 14 December 2018. This NNR authorisation to continue with hot commissioning is still outstanding.

Two additional projects were registered. The first project aims to obtain an X-ray system which will be used to detect any liquid in waste drums. The second project will establish a waste segregation and repacking facility in which the X-ray identified liquid can be removed from the waste drums. In 2019, a Necsa team visited Andra (France) and Enresa (Spain) to study and observe waste drum verification technologies in operation prior to the procurement and commissioning of X-ray technology for verification of the waste drum contents. A licensing strategy was submitted to the NNR on how the waste segregation facility and the X-ray system will be licensed.

The construction and installation of the smelter facility is complete. The cold commissioning and hot commissioning of the facility is still to follow. The installation of a test smelter will be completed in 2020/ 2021. The construction and operation of a smelting facility in Area 26 on the Pelindaba East site was initiated as part of Necsa’s waste management strategy with the objective of decontaminating metals to reduce the volumes by clearing the metals for reuse and recycling purposes. Melting of uranium-contaminated and potentially contaminated metals is currently accepted as the best practical means for the management of this category of waste.

6.2.4.2 Nuclear waste disposal

Necsa continues to manage Vaalputs until the National Radioactive Waste Disposal Institute is in a position to obtain a Nuclear Installation Licence.

6.2.4.3 IAEA/AFRA-related activities

SHARS mobile hot cell

Necsa has developed the mobile hot cell (MHC) which is used for the removal and conditioning of Category 1 and 2 Disused Sealed Radioactive Sources (DSRS). These spent sources pose a potential security risk if they are poorly controlled or uncontrolled in numerous countries. In order to address this challenge Necsa was contracted by the IAEA to assist other member states who have challenges in managing their DSRS inventories. This MHC was successfully utilized in various overseas countries such as Sudan, Tanzania,

6.3 RESEARCH & TECHNOLOGY DEVELOPMENT The mandate of the Research & Technology Development (R&TD) division is to grow and maintain core research capacity in the following nuclear and radiation-related fields:

(a) Radiation Science, involving reactor theory and calculations, as well as applications of radiation beamlines for pure and applied research.

(b) Applied Chemistry in nuclear and radiation-related chemistry fields.

(c) Radiochemistry research for medical isotope and radiopharmaceutical development.

Niche products and services are developed in the following strategic impact areas:

1. Medical diagnostics and therapy

2. Industrial applications of radiation

3. Clean energy

4. Materials beneficiation

5. Conditioning of nuclear and non-nuclear waste.

In addition to those impact areas, R&TD renders important research support to the National System of Innovation (NSI) in order to help establish a knowledge-based economy with specific emphasis on the nuclear and radiation sciences. The generic R&TD organisational model is shown in Figure 1.

FIGURE 1: SCHEMATIC OF R&TD FOUNDATIONS, CORE SKILLS, COORDINATION AND IMPACT

Waste Conditioning

Industrial Applications

Material beneficiation

Clean energy

Medical applications

IMPACT THROUGH TECHNOLOGY

CONTRACT RESEARCH AND PROGRAM MANAGEMENT

RADIATION SCIEN

CE

RADIO CHEM

ISTRY

APPLIED CHEM

ISTRY

SAFETY, HEALTH, ENVIRONMENT, QUALITY

Nuclear reactors

Nuclear diagnostics

SHARS mobile hot cell


R&TD has a steadily growing number of clients that are served through contract research in the respective impact areas. The Necsa subsidiaries, in particular, are provided with focused research support in order to maintain a competitive advantage and to expand their existing product portfolios. A systems engineering approach to product development is followed. Core science and technology activities are supported by project and programme management. In order to benchmark and strengthen its own capabilities, close collaboration with national and international collaborators is actively pursued. Safety, quality, health and environmental protection are of uncompromising importance to R&TD.

SUMMARY OF MAIN RESEARCH OUTPUTS

Apart from outputs from commercial and institutional-related programmes, which is discussed in more detail under the different departmental activities, the knowledge dissemination-related research outputs of the R&TD division can be summarised as follows:

The main R&TD activities and notable achievements during the 2019/20 financial year are highlighted in departmental context below.

6.3.1 RADIATION SCIENCE DEPARTMENT

The purpose of the Radiation Science Department is to establish, grow and maintain:

¢ Internationally benchmarked and recognised reactor simulation and calculation capabilities and to use these to render support towards the Necsa Group’s position in the global radioisotope market.

¢ A vibrant neutron beamline centre of excellence in Africa with an extensive South African user base.

¢ Peer-recognised core expertise judged by research outputs, to position Necsa as a partner of choice.

¢ Core expertise in reactor and radiation science and technology, required to assist with intellectual property (IP) generation.

¢ State-of-the-art research facilities and expert instrument scientists, such as modernised SAFARI-1 neutron beamline facilities, complementary X-ray facilities, and accelerator-based beamline facilities.

¢ A growing NSI user community that benefits from the utilisation of the beamline facilities.

¢ High-level human capital development through training and postgraduate research support.

¢ Networks and research consortia with other institutions. ¢ Participation in technical cooperation and skills exchange programmes

of the IAEA.

In this section of the report, progress and innovative developments in these areas are highlighted.

6.3.1.1 Radiation science highlights

Local (NSI) collaborations and networking

Collaborations with partners from within the NSI, an initiative of the Department of Science and Innovation, are important to promote innovation through the establishment of national research networks. Some key collaboration initiatives for the reporting period are listed:

¢ The diffraction laboratories, equipped with two neutron diffraction and complementary X-ray diffraction facilities, were routinely used by students and researchers. The neutron diffraction facility is equipped with extensive temperature environments to facilitate in situ parametric studies of materials. South African universities utilise these facilities for complementary and in many cases, decisive inputs to their postgraduate research projects. Research, using beamlines, has contributed to improved materials and components. For example, the use of beamline techniques has enabled characterisation of precursor materials in Li-ion battery development, additively manufactured components (3D printing), and beneficial surface modification techniques (laser shock peening) to improve fatigue resistance, as well as characterisation of welded structures (assessments of post-weld stress relieve processes).

¢ The micro-focus X-ray facility was fully operational, and 23 postgraduate students, 16 researchers and five commercial clients benefitted from its use during this reporting period. It remained fully operational, even during the COVID-19 lockdown period, when it was used to conduct 3D scanning of ventilator parts for reverse engineering purposes to enable 3D printing of these parts by the Central University of Technology in Bloemfontein, North-West University and Vaal University of Technology consortium. The collaboration project aims at delivering a revived version of the Bird Mechanical Ventilator (developed in the early 80s) but with a novel South African variation. The micro-focus X-ray team at Necsa supported this effort through 3D tomography scanning in order to render the internal components and mechanical features, especially all the hidden channels and features, visible (see Figure 2).

TABLE 13: KNOWLEDGE DISSEMINATION-RELATED RESEARCH OUTPUTS OF THE R&TD

Type of output Number

Innovation disclosures 8

ISI journal publications 27

Other peer-reviewed journal publications 6

Technical and contract research reports 27

Note: A list of journal publications can be found at the end of this Annual Report.

FIGURE 2: SCAN OF THE VALVE OF THE BIRD VENTILATOR

¢ A pulsing system has been designed for the Necsa Van de Graaff accelerator that will expand the applications scope to include energy resolved neutron experiments. The main applications from which NSI users will benefit are the imaging of complex flow systems and non-destructive testing, using fast neutron radiography.

¢ Pelindaba Laboratories for Accelerator-based Science (PLABS) continued collaborative links with the MeASURe group at University of Cape Town, assisting in research into nuclear thermometry, as part of the ATLAS/CERN collaboration via the UJ Engineering Department. In collaboration with iThemba LABS, a joint iThemba LABS/Necsa multipurpose full ion beam analysis chamber was commissioned on the iThemba LABS Gauteng campus.

6.3.1.2 Radiation Calculation Support

The Radiation and Reactor Theory (RRT) section at Necsa is responsible for theoretical and computational modelling of reactor physics, reactor thermal-hydraulics, criticality, shielding and material activation phenomena. Within this space, RRT both provides calculational analysis services, and develops new methods and software products, the latter most notably captured as part of the OSCAR reactor calculational package developed by RRT over the past 20-plus years (Figure 3 below depicts a 3D model of the SAFARI-1 core region). In support of these activities, RRT aims to maintain an active research base, with the 2019/2020 financial year yielding nine international conference and journal publications and 22 local conference contributions.

FIGURE 3: MODEL OF THE SAFARI-1 REACTOR CORE REGION

Vaalputs waste disposal site

6.3 RESEARCH & TECHNOLOGY DEVELOPMENT (continued)


6.3.1.5 Outreach and awareness drives

As part of an outreach strategy to get promising young people interested in science, Radiation Science scientists made contributions to the National Science Week and participated as adjudicators for the North Gauteng Senior Science Fair and as conveners at the International Science Fair.

Micro-XCT Instrument scientists hosted several visiting groups from the University of Pretoria (Nuclear Engineering students), the University of the Witwatersrand (first-year Geosciences students) and the University of Limpopo (Engineering in relation to renewable energy and Li-ion batteries) and presented a public lecture at the Wits School of Geosciences’ Geotalk series. They also presented the benefits of radiography and tomography as research tools at the Association of Southern African Professional Archaeologists (ASAPA) conference.

6.3.1.6 International collaborations

Necsa’s neutron beamline scientists participated in the first SA-BrightnESS2 workshop at iThemba LABS to contribute to the European Commission Infrastructure Development project for the European Spallation Source (ESS). The project aims to expand the knowledge of neutron scattering techniques in South Africa as well as to collaborate with the development of a quality standard for the neutron strain scanning technique in conjunction with three of the most prominent groups in Europe. The BrightnESS2 project, a flagship project within DSI, runs over three years (2019 – 2021). The Radiation Science beamline groups contribute:

¢ Work packages 2.1 and 2.2 in collaboration with iThemba LABS and the involvement of South African researchers at large. The primary aim is capacity building through neutron research in South Africa and exploitation of the potential benefits that can be reaped from the new ESS facility that will come online in 2023. The process has been initiated at a first SA-BrightnESS2 workshop that was held during August 2019 where nine thrust areas were identified to be led by prominent local researchers.

¢ Work package 2.3(A) - Engineering pilot on the use of neutron strain scanning. The Necsa neutron diffraction section actively participates in similar collaboration with the facilities and scientists from the three leading neutron strain scanner instruments in Europe, i.e. ILL (France), MLZ (Germany) and ISIS (UK). The primary aim is to establish standardisation protocols to ensure integration and capability inter-comparison among neutron strain scanners internationally.

The micro-focus X-ray team played a key role in the Bakeng-Se-Afrika (BsA) project, which is a project within the Erasmus Plus programme, a continuation of the former European Commission’s Erasmus Mundus programme. The project involves a consortium of three South African and four European universities. The objective of BsA is to develop and manage a comprehensive digital imaging collection of South African skeletal remains as a capacity-building resource for improvement in internationalisation of higher educational institutes (HEIs). The Necsa instrument scientists contributed extensively in the 3D scanning of human and non-human skeletons from the three SA repositories (UP, SMU and SUN), with data processing and with mentoring of postgraduate students involved in the project. Outputs will impact teaching and research in HEIs, forensic science, healthcare and businesses such as dental implant companies.

As part of the DSI-initiated collaboration between South Africa and the Russian Joint Institute for Nuclear Research (JINR), a project titled ”Collaborative neutron powder diffraction studies of materials and components” was approved for the period 2020-2022. Besides the submission of the technical proposal, in response to an IAEA request for proposal for the Moroccan prompt gamma neutron activation analysis system, other IAEA collaborations involved the participation of a Necsa expert (Dr AM Venter) on a panel of four international members to review a technical document, “Neutron Scattering with Low and Medium Flux Sources”. Dr Venter was also invited by the IAEA as an advisor to the Birine Research Reactor facility in Algeria to render advice on the development of a neutron powder diffraction facility.

RRT routinely supported fuel and core management in the form of reload and core-follow safety calculations for SAFARI-1 and continued to develop and improve the tools and methods to meet the needs of their clients. During this financial year, efforts were focused mainly on improved temperature calculations for fuel and molybdenum target plates and building thermal-hydraulic support capabilities. Other important support for SAFARI-1 included fuel qualification studies aimed at alternative suppliers, criticality studies for the SAFARI-1 fresh fuel storeroom and radiation damage assessment for the grid plate and core box as part of the SAFARI-1 life extension projects. Support work for NTP Radioisotopes included shielding calculations and designs for several packages, drums and storage and transportation casks, as well as shielding and dose-rate calculations for the NTP hot cells.

RRT continued to put significant effort into ensuring compliance to NNR requirements relating to verification and validation of calculation models used in safety and design analyses. In this regard, RRT was audited by Eskom as part of a contract research project and received a clean audit. Overall, RRT analysis services was responsible for supporting most safety and licensing submissions at Necsa, and produced over 100 technical and analysis reports to this end in the 2019/2020 financial year.

6.3.1.3 Radiation science user facilities at SAFARI-1

The SAFARI-1 beamline facilities comprise two world-class neutron diffraction instruments. The materials probe for internal strain investigations (MPISI) is a neutron strain scanning instrument that enables high-resolution depth-resolved studies within bulk materials and components. The other is the powder instrument for transition in structure (PITSI). It is equipped with an extensive suite of temperature capabilities that enable in situ parametric studies of crystallographic and magnetic phases and transitions. These facilities are continuously expanded and improved, based on user demands. For instance, the SAIW Centre for Welding Engineering at the Department of Materials Science and Metallurgical Engineering at UP has recently contributed R130 000 worth of consumable equipment to the neutron diffraction group at Necsa. With the closing down of the JEEP II reactor in Norway, some of the neutron powder diffraction systems have been offered to Necsa, which include linear position sensitive detector tubes and a radial oscillating collimator. The estimated value of this equipment is in excess of R1.5m. The equipment will be used to complement the PITSI instrument expansion programme.

6.3.1.4 Contract research projects

As part of the focus on industrial applications of radiation, the PLABS group through the Technology Innovation Agency (TIA) cluster has started an investigation into the feasibility of determining wall thickness of a dynamically eroding system by using the identification of unique gamma signatures. An overall radon monitoring and integrated logging system is also being developed by PLABS to aid the national objective of identifying the national radon footprint.

The micro-focus X-ray facility was utilised in six funded research projects for the Central University of Technology (Bloemfontein).

The RRT section, subcontracted by Pelindaba Enterprises, conducted work on an Eskom awarded contract for the removal and disposal of six old Koeberg steam generators and two scrapped reactor pressure vessel heads. Dose rate and shielding calculations were performed for NTP as part of a larger project for the extension of the Thabana pipe store facility for storing SAFARI-1 spent fuel assemblies, solid-residue and high-level liquid waste from chemically processed molybdenum target plates. R&TD submitted a technical proposal in response to an IAEA request for proposal, for the engineering design of a prompt gamma neutron activation analysis system and a neutron imaging instrument at the Centre National de l’Énergie, des Sciences et des Techniques Nucléaires (CNESTEN) in Morocco. The project value is approximately €1.5M.

6.3.1.7 Reactor code development

The OSCAR system has been applied successfully as a reactor calculation package to a number of operating research reactors around the world. Most notably, it is used as the primary reactor calculational package at the SAFARI-1 reactor at Necsa, the HFR, HOR and Pallas reactors in the Netherlands and the MNR reactor in Canada. A number of further local and international institutions use the code system as either a research or industrial tool.

An international workshop held in April 2019 marked the release of OSCAR-5, the fifth major version in the 25-year lifespan of the system. OSCAR-5 represents a completely overhauled, multi-physics, multi-code reactor calculational platform, capable of research reactor, light water reactor and small to medium reactor modelling. The workshop was held from 15 – 19 April 2019 at Amanzingwe Lodge near Necsa and welcomed 40 participants from 12 countries and 18 different nuclear-related institutions (Figure 4).

The focus has changed to migrating existing users of the OSCAR-4 system to the OSCAR-5 platform, and to begin the feasibility analysis with potential new users, which include institutions from Australia, USA and France.

FIGURE 4 LOCAL AND INTERNATIONAL DELEGATES AT THE OSCAR-5 RELEASE WORKSHOP HELD AT AMANZINGWE IN APRIL 2019

Conferences and visits abroad

The current IAEA CRP (International Atomic Energy Agency Coordinated Research Project) on multi-cycle depletion methods is nearing completion. Other notable conferences and/or international interactions from Radiation Science staff members during the year:

¢ A Radiation Science expert presented an oral presentation titled 'Visions with the future of neutron scattering in Africa' during a celebratory micro-symposium as part of the proceedings of the European Conference on Neutron Scattering (ECNS 2019). The visit was funded by the BrightnESS2 programme.

¢ A scientist from the radiography group received an IAEA grant to participate in a training Workshop on the ‘Advanced Use of Neutron Imaging for Research and Applications’ held from 23 – 27 Sept 2019 and hosted by South Korea, where he presented a paper titled ‘Upgrade and Optimization of the Neutron Radiography Facility at Necsa, South Africa’.

6.3.1.8 Recognition

National and international recognition of Necsa’s expertise in the field of nuclear and radiation science are evidenced by:

¢ A Necsa Radiation Science expert (Dr AM Venter) served on the Board of the DSI-NRF Centre of Excellence in Strong Materials and on a six-member international panel, which developed an ISO test method for determining residual stresses by neutron diffraction. This was published by ISO/DIN in 2019.

¢ A Radiation Science expert (Dr FC de Beer) was appointed to the position of Senior Associate Researcher in the Department of Anthropology and Development Studies at UJ.

¢ The ScanManipulator neutron diffraction data reduction, analysis and visualisation system, developed at Necsa (Dr D Marais), was declared as an open-source project and placed on a public repository for use by the wider scientific community.

¢ A Radiation Science scientist (Mr TC Tjebane) was awarded the prize for the best doctoral student poster presentation in the field of condensed matter physics and material science at the 2019 conference of the South African Institute of Physics, held at the University of Venda, 8 – 12 July 2019.

Necsa Reasearch & Technology Development


conditioning technology and fluorine technology. Important NSI programmes, such as the Fluorine Expansion Initiative (FEI) and the Advanced Materials Initiative (AMI) programmes of the DSI reaped significant benefits from the research of Applied Chemistry.

6.3.2.1 Applied Chemistry highlights

Technology development programmes with local and international collaborations

Nuclear fuel cycle development programme: The nuclear fuel cycle (NFC) refers to all processes commencing with uranium mining, fabrication of nuclear fuel and the post-reactor processes to manage the nuclear waste. In Necsa, R&TD skills development and demonstration of NFC processes are pursued to firstly support isotope production of NTP, but also to prepare for possible future localisation in the case of a new nuclear build programme.

Good progress was made with research related to the purification and homogenisation of uranium feed material for conversion to UF6. Firstly, an ion-exchange-based purification process that focused on the selective removal of impurities from the uranium feed stream was evaluated. Secondly, a membrane-assisted solvent extraction process was developed to recover uranium from the historic ‘unburnts’ waste stream, and potentially other sources, such as fluoride-based waste streams associated with front-end NFC activities. The process is based on the well-known HNO3 /TBP solvent extraction system and could also be used to purify uranium from other waste streams, including NFC back-end waste streams. From the results, it is clear that the developed solvent extraction process is far more suitable for uranium purification than the ion exchange process.

As part of the Advanced Metals Initiative programme, a laboratory study for the recovery of uranium from U3Si2 fuel manufacturing scrap has progressed well. The aim is to finally convert the recovered enriched uranium to uranium metal for the production of LEU-based products used in isotope production.

6.3.2.2 Plasma gasification development programme

As part of down-managing the nuclear waste liability on site, Applied Chemistry plays a central role in developing conditioning technology for selected waste streams. Plasma gasification technology was further developed for nuclear as well as non-nuclear applications. In the nuclear field, the technology is applicable to the destruction of contaminated waste (e.g. thermal destruction of organic liquids and solvent extracting agents). Plasma technology is of particular importance due to the high temperature that can be achieved, thus expanding the range of waste materials that can

¢ Radiation Science personnel served on various international committees such as the International Scientific Committee of MECA SENS (mechanical stress evaluation by neutron and synchrotron radiation), the International Advisory Committee for NOBUGS (New Opportunities for Better User Group Software), the Advisory Committee of the International Society for Sample Environments (ISSE), and on the Executive Committee for the African Light Source (AfLS).

¢ Access to international neutron facilities based on the merit of the research proposals has been awarded to Radiation Science staff members at the residual stress instrument of MLZ (Germany) and the cold neutron imaging facility at the Rutherford Appleton Laboratories in the UK.

¢ Radiation Science personnel served on various national committees, such as the South African Committee of the International Union of Crystallography, the Mineralogical Association of South Africa, and as Chair of the Synchrotron Roadmap Implementation Committee.

¢ One scientist (Mr Emmanuel Montwedi) was appointed as the executive secretary of the International Youth Nuclear Congress (IYNC).

6.3.1.9 Training, human capacity building and talent management

During this reporting period, 12 Radiation Science staff members were enrolled for PhD and two for MSc studies. Of these, three received notice of successful completion of their PhD degrees and one Master’s degree in nuclear engineering was awarded with distinction. In addition, Radiation Science instrument scientists supported 12 PhD students and 14 MSc students from higher education institutes, utilising Necsa’s radiation research facilities.

Several postgraduate training courses have been presented at Necsa and at the North-West University Mafikeng campus and a number of appointments of Radiation Science personnel at universities have been effected in positions such as: extraordinary professor with the CARST School of the North-West University, adjunct professor at the North Carolina State University in the USA, and senior lecturer at the NWU, as part of the CARST programme.

6.3.2 APPLIED CHEMISTRY DEPARTMENT

The purpose of the Applied Chemistry department is to establish and maintain core expertise in the chemistry of the nuclear fuel cycle (front and back end), material science of nuclear materials (especially uranium) and related spin-off technologies and to apply this know-how in the development of new products. Core skills relate to nuclear fuel cycle-related materials beneficiation, plasma-based material modification and processing, waste

be processed. One of the important unit operations, therefore, is plasma-facilitated volume reduction for compressible low-level waste, polymers such as PTFE and ion exchange resins, as well as organic liquids such as oil.

In the non-nuclear field, the plasma technology method is applicable to organic toxic waste destruction (e.g. pesticides) or biomaterial gasification. In selected cases the off-gas could be utilised in the form of heat or for the production of synthetic fuels. An investigation onto the depolymerisation of scrap hydrocarbon polymers has started at laboratory level to produce syngas fuel. This project is funded by the TIA Seed Fund. An industry partner for the tyre feedstock has been identified, while funding for technology development based on tyre gasification and conversion into energy is awaited from TIA.

The commercial viability of plasma waste processing technology can be demonstrated at different plant sizes for different feed materials which includes tyre waste, municipal solid waste, electronic waste, medical waste, etc. An MOU was signed between Necsa and the Limpopo Eco-Industrial Park on the development and implementation of plasma gasification technology for solid municipal waste. This is a >R300m project over 10 years. There is also scope to expand to other waste types. Collaboration agreements were also concluded between Necsa, Sefako Makgato University and Wits University. The main topic of research is plasma application in the dental industry with Sefako Makgato University and energy optimisation on plasma gasification systems with Wits University.

6.3.2.3 Plasma spheroidisation development programme

The plasma spheroidisation system, which was acquired through a National Equipment Programme allocation from the NRF, was used to successfully spheroidise a number of different alloy powders. Most notably, kilogramme quantities of Ti6Al4V alloy material were spheroidised for the CSIR Titanium Centre of Competence. Spheroidised powders are used for 3D printing of components, which in South Africa is currently focused on the aerospace and medical industries, but is to be extended to the precious metal and refractory industries.

Surface contamination of these powders is a serious threat as it negatively influences final component strength. Necsa is now focused on reducing surface contamination through different methods guided by appropriate analysis of, for example, the oxygen concentration. Comparative tests have already indicated that the Necsa produced powders are as good as imported powders in terms of physical attributes. A more precise and versatile combustion analyser is in the process of being purchased, using funding from DSI to make South Africa competitive in the production of spheroidised titanium-based powders.

The spheroidisation of novel high entropy alloys such as FeCrMnNiCo has also started. Models to explain experimental spheroidisation and powder synthesis data are being developed making use of multi-physics modelling software. Investigations to determine if spheroidisation could simplify the manufacturing of uranium-based alloys used in the production of medical isotopes has also started.

6.3.2.4 Fluorochemical technology development programme

Fluorine-related technology and know-how have been retained from previous NFC endeavours at Necsa for potential deployment in a revived nuclear fuel cycle for a future energy generation fleet. Research & Technology Development focuses on commercial fluorine spin-off products in support of Necsa’s Pelchem subsidiary, and on expanding the range of fluorochemical products in support of South Africa’s mineral beneficiation drive, specifically fluorspar.

Product development through the Fluorochemical Expansion Initiative (FEI) funded by DSI focused on a range of chemicals, such as the electronic gases NF3 and COF2 as well as fully fluorinated fluorocarbon liquids, such as perfluorodecalin (PFD), which is used in the medical and cosmetic industries. A project to develop a production route for LiPF6, a salt used in the electrolyte for lithium-ion batteries, formed a major part of this programme. The FEI funding mechanism was terminated and individual

product development, based on a convincing business case, will now be funded by DSI. The first project chosen is the development of LiPF6 production technology to pilot plant scale.

Under the DSI-funded energy storage programme, new processes to develop products, such as LiPF6 containing electrolytes are under investigation. The aim is to improve electrolyte products for the rapidly expanding energy storage market. In addition, promising preliminary results were achieved with the fluorination of manganese-based cathode materials, which is aimed at improving the lifespan of standard lithium-ion batteries. This work is being done in collaboration with Argonne National Laboratory (ANL) in the USA.

6.3.2.5 Neodymium trifluoride development programme

Neodymium trifluoride (NdF3) is the source of neodymium metal, a lanthanide used mainly in the manufacture of permanent magnets for various commercial applications. As part of South Africa’s minerals beneficiation objective, Necsa has developed a cost-effective and environmentally friendly process for converting neodymium oxide to neodymium fluoride, which is part of Necsa’s capability for conversion of metal oxides to metal fluorides. Necsa has licensed the NdF3 production process to a local private company who in turn has secured innovation type funding to develop a demonstration plant for this process.

6.3.2.6 Waste management development programme

Research and development continued on the processing of high-level nuclear waste streams through the development of partitioning and conditioning technologies. The aim of this programme is to recover enriched uranium for reuse in isotope production as well as to develop encapsulation matrices for high-level nuclear waste for final safe disposal. The programme to develop encapsulation matrices for Mo-99 manufacturing waste streams is done in collaboration with the Australian Nuclear Science and Technology Organisation (ANSTO). Further progress of this work is seriously constrained by the availability of hot cells to demonstrate the laboratory developed processes. However, experience gained in this project would assist South Africa when making choices on how to dispose of high-level nuclear waste.

As part of down-managing the nuclear waste liability on site, R&TD plays an important role in developing conditioning technologies for selected front-end nuclear waste streams. The development focus was on the following unit operations used in nuclear waste conditioning:

¢ Chemical and physical characterisation of waste streams. ¢ Plasma-facilitated volume reduction, mainly through carbon containing

matrix destruction. ¢ Decontamination of uranium containing waste streams through selective

leaching, resin adsorption and solvent extraction. ¢ Cementitious encapsulation for final waste disposal at Vaalputs.

Plasma dissociated zirconium/pigments development programme

Necsa has developed a patented process for the production of inorganic doped zircon pigments (blue, yellow and pink) directly from plasma-dissociated zircon (PDZ) which is aligned to the country’s minerals beneficiation objective.

Under a licence from Necsa, Brinni Beneficiation Technologies (Pty) Ltd, a start-up company owned by Ishango Scientific Systems (Pty) Ltd, is interested in commercialising Necsa’s technology by manufacturing zirconium pigments for the ceramics industry. As a first step in the commercialisation effort, Necsa completed a pre–feasibility study on behalf of Brinni through R4m funding made available by the Industrial Development Corporation (IDC). The prefeasibility study and a market research study, conducted by Roskill Consulting Group Ltd, indicated a potentially favourable outcome both commercially and technically.


the technology which has matured to culminate in commercial outcomes. At early technology readiness levels (TRL), these are supported by funded technology platforms/clusters to enable the required NSI and industry partnerships.

6.3.3.1 Radiochemistry department highlights

6.3.3.1 1 Manufacturing of Rhenium-SCT for skin cancer therapy

A new non-invasive therapeutic for skin cancer is to be produced locally for the African market.

Rhenium-SCT® (skin cancer therapy), is a specialised state-of-the-art skin brachytherapy that utilises the beta-emitter Rhenium-188. It is indicated for the treatment of basal cell and squamous cell carcinoma. Rhenium-SCT is a single session, non-invasive, outpatient treatment, which is provided by Oncobeta GmbH (Germany), a pioneer and innovator in the epidermal radioisotope sector. They currently supply Rhenium-SCT to the European, Australian and South African markets. To investigate the feasibility of having a production site in the southern hemisphere, Oncobeta signed a contract with Necsa for the sample production of Rhenium-SCT for supply to customers in Africa. The technology transfer took place over three months and the first patient dose was successfully manufactured and shipped to Steve Biko Academic Hospital for treatment of a patient.

6.3.3.1.2 Development of a single vial 68Ga-PSMA kit for treating prostate cancer

Gallium-68 is an exciting new PET imaging radioisotope, but its half-life of 68 minutes makes synthesis at a radiopharmacy facility and shipment to the hospital difficult. The solution is a freeze-dried kit where the 68Ga is added in the hospital and the preparation is ready for injection after 10 minutes. The 68Ga can be added to a variety of molecules for different applications.

The most recent development is the addition to PSMA, which is selective for primary and secondary prostate cancer. The Necsa Radiochemistry group developed a single vial PSMA kit that has passed the technical feasibility study and now needs to undergo GMP compliance certification before production and distribution under a Section 21 authority of the Medicines Control Council. Necsa secured R34.5m funding from NTP, drawn from the NTP R&D and innovation fund, to proceed with the next step in the value chain, namely production according to good manufacturing practice (GMP), in collaboration with the P3000 radiopharmaceutical facility at Necsa.

6.3.2.7 Technical cooperation projects

Within the framework of the energy storage programme, DSI has resolved to put in place a funding instrument for collaboration with ANL under an SPP (Strategic Partnership Project) agreement. Collaboration with ANL is currently focused on the development of superior cathode materials but will be expanded to developing advanced electrolytes for Li-ion batteries.

6.3.2.8 Conferences and visits abroad

Applied Chemistry researchers participated in the 24th International Symposium on Plasma Chemistry from 9 – 14 June 2019, through lectures and a poster presentation. Other contributions to international conferences included presentations at the annual Advanced Materials Initiative Conference (CoSAami 2019),the International Conference of the Microscopy Society of Southern Africa (MSSA) and the 20th Annual International Conference of the Rapid Product Development Association of South Africa.

6.3 2 9 Training, human capacity development and talent management

Two Applied Chemistry permanent staff members obtained postgraduate degrees (MSc cum laude, MEng) and one contract worker obtained a postgraduate degree (PhD) during the 2020 financial year.

Applied Chemistry personnel acted as lecturers for the postgraduate degree at CARST at NWU, Mafikeng campus and as co-supervisors for three MSc students. Furthermore, on average Applied Chemistry supported 18 postgraduate students at university (mostly through African Management Initiative funding instruments), three postgraduate students in Necsa Laboratories and two post-doctoral fellows. The fellows are co-funded by the NRF. Four members of Applied Chemistry were also registered for postgraduate studies.

6.3.3 Radiochemistry department

Radiochemistry continued to perform pipeline research to enhance Necsa’s status as an internationally competitive radiochemical isotope producer. Besides the development of radiochemicals (precursors for radiopharmaceuticals), the emphasis has shifted further down the value chain to the development of new radiopharmaceuticals. This section also includes highlights of several product development programmes as well as

6.3.3.1.3 Clinical trial for a 195mPt-cisplatinum companion diagnostic

Part A of the phase I/II clinical trial on the use of 195mPt-cisplatinum as a companion diagnostic to optimise and individualise the dose for patients, which was funded by the TIA for completion of the trial preparation phase, has been completed. The next phase (Part B) is execution of the trial. A due diligence for this part was completed with TIA and a GMP licence is in process in order to produce the 195mPt-cisplatinum for clinical trials.

6.3.3.1.4 A new theranostic for identifying and treating tumours

The molecular compound, GluCABTM is a new theranostic and will initially be used to seek, identify, and treat solid mass tumours such as those found in breast and ovarian cancer. The term ‘theranostics’ refer to an agent used for diagnosis via imaging followed by therapy and is fast becoming the norm in personalised medicine. The concept of passive targeting through the enhanced permeability and retention effect has been demonstrated through micro-PET evaluation in xenografted (organ transplant from a donor of different species) mice where clear tumour uptake could be demonstrated. A new chelator has been successfully incorporated in the molecule which will allow radiolabelling at room temperature and at physiological pH, which is a major improvement. The local pharmaceutical company that funded the current preclinical phase unfortunately had to withdraw from the project. The proposal for the next phase which involves the active targeting through a cleavable linker has been compiled and engagement with new funders is ongoing.

6.3.3.1.5 Ethylenedicysteine Deoxyglucose for detection of tumour lesions

Ethylenedicysteine Deoxyglucose (ECDG) is a diagnostic drug used in the detection of tumour lesions. This is also funded by a local pharmaceutical company. The technology has progressed to a kit formulation and is awaiting further testing in limited phase II clinical trials at the University of Free State Universitas hospital. SAHPRA and Ethics Committee approval were finally obtained for a further 15 lymphoma patients. In January 2020 all these approvals were in hand and patient recruitment is in process. Execution of the trial will happen in the new financial year.

6.3.3.1.6 Mo-99 production through alternative methods

NTP has tasked Radiochemistry to undertake research on alternative methods to produce Mo-99. A patent describing a unique way of producing Mo-99 has been filed internationally. Experiments to prove the concept were performed at the ‘Canadian Isotope Innovations’ linear accelerator. In principle the experiments were successful, but further optimisation is needed.

6.3.3.1.7. Terbium-161 PSMA

Necsa, Radiochemistry was part of an international team that won the Marie Curie Award for best oral presentation, 'Terbium-161 for PSMA-targeted radionuclide therapy of prostate cancer' at the 31st Annual European Association of Nuclear Medicine (EANM) conference held in Dusseldorf in October 2018. The project has moved to the clinical phase and first in-human studies in Germany using Tb-161 DOTATATE in neuro endocrine tumour patients have taken place. The preliminary outcome is positive, but patient responses need to be monitored over a longer period of time and after several cycles of administration. Necsa continued to provide the irradiated targets for the Tb-161 production as part of this collaboration. Several high impact papers have been published by the Group. A first-in-human trial in South Africa using Terbium -161 PSMA for prostate cancer patients is planned for the new financial year.

6.3.3.1.8 Enabling technology platforms/clusters

Nuclear medicine research infrastructure

The South African Research Infrastructure Roadmap (SARIR) was launched by the Department of Science and Technology (now the DSI) in 2016. Nuclear medicine is one of the focus areas. The DSI approved the application for Nuclear Medicine Research Infrastructure (NuMeRI) in 2017 and the revised first three-year budget was awarded to Necsa to carry out the incubation phase. Execution of the Necsa incubation phase/contract for

NuMeRI was successfully completed and all the KPIs were achieved. The successful delivery on the R149m infrastructure programme proves Necsa’s capability to execute such large-scale research projects.

The development of the PET-TB facility at Tygerberg received priority from the start. Under the agreement between Necsa and Stellenbosch University, the NII (NuMeRI Infection Imaging centre) equipment was ordered through Necsa. After successful procurement of a PET-CT, completion of the building works and the refurbishment of the radiopharmacy, the NII opened its doors on 15 November 2019. Routine patient scans are taking place daily.

The NuMeRI host for the main facility, Steve Biko Academic Hospital (SBAH), together with the University of Pretoria, was the successful bidder and NuMeRI Main Centre at Steve Biko Hospital (NuMaCS) was contracted in 2018. An independent legal entity, NuMeRI NPC (non-profit company), was registered in February 2019, which will take NuMeRI forward and act as the host from 1 April 2020. This NuMeRI NPC organisation has now contracted with the DSI for future funding. Handover from Necsa to the NPC took place in this financial year. Necsa assisted the NPC to launch the tender for the main building including two cyclotron bunkers as well as the research and commercial cyclotron tenders.

6.3.3.1.9 Preclinical imaging facility

The interim preclinical imaging facility (i-PCIF) is a NuMeRI node that will remain at Necsa for the next three years until the building at SBAH is complete. It was inaugurated in 2017 and has completed its third full year of operation as part of Necsa Radiochemistry. The i-PCIF has grown into a one-stop laboratory supporting projects on, preclinical tracer or drug development and beyond. High-tech small animal molecular imaging equipment (SPECT/CT and PET/CT) was made available. In addition, rapid gamma-counting, optical imaging, cryotome tissue sampler and autoradiography apparatuses were procured as auxiliary tools. The animal house was upgraded to host a modern self-sustainable unit with cages that are individually ventilated. Moreover, a specialised mobile container unit hosting the laboratory to safely perform research with microorganisms and pathogens (such as TB, HIV, malaria and viruses) was commissioned and erected next to the i-PCIF. Necsa has been a valuable platform providing expertise and equipment such as access to the SAFARI-1 reactor, radioisotopes, research radiotracers or radiopharmaceuticals and facilitation of new developments within the existing R&D radiotracer laboratories.

The projected scope of the i-PCIF is that it will become a national, operational facility offering unique nuclear imaging of small animals in South Africa, sub-Saharan Africa and beyond. The i-PCIF is being positioned to support pharmaceutical, biological and clinical research and provide unparalleled service in translational medicine, therapeutics, and diagnostics. Current research projects involving the i-PCIF infrastructure have 25 students enrolled. In addition, training and other knowledge exchanges were offered to several national and international scientists.

About 20 projects were completed in 2019/20 and 15 peer-reviewed publications, 20 invited academic and public lectures as well as several oral and poster presentations created valuable publicity for the i-PCIF. The i-PCIF and Radiochemistry Department have become part of an international IAEA-guided research project that will engage globally in performing research on Zirconium-89 labelled radiopharmaceuticals. The focus for Necsa is to provide innovation in the field of malaria research, which involves supporting the discovery, radiopharmaceutical development and the preclinical characterisation of potential Zr-89 radiotracers against the malaria pathogen.

6.3.3.1.10 Nuclear technologies in medicine and biosciences initiative

The nuclear technologies in medicine & biosciences initiative (NTeMBI) is a DSI programme, which was transferred to TIA in 2019 and is hosted and managed by Necsa. NTeMBI has operated successfully since its inception in 2011 by consolidating the expertise among various islands of excellence in the field of nuclear medicine in South Africa, thereby achieving the original mandate given to the programme by its originator, the DSI. The programme has made considerable strides in capacity building in an under-resourced

Plasma gasification


Radiochemistry Human Capital Development

Two Necsa Radiochemistry staff members successfully obtained their PhDs in Medical Nuclear Science from the University of Pretoria. Under the auspices of an IAEA CRP, the company ‘Canadian Isotope Innovations’ in Saskatoon was visited by two Radiochemistry staff members to perform collaborative experiments to investigate alternative production methods for Mo-99.

The larval room in the pilot insectary at the NICD

Several postgraduate training courses have been presented at Necsa and the North-West University Mafikeng campus. One Radiochemistry member holds an extraordinary professorship with the North-West University, School of Pharmacy as well as the Nuclear Medicine department at the University of Pretoria. Furthermore, Radiochemistry supported four postgraduate students who also work in Necsa Laboratories.

industry as evidenced by the large number of graduates and internationally peer-reviewed publications annually. In addition, a significant number of preclinical trials and first-in-human studies have been carried out on a modest budget.

With its transfer into TIA, NTeMBI is currently in a feasibility phase under consideration for transition to a national TIA cluster. The goal is to exploit the high concentration of skills, expertise, infrastructure and companies across South Africa within the nuclear medicine environment through a coordinated and focused programme.

The malaria sterile insect technique (SIT) project aims to achieve malaria vector control through the release of sterile male mosquitoes. The malaria SIT project is managed by Necsa but the team is based at the NICD in Johannesburg. The team headed by Dr Munhenga consists of three permanent employees partially seconded to this project, and five postgraduate students.

Necsa R&TD was instrumental in obtaining the funding for a pilot mass insect rearing facility able to rear 250 000 sterile male mosquitoes per week as the next important step in the overall project. The establishment of the pilot insectary (funded by DSI) on the NICD site situated at Modderfontein by a project team from Pelindaba Enterprises has been successfully completed. The photograph below shows the outside of the facility and the photograph in the next column shows the larval racks donated by the IAEA used to rear the larvae.

The pilot insectary on the NICD site situated at Modderfontein is able to rear 250 000 sterile male mosquitoes per week

6.4 NUCLEAR COMPLIANCE AND SERVICES 6.4.1 SECURITY SERVICES

The objective of the Security Services department is to implement and ensure compliance to international and national security requirements at Necsa’s Pelindaba site. Security measures are implemented in a graded approach with sufficient defence in depth at each facility. Necsa categorisation guidelines incorporate that of the IAEA and are consistent with the current design basis threat.

In accordance with international best practice, the physical protection system focuses on proactive and reactive security measures based on the security risk profile of nuclear, chemical and other facilities. The aim is to prevent and control the realisation of a malicious act such as unauthorised removal of assets including nuclear material and/or potential sabotage.

As a National Key Point (NKP) in terms of the National Key Points Act, Necsa is evaluated on an annual basis to determine effectiveness of implementation of NKP requirements. The NKP office of SAPS performs the security evaluation focusing on management of the security operations, administration of the security officers, and the adequacy of the physical protection measures.

TABLE 14: ANNUAL NKP SECURITY EVALUATION CONDUCTED IN SEPTEMBER 2019

Year 2015 2016 2017 2018 2019

NKP compliance rating 98.98% 98.72% 97.79% Evaluation report

out-standing

97.36%

The Necsa Joint Planning Committee was established in terms of the National Key Points Act and brings together various stakeholders such as SAPS, State Security Agency, Necsa, Madibeng Municipality and the NNR. The committee met five times as scheduled during the 2019/2020 financial year in order to fulfil its main functions of providing guidance, as well as monitoring and evaluating security and emergency processes for the site.

6.4.1.1 Security systems

Security upgrade projects are important to maintain the desired security posture and strengthen Necsa’s physical protection measures by means of technological improvements.

TABLE 15: THE UPGRADES UNDERTAKEN DURING 2019/ 2020 WERE:

Area of upgrade Work performed

Access control systems Software upgrades and data storage capacity improvements were completed.

Gate migration project was completed with double badging task outstanding. Necsa reverted back to card badging due to the COVD-19 pandemic.

SLA (FLIR and Gallagher) was signed between Necsa and service providers for software upgrade.

Selected facilities Hardening, surveillance and redundancy measures. Security systems upgrade project at Pelstore Battery room and V-I5 was completed.

Surveillance system Areas to install PTZ cameras around Necsa site perimeter was identified, memorandum to install PTZ cameras was drafted and approved.

Uninterrupted power Modern and high capacity uninterruptible power supply (UPS) system installed to supply critical security system infrastructure at Area 15 control room.

YM Stores security systems integration YM Stores has a standalone security system and it has be integrated so that CCTV and alarms are monitored from the central alarm station (CAS) - design was drafted.

6.4.2 SAFETY CULTURE

The Safety Culture Enhancement unit is responsible for providing guidance, support and implementation of safety culture aspects at the Necsa Group. The term ‘safety culture’ encompasses conventional, nuclear and chemical safety culture. During the year, various awareness sessions were conducted within the Necsa Group and all radiological facilities were audited against their departmental safety culture enhancement plans.

Following the NTP events in 2017 and the Independent Safety Culture Assessment (ISCA) by the IAEA during August 2018, a corrective action plan, based on the IAEA ISCA Mission suggestions and recommendations were agreed and implemented. As part of the safety and security culture improvements, a Safety and Security Culture Forum was established to oversee, monitor, coordinate, share experiences and improve the Necsa safety and security culture processes.

As part of improving the Necsa Group safety culture, Necsa embarked on ‘Changing Behaviour – Enhancing Nuclear Safety and Security Culture’ workshops. During November 2019, eight workshops for NTP personnel took place. Further workshops for the Necsa Group are planned during the next financial year. These workshops, presented by international subject matter experts, are fully sponsored by the USA Oak Ridge Laboratory.

The graph below shows the behaviour-based safety contact indicator reflecting the percentage of staff observed as well as the monthly total injury rate.

Students visiting Necsa Radiography Unit


Table 17: Discharges of industrial effluent and low active effluent to the Crocodile River – October 2018 to September 2019

Q1 (2018)Oct – Dec

Q2 (2019)Jan – March

Q3 (2019)Apr – Jun

Q4 (2019)Jul – Sept

YTD Oct 2018 –Sept 2019

Industrial effluent (m3) 14 321 15 120 9 360 15 840 54 641

Low active effluent (m3) 1 117 689 1 964 697 4 467

Total effluent discharged to Crocodile River (m3) 15 438 15 809 11 324 16 537 59 108

Dose impact (µSV)* 0.6500 0.6665 1.2089 0.7912 3.3166

Table 18: Modelled dose to the public

2017 calendar year

mSv

2018 calendar year

mSv

2019 calendar year

mSv

Liquid to Crocodile River 0.0057 0.0025 0.0034

Gaseous releases 0.0012 0.0002 0.0006

Total 0.0069 0.0027 0.0040

% of the annual public dose constraint (0.250 mSv) 2.783 1.086 1.597

The environmental monitoring programme at Vaalputs was in full compliance with sample reporting levels. No environmental nuclear occurrences were registered.

6.4.6 SAFETY SERVICES

The Safety Services department is responsible for SHEQ functions at Necsa - health and medical services, radiation protection, conventional safety support, emergency services and emergency preparedness as well as SHEQ management system compliance and auditing.

The number of SHEQ audits conducted in this reporting period was 30 compared to 44 in the previous year.

For the financial year there were 100 nuclear occurrences registered with the NNR, all with an INES (International Nuclear Event Rating Scale) rating of 0. No nuclear occurrence with an INES rating of one or more was reported. The Necsa Group’s overall DIIR improved from 0.68 to 0.56 compared with the previous financial year.

6.4.3.1 Compliance with nuclear licence requirements

The Compliance Assurance Enforcement Inspectorate (CAE) was established with the mandate of ensuring that licence and authorisation conditions from the NNR and Department of Health, among other authorities, are adequately and effectively implemented at Necsa facilities. The inspectorate was established on 1 March 2018. An inspection process was developed for a graded approach to integrate the areas of concern raised with the existing Necsa systems. Due to the newness of the function and limited resources, the focus was mainly on NTP operations. Twelve inspections were completed with a total of 131 areas of concern and 28 observations raised, of which 79% were considered continual improvements and 21% of the non-compliances are required to be reported on the corporate event management system.

6.4.4.2 Non-proliferation

Necsa officials were nominated and others reappointed to assist the South African Council for Non-Proliferation of Weapons of Mass Destruction in achieving its objectives through various committees. The officials nominated are serving on the Nuclear and Missile Dual-Use Committee, Comprehensive Nuclear-Test-Ban Treaty Coordinating Committee and the Control Committee.

6.4.4.3 Member state support programme (MSSP)

The IAEA has developed a long-term R&D Plan for the 12-year period from 2012 to 2023, which sets out the capabilities it needs to achieve its strategic objectives. Short-term programmes are provided in the biennial Development and Implementation Support (D&IS) Programme for Nuclear Verification - the 2020-2021 document was issued in January 2020. During the annual review meeting held on 20 September 2019 at the Vienna International Centre between the IAEA and the RSA, a total of 16 tasks (10 proposed and six active tasks) were discussed.

6.4.4.4 Non-destructive assay

The hot commissioning of the High Activity – Active Well Coincidence Counter (HA-AWCC) is still ongoing and is anticipated to be completed during the next reporting period. The project was initiated by South Africa in collaboration with the USA to develop a technique to quantify the U-residues at NTP. The state declaration to the IAEA of U-residue generated from the molybdenum production process at NTP is currently still based on estimates.

6.4.5 LICENSING AND SAFETY ANALYSIS

The Licensing and Safety Analysis Department’s objective is to maintain effective protection of persons, property and the environment. It is governed by a number of acts including the NNR and Nuclear Energy Act of 1999, as well as international treaties, conventions and agreements. Necsa has 41 nuclear installation licences issued by the NNR for various nuclear and radiation facilities. Each of the licences is displayed in English, Setswana and Afrikaans at the respective facilities.

The Licensing and Safety Analysis Department manages these licences, supports the facilities with safety analyses and preparation of safety cases and liaises with the NNR and various government departments.

6.4.5.1 Compliance with water permit requirementsCompliance is measured against water permit no. 1874B. The table below reflects the effluent generated during the water year from 1 October 2018 to 30 September 2019. The Pelindaba West Pans (PW 9-14 with a capacity of 14 748m3) and Beva Pans (PW A-C and 1-8 with a capacity of 16 054m3) are excluded as they are not receiving effluent.

6.4.5.2 Compliance with air permit requirements

The total fluoride emissions for the January 2019 to December 2019 period (calendar year) amounted to 1 990kg, which was lower by 807kg compared to the previous year’s (2018) emission of 2 797kg. The monthly site limit was not exceeded during the year. Total fluoride emissions for the reporting period was 11% of the annual air emission licence constraint of 17 695kg per year.

6.4.5.3 Compliance with environmental requirements of the nuclear licence

Five nuclear occurrences related to the environment occurred during the 2019 calendar year. Radiation dose to the public, as modelled on actual authorised releases, indicates that there was no significant dose impact to people or the environment due to Necsa’s activities. All the events were Category 2 nuclear occurrences. The first three are all related to A8 stack statutory requirements. This had no influence on the environment because at the time A8 was out of production and the stack is also an inconsequential stack (low releases).

The last two were also related. This was caused by a water pipe that leaked. The water then flowed into A8 and from there into the environment. Low levels of uranium contamination were detected in the environment. Most of the contamination was isolated at the early warning weir and pumped to an evaporation pan. This was a Category 2 event. No contamination left the site. EMG monitors the contamination in the environment and reports findings to the NNR.

0

2

4

6

8

10

12

14

16

18

20

0

0,2

0,4

0,6

0,8

1

1,2

1,4

1,6

1,8

2

Apr

18

Jun

18Ju

l 18

Aug

18

Sep

18

Oct

18

Nov

18

Dec

18

Jan

19Fe

b 19

Mar

19

Apr

19

May

19

Jun

19Ju

l 19

Aug

19

Sep

19

Oct

19

Nov

19

Dec

19

Jan

20Fe

b 20

Mar

20

TIR Contact Indicator

OBSE

RVAT

ION

CONT

ACT

INDI

CATO

RS

TOTA

LIM

JURY

RATE

=()(

TIR)

NECSA GROUP SAFETY TRENDS

6.4.3 EMERGENCY PLANNING

Regular emergency exercises are conducted to demonstrate adequacy of the site emergency plan and to test the proper implementation of plans and procedures. Six scheduled emergency exercises were successfully carried out during the year. In addition, a regulatory nuclear emergency exercise initiated by the NNR was successfully completed on 3 October 2019.

Emergency exercises serve to train Necsa personnel and all emergency functionaries on emergency procedures and to identify any deficiencies in the current plan. continues to implement corrective actions to address identified deficiencies.

6.4.4 NUCLEAR SAFEGUARDS

Necsa performs safeguards and nuclear non-proliferation activities on behalf of the South African government as delegated by the Department of Mineral Resources and Energy in terms of the Nuclear Energy Act. This is required by the Nuclear Non-Proliferation Treaty as detailed in the Comprehensive Safeguards Agreement, both entered into with the IAEA in 1991. Safeguards implementation was further strengthened by the additional protocol to the safeguards agreement, signed in 2002.

6.4.4.1 Inspection activities and additional protocol

All inspections carried out during the reporting period met the IAEA safeguards requirements and were conclusive. The annual additional protocol declarations were submitted to the IAEA in May 2019 as required by the Additional Protocol , and were accepted as satisfactory by the IAEA. Having evaluated the results of safeguards activities and all other available safeguards relevant information for South Africa, the agency found that there was no indication of diversion of declared nuclear material from peaceful nuclear activities and no indication of undeclared nuclear material and activities in the state. On this basis, the agency concluded that all nuclear material in South Africa remained in peaceful activities during the reporting period.

Due to the COVID-19 pandemic and following the declaration of the lockdown, the Agency was informed by the state in March 2020 of the postponement of verification activities in South Africa until further notice. While postponement of verification activities was still in place, the following actions were implemented during the reporting period, in order to maintain transparency and compliance to the provisions of the Safeguards Agreements:

¢ Bi-weekly (every two weeks) Inventory Change Reports (ICRs) to the IAEA to declare the flow of nuclear material within and between safeguarded facilities.

¢ Bi-weekly (every two weeks) Remote Monitoring Surveillance (RMS) Reports for facilities where RMS is implemented.

¢ Additional information to the extent possible, which will allow the IAEA to have a clear understanding and draw conclusions related to the status of nuclear material within the State.

Table 16: Liquid effluent generated – October 2018 to September 2019 (Water Year)

Effluent destinationVolume

(m3)Permit limit

(m3)

Percentage of permitted

(%)

Crocodile River 59 108 250 000 23.64

PE Pans 1-5 12 221* 19 000 64.32

PE Pan 6 235 8 500 2.77

PE Pan 7 – – –

PE Pan 8 2 220# 4 500 49.33

PE Pan 9 2 886 15 000 19.24

CAF2 191* 941 20.30

Total 76 861 297 941 25.80

* Only water to keep the pans wet as per licence conditions# Water pumped from contaminated borehole for rehabilitation


6.5 PELINDABA ENTERPRISES Pelindaba Enterprises is the commercial division through which Necsa’s products and services are provided to industry. It specialises in project management and manufacturing of nuclear and high precision components.

6.5.1 PROJECTS & CONSULTING SERVICES (P&CS)

P&CS is a department within Pelindaba Enterprises that provides project management and administrative support services to the Necsa Group. It has the capability and expertise to put together project teams of specialists within Necsa, ensuring projects are integrated across the various engineering, scientific and fabrication areas within Necsa.

Main highlights on projects managed by P&CS are as listed below:

6.5.1.1 External projects

Eskom’s metallic waste project

Pelindaba Enterprises together with other Necsa departments are currently executing Eskom’s metallic waste projects for the Koeberg Nuclear Power Station. These projects are awarded on a work package basis and the below three work packages are underway:

¢ Characterisation study and site work ¢ Characterisation source term calculation ¢ Chemical characterisation

6.5.1.2 Internal projects

¢ Area 14 oil basement facility – cutting of pipes. ¢ Area 27 – cylinder de-heeling. ¢ Conversion plant, this refers to the Decontaminate and Decommissioning

of the Conversion Plant.

All the above projects fall under D&D projects that have been placed on hold due to site closure.

¢ Thabana pipe store extension – the EIA has been placed on hold due to COVID-19.

¢ Training Centre workshops roof refurbishment.

6.5.2 MANUFACTURING

Pelindaba Manufacturing is an ISO 9001:2015 certified organisation, which is also certified as an ASME III supplier of nuclear manufacturing. The ASME III certification gives NM the capability to design, fabricate, and assemble nuclear components which includes but is not limited to vessels, piping, supports, and tanks.

Nuclear Manufacturing conforms to ISO 9001 for general industrial products, ASME VIII for coded non-nuclear grade components, ASME III for coded nuclear grade components and ISO 3834 for welding.

The main highlights on the projects currently being undertaken by Pelindaba Nuclear Manufacturing are listed below:

6.5.2.1 SEC cooling piping

Significant progress has been made on the Eskom Koeberg SEC Cooling Piping project which consists of procurement of ASME III material, fabrication of piping, testing and delivery to Koeberg Nuclear Power Station.

The delivery date of the trains which was scheduled for end of March 2020, has been impacted by COVID-19.

6.5.2.2 HOLTEC - Hi-Star 100 tilting plate and fuel spacer project

Holtec International placed an order with Pelindaba Manufacturing to fabricate cask tilting plates and fuel spacers for Koeberg Nuclear Power Station. All 224 lower and 224 upper fuel spacers as well as seven cask tilting plates fabricated passed final quality control tests. These were delivered to Eskom Koeberg at the end of August 2019.

6.5.2.3 Stainless steel columns

NTP placed an order for 600 stainless steel columns with Industrial Manufacturing in October 2019. The stainless steel columns are used to trap molybdenum and iodine during the isotope production process.

Four hundred columns have been manufactured, passed final release inspection and delivered to NTP while fabrication of the remaining 200 is in progress.

6.5.3 FINANCIAL PERFORMANCE 2019/20

Pelindaba Enterprises recorded R79m revenue against a budget of R99m. The R20.8m variance resulted from the Eskom SEC Piping project completion date being extended from 31 March 2020 to later in the year, as well as fewer orders received from NTP and internal Necsa clients.

6.6 BUSINESS DEVELOPMENT AND INNOVATION The Business Development and Innovation division is mandated to optimise value creation from Necsa’s businesses and to facilitate the identification, protection and exploitation of intellectual property developed and owned by Necsa. The department provides a leadership role in innovation matters, which include technology licensing management, securing funding for further development based on sound business principles and overall leadership of strategic projects with commercial potential across Necsa’s strategic impact areas.

6.6.1 INVESTMENT AND COMMERCIAL PARTNERSHIPS

Some of the technologies being exploited by Necsa in partnership with other entities (including subsidiaries) are outlined below:

6.6.1.1 GluCAB – a cancer theranostic drug

The University of Cape Town (UCT) is a technology co-inventor and commercialisation partner with Necsa on GluCAB. Necsa was the initial commercial lead but the relevant human capacity has been lost. UCT has, as a result, taken the commercial lead and is proactive in unlocking funding opportunities within their funding frameworks and global platforms. Necsa is realising significant progress in technology development through the strategic partnership it forged with a well-established laboratory in France. UCT has supported this partnership by committing about R500 000.

6.6.1.2 Mining shroud detection technology

Necsa has patented a novel process based on gamma-emitting sources to aid in the detection of broken mining shrouds, which, undetected or poorly detected, may result in long downtime and associated opportunity costs in open cast mining. Necsa’s subsidiary, NTP, is funding a detailed market study to evaluate the full market potential of this technology.

6.6.1.3 Plasma waste-to-energy technology

Necsa has developed plasma waste gasification technology up to proof of concept, and through external funding, has built a 0.5 ton per day demonstration system on site, which has ignited interest from potential industry partners. Refer to the R&TD (Applied Chemistry) section of this Annual Report for additional detail.

This technology can be demonstrated at different plant sizes for different feed materials, which include tyre waste, municipal solid waste, electronic waste and medical waste. A co-funding, commercial agreement for waste tyre feedstock has been finalised with Xerus Energy, while a funding application for the upscaling of the demonstration system is used at the TIA.

Necsa has signed an MOU with Limpopo Eco-industrial Park (LEIP) for the possible use of its plasma gasification technology to realise LEIP’s zero solid waste objective. This relationship is envisaged to unlock the necessary funding to develop the plasma technology for various types of waste generated in eco-industrial parks.

6.6.1.4 Ga-68-PSMA – a diagnostic drug for prostate cancer

A partnership was formed between the nuclear medicine department at Steve Biko Academic Hospital and NTP. Steve Biko Hospital expressed

their intent to be the local client for the product kit. Final stage work is in progress utilising funding of R4.5m from NTP’s R&D and innovation fund. (See technical details in the R&TD section of this Annual Report).

6.6.1.5 Neodymium trifluoride (NdF3)

As part of South Africa’s minerals beneficiation objective, Necsa has developed a cost-effective and environmentally friendly process for converting neodymium oxide to neodymium trifluoride. Neodymium trifluoride is used mainly in the manufacture of permanent magnets employed in many commercial applications. Necsa, in its efforts to support local SMMEs and strengthen local manufacturing capabilities has availed its neodymium trifluoride technology to Rare Earth Refinery (RER), an SMME that has since been able to unlock funding from the TIA to build a demonstration plant and produce a market sample. Necsa can look forward to realising royalty payments if this technology is commercially successful.

6.6.2 INNOVATION DISCLOSURES AND INTELLECTUAL PROPERTY

6.6.2.1 Innovation disclosures (IVDs)

The IP management function of Business Development and Innovation records and reports the number of innovation disclosures to the National Intellectual Property Organization (NIPMO) on a biannual basis. Necsa continues to reach its yearly IVD targets, with a total number of eight IVDs for FY19/20. The highest number of reported IVDs came from battery-related innovations with a total of five IVDs. The IVDs are undergoing review and it is expected that the outcome will make a meaningful contribution to Necsa’s IP portfolio.

6.6.2.2 IP awareness

The IP management team hosted a half-day seminar at Necsa in recognition of World IP Day themed Going for Gold: IP and Sports on 31 May 2019. The keynote speaker was Shona Hendricks, Head of Sport Science from the UP. The event was hosted by Dr Duduetsang Saku and included several speakers, such as Lungelwa Kula (NIPMO), Omphile Modibela (NTP Head of Legal), Umesh Natha (Necsa GM: Strategy and Performance) and Theunis Hanekom (Necsa IP Manager).

6.6.2.3 IP management

The previously reported Patent Cooperation Treaty (PCT) applications for Necsa patents ‘Mo-99 via the gamma, n reaction’ (Inventor: Prof Jan Rijn Zeevaart) and ‘The production of lithium hexafluorophosphate’ (Inventors: Mpho Lekgoathi, John Le Roux, Danny Mmotong) have been completed. Both applications are now at national phase entry in strategic territories. These activities have since been reported to NIPMO in a more comprehensive manner.

6.6.2.4 Seed fund innovation and investment programme

Necsa continued to leverage its TIA Seed Fund Facility (established in 2017) to assist in translating research outputs into fundable ideas for technology development and commercialisation. The current fund value per project is R800 000. Projects funded include market studies for prospective fluorochemicals and technology development projects in areas of waste treatment for metal recovery and energy generation.

Pelindaba Enterprises Nuclear Manufacturing


6.7 FINANCE DIVISIONThe Finance Department is divided into three departments: Finance Management, Supply Chain Management and Information & Communications Technology.

6.7.1 FINANCE MANAGEMENT

The Finance Department is responsible for the stewardship and control of physical and financial resources within Necsa. In this regard, the intention is to balance the four key priorities of cost reduction, compliance, efficiency and growth. The activities expected from the Finance Department range from basic record keeping to providing strategic decision support.

6.7.1.1 Corporate Finance

The company’s liquidity, working capital and investment strategies are managed by Corporate Finance. It oversees the overall financial strategy of the Necsa Group with respect to its divisions and, to some extent, its subsidiaries.

This involves strategic group aspects such as available for sale financial assets, post-retirement medical aid liability funding, insurance, bankers and other financial stakeholders, as well as optimising financial performance. This is to ensure that the company does not invest in risky portfolios or use speculative methods to achieve short-term gains that might adversely affect the long-term sustainability of the Necsa Group. The core principles are prudence and good corporate governance. Issues of concern are reported to the decision makers such as the EXCO, the Audit and Risk Committee and the Board of Directors.

Corporate Finance is responsible for the management of accounting cycles including payroll, accounts payable, accounts receivable, inventory control, treasury, and cash management. The department acts as a custodian of Necsa’s property, plant and equipment (PPE) and maintains the Necsa asset register. The majority of the company’s financial policies and procedures are prepared and reviewed by this department.

The optimal functioning of this department is currently constrained by the funding, liquidity and solvency issues. The organisation has a high level

Companies Act of 2008 and other relevant legislation and good practices.

The costing and project function, which is mainly responsible for registering projects in the ERP system, resides in this section. This includes tracking and reporting on registered projects.

The Compliance Section’s responsibilities include identifying key risks faced by the Finance Division to ensure that measures and internal controls are put in place to mitigate current and emerging risks. This section is also responsible for tracking and reporting on fruitless and wasteful expenditure, irregular expenditure and the loss register to mitigate and prevent recurrence. These incidents are reported by line management and integrated reports are compiled for the Board of Directors through the Audit and Risk Committee.

An annual highlight of the FCR section is the coordination and execution of the year-end reporting and statutory audit by the Auditor-General of South Africa leading to the publication of the Necsa Group’s AFS and Annual Report.

Contributions to financial planning include the coordination of the company budget and the preparation of company and group financials for inclusion in the corporate plan, which is submitted annually at the end of February. The mandatory National Treasury templates are prepared and submitted to the National Treasury during July and December each year.

This section also provides professional advisory financial services to Necsa

of fixed costs and weak balance sheet which limit the implementation of austerity measures and the creation of new growth opportunities. The current recession as well as the COVID-19 pandemic will further exacerbate the already distressed cash position and management is diligently implementing various measures to turn around the entity by exploring new efficiencies.

Corporate Finance is also involved in providing core information that is utilised in the preparation of the Necsa Group’s annual financial statements.

There are some hurdles with regard to competencies emanating from the inability to recruit and retain experts in this section mainly due to delays in organisational processes.

6.7.1.2 Business units

The business unit section is responsible for implementing and monitoring internal controls to ensure the achievement of organisational objectives. The recording of financial transactions is conducted timeously to ensure that reliable and accurate information is used in the financial reports. All transactions are recorded in compliance with the prevailing laws, regulations and procedures. The business unit section is also responsible for record keeping, assisting line management in preparation of the medium-term expenditure framework (MTEF) budgets, forecasts, variance analysis, and reconciliations, as well as related administrative functions.

Working closely with internal auditors, assurance is provided that accounts are fairly presented and fraudulent transactions are detected.

6.7.1.3 Financial compliance and reporting

The financial compliance and reporting (FCR) section takes the raw accounting entries from the enterprise resource planning (ERP) system and transforms it to useful annual financial statements that are understandable by all stakeholders. The FCR role includes the timeous preparation of management accounts for EXCO meetings, and quarterly reports to the Audit and Risk Committee (ARC) and Board Meetings, DMRE and National Treasury. This section is responsible for the preparation of the Consolidated Necsa Group’s AFS. The AFS are prepared in compliance with Treasury Regulations, IFRS, the Public Finance Management Act (PFMA), the New

Pelindaba Enterprises Nuclear Manufacturing

to ensure compliance. The current challenge facing the FCR section is a lack of capacity to optimally function and discharge its fiduciary duties.

6.7.1.4 Financial Systems

The Financial Systems section maintains the full integrity of the ERP and payroll systems for Necsa and its major subsidiaries, NTP Radioisotopes SOC Ltd (NTP) and Pelchem SOC Ltd (Pelchem) and to an extent also for AEC-Amersham SOC Ltd. This is accomplished through acting as system administrators and first line user support, overseeing software change control and performing software quality control. User access control policies and procedures are also managed. The largest current financial systems projects are the integration of Necsa’s ERP system with the Central Supplier Database of National Treasury and the upgrade of the ERP system to the latest version.

6.7.2 SUPPLY CHAIN MANAGEMENT

The Supply Chain Management (SCM) Department develops relevant policies and procedures while also managing compliance with these policies and procedures, legislation and codes of good practice. In addition, SCM provides contract management and enterprise and supplier development (ESD) support.


TABLE 19: TOTAL GROUP PROCUREMENT SPENDING:

Area Value

Intragroup spend (national) R334 274 267

National spend external to Group R607 392 410

International spend (external to Group) R64 859 737

Total Group procurement spend R1 006 526 413

TABLE 20: TOP SUPPLIERS TO THE NECSA GROUP

No. Supplier Product/service rendered Value (R)

Percentage of procurement

spend external to Necsa Group

1 Eskom Electricity R76 537 571.92 7.6

2 National Nuclear Regulator Nuclear licensing R52 578 446.00 5.22

3 Siemens Healthcare (Pty) Ltd Per/CT system R45 000 000.00 4.47

4 MIMI Group Ltd (Momentum) Medical aid premium R32 257 511.53 3.20

5 Areva NP Safari target plates R31 069 151.47 3.08

6 Sasol Oil (Pty) Ltd Fuel R26 294 103.13 2.61

7 Vergenoeg Mining Company (Pty) Ltd Raw material R19 678 360.00 1.95

8 Rand Water Local services R16 161 747.74 1.60

9 AON South Africa (Pty) Ltd Insurance brokers R13 908 996.84 1.38

10 iThemba LABS Analytical services R11 400 811.86 1.13

TOTAL R324 886 700.00 32.24

TABLE 21: BROAD-BASED BLACK ECONOMIC EMPOWERMENT SPEND

Procurement spend Value

Percentage of national

procurement spend

Total B-BBEE spend R505 308 149 53.66

B-BBEE recognition spend R581 335 235 61.73

6.7.2.2 Necsa B-BBEE ratings

The annual B-BBEE evaluation was undertaken for each entity within the Necsa Group by an independent rating agency accredited by the South African National Accreditation System (SANAS). Each entity received a rating as follows: Necsa – non-compliant, NTP- Level 8 and Pelchem – non-compliant.

A consolidated scorecard was prepared for the Necsa Group. The Necsa Group was recorded as a non-compliant contributor with a B-BBEE procurement recognition level of 0%. Areas that require improvement relate mainly to skills development and ESD (enterprise and supplier development). The main reasons for the non-compliant contributor level are:

¢ Spending in the nuclear industry is dominated by outsourced and specialised suppliers. ¢ Not enough was spent on ESD to earn additional points on the verification scorecard. This was due to insufficient funds during the financial year.

6.7.3 INFORMATION TECHNOLOGY INDICATORS

The IT function at Necsa is provided through Systems and Information Management. The IT function mainly provides the following services to Necsa and to a limited extent also to its subsidiaries, Pelchem and NTP:

¢ Enablement of business objectives through the use of ICT. ¢ Strategic business improvement initiatives. ¢ The development and maintenance of software applications. ¢ The implementation and maintenance of enterprise-wide systems and infrastructure such as network, email and internet. ¢ The provision of telecommunication services including landline and cellular communications and services. ¢ The provision of support services for any problems/faults or any other related IT issues. ¢ IT management and governance. ¢ Information security.

6.7.3.1 IT governance

An IT risk assessment was conducted to determine the critical resources that may be affected by a threat or vulnerability as well as to update the IT disaster recovery plan. The Auditor-General conducted the annual audit on general computer controls. There were no repeat findings and only one new finding was recorded.

6.7.3.2 IT projects

The following IT projects were undertaken in the current reporting year:

¢ RT15: Implementation of National Treasury mobile service contract which included the termination of cell phone allowances. ¢ Workflow system upgrade.

6.7.3.3 IT performance

TABLE 22: AVAILABILITY, CAPACITY AND PROBLEM RESOLUTION TARGETS ACHIEVED

Metric measured Description Score achieved Target

Average system availability This metric measures the availability of applications and the supporting hardware and networking devices

99.93% 99.99%

Average storage capacity This metric measures the availability of space on the Necsa storage area network 55.95% <75%

Average turnaround percentage This metric measures the percentage of problems resolved within a specified period 90.60% 100%

Pelindaba Enterprises Engineering Services


Challenges ¢ Missed production targets due to aged and sub-economic plants. ¢ Double digit percentage price escalations of input material and electricity. ¢ Contract manufacturing sector in South Africa. ¢ Lack of investment in upgrading the production infrastructure.

Expansion and growth projectsPelchem’s long-term sustainability is underpinned by two major projects, the state-owned pharmaceutical company, Ketlaphela Pharmaceuticals, and the commercially scaled fluorochemicals complex, Project Thuthukani. The execution of these projects is dependent on partnerships and investment to localise production and increase beneficiation in the country.

Ketlaphela’s strategy is to localise the production of pharmaceutical products mainly for the burden of diseases (HIV/AIDS, TB and malaria) and later lifestyle diseases (hypertension, diabetes). Ketlaphela will realise revenues of R1b with 6% profit margins in 2021/22 increasing to R2.9b by 2026/27 - , while addressing the negative trade balance, exporting of jobs and security of supply to meet the requirements of government and the region.

Project Thuthukani is the development of a commercially scaled fluorochemicals complex (F-Complex), anchored by a 30 000 tpa of high purity hydrofluoric acid (HF) and commercially scaled downstream specialty plants. At commercial operation in 2025/26, Pelchem will realise revenues of over R1b per annum at 6% profit margins and improve Pelchem’s market share from 0.065% to 11.2%. The economically scaled plants will serve the global fluorochemical market.

Short-term strategic initiatives with bankable investment cases will be executed to generate a revenue of R78m by 2021/22. These include refurbishments to improve plant availability to >86% and development of highly valued new products.

6.8 PELCHEM SOC LTD

Managing Director's overview In a year characterised by highly challenging local and international market conditions, the implementation of the turnaround strategy started to bear fruit. Pelchem ended the year better than expected, with losses narrowed by 43% compared to the previous year, on the back of increased margins and reduction of inefficiencies, especially in production and related expenses. A major milestone in the history of Pelchem was the successful development of the bankable business case for the state-owned pharmaceutical company, Ketlaphela Pharmaceuticals SOC Ltd, and secured government approvals. It is expected that the state-owned pharmaceutical company will be fully operational by the end of the next financial year post all regulatory approvals. I am very pleased that both Pelchem and Ketlaphela swiftly responded to the COVID-19 scourge by producing and supplying World Health Organization (WHO) recommended sanitisers.

The sustainability of Pelchem is based on expansion and growth and to that end, it is investing in both short-term and long-term growth projects. In pursuit of our long-term expansion and growth ‘Project Thuthukani’, we are developing a new 30 000 tpa commercially scaled fluorochemical production facility. The project is at a prefeasibility phase and we plan to break ground in 2023/24. During the year, focus was placed on developing a more engaged, high performance and customer orientated workforce. In preparation of the Expansion and Growth Strategy, we have partnered with the Services SETA to provide specialised fluorochemicals training.

We are gearing up for an exciting new chapter in the Necsa Group, as the new business model is under development to catalyse the sustainability of Necsa.

We expect market conditions to be more challenging in the following year, as a result of the global COVID-19 pandemic and the prevailing economic weakness. We are innovatively repurposing in order to increase our market position to survive the expected challenges.

I would like to thank the Minister of Mineral Resources and Energy, the Department and the Board for their guidance and support, as well as our stakeholders, including customers and suppliers for their continued support as well as our staff, the Pelichamps. We recognise and appreciate your valuable contribution to the organisation

Ivan Radebe

Managing Director

Pelchem profile Our vision

Global manufacturer and supplier of commodity and specialty chemicals.

Our mission

o To be the preferred supplier of commodity and specialty chemicals.

o Deliver on our promises, safely and in an environmentally responsible manner.

o Driving growth through excellence, innovation, performance and customer focus.

o Deliver world-class products and services reliably.

Our valuesFoundational values

Business values

People values

Safety and integrity Innovation Reliability and excellence

Pelchem profile Pelchem SOC Ltd, ‘Pelchem’ is a world-class manufacturer and supplier of fluorochemicals to a wide variety of market segments. Pelchem was corporatised in 2007 as a wholly owned subsidiary of the South African Nuclear Energy Corporation SOC Ltd, Necsa. It has been in operation for over 35 years developing its own technology and expertise. Pelchem is a critical supplier of hydrofluoric acid and fluorine to the automotive, refineries, stainless steel, plastic packaging and mining sectors both in South Africa and globally. Pelchem further exploits its patented technology through the production and supply of high-value specialty products exported into the fluoropolymer, pharmaceutical and semiconductor industries.

Pelchem’s core mandate is to: ¢ Manufacture and supply fluorochemicals to local and global markets. ¢ Retain and maintain critical technology, IP and strategic capabilities and

skills relating to the production of fluorochemicals.

Pelchem has two subsidiaries:

¢ Ketlaphela Pharmaceutical SOC Ltd – intended to manufacture and supply burden of diseases (HIV/AIDs, TB, malaria, etc.) pharmaceutical products.

¢ LESA SOC Ltd (dormant).

Highlights and challenges of 2019/20Highlights

¢ Successful development of the state-owned pharmaceuticals company, Ketlaphela Pharmaceuticals.

¢ Substantial reduction of the net loss by 76%. ¢ Improved customer satisfaction rating by 18%. ¢ Pipeline of business development opportunities that will serve as a

catalyst to profitability.

"We are gearing up for an

exciting new chapter in the

Necsa Group, as the new

business model is under

development to catalyse the

sustainability of Necsa."


6.9 NTP RADIOISOTOPES SOC LTD

Managing Director's overview2019/20 proved to be a watershed for NTP as we began an ambitious five-year strategic plan following the unplanned and extended shutdowns that affected our company. We developed and implemented a crucial Sustainable Return to Service programme as part of the strategic objectives to ensure sustainability and reliable supply of key isotopes to the global and local customers.

The Sustainable Return to Service programme that was rolled out in May 2019 provided an integrated framework and practical model for the phased and sustainable re-opening of our radiochemicals facilities. NTP worked closely with the DMRE and both the NTP and Necsa key staff members and boards to address the many requirements from the NNR to ensure a safe return to operation under our NIL 39 licence. Within eight months of the launch of the programme, NTP managed to keep its radiochemicals facilities operational for the entire period and doubled the number of Molybdenum-99 (Mo-99) and Iodine –131 production runs. Through this, our company was able to regain nearly 80% of its former market share while also increasing yields and improving production efficiency.

The increased output meant that NTP was able to assist the global market with additional volumes of radioisotopes on an ad hoc basis, filling supply gaps caused by routine or other unplanned shutdowns of other isotope production facilities or reactors. NTP is one of only four large commercial producers of fission-based Mo-99, the most important diagnostic medical radioisotope in the world. NTP plays an important role as a member of the OECD high-level group on the security of supply of medical radioisotopes, ensuring the sustainable and reliable supply of this essential active pharmaceutical ingredient (API).

The financial challenges on NTP from the previous shutdown should be managed better in the coming period given the foundations laid in 2019/20 and the continued Sustainable Return to Service programme implementation that will ensure that NTP is resilient in future. The importance of this integrated management programme was clearly demonstrated in March 2020 when a COVID-19 disaster started affecting our business and global logistics. The safety management culture is gaining traction within all NTP operations and systems.

Ms Tina EbokaGroup Managing Director: NTP Radioisotopes SOC Ltd

6.9.1.2 NTP Logistics SOC Ltd

NTP Logistics provides bespoke end-to-end supply chain logistics services specialising in the global distribution of all classes of hazardous goods, time-sensitive, temperature-sensitive and high-value goods offering a full spectrum of land, air and sea solutions. The company is a market leader with experience in national and international regulatory requirements. NTP Logistics holds permits and licences from the NNR, Department of Mineral Resources and Energy, Department of Health and Department of Transport. The company maintains ISO 9001 certification.

6.9.1.3 Gammatec NDT Supplies SOC Ltd

Gammatec NDT Supplies SOC Ltd is a supplier, distributor, manufacturer and turnkey solution provider of non-destructive testing equipment, accessories and consumables. Technologies provided include acoustic emission, ultrasonic, phased array, visual inspection, dye penetrant, eddy current, magnetic particle, as well as radiography sources such as Iridium-192, Caesium and Selenium. The company is ISO 9001 accredited.

Gammatec NDT Supplies SOC Ltd exports to over 70 countries with a focus on Africa, the Middle East, Southeast Asia and Australasia. Gammatec’s equity associate, Oserix SA, based in Belgium, services the gamma radiation isotopes market in Europe, North Africa, and the Americas.

6.9.1.4 Gamwave Gauteng (Pty) Ltd

NTP Radioisotopes is a minority shareholder (40%) of Gamwave (Pty) Ltd, which provides irradiation and gamma sterilisation services for the agricultural, food and medical sectors. Gamwave is an associate partner of NTP Radioisotopes.

6.9.2 NTP HIGHLIGHTS AND CHALLENGES

6.9.2.1 Highlights

The Sustainable Return to Service programme was approved by the NTP Board and NTP executives. This strengthened the Chief Nuclear Officer (CNO’s) office with additional competence and capacity to enhance NTP’s drive for an improved behavioural and safety culture.

¢ A Dekra surveillance audit was successfully conducted in December 2019. Audits from the Food and Drug Administration (USA) and Therapeutic Goods Administration (Australia) were also conducted, with corrective plans successfully submitted during 2020.

¢ Clean safeguard audits were received from the IAEA in terms of the provisions of the Non-Proliferation Treaty.

6.9.2.2. Challenges

¢ SAHPRA conducted an audit of the radiopharmaceutical facility in April 2019 and a number of findings were raised. An action plan was compiled and submitted – close-out of some of the actions is still in progress.

¢ Delays were experienced on the U-residue project. The challenges were investigated and corrective measures implemented through the Sustainable Return to Service programme.

NTP profileNTP Radioisotopes SOC Ltd is a wholly owned subsidiary of Necsa and is based at Pelindaba. NTP operated as a division of Necsa from the early 1990s and was incorporated as a limited liability company in October 2003.

Pelindaba produced small volumes of medical radioisotopes since 1973, initially to supply the South African nuclear medicine market. In the 1990s, this scheme was commercialised and the hot cell complex previously used for nuclear fuel testing was converted into radiochemical production facilities. The first export orders for the key medical radioisotope Molybdenum-99 were shipped in 1994.

NTP has grown to become one of the world’s leading suppliers of medical radioisotopes and is one of the key global commercial producers of Molybdenum-99 and Iodine-131. NTP is a pioneer in the integrated LEU production and processing for medical radioisotopes, and has helped to make South Africa a hub of nuclear medicine excellence on the African continent. In 1989 NTP began producing and distributing its own high-yield Technetium-99m generators, used by nuclear medicine practitioners in the SADC region. In 2005, in partnership with the National Research Foundation’s iThemba LABS, the company also began to produce on-site cyclotron-based FDG F-18, which is used for cancer diagnosis. Following the successful conversion of the SAFARI-1 Research Reactor core to LEU fuel in 2009, in 2010 NTP became the first large-scale producer to offer commercial all-LEU-based Mo-99 and Iodine-131 in which both the fuel and the targets were LEU-based. In 2012 NTP partnered with the Australian Nuclear Science and Technology Organisation (ANSTO) in terms of which, NTP’s LEU-based technology would be used to construct a large-scale Mo-99 production facility at ANSTO’ in exchange for a fee, a supply backup partnership for global supply under NTP sales and supply contracts with customers.

Also in 2012, NTP began the first African-based production of the non-carrier-added (n.c.a.) beta-emitter Lutetium-177, which has diagnostic and therapeutic applications. NTP later facilitated the first medical procedure in South Africa using Lu-177 n.c.a. labelled with prostate-specific membrane antigen (PSMA) for the treatment of prostate cancer.

6.9.1 NTP GROUP SUBSIDIARIES AND ASSOCIATE COMPANIES

6.9.1.1 AEC-Amersham SOC Ltd

AEC-Amersham is the African and Indian Ocean Islands region distributor for NTP radiopharmaceutical products, a range of other imported life science products and service offerings. The company is ISO 9001 certified and complies with all the regulatory requirements that enable the company to import and export its products.

NTP RADIOISOTOPES SOC LTD

Radiochemical Hot Cells

"NTP is one of only four large

commercial producers of fission-

based Mo-99, the most important

diagnostic medical radioisotope in

the world. NTP plays an important

role as a member of the OECD

high-level group on the security of

supply of medical radioisotopes,

ensuring the sustainable and reliable

supply of this essential active

pharmaceutical ingredient (API). "


07 Human Resources and Real Estate Management

7.1 Overview 7.1.1 KEY HUMAN RESOURCES CHALLENGES

The main HR challenge faced by the organisation is the ability to achieve transformational objectives in key areas of the organisation where diversity is lacking. This challenge has its roots in the purposeful management towards a gradual decline in the overall headcount aimed at containing the salary bill, as well as in the low level of natural attrition of staff numbers. This inhibits the organisation’s ability to aggressively recruit young Black talent.

The situation is compounded by the challenge of an ageing workforce, which poses a serious risk of knowledge loss and calls for effective measures to be put in place to manage that risk. The effective implementation of the organisation’s talent management framework to facilitate the attraction, retention, and development of a young workforce that will take this organisation forward has become critical.

7.1.2 HR PRIORITIES FOR THE YEAR UNDER REVIEW

Against the challenges and opportunities identified, the following high-level HR priorities were identified that will contribute towards the achievement of Necsa’s strategic objectives.

¢ Implementation of career ladders. ¢ The effective implementation of talent management. ¢ Programmes to ensure that the performance management culture is

fully embedded within the organisation. ¢ Creating an environment that is conducive to sound employee relations

and wellness.

7.1.3 WORKFORCE PLANNING FRAMEWORK AND KEY STRATEGIES

Workforce planning is a critical cornerstone in sound HR management and it plays a vital role in ensuring the execution of the organisation’s strategic priorities.

However, as those requirements exist within the context of serious financial constraints, the development of an objective instrument for use in the classification of jobs as either critical or as support, is needed to aid in the prioritisation of the limited budget. Accordingly, the framework for identifying critical roles was developed as a model to assess every role within the organisation. A value creation framework was used to arrive at a role mapping chart that categorises all roles as either critical or as support.

7.1.3.1 Employee performance management framework

Performance management ensures a fair, equitable and transparent process that instils a culture of high performance. To create a link between reward and performance, the concept of a pay progression model introduced in the previous financial year, was continued. This contributed to an increase in the number of employees signing performance contracts and completing performance assessments with their managers. The performance assessment participation rate achieved for the current financial year was 90%.

7.1.4 EMPLOYEE WELLNESS PROGRAMME

Necsa’s Employee Wellness Programme continues to play a significant role in providing psycho-social practical assistance and support to employees and line management. Further overseeing the wellbeing of employees who are emotionally unbalanced. The programme. has consistently been used by employees from diverse backgrounds and occupational levels.

SECTIONThe strategic goals of Necsa Group’s Human Resources (HR) department are to turn the Group into an employer of choice through the pursuance of excellence in human capital management practices. This involves attracting, engaging, training, developing and retaining performance-driven, talented employees to support the Group’s vision to become a world-leading nuclear technology organisation.

The primary mandate of the HR department is to provide strategic human resources support services to enable the Necsa Group to build organisational capabilities to achieve its strategic objectives and deliver on its mandate.


7.3.2 RETIREMENT FUND

As part of its employee value proposition, Necsa has a retirement fund in the form of a defined contribution provident fund called Momentum FundsAtWork Umbrella Provident Fund administered by Momentum. The Necsa retirement fund offers two investment options: a Necsa default portfolio called the Life Stage Model and a member elected allocation (member choice) where members can switch in and out on a monthly basis at no cost.

The Life Stage Model is a default portfolio that switches from more aggressive investment portfolios for those still far from retirement age, to a more conservative and ultimately defensive portfolio for members approaching retirement age. The life stage portfolio ranges include the Necsa mapped life stages and Momentum life stages portfolios. For the Necsa mapped life stages portfolio, a default portfolio at seven years from retirement is 100% enhanced factor five which targets CPI + 5% investment return.

technical relative to total staff and 65% for Black technical relative to all technical staff. The target performance shown in Chart 3 is attributable to a number of factors, a key reason being that the target is very sensitive to employee movement.

Q4 Q3 Q2 Q1

Total Technical Staff 817 834 845 881

Technical Staff as a % of Total Staff 44,87% 44,96% 44,88% 45,06%

Total Black Technical staff 547 558 561 554

Black Technical Staff as a % of Total Technical Staff 66,95% 66,91% 66,39% 62,88%

Total Non-Technical Staff 1004 1021 1038 1074

Total Non-Technical Staff as a% of Total Staff 55,13% 55,04% 55,12% 54,94%

0

200

400

600

800

1000

1200TECHNICAL STAFF

7.2.2 APPOINTMENTS

A total of 46 employees were appointed within the Necsa Group during this financial year. Of those, 38 are from the designated groups with the remaining eight being white, a trend that contributes positively to transformation.

7.2.3 TERMINATIONS

For the year under review, the Necsa Group lost 88 employees through resignations, retirement, dismissals and death in service, translating into an overall staff turnover rate of 4.83% for the year.

The resignations by gender consist of 22 females and 66 males. In terms of occupational levels, this represents two top management, four senior management, 21 middle management, 48 skilled, 11 semi-skilled, and two unskilled workers.

F M F M F M F M

Q2 Q3 Q4 Q1

MIDMAN 2 6 1 3 2 7

SEMISKIL 3 1 3 4

SKILLED 4 12 3 11 4 5 3 6

SNRMAN 1 1 2

UNSKLD 1 1

TOPMAN 2

2

6

1

32

7

3

1

344

12

3

11

45

3

6

1 12

1 12

0

2

4

6

8

10

12

14

MIDMAN

SEMISKIL

SKILLED

SNRMAN

UNSKLD

TOPMAN

TERMINATIONS

The top five main reasons for utilising the programme during the review period were trauma/ post-traumatic stress disorder; marital and family issues; unacceptable behaviour; child/ parenting issues; and health-related issues.

7.2 Employment statistics 7.2.1 NECSA GROUP STAFF COMPOSITION FOR

THE YEAR ENDING 31 MARCH 2020

Necsa’s total staff complement, inclusive of contract workers, as at 31 March 2020 was 1 821 as compared to 1 900 at 31 March 2019. Of this1 774 are permanent employees while 47 are contract workers. Chart 1 reflects the breakdown of the staff complement by occupational categories.

0

50

100

150

200

250

300

350

400

CNTRTW MIDMAN SEMISKIL SKILLED SNRMAN TOPMAN UNSKILL

OCCUPATIONAL LEVELS

STAFF COMPOSITION

BLACK - M

BLACK - F

WHITE - M

WHITE - F

One of Necsa’s predetermined objectives is to ensure that it employs a larger percentage of technical relative to support staff. Chart 2 shows that this was 44.87%, while the percentage of Black technical relative to total technical staff was 66.95% as at 31 March 2020. The year-to-date figures for technical in relation to total staff and Black technical in relation to all technical staff is 45% (target 46.05%) and 65% (target 63%) respectively, while the comparative figures for the previous financial year were 45% for

7.3 Staff financial statistics 7.3.1 REMUNERATION

Necsa treats remuneration as a strategic tool with which it competes for talent, while at the same time aligning its staff to the organisational culture of rewarding high performance. Necsa pays all its employees a guaranteed package based on the total cost to company principles.

Necsa therefore regards the need to maintain fair and competitive remuneration that is consistent with sector practices and the Collective Agreement governing employees, as a business imperative. As the organisation is highly unionised, salary adjustments of employees are determined through collective bargaining with unions, while those of senior management and executives are within the purview of the Board Social and Ethics Committee.

Adjustments to the remuneration of executive directors are recommended by the Social and Ethics Committee and are approved by the Board of Directors. For the reporting period, executive directors have not received any adjustment to their remuneration. Directors’ emoluments are disclosed under Note 37 in the financial statements.

Table 7: Training costs

Directorate/Business unit

Personnel expenditure

(R’000)

Training expenditure

(R’000)

Training expenditure

as a % of personnel cost

No. of employees

trained

Avg training cost per

employee (R)

AEC-Amersham 45 806 89 0.19 40 2 225

Engineering & Technical Services 35 746 395 1.11 150 2 633

Finance & Information Management 87 498 594 0.68 100 5 940

Group Functions 94 570 5 167 5.46 38 135 973

Human Resources & Real Estate Management 95 228 2 284 2.40 192 11 895

NTP 190 098 1 381 0.73 353 3 912

Nuclear Compliance Services 182 715 1 162 0.64 251 4 630

Operations 210 538 3 810 1.81 388 9 820

Pelchem 59 566 450 1.76 115 3 913

Pelindaba Enterprises 47 419 274 0.58 70 3 914

Research & Technology Development 11 0631 2 536 2.29 124 20 452

TOTAL 1 159 815 18142 1.56 1 821 9 963

Necsa Learning Academy Tooling CentreNecsa Learning Academy

NO

OF

STAF

F

Chart 1

Chart 2

Chart 3


7.4 STAFF SOCIAL STATISTICS The organisation had a total of 242 vacancies as at 31 March 2020. Of these, three are at top management level and 13 in senior management, with the balance of vacancies spread across the remaining occupational levels, of which a significant portion is at skilled levels. The overall vacancy rate for the Group is 11.62%, which reflects the effect of the austerity measures in the form of a moratorium on filling vacancies which has been in place to contain the wage bill.

TABLE 23: EMPLOYMENT AND VACANCIES

Job category

2019/2020approved

posts

2019/2020number. of employees

2019/2020vacancies

2019/2020% of vacancies

Top management 11 7 4 36.4

Senior management 45 32 13 28.9

Professional qualified 361 292 69 19

Skilled 992 866 126 12.7

Semi-skilled 412 387 25 6.1

Unskilled 196 190 6 3.1

Subtotal 2017 1 774 243 12

Contract – 47 –

TOTAL 2017 1 821 243 12

7.4.1 EMPLOYMENT CHANGES

As seen in Table 24, 88 employees left the organisation through a combination of normal retirement, resignations, dismissals and deaths during the financial year. Of this, about 47 were from the designated group, while the rest were white. The overall staff turnover rate for the year, including avoidable and non-avoidable terminations, was 4.83%, which is a relatively moderate rate of attrition.

In contrast to terminations and in line with the austerity measures, only 46 appointments were made for the entire year, some of which were internal promotions where existing staff were appointed to higher level positions. Worth noting is that 83% of those were employees from the designated group, in line with the transformation imperatives.

0

10

20

30

40

50

60

70

80

90

100

Appointments Exits Appointments Exits

Designated group Total employees

SEEYOLP

ME FO REB

MUN

Management

Engineers

Scientists

OtherprofessionalsSupervisors

Operators

Artisans

Technicians

Skilled

Semi-skilled

Unskilled

Total

MOVEMENT PER JOB CATAGORIES

MOVEMENT PER JOB CATEGORIES

TABLE 24: CHANGES IN EMPLOYMENT OVER THE FINANCIAL YEAR

Job category

Designated group Total employees

Appointments Exits Appointments Exits

Management 5 16 9 29

Engineers 5 1 6 2

Scientists 0 1 0 1

Other professionals 6 2 6 0

Supervisors 0 0 0 0

Operators 0 0 0 0

Artisans 2 0 3 3

Technicians 2 3 2 7

Skilled 12 13 14 28

Semi-skilled 6 11 6 17

Unskilled 0 0 0 1

Total 38 47 46 88

TABLE 25: STAFF TURNOVER IN CRITICAL SKILLS CATEGORIES

Job category 2019/2020 2018/19 2017/18 2016/17 2015/16

Management 1.59% 1.90% 0.25% 0.62% 0.12%

Engineering and science 0.16% 0.49% 0.51% 0.26% 0.65%

Technical 0.55% 0.87% 0.97% 0.31% 0.30%

TABLE 26: REASONS FOR STAFF LEAVING

Reason Number% of total no.

of staff leaving

Death 5 5.68

Resignation 44 50.00

Dismissal 6 6.82

Retirement 33 37.50

Ill health 0 0.00

Disability 0 0.00

Retrenchment 0 0.00

Total 88 100


7.5 LABOUR RELATIONS TABLE 27: MISCONDUCT AND DISCIPLINARY ACTION

Description Number/s

Verbal warning 1

Written warnings 4

Final written warnings 6

Pending 3

TABLE 28: DISCIPLINARY HEARINGS AND GRIEVANCES

Description 2019/20 2018/19 2017/18 2016/17 2015/16

Disciplinary actions 15 16 10 6 27

Grievances registered 19 31 23 24 186

TABLE 29: LABOUR UNION MEMBERSHIP

2019/2020 2018/19 2017/18 2016/17 2015/16

Unionised Number Percentage Number Percentage Number Percentage Number Percentage Number Percentage

Pelindaba Workers Union 287 23.14 257 20.95 300 23.96 326 26.2 341 27.72

Solidarity 75 6.04 62 5.05 75 5.99 81 6.5 92 7.4

National Education, Health and Allied Workers Union (NEHAWU) 789 63.62 761 62.02 694 55.43 647 51.9 606 49.26

Subtotal 1 151 92.83 1 080 1 069 85.38 1 054 84.6 1 039 84.38

Non-unionised 89 7.18 147 11.98 183 14.61 191 15.52 191 15.52

Total 1 240 99.98 1 227 100 1 252 99.99 1 245 99.99 1 230 99.99

7.5.1 EMPLOYMENT EQUITY

Necsa Group believes that a more diverse workforce results in greater innovation and value creation for the organisation. The organisation has a five-year EE Plan (2015-2020 financial year) that incorporates goals and targets as required by the EE Act. Structures are in place to ensure broad participation across the Group to promote equal opportunity and fair treatment for all employees. This is achieved through EE forums at each division and at subsidiary level. Progress is monitored by the Group EE Forum as well as the Group Executive for Human Resources and REAM. Collectively, these structures have strengthened Necsa’s focus and accountability for implementing the EE Plan and facilitates inclusive change within the organisation.

The information is presented in accordance with the requirement of Section 22 of the Employment Equity Act which enjoins every designated employer to publish a summary of their Employment Equity Report in the Annual Report. The Necsa Group staff complement, inclusive of people with disabilities, is presented in Chart 4. Evidenced from the chart is that males constitute 62.6% and females of all races constitute only 37.4%. In terms of race, the Group is reasonably transformed with Blacks constituting 75.8% and Whites 24.2%.

Nuclear Manufacturing officially accredited with ISO 3834

Necsa welder training officer showcasing work done by NLA to AFRA Technical Working Group

Graduation ceremony of Radiation Protection Officers (RPO)(NQF level 4)

Top management Senior management Professional level Skilled level


7.5.2.3 Training interventions

For the period April 2019 to March 2020, R1 906 854 was spent on training interventions. Table 33 shows the number of employees who attended.

TABLE 33: TOTAL NUMBER OF EMPLOYEES TRAINED DURING APRIL 2019 – MARCH 2020

Black Coloured Indian White

Gender M F M F M F M F

Employees 214 120 2 0 2 0 52 16

Total 334 2 2 68

7.5.2.4 Radiation Protection Training Programme

A total of 50 students enrolled in the Radiation Protection Training Programme offered at the Radiation Protection Training Centre (RPTC). Twelve were funded by Necsa and 32 were private clients funded by various companies. Of these students, 14 were trained for the RPO1 Programme, 15 attended the RPO Awareness Programme and 15 attended the RPO Safety Programme in Mining and Pharmaceutics. The RPTC co-supervised one MSc and three PhD students from various institutions in radiation-related fields of study, One from the University of Johannesburg and three from the North-West University. The breakdown is reflected in Table 34. For the period April 2019 to March 2020, the RPTC had an income of R756 383.

TABLE 34: AREA OF TRAINING: RPTC - PERIOD OF TRAINING: APRIL 2019 - MARCH 2020

Training area

Gender Race Total

M F B C I W

RPO1 8 4 4 0 0 8 12

Radiation Protection in Industry 4 1 0 0 0 5 5

Radiation Protection in Mining and Pharmacy 9 4 7 0 0 6 13

MSc 0 1 1 0 0 0 1

PhD 2 1 3 0 0 0 3

Total 23 11 15 0 0 19 34

7.5.2.5 Statutory training – SHEQ

Safety is a key component of Necsa operations and training in Safety, Health, Environment and Quality (SHEQ) was undertaken to ensure that organisational operations are compliant with applicable regulatory requirements. For the period April 2019 to March 2020, Statutory Training had an external income of R1 650 815.

A breakdown of the training presented and the number of participants per programme are reflected in Table 35.

TABLE 35: STATUTORY TRAINING - SHEQ

Course

Black Coloured Indian White

Male Female Male Female Male Female Male Female

Chemical Worker Full Course 84 75 17 3 3 1 8 7

Chemical Worker Exam 187 76 10 2 1 1 86 19

Confined Spaces Exam 10 2 1 0 0 0 4 0

Decontamination Worker Full Course 12 8 1 0 0 0 5 2

Decontamination Worker Exam 19 2 0 0 0 0 2 2

Lock Out Tag Out Full Course 8 2 0 0 1 0 0 0

Lock Out Tag Out Exam 7 2 0 0 0 0 3 0

Noise Worker Full Course 75 42 1 0 0 0 4 2

Noise Worker Exam 292 66 28 4 4 0 140 21

Necsa Orientation 42 68 1 0 3 1 10 4

Contractor Orientation 331 107 10 3 4 3 63 13

Radiation Worker Full Course 104 70 2 0 5 1 11 5

Radiation Worker Exam 210 95 7 1 2 2 104 23

NOSA Apply SHE 9 1 1 0 0 0 2 1

NOSA Apply SHE Reassessment 2 0 1 0 0 0 0 0

NOSA Environmental Management 1 1 0 0 0 0 2 0

NOSA Incident Investigation 2 1 4 1 0 0 0 0

NOSA Intro to OCC SHE 1 0 0 0 0 0 2 0

NOSA SHE representative 6 1 0 0 0 0 0 0

TOTAL 1 402 619 87 14 23 9 446 99

TABLE 30: ANALYSIS OF PEOPLE WITH DISABILITIES

2015 2020

Total staff complement 2 122 1 821

Target for disabled staff 42 36

All people with disabilities 25 25

% deviation from target -41 -39.55

Shortfall 17 11

% current status 1.18 1.37

In the effort to remove barriers affecting entry of people with disabilities into the workplace, Necsa is embarking on disability sensitisation workshops. A workshop targeting staff members across all occupational levels was held on site on 7 and 8 October 2019.

Another noteworthy initiative undertaken by the Necsa Group included support for the Give the Gift Movement by staff members, which, through food sales on Heritage Day, helped to raise funds that enabled Necsa to donate a wheelchair to a person in need in Ga-Rankuwa.

7.5.2 STAFF DEVELOPMENT

7.5.2.1 Necsa Study Assistance Scheme

During the 2019/20 financial year, R2 285 163 was spent on the Study Assistance Scheme (SAS) that assisted 118 Necsa staff members to obtain qualifications at various institutions of higher learning.

7.5.2.2 Necsa internship programme

Necsa embarked on the training of interns, funded and supported by the Chemical Industries Education and Training Authority (CHIETA). A total of 58 unemployed Black youth, comprising 39 females and 19 males, participated in the programme this financial year.

0

5

10

15

20

25

30

35

40

45Black Male

Black Female

Coloured Male

Coloured Female

Indian Male

Indian Female

White Male

White Female

INTERNSHIP PROGRAMME

The number of employees who attended Adult Basic Education and Training (ABET) is shown in Table 31

TABLE 31: ABET TRAINING

Gender Race Total

M F B C I W

9 15 23 0 0 1 24

Thirty Necsa employees are participating in the Generic Management Learnership NQF Level 5. The breakdown of this group per gender and race is reflected in Table 32.

TABLE 32: GENERIC MANAGEMENT LEARNERSHIP NQF LEVEL 5

Gender Race Total

M F B C I W

19 11 25 0 0 5 30


7.5.2.6 Technical skills training

The Necsa Skills Development Centre (NSD) continues to fulfil its mandate in response to the National Skills Development Strategy. The centre was fully utilised and continues to attract new clients. The total number of apprentices trained for the reporting year was 151.

The Trade Test Centre (TTC) continues to grow and conducted 287 Trade Tests. Trade Test Preparation was conducted for 334 candidates, Gap Training for 100 candidates, and Pre-assessment/Artisan Recognition of Prior Learning (ARPL) for 73 candidates. Technical Skills Training (eight-day short course) at NLA was attended by 162 engineering students from the University of Pretoria. The Fabrication Section started with the training of specialised copper welding for Glencore artisans. NLA also facilitated the recruitment of qualified artisans for Unica and New Age . NLA hosted personnel from the Department of Public Enterprises at a Skills Development Programme on 12 June 2019. In attendance were representatives from Eskom, Transnet, NSF, Denel, NAMB, Indlela and Safcol.

7.5.2.7 CHIETA resource mobilisation

The organisation received funding from CHIETA through a Discretionary Grant approval to an amount of R6 000 000 which enabled 560 Necsa employees to attend a number of training sessions and 59 interns to be placed at Necsa.

7.5.2.8 Nuclear technology schools of specialisation (NTSOS)

A joint strategic partnership between Necsa and the Gauteng Department of Education (GDE) was launched on 24 April 2018. The main aim of the project is for Necsa to influence the curriculum in all matters relating to radiation technology, in order to increase the talent pipeline required by the industry. These include applications in power generation, health, manufacturing, etc.

Four schools in Atteridgeville were included as part of the project, namely Edward Phathudi Combined School, Phelindaba Secondary School, Hofmeyr High School and Bokgoni Technical School. The project focused on curriculum development, maths and science programmes, infrastructure development, technical skills programmes for teachers and learners, as well as resource mobilisation.

In the 2019-2020 academic year, Necsa employees volunteered their services through participating in curriculum development, providing catch-up teaching and revision for grades 10-12 in mathematics and science. The four NTSOS schools achieved above 96% matric pass rates for 2019 with Edward Phathudi Combined School and Bokgoni Technical School each achieving 100%.

Twelve learners who completed matric in 2018 from these schools are attending classes at NLA for the coming two years in the fields of Electrical Engineering, Mechanical Engineering and Welding. Three other learners are sponsored through CHIETA to complete their technical classes (N2) at Denver College to qualify to enrol as artisan trainees at NLA.

7.6 KNOWLEDGE MANAGEMENT7.6.1 KNOWLEDGE AT RISK ASSESSMENT

A key activity within HR is the performance of Knowledge at Risk Assessments throughout Necsa to assess the risks associated with the loss of knowledge from key and critical roles. Apart from assessments conducted on people leaving Necsa through resignations/retirements, the department also conducts assessments on people occupying critical posts, as identified by departmental managers.

The figure below shows the total number of knowledge loss risk assessments conducted per division in the 2020 FY. The assessments include Pelchem, but not NTP (which committed to doing it internally).

¢

TOTAL KNOWLEDGE LOSS RISK ASSESSMENTS 2020 FY

0

2

4

6

8

10

12

14

Pelchem Research &Technology

Development

Operations PelindabaEnterprises

NuclearCompliance &

Services

HumanResources

Financial &Business

Development

The knowledge loss risk assessments were conducted with prioritised individuals, including those who are retiring within the next three years, as well as staff who gave notice of resignation.

7.6.2 LIBRARY SERVICES This section is responsible for the Necsa Library, newspapers, articles and journal distributions, as well as activities related to the IAEA INIS (International Nuclear Information System). The Chief Librarian is also the designated INIS Liaison Officer for South Africa at the IAEA.

Noteworthy activities/events for the 2019/20 financial year include:

¢ The South African Library Week 2020 was celebrated from 16 to 22 March 2020. ¢ The annual inspection on nuclear safeguards management for the additional protocol building declaration was conducted at the library on 28 February

2020.

Necsa Learning Academy class in progress


7.7.2 PELINDABA DEVELOPMENT PLAN

It is imperative to develop a blueprint based on which assets will be managed through their life cycle, in order to:

¢ Improve efficiencies within the Pelindaba property portfolio. ¢ Define the core property assets and the non-core property assets. ¢ Generate additional income in terms of best practice asset

management.

The total size of the Pelindaba property is 2 361ha. Necsa’s fenced area is 663.7ha (29% of the total Necsa-owned property). An area of 783.4ha is made up of roads (N4 and R104) and areas such as wetlands and steep slopes which cannot be developed. Necsa has kept 68% of its land on the Pelindaba site vacant for several decades in order to secure the formal Emergency Planning zone or buffer area (an area within a 5km radius) from the SAFARI-1 reactor.

7.7 REAL ESTATE ASSET MANAGEMENT Real Estate Asset Management (REAM) is a property management, transport, courier and postal services department of the Necsa Group, responsible for efficient and effective management of immovable property and the fleet (movable property) portfolio.

7.7.1 OVERVIEW The portfolio includes immovable assets (office buildings, laboratories, workshops, warehouses, residences and land) and movable assets (passenger vehicles, trucks and trailers), located all over South Africa, including assets at the Pelindaba site, Vaalputs site and Springbok. The REAM mandate focuses on improving the condition of properties in order to provide safe and quality supporting facilities to the Necsa Group while growing the portfolio value through commercialisation.

Despite the fact that the majority of the Necsa Group infrastructure was built during the 1960s and the 1970s, the infrastructure will continue to be central to the organisations’ existence and therefore requires management, albeit with fewer resources.

At the core of the REAM strategy is ensuring that the condition of the infrastructure is improved and continuously maintained to support the Necsa Group’s business operations first, while generating income through the exploitation of assets. This forms part of the Necsa Group’s operational growth strategy.

Necsa Group structure

Cyclofil SOC Ltd (Dormant)

100%

NTP Radioisotopes

SOC Ltd 100%

ARECSA Human Capital

SOC Ltd (Dormant)

51%

Pelchem SOC Ltd

100%

BVI No.33 SOC Ltd 41.67%

MINISTER OF MINERAL RESOURCES AND ENERGY (THE MINISTER IS NECSA'S

EXECUTIVE AUTHORITY)

NECSA BOARD OF DIRECTORS

NECSA SOC LTD100%

Gamwave40%

Previously Cyclotope SOC Ltd (Dormant)

100%

AEC Amersham SOC Ltd 100%

Gammetec Middle East

General Trading Liability Company 76%

Gammetec Aseana NDT

Supplies SDN.BHD 100%

Pharmatopes SOC Ltd (Dormant)

100%

Gammetec NDT Supplies SOC

Ltd 55%

Oserix 25%

Element 4250%

Lectromax Australia 90%

Lecromax New Zealand 100%

(Dormant)

Flouropharm SOC Ltd (Dormant)

100%

Flourochem SOC Ltd (Dormant)

100%

LESA SOC Ltd 100%

Fluoro Pack SOC Ltd (Dormant)

100%

NTP Logistics SOC Ltd 51%

Gamma Film Industries SOC Ltd (Dormant)

100%

NTP Europe 100%

Necsa visiting Ennis Thanbong Combined School in celebration of Mandela Day


08 Governance structures

8.1 BOARD OF DIRECTORS The Board of Directors is the Accounting Authority in terms of the PFMA and is appointed for a renewable period of three years by the Minister of Mineral Resources and Energy. In terms of Section 16 of the Nuclear Energy Act, Necsa is governed and controlled by a Board of Directors to ensure that the objects of the Act are carried out, and to exercise general control over the performance of Necsa’s functions. The Board of Directors embraces the principles of good corporate governance and considers these as the underlying philosophy in creating organisational excellence at all levels within Necsa.

The Board sets the precedent in driving ethics, and the directors, collectively and individually, acknowledge their responsibilities and duties in terms of the Board Charter, King III code of governance and other regulatory and legislative requirements.

The Board is accountable for the overall formulation, monitoring and review of Necsa’s corporate strategy and related affairs, while delegating to management the responsibility for business performance and achievement of the organisation’s objectives.

The Board composition reflects the wide range of skills and knowledge necessary to meet Necsa’s strategic objectives.

8.1.1 CONFLICTS OF INTEREST The Board recognises the importance of acting in the best interests of the Corporation. The Board applies the provisions of the Companies Act by avoiding conflicts of interests. Directors are required to declare their general interests annually and at each meeting in accordance with the Companies Act.

8.1.2 BOARD REMUNERATION Necsa non-executive directors are remunerated for the meetings attended, and other ad hoc non-meeting duties performed on behalf of the Corporation. Preparation and attendance fees payable to Board members are determined by the Minister of Mineral Resources and Energy in consultation with the Minister of Finance. Employees of national, provincial and local government or agencies and entities of government are not entitled to additional remuneration. The details of Board remuneration for the year ended 31 March 2020 are stated in Note 37 to the Annual Financial Statements on page 197.

8.1.3 DIRECTOR DEVELOPMENTIn the best interests of the Corporation, Necsa encourages ongoing director development to enhance governance practices within the Board. The Board undergoes a Necsa-specific induction process within six months of appointment.

8.1.4 DETAILS OF BOARD MEMBERS Board composition information of the South African Nuclear Energy Corporation SOC Limited (Necsa) for the reporting period 1 April 2019 to 31 March 2020 appear in the tables below.

For the period under review, the Board composition will be categorised as follows:

(a) Category 1 is with respect to the Board appointed with effect from 6 December 2018 and whose three-year term would have ended on 21 December 2021 had they all not resigned.

(b) Category 2 is with respect to the Board that was appointed on a three-year term effective from 17 January 2020 until 17 January 2023. This Board comprises eight non-executive directors, who were independently appointed by the Minister of Mineral Resources and Energy, two representatives of the DMRE and an Executive Director (GCEO).

SECTION


Mr D RobertsonBoard Member

Dr G Davids Board Member

Dr R Masango Board Member

Mr J Shayi Board Member

Mr A MyoliActing Group Chief Executive Officer

Mr JP Ndhlovu Board Member

Ms L Noge-Tungamirai Board Member

Ms B MakgopaBoard Member

Dr R M Adam Chairperson of the Board

Mr D Nicholls Board Chairperson

Mr B Singh Board Member

Ms A Chowan Board Member

Ms MonaleBoard Member

MS V NgwenyaBoard Member

Dr PE Molokwane Board Member

Dr N Magau Board Member

Mr A PatelBoard Member

Mr M MaboaBoard Member

Ms PN KingstonBoard Member

Ms S MasangoBoard Member

BOARD OF DIRECTORS - EFFECTIVE FROM 06 DEC 2018 – 14 JAN 2020 BOARD MEMBERS - EFFECTIVE 17 JANUARY 2020 TO DATE


Surname and initials Gender

Race (Black, Indian, Coloured and White) Age Qualifications

Terms of Board appointment

Active membership on other organisations/companies/entities boards

Date of first appoint-ment

Expiration/resignation date

Mr JP Ndhlovu Male Black 49 ¢ Oxford Advanced Management Programme (MAP) – Said Business School, Oxford University, UK

¢ Bachelor of Administration Honours (Industrial Psychology) – University of KwaZulu-Natal

¢ Honours (Organisational Psychology) – University of KwaZulu-Natal

6 December 2018

07 July 2019 n/a

Dr R Masango Female Black 44 ¢ PhD (Nuclear Engineering) – Pennsylvania State University, USA

¢ MSc (Nuclear Engineering) – Pennsylvania State University, USA

¢ Diploma in Project Management – Lyceum College (JHB)

¢ BTech (Chemical Engineering) – Cape Peninsula University of Technology

¢ National Diploma (Chemical Engineering) – Cape Peninsula University of Technology

6 December 2018

02 August 2019

Non-Executive Director: ¢ ArioGenix ¢ Ario Inverters ¢ Ario Rectifiers ¢ Ario Holdings ¢ FTF Foundation ¢ Redhorn Holdings ¢ Mzesi Water & Construction ¢ Yonga Energy ¢ Tingo Technologies ¢ Africa Energy Wise Solutions ¢ Amanzi Technologies ¢ Miyeza Investments ¢ Vito ¢ KeaVaya and Home ¢ CSIR ¢ MM Dairy Products ¢ CPUT Chemical Engineering Advisory

Board

Dr PE Molokwane

Female Black 42 ¢ PhD (Chemical Technology –Environmental) – UP

¢ MSc (Applied Radiation Science & Technology) – University of North-West

¢ BSc Physics & Chemistry – University of North-West

¢ Postgraduate Diploma (Applied Radiation Science & Technology) – University of North-West

6 December 2018

14 January 2020

Non-Executive Director: ¢ Eskom SOC Limited and Chair of

Tender Committee ¢ National Planning Commission, The

Presidency, Department of Planning, Monitoring and Evaluation

¢ South African Forestry Company SOC Limited (SAFCOL)

¢ Board Member:Inkomati Usuthu Catchment Management Area (IUCMA)

¢ Member of Audit & Risk Committee (IUCMA)

¢ Sedibeng Water Board, Chair of Finance, Investment and ICT Committee, Member of Audit & Risk Committee

Ms MV Ngwenya

Female Black 50 ¢ BA Hons (Labour Relations) – Rand Afrikaans University

¢ BA Social Work – University of the North

¢ Management Advanced Programme (MAP) – Wits University

6 December 2018

14 January 2020

¢ Chair: Sizwe Medical Aid Remuneration Committee

¢ Member: NFVF Advisory Panel ¢ Ex-Officio: NFVF Human Resources

and Ethics Committee

TABLE 36: DETAILS OF BOARD MEMBERS

Directors appointment effective 6 December 2018







Dr RM Adam Male White 63 ¢ BSc Honours (Chemistry) – UCT

¢ BSc Honours (Physics) – UNISA ¢ MSc (Physics) – UNISA ¢ PhD (Physics) – UNISA ¢ Coaching for Performance –

Open University

6 December 2018

4 July 2019 ¢ Member of the Human Resources Development Council

¢ Member of the Board of the Square Kilometre Array

¢ Fellow of the Royal Society of South Africa

¢ Member of the Academy of Sciences of South Africa

¢ Member of the Engineering Academy of South Africa

¢ Member of the South African Council for Natural Scientific Professions

¢ Member of the South African Institute of Physics

¢ Member of the Institute of Civil Engineers

Mr A Patel Male Indian 45 ¢ B Proc LLB and H Dip (Company Law) – University of the Witwatersrand

¢ Diploma in Pension Funds – University of the Witwatersrand

¢ DLA Piper Harvard leadership Programme – Harvard Business School

6 December 2018

19 August20149

¢ Member of the Law Society of the Northern Provinces

¢ Member of the South African Society for Labour Law (SASLAW)

Mr B Singh Male Indian 49 ¢ B Com Honours (Accounting) – UNISA

¢ Advanced Credit Diploma – Institute of Bankers in SA

¢ Certificate in Banking (CAIB) – Institute of Bankers

¢ MBA (General) – UP ¢ International Executive

Development Programme (IEDP) – University of the Witwatersrand

6 December 2018

14 January 2020

¢ Director: Johannesburg Observatory Science & Technology Site NPC, a non-profit organisation

¢ Member of Institute of Directors (IODSA)

¢ Institute of Public Finance & Auditors ¢ Certified Associate Member – Institute

of Bankers ¢ NRF Corporate Executive Committee

member ¢ Chairman: NRF Pension Fund ¢ Member: NRF Pension Fund

Investment Committee ¢ Chairman: DUT Audit Committee ¢ Member of DUT Finance, Investment &

Remuneration Committee ¢ TENET Board Member ¢ Chairman: NRF Bid Award Committee ¢ Member: NRF Board Procurement

Committee ¢ Member of SKA International Board

Finance Sub-Committee ¢ Square Kilometre Array, SA, Steering

Committee by invitation Management rep on Labour Negotiation Forum

¢ Chairman: NRF Post-Retirement Medical Aid Committee

¢ Ex-Officio Member: NRF Board, Audit & Risk Committee and Procurement Board

¢ Ex-Officio Member: DST CFO Forum Member








Mr MJ Maboa

Male Black 40 ¢ B Com (Fin Acc), UCT ¢ Postgraduate Diploma in

Accounting ¢ Advanced Diploma in Auditing ¢ Professional Qualifying Exam, Part

1 & 2

17 January 2020

16 January 2023

¢ Board Member, Movundlela Consulting (Pty) Ltd - M Consulting Mashukudu James Maboa and Co Incorporated - MJM

¢ Board Member, Nehawu Investment Holdings (Pty) Ltd

¢ Board Member, Pelchem SOC Ltd ¢ Board Member, NTP Radioisotopes SOC

Ltd ¢ Eyesizwe Ming (Pty) Ltd 2019 ¢ Audit Committee Member, Services

Sector Education and Training Authority (SSETA)

¢ Audit Committee Member, NEHAWU Investment Holdings (NIH)

¢ Audit Committee Member, Hosmed Medical Scheme

Mr LJ Shayi Male Black 61 ¢ Master of Business Leadership, UNISA

¢ Master of Science in Chemistry, UP

¢ BSc (Hons): Majors in Physical and Inorganic Chemistry, University of Natal

¢ BSc: Majors in Chemistry and Physics, University of the North

17 January 2020

16 January 2023

n/a

Ms SKN Masango

Female Black 32 ¢ PhD Candidate in Nuclear Physics, University of the Western Cape

¢ Masters in Nuclear Physics, University of the Western Cape

¢ Hons in Nuclear Physics, University of Zululand

¢ BSc Physics & Electronics (major in electronics), University of Zululand

¢ Project Management Diploma, Varsity College

¢ Certificate in Detector and Instrumentation Technology, Fermilab, USA

17 January 2020

16 January 2023

n/a

Ms L Noge-Tungamirai

Female Black 38 ¢ MBA, Wits Business School ¢ Master Network Engineering

Diploma, Torque-IT ¢ IT Programming Diploma, CTU

Training Solutions

17 January 2020

16 January 2023

¢ Member of the Institute of Directors (IoDSA)

¢ Member of Institute of People Management

¢ Board member, Community Schemes Ombud Services (CSOS)

¢ Board member, National Library of South Africa (NLSA)

¢ Board member, Mangosuthu University of Technology (MUT)

¢ Board member, Boxing SA ¢ Board member, Development Bank of

Southern Africa (DBSA)







Ms PN Kingston

Female Black 49 ¢ MSc (International Law) – University of Nottingham, England

¢ BA LLB – University of Wales, Wales

¢ International Baccalaureate Diploma – International School of Moshi, Tanzania

6 December 2018

14 January 2020

¢ Sphere Holdings (Pty) Ltd ¢ Ditswammung Mineral Resources

Consortium ¢ Telesure Group Services (Pty) Ltd ¢ Kingston Art Agency (Pty) Ltd ¢ Mirai Group Investments (Pty) Ltd

Mr D RobertsonActing GCEO

Male White 69 ¢ BSc Honours Mathematics, Rhodes University

¢ MSc Mathematics, Rhodes University

10 December 2018

30 June 2019 (Contract ended)

n/a

TABLE 37: DIRECTORS APPOINTMENT EFFECTIVE 17 JANUARY 2020







Mr DR Nicholls

Male White 66 ¢ BSc (Hons) in Mechanical Engineering (2-1), Royal Naval Engineering College, Manadon

¢ Postgraduate Diploma in Nuclear Reactor Technology, Royal Naval College, Greenwich

17 January 2020

16 January 2023

n/a

Dr NT Magau

Female Black 68 ¢ D Ed, Harvard University ¢ M Ed, Rand Afrikaans University ¢ B Ed, University of South Africa ¢ BA, University of the North

17 January 2020

16 January 2023

¢ NTP Radioisotopes Board ¢ Trustee of Bertha Gxowa Foundation ¢ Dept of Water Izakhiwo Infundo Trust

Dr GJ Davids

Male Coloured 60 ¢ BA in Public Administration, University of Western Cape

¢ BA (Hons) Development Administration

¢ MA in Public Administration, Stellenbosch University

17 January 2020

16 January 2023

¢ UWC, Representative of various university committees responsible for planning, policy matters, academic leadership, etc.

¢ UWC Faculty Chairperson of Assessment Committee

¢ UWC, Member of Senate ¢ Assessment Committee


Member details

BoD Strategic Plan BoD meeting Special BoD Special BoD Special BoD Special BoD Special BoD

11 April 2019

30 May 2019

30 July 2019

19 September 2019

11 October 2019

23 October 2019

28 October 2019

Dr RM Adam P P R R R R R

Mr A Patel A A A R R R R

Mr B Singh A P P P P T P

Mr JP Ndhlovu P A R R R R R

Dr R Masango P P P R R R R

Dr PE Molokwane P P P P P P T

Ms MV Ngwenya P P P A A A A

Ms PN Kingston P P T P P P P

Mr D Robertson P P R R R R R

Mr AB Myoli – – P A P P P

PATR

Member present at the meetingMember not present, but tendered an apology Member participated via teleconferenceMember had resigned from the Board at this point

Members attendance for Directors appointment effective 17 January 2020

Member details

Introductory meeting

Meeting with Minister BoD meeting Two-day Board strategy session

27 January 2020

28 January 2020

24 February 2020

9 March 2020

10 March 2020

Mr Nicholls DR P P P P P

Dr Magau NT P P P P P

Dr Davids GJ A A P P A

Mr Maboa MJ P A P P P

Mr Shayi LJ P A P P P

Ms Masango SKN P A P P P

Ms Noge-Tungamirai L A P P P P

Ms Chowan A A P P P P

Ms Monale PE N N A P P

Ms Makgopa B N N A P P

Mr Myoli AB P P P P P

PATN

Member present at the meetingMember not present, but tendered an apology Member participated via teleconferenceMember not appointed at this stage

8.1.9 COMMITTEES OF THE BOARD

The Board has continued to improve its effectiveness and quality of governance. This is evidenced by revision of the number of Board subcommittees from two statutory subcommittees to four, and by the development of the Corporation’s strategy and plan, to ensure its alignment with the mandate of Necsa.

The Board was assisted by four subcommittees, namely Audit and Risk, Social and Ethics, Research & Development, and Investment and Finance. The Board committees met at least once per quarter and all the committees have adopted formal terms of reference (TOR) and provided the required feedback to the Board through committee reports. Board committees and TOR are reviewed annually to ensure continuing relevance.

In terms of Section 19 of the Nuclear Energy Act, the Board is advised by advisory committees whose mandate it is to assist the Board in discharging its responsibilities. These committees play an important role in enhancing high standards of governance and improving effectiveness within the Necsa Group. External advisors are invited to attend Board and/or committee meetings on an ad hoc basis, as and when the need arises.

8.1.10 AUDIT AND RISK COMMITTEE

The Audit and Risk Committee plays a key role in assisting the Board to fulfil its oversight responsibilities in areas such as the entity’s financial reporting, internal control systems, risk management systems and the internal and external audit functions.







Ms A Chowan

Female Indian 46 ¢ CA(SA) Registered Auditor ¢ Bachelor of Accountancy,

University of Durban Westville ¢ Postgraduate Diploma in

Accounting, University of Durban ¢ LLB, UNISA

17 January 2020

16 January 2023

¢ Member on the SAICA Disciplinary Committee

¢ Member of the Tax Court ¢ Board member, SACORP (Lister

company) ¢ Board member, Legal Aid South Africa ¢ Board member, Alexkor SOC Ltd ¢ Board member, Action Aid South Africa ¢ Member and Chair: Audit Committee,

SAMSA

Ms PE Monale DMRE Repre-sentative

Female Black 56 ¢ MSc in Applied Radiation – University of North-West

¢ BSc Ed – University of North-West ¢ Training Course on Physical

Protection of Nuclear Material and facilities – (IAEA)

¢ Training Course on State System for Accounting for and Control of Nuclear Material – IAEA

¢ Safeguards Training – IAEA

1 February 2020

31 January 2023

n/a

Ms B Makgopa (Alternative to Ms Monale)

Female Black 44 ¢ MSc Nuclear Engineering – UNW ¢ BSc Honours Environmental

Management – UNISA ¢ BSc Honours in Physics – RAU ¢ BSc Physical Sciences – RAU ¢ Programme in Project

Management – UP ¢ Executive Leadership

Development Programme – NSG/UNW

1 February 2020

31 January 2023

Director: Tsebo Science and Technology Centre

Mr AB Myoli(Acting GCEO)

Male Black 55 ¢ BSc (Mechanical ) – UCT ¢ Master of Business Leadership

(MBL) – UNISA ¢ Snr Management Programme

– University of Stellenbosch Business School

¢ Diploma Packaging Management – Durban Institute of Technology

09 July 2019

To date n/a

8.1.7 BOARD CHARTER

The Nuclear Energy Act and Board Protocol serve as the Necsa Board Charter. These regulate the Board in accordance with the principles of good corporate governance and set out the specific duties and responsibilities to be discharged by the Board as a unitary working group. The Charter ensures that all Board members, acting as the Accounting Authority, are aware of the legislation and regulations affecting their conduct and that the principles of good corporate governance are applied in all their dealings with respect to and on behalf of Necsa.

8.1.8 MEETINGS OF THE BOARD

The Nuclear Energy Act requires that the Board meets at least four times per annum to discuss and review the strategy and business plan. Special Board Meetings are convened when necessary to deliberate on issues that require Board resolutions between scheduled meetings. Members of management are periodically invited to make presentations on issues of particular interest to the Board.

Meetings of the Board will be reported in two phases:

(a) Phase 1 is with respect to meetings of the Board appointed with effect from 6 December 2018 and whose three-year term would have ended on 21 December 2021 had they all not resigned.

(b) Phase 2 is with respect to meetings of the Board that was appointed on a three-year term effective from 17 January 2020 to 17 January 2023.

Members attendance for Directors appointment effective 6 December 2018


Details of Executive ManagementThe members of the EXCO are:

Name CapacityAppointed to the Committee Qualifications

Mr AB Myoli Acting Group CEO 9 July 2019 – date ¢ BSc (Mechanical ) – UCT ¢ Master of Business Leadership (MBL) – UNISA ¢ Snr Management Programme – University of Stellenbosch

Business School ¢ Diploma Packaging Management – Durban Institute of Technology

Mr TJ Tselane Group Executive: Technology and CTO

1 September 2017 – date ¢ MSc (Applied Nuclear Physics) – University of Western Cape ¢ BSc (Honours Nuclear Physics) -North West University ¢ BSc (Chemistry and Physics) – North West University ¢ Project Management qualification – UP ¢ Executive Senior Management Programme qualification – UP ¢ Global Executive Development Programme – GIBS

Mr R Ramatsui Group Executive: Pelindaba Enterprises

1 September 2017 – date ¢ Project Management – University of Wales ¢ Master of Business Administration – UNISA

Mr U Natha General Manager: Strategy and Performance

1 September 2017 – date ¢ BSc: Chemical Engineering – UKZN ¢ Master of Business Administration – UKZN

Mr M Jantjie Acting Chief Legal Advisor (ex-officio member)

1 August 2019 – date ¢ BA (Majors: Psychology, Political Science) – Nelson Mandela University

¢ Postgraduate Diploma in Higher Education (HDE) – Nelson Mandela University

¢ LLB – UNISA ¢ LLM – UP ¢ Certificate in Industrial Relations, UNISA

Ms M Rasweswe Group Executive: Nuclear Compliance and Services

1 January 2017 – date ¢ N Dip Chemical Engineering

Ms H Khumalo Chief Financial Officer 1 September 2017 – date ¢ Master of Business Leadership (MBL) – UNISA ¢ Postgraduate Diploma, Business Management (PGDBM) –

UNIKZN Graduate School of Business ¢ BCom Majors: Business Management and Internal Auditing ¢ National Diploma: Internal Auditing

Mr Z Ismail Acting Head of Internal Audit (Co-opted member)

1 November 2018 –date ¢ BCompt Degree – UNISA

Dr JR Zeevaart Acting Divisional Executive: Research & Development

1 August 2019 – date ¢ PhD (Radiochemistry) Delft University of Technology

Mr M Mondi Group Executive: Human Resources and Real Estate Asset Management

1 September 2017 – date ¢ Bachelor of Philosophy – University of Stellenbosch ¢ BA Education – University of Transkei ¢ Masters Diploma (HRM) – RAU ¢ Masters Artium (Labour Relations & HRM) – UPE ¢ Management Development Programme – UNISA

Mr F Mkhabela Chief Risk Officer (ex-officio member)

1 January 2018 – date ¢ BCom (Accounting) – University of the Witwatersrand ¢ Honours B Com (Auditing) – UNISA ¢ Certified Internal Auditor (CIA) – Global Institute of Internal Auditors ¢ Certification in Control Self-Assessment – Global Institute of

Internal Auditors ¢ Certificate in Public Sector Risk Management – National Treasury ¢ Certificate in Performing an Effective Quality Assessment - Institute

of Internal Auditors South Africa (IIASA) ¢ Certificate in Advanced Performance Auditing in the Public Sector

IIASAMs N Tengimfene General Manager: Corporate

Communication & Stakeholder Relations

1 September 2017 - date ¢ Advanced Diploma in Social Work, National Training Welfare Institute, Dar es Salaam

¢ BA (Industrial & Organisational Psychology) – UNISA ¢ BA Hons (Industrial & Organisational Psychology) – UNISA ¢ MA (Industrial & Organisational Psychology) – UNISA

Committee members for the period from 1 April 2019 to 14 January 2020 were:

¢ Mr B Singh (Chairperson) ¢ Dr PE Molokwane ¢ Mr A Patel

Committee members appointed effective from 17 January 2020 are:

¢ Ms A Chowan (Chairperson) ¢ Ms L Noge-Tungamirai ¢ Ms S K N Masango ¢ Mr LJ Shayi

The table below reflects meetings convened for the period from 1 April 2019 to 31 March 2020.

Members names

Meeting dates

28 May 2019 23 July 2019

Mr B Singh(Chairperson) P P

Dr PE Molokwane A P

Mr A Patel T A

Mr D Robertson P R

Mr AB Myoli N P

P Member present at the meetingA Member not present, but tendered an apology T Member participated in the meeting via teleconferenceR Member had resigned at this pointN Member not appointed at this stage

8.1.11 SOCIAL AND ETHICS COMMITTEE

This committee was formally constituted in line with the provisions of regulation 43(5) read with Section 72(4)-(10) of the Companies Act, Act 71 of 2008. The role of the SEC is to assist the Board with the oversight of social and ethical matters relating to the company.

Members of the committee for the period from 1 April 2019 to 14 January 2020 were:

¢ Ms P Kingston (Chairperson) ¢ Dr PE Molokwane ¢ Mr JP Ndhlovu ¢ Mr D Robertson

Committee members appointed effective from 17 January 2020 are:

¢ Dr NT Magau (Chairperson) ¢ Dr GJ Davids ¢ Mr LJ Shayi ¢ Ms L Noge-Tungamirai

The table below reflects meetings convened for the period from 1 April 2019 to 31 March 2020.

Members names

Meeting dates

28 May 2019 22 July 2019

Ms P Kingston P P

Dr PE Molokwane P P

Mr JP Ndhlovu A R

Mr D Robertson P R

Mr AB Myoli N P

Members names

Meeting dates members

appointed effective

17 January 2020

30 March 2020

Dr NT Magau P

Dr GJ Davids P

Mr LJ Shayi P

Ms L Noge-Tungamirai P

P Member present at the meetingA Member not present, but tendered an apology R Member had resigned at this pointN Member not appointed at this stage

8.1.12 Investment and Finance Committee

The purpose of the Investment and Finance Committee is to assist the Board in fulfilling its obligations by reviewing reports, making recommendations to the Board on matters relating to investment policies, as well as reviewing the viability of business opportunities and/or cases. The committee also reviews the Necsa Group’s financial performance and procedures for compliance with the investment policies. The Investment and Finance Committee considers and recommends for approval the Necsa Group Corporate Plan and attends to other such matters as may be delegated to the committee by the Board.

Members appointed are:

a. Mr MJ Maboa (Chairperson)b. Dr NT Magauc. Ms A Chowand. Ms SKN Masango

8.1.13 Research, Development and Technology Committee

The objective of the committee is to provide assurance to the shareholders and/or stakeholders of Necsa that research, development, and technology matters of the Company are strategic, innovative, and supported at the highest level.

Members appointed are:

a. Ms SKN Masango (Chairperson)b. Mr LJ Shayic. Mr DR Nichollsd. Dr GJ Davids

8.1.14 Composition of members of the executive management

In terms of sections 22 and 23 of the Nuclear Energy Act, the CEO has the power and authority to, among other things, implement approved business plans, annual budgets and all other issues and matters relating to the achievement of Necsa’s goals, and prepare, review and recommend the annual budgets and any amendments to the budget, to the Board.

The CEO, in carrying out the powers set out above, is assisted by the Executive Management Committee. The CEO is the Chairperson of the Committee. The Committee’s main functions include alignment of Necsa’s business with the Group mission, vision, strategies, targets and policies, and consideration of material business, strategic, financial and functional issues.


8.2 RISK MANAGEMENT Enterprise-wide Risk Management has the principal objective of increasing the likelihood of Necsa achieving its objectives. The methodology and processes described are aimed at ensuring that significant business risks are systematically identified, assessed and reduced to acceptable levels

8.2.1 RISK METHODOLOGY

Group Risk Management follows the Risk Management Framework of ISO 31000, the Committee of Sponsoring Organisations (COSO) of the Treadway Commission, the National Treasury Risk Management Framework and King III, to ensure alignment with best practice.

The Necsa Group Risk Management Policy and Strategy was approved by the Board in March 2015. It has been reviewed and is awaiting final approval by the Board. The strategy outlines roles and responsibilities for risk identification, assessment and management, as well as the overall risk management process. As a nuclear organisation operating a research reactor, sustainability risks relating to safety, security, regulatory compliance and commercial success of subsidiaries are prioritised. Current, imminent and envisaged risks that may threaten the long-term sustainability of the Group are considered.

Necsa’s risk tolerance is set at a risk rating level of ≥16 (i.e. those risks with high impact and high likelihood of occurrence). The company’s risk appetite has been defined as “No risk may remain in the very high (unacceptable) category (16≤ rating ≤25) for longer than two consecutive quarters before being managed into a more acceptable (lower) risk category (rating ≤15)”.

8.2.2 RISK MANAGEMENT ASSURANCE

Assurance for the risk management process is provided through a series of interrelated processes which include Divisional Risk Champions, the Group’s Internal Risk Management Committee (IRMC), Internal Audit, the Audit and Risk Committees of both EXCO and the Board, as well as the Board of Directors.

The IRMC assists EXCO and the Board with the implementation of the Risk Management Policy and Strategy by developing processes for risk identification and control. These processes involve Risk Champions updating divisional risk registers at management committee meetings for amalgamation into the Necsa Group Strategic Risk Register (note that the NTP and Pelchem subsidiaries manage their own risk registers). The IRMC meets on a quarterly basis to review the Necsa Group Strategic Risk Register and progress with risk responses. Internal Audit conducts a risk-based audit and assesses the effectiveness of the risk management processes for assurance to both EXCO and the Board.

8.2.3 STRATEGIC RISKS

The top risks currently faced by Necsa are indicated as follows:

8.2.3.1 Single supplier of fuel elements and target plates

There are various measures undertaken to mitigate the risk of a single supplier of the fuel elements and target plates used in the production of radioisotopes. These include regulatory approvals for delivery of plates from NCCP (Russian suppler) for LTA (Lead Test Assemblies), swaging qualification of NCCP dummy plates completed by MTR, NNR response received on transport plan and an NCCP audit report. Residual Risk Level is at 25.

8.2.3.2 Pelindaba Enterprises not achieving sales targets

The risk of Pelindaba Enterprise not achieving its sales targets impacts on its viability. Mitigation actions include implementation of PE’s revised business strategy and business plan which calls for increased repeat orders, increasing the order book, holding managers accountable for actions under their control and use of market-related rates. Residual Risk Level is at 20.

8.2.3.3 Going Concern status

Necsa’s Going Concern status is determined in terms of the Companies Act based on liquidity and solvency criteria; it is crucial in determining business continuity. Mitigation actions include savings on variable costs, which are being pursued by reprioritising expenditure. Employees are encouraged to negotiate cost savings from suppliers prior to placing purchase orders, thus encouraging increased sales focus, securing additional funding for R&D and implementation of zero-based budgeting. Residual Risk Level is at 25.

8.2.3.4 Necsa not achieving an unqualified audit opinion

Mitigation actions include resolution of all outstanding internal and external audit findings, regular reassessment of policies and procedures and compliance thereto to prevent new findings, internal audit assurance, regular skills training and implementation of management control policy frameworks. Residual Risk Level is at 25.

8.2.3.5 Source of neutron availability beyond 2030

Mitigation actions include SAFARI-1 to run until 2030 and preferably in parallel with the multipurpose research reactor (MPR) for three to five years. The draft Project Initiation Report has been completed. Residual Risk Level is at 25.

8.2.3.6 Liquidity risk

This risk refers to Necsa’s effectiveness when it comes to cash flow management, which is critical due to Necsa’s current financial position. Mitigation actions include accessing the MTEF ring-fenced funds and accessing additional bank overdrafts if approved. Other actions include circulating budget manuals and guidelines to line management; holding information sessions by decentralised financial officers and GEs/ DEs emphasising the importance of cost-cutting within the Necsa Group; managing the forecast on a monthly basis to ensure that allocated budget is spent sparingly; following proper procurement processes; issuing delegations of authority to ensure that funding is approved by qualified officials; providing complete management accounts on a monthly basis to EXCO for deliberation and implementation of zero-based budgets; and identifying new sources of income. Residual Risk Level is at 25.

8.2.3.7 COVID-19 disaster risks

The top COVID-19 risks currently faced by the Group are as follows:

8.2.3.7.1 Necsa Group’s business interruption

Necsa Group entities have suffered a significant loss of revenue due to business interruption emanating from the COVID-19 disaster management measures undertaken by South Africa and various international countries with which Necsa entities conduct business. The travel restrictions imposed worldwide have made it extremely difficult, and in some instances impossible, to conduct business during the period March to June 2020. An assessment of the overall expected COVID-19 economic impact on the Necsa Group was conducted. Focused actions are being undertaken to mitigate the impact of COVID-19.

8.2.3.7.2 Employee exposure to COVID-19 (possible employee infections)

The Necsa Group has put in place various measures to mitigate against employee infections on the Necsa site. A detailed health and safety risk assessment was conducted.

Mr M Mondi Group Executive Human Resources and Real Estate and Asset Management

Dr JR Zeevart Acting Divisional Executive: Research & Technology Development

Ms MA Rasweswe Group Executive Nuclear Compliances and Services

Mr U Natha General Manager Strategy

Mr A Myoli Acting Group Chief Executive Officer

Mr M JantjieActing Chief Legal Advisor (ex-officio member)

Mr MU Ramatsui Group Executive Pelindaba Enterprises

Mr Z Ismail Acting Chief Audit Officer

Mr FM Mkhabela Chief Risk Officer

Mr TJ Tselane Chief Technology Officer

Ms HNB Khumalo Chief Financial Officer

Ms NF TengimfeneGeneral Manager Corporate Communication & Stakeholder Relations

EXECUTIVE MANAGEMENT COMMITTEEIn terms of sections 22 and 23 of the Nuclear Energy Act, the CEO has the power and authority, among other things, to implement approved business plans, annual budgets and all other issues and matters relating to the achievement of Necsa’s goals, and prepare, review and recommend to the Board the annual budgets and any amendments thereto.

The CEO, in carrying out the powers set out above, is assisted by the Executive Management Committee. The CEO is the Chairperson of the committee. The committee’s main functions include alignment of Necsa’s business with the Group mission, vision, strategies, targets and policies and consideration of material business, strategic, financial and functional issues.


09 Sustainability report

9.1 ECONOMIC SUSTAINABILITY The following integrated report capitals are directly linked to economic sustainability:

¢ Necsa’s Financial Capital includes operational and capital grants from government, revenues from commercial ventures as well as debt financing. Necsa manages its financial capital through its Finance and Business Development division, its two commercial subsidiaries, NTP and Pelchem, as well as the Pelindaba Enterprises division as an incubator of new business ventures. In addition, a Business Development Department resides in the R&TD Division.

TABLE 39: FINANCIAL CAPITAL INDICATORS

Necsa Group2015

Rm2016

Rm2017

Rm2018

Rm2019

Rm2020

Rm

Necsa corporate sales 353 382 401 388 402 R419m

NTP Group net profit 69 183 203 122 147 (R60m)

Pelchem Group net profit (18) 29 (36) (35) 78 (R19m)

Group bank overdraft 66 85 124 32 46 R22m

¢ Necsa’s Manufactured Capital includes its buildings, infrastructure, plant and equipment used in its operations. It is managed jointly by REAM, Engineering and Technical Services division, Security Services and Corporate Finance departments, as well as the respective facility operating units.

TABLE 40: MANUFACTURED CAPITAL INDICATORS

Necsa Group 2015 2016 2017 2018 2019 2020

Research reactor availability 300 days 303 days 298 days 299 days 276.06 days 302.9 days

¢ Necsa’s Intellectual Capital includes the organisation’s stock of intellectual property, as well as the tacit knowledge embedded in systems and possesses. Necsa manages its intellectual capital through the IP office in the Business Development Department and the Knowledge Management Unit. The Research & Technology Development division generates new IP.

TABLE 41: INTELLECTUAL CAPITAL INDICATORS

Necsa Group 2015 2016 2017 2018 2019 2020

Innovation disclosure 18 13 15 10 10 8

Research publications 34 55 43 45 44 35

Internationally granted patents 50 16 10 7 2 2

SECTIONThe Necsa Group is committed to the goal of sustainable development to ensure that opportunities available to future generations are not compromised. To this end, the company’s economic, social and environmental impacts are considered.

In each of the three domains, sustainability is examined in terms of the relevant capitals at the core of the International Integrated Reporting Framework and relevant performance indicators presented.


9.3 ENVIRONMENTAL SUSTAINABILITY ¢ Necsa’s Environmental Management Group takes responsibility for environmental monitoring on the Pelindaba site and has a veterinarian on call to

attend to wildlife in need. The Nuclear Liability Management Department performs ongoing decommissioning and decontamination while the Utilities and Facilities Department manages water and electricity consumption.

TABLE 43: NATURAL CAPITAL INDICATORS

Necsa Group 2015 2016 2017 2018 2019

Execution of animal decommissioning and decontamination plan 106% 90% 99% 122.8% 85.15%

Public dose impact as% of allowable limit

(0.250 mSv) 2.5 2.2 2.2 1.94 1.16

Percentage of permitted effluent released to Crocodile River

(250 000m) 77 43 29 20.5 27

Percentage of permitted fluoride emission 25 34 25 12 11

Annual electricity usage 86 GW.h 86 GW.h 76 GW.h 67 GW.h 69.61GW.h

Annual water usage 1 064 300 m3 105 978 m3 815 500 m3 776 920 m3 771 400 m3

9.2 SOCIAL SUSTAINABILITY ¢ Necsa’s Human Capital includes the vast educational qualifications of its staff and their nuclear industry experience as well as their motivation to innovate

and collaborate. The Human Resources Department in collaboration with the Necsa Learning Academy are dedicated to managing this capital.

TABLE 42: HUMAN CAPITAL INDICATORS

Necsa Group 2015 2016 2017 2018 2019 2020

Staff number 1 906 1 857 1 912 1 962 1 900 1 821

Percentage technical staff 50.1 49.2 47.8 45.01 44.95 44.87

Black technical staff as% of all technical staff 53.1 56.0 58.5 61.51 44.87 66.95

Trade test conducted 467 450 304 437 384 334

Study assistance recipients 148 146 102 142 146 118

Disabling injury incident rate 0.71 0.78 1.1 1.03 0.68 0.56

Non-unionised staff percentage 18.7 16 15.3 14.61 11.98 7.18


10 Financial report

SECTION

Country of incorporation and domicile South Africa

Nature of business and principal activities The South African Nuclear Energy Corporation SOC Limited is responsible for managing certain institutional obligations defined in the Nuclear Energy Act, No. 46 of 1999

Directors

Mr L Tyabashe (Group Chief Executive Officer)

Mr DR Nicholls (Necsa Group Chairperson)

Dr NT Magau

Dr GJ Davids

Mr MJ Maboa

Mr LJ Shayi

Ms L Noge Tungamirai

Ms A Chowan

Ms SKN Masango

Ms BM Makgopa

Ms PE Monale

Registered office Elias Motsoaledi Street Extension (Church Street West)

R104 Pelindaba

Brits Magisterial District, Madibeng Municipality

North West Province

0240

Business address Elias Motsoaledi Street Extension (Church Street West )

R104 Pelindaba


North West Province

0240

Postal address PO Box 582

Pretoria

0001

Shareholder Department of Mineral Resources and Energy

Registered Auditors Auditor-General of South Africa

Acting Company Secretary Mr MZ Jantjie (Acting Company Secretary)

Company registration number 2000/003735/06

Supervised by The financial statements were supervised by:

Hlengiwe Khumalo (Group CFO)

General Informationfor the year ended 31 March 2020


The Directors are required in terms of the Companies Act of South Africa and the Public Finance Management Act No.1 of 1999 (PFMA) 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 fairly present the state of affairs of the Group and Company as at the end of the financial year and the results of its operations and cash flows for the year then ended, in conformity with International Financial Reporting Standards.

The Annual Financial Statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgement and estimates.

The Directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and place considerable importance on maintaining a strong control environment. To enable the Directors to meet these responsibilities, they set 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 Group and all employees are required to maintain the highest ethical standards in ensuring the Group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group. While operating risk cannot be fully eliminated, the Group 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 to the best of their knowledge, 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 Directors have reviewed the Group’s cash flow forecast for the year ended March 31, 2021 and, in light of this review and the current financial position, they are satisfied that the Group has or had access to adequate resources to continue in operational existence for the foreseeable future.

The Financial Statements set out on pages 15 to 128, which have been prepared on the going concern basis, were approved by the Directors on February 26, 2021 and were signed on their behalf by:

Mr Ayanda Myoli (Acting Group Chief Executive) Mr DR Nicholls (Necsa Group Chairperson)

Friday, February 26, 2021

The reports and statements set out below comprise the Financial Statements presented to the shareholders:

Directors' Responsibilities and Approval 91

Report of the Audit and Risk Committee 92 - 94

Company Secretary’s Certification 95

Directors' Report 96 - 102

Report of the Auditor General to Parliament on the South African Nuclear Energy Corporation of South Africa and its Group Companies

103 - 113

Consolidated and Separate Statement of Financial Position 114 - 115

Consolidated and Separate Statement of Comprehensive Income 116

Consolidated and Separate Statement of Changes in Equity 117 - 118

Consolidated and Separate Statement of Cash Flows 119

Significant Accounting Policies 120

Notes to the Annual Financial Statements 121 - 219

Directors' Responsibilities and Approvalfor the year ended 31 March 2020

Indexfor the year ended 31 March 2020


We herewith present our report for the financial year ended 31 March 2020

1. Audit and Risk Committee ReportThe Necsa Audit and Risk Committee (ARC) is a formal statutory committee in terms of Section 51(1)(a)(ii), Section 77 of Public Finance and Management Act read together with Treasury Regulations 27.1, and acts as a governance structure of the entity. The committee functions within documented Terms of Reference and complies with relevant legislation, regulation and governance codes. This report of ARC is presented to the stakeholders in compliance with the requirements of the Companies Act 71, of 2008 and the revised King IV.

2. Composition of the CommitteeThe committee comprise of four independent non executive directors. The committee was elected by the Necsa Board subsequent to the Board appointment by the Honourable Minister Gwede Mantashe. During the 2019/20 financial year, the committee was not fully capacitated due to the resignation of some board members. However, with the appointment of the new Necsa board, the ARC is fully capacitated.

3. Audit and Risk Committee Terms of ReferenceThe ARC has adopted a formal Terms of Reference that have been approved by the Board of Directors. The Committee has conducted its affairs in compliance with its Terms of Reference and has discharged its responsibilities contained therein.

4. Audit and Risk Committee members, meeting attendance and qualifications

Mr LJ Shayi 14 April 2020 Master of Business Leadership, Master of Science in Chemistry, BSc (Hons): majors in Physical and Inorganic Chemistry, BSc: majors in Chemistry and Physics

Ms A Chowan 14 April 2020 CA(SA) Registered Auditor, Bachelor of Accountancy, Postgraduate Diploma in Accounting, LLB degree

Ms S Masango 14 April 2020 PhD Candidate in Nuclear Physics, Masters in Nuclear Physics, Hons in Nuclear Physics, BSc Physics & Electronics (major in electronics), Project Management Diploma, Certificate in Detector and Instrumentation Technology

Ms L Noge Tungamirai 14 April 2020 Master of Business Administration, Master Network Engineering; IT Programming Diploma

5. Roles and responsibilities5.1 Statutory Duties

The Committee’s role and responsibilities include statutory duties as per the Companies Act, PFMA, Treasury Regulations and further responsibilities as assigned to it by the Board of Directors.

5.2 External Auditor Appointments and Independence

The Committee has satisfied itself that the external auditor was independent of the Group, as set out in the Companies Act 71 of 2008, which includes consideration of conflicts of interest as prescribed by the Public Audit Act (PAA).

Requisite assurance was sought and provided by the external auditor that internal governance processes within the audit firm, support and demonstrate its claims to independence.

The Committee, in consultation with executive management, agreed to the engagement letter, terms, audit plan and budgeted fee for the 2020 year.

5.3 Financial Statements and Accounting Practices

The Committee has evaluated the Annual Financial Statements of the company and the Group for the year ended 31 March 2020 and based on the information provided to the Committee, noted compliance in the preparation of the Annual Financial Statements, with the requirements of the Companies Act 71 of 2008 and the PFMA, and International Financial Reporting Standards. The Committee concurs that the adoption of the going concern premise in the preparation of the Annual Financial Statements is appropriate. The Committee has recommended the adoption of the Annual Financial Statements and the Integrated Annual Report by the Board of Directors.

The ARC has:

¢ Reviewed and approved the appropriateness of accounting policies, disclosure policies and the effectiveness of internal financial controls

¢ Reviewed and discussed with the Auditor General and Accounting Authority the audited Annual Financial Statements.

¢ Reviewed the Auditor General's management letter and management responses.

¢ Reviewed changes in accounting policies and practices.

¢ Reviewed significant adjustments resulting from the audit.

¢ Reviewed and discussed with the Accounting Authority, Performance Information submitted to the Auditor-General.

Report of the Audit and Risk Committeefor the year ended 31 March 2020

Report of the Audit and Risk Committee (continued)for the year ended 31 March 2020

5.4 Internal financial controls

While the Board is responsible for the internal control systems and for reviewing their effectiveness, responsibility for their actual implementation and maintenance rests with executive management. The systems of internal control are based on established organizational structures, together with written policies and procedures, and provide for suitably qualified employees, segregation of duties, clearly defined lines of authority and accountability.

As a result of the issues outlined under Finance Section in this report as well as the external audit opinions for the two previous years, the internal financial function lacks proper controls and various recommendations have been made to management towards improving the control environment. The Committee has overseen a process by which Internal Audit has performed audits according to a risk based audit plan where the effectiveness of the risk management and internal controls were evaluated. The ARC’s concerns draws from the information and explanations provided by the Internal Audit function as well as those raised by the Auditor-General. The findings of these evaluations formed the basis for the Committee’s recommendations in this regard to the Board of Directors, in order for the Board of Directors to report thereon.

5.5 Combined assurance

Ensure the combined assurance model addresses all significant risks facing the group; and by monitoring of the relationship between external and internal assurance providers and the group.

5.6 Going Concern

Notwithstanding the liquidity issues at Necsa and its subsidiary Pelchem SOC Ltd, the Committee has reviewed management's assessment of the going concern status of the Group and has recommended to the Board of Directors that the Group is a going concern.

5.7 Internal Audit

The Committee is responsible for ensuring that the Group’s Internal Audit is independent and has the necessary resources, standing and authority within the Group to enable it to discharge its duties. Furthermore, the Committee oversees cooperation between the internal and external auditors and serves as a link between the Board of Directors and these functions. The Committee considered and approved the Internal Audit Charter. The Internal Audit function’s Annual Audit Plan and Three Year Strategic Plan were approved by the Committee.

The Internal Audit function reports administratively to the Acting Chief Executive Officer and functionally to this Committee and is responsible for reviewing and providing assurance on the adequacy of the internal control environment across all of the Group’s operations.

The Internal Audit function has direct access to the Committee, primarily through its Chairperson. From the various reports of the internal auditors, the findings were noted and recommendation made to management to implement the corrective actions.

5.8 Expertise and experience of Chief Financial Officer and Finance function

The entity appointed an Acting Chief Financial Officer who was heading the Internal Audit for the period November 2018 up to November 2019. The Committee is concerned with the proper functioning of the finance department, especially with regards to critical vacant positions, appropriate skills and experience of certain departments within finance. The previous committee made various recommendations to management to capacitate the function appropriately but most of the recommendations have not been implemented largely due to financial constraints which have negatively impacted the continued professional development of staff in the Finance department as a whole.

5.9 Governance and Management of Risk

The Committee oversees the implementation of the risk management policy and plan taking into account risk management systems and processes by: .

¢ Ensuring that the group has an effective policy and plan for risk management.

¢ Overseeing the development and annual review of the risk management policy and plan.

¢ Monitoring implementation of the risk management policy and plan.

¢ Make recommendations to the board on levels of risk tolerance and risk appetite.

¢ Ensuring that the risk management is integrated into business operations.

¢ Ensuring that risk management assessments are conductedon a continuous basis.

¢ Ensuring frameworks and methodologies are implemented to increase the possibility of anticipating unpredictable risks.

¢ Ensuring that management considers and implements appropriate risk responses.

¢ Expressing the committee’s opinion of the effectiveness of the system and process of risk management.

¢ Ensuring that risk management reporting in the integrated report is comprehensive and relevant.

The Committee is satisfied that appropriate and effective systems for monitoring of risks are in place, however the committee remains alert to the fact that the strategic risk exposure remains significantly high.


5.10 Auditor’s Report

To confirm the independence of the external auditors, the Committee is satisfied that the audit was conducted without any influence from Management. To this end, the Committee remains open to discussing any other issues that the auditors may have, without the presence of Management.

The Committee accepts the audit opinion of the Auditor-General on the Annual Financial Statements and recommends that the audited Annual Financial Statements be accepted and read together with the report of the Auditor General.

The committee expresses its appreciation to the accounting authority, the senior management team, internal audit and the Auditor-General for their continued support and dedication during the year under review.

On behalf of the Audit and Risk Committee

Ms A ChowanChairperson - Audit and Risk CommitteeFriday, February 26, 2021

Report of the Audit and Risk Committee (continued)for the year ended 31 March 2020

Group Secretary’s certification for the year ended 31 March 2020

IIn 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 Act and that all such returns are true, correct and up to date.

In my opinion as Acting Company Secretary, I hereby confirm, in terms of the Companies Act 71 of 2008, for the year ended 31 March 2020, that the Group has lodged with the Commissioner of Companies all such returns as are required of a public company in terms of this Act and that all such returns are true, correct and up to date.

Mr MZ JantjieActing Company SecretaryFriday, February 26, 2021


Directors' reportfor the year ended 31 March 2020

Directors' report (continued)

for the year ended 31 March 2020

The Directors have pleasure in submitting their report on the Financial Statements of The South African Nuclear Energy Corporation SOC Limited and its Group companies for the year ended March 31, 2020

1. Nature of businessIncorporated in the year 2000, the South African Nuclear Energy Corporation SOC Limited (Necsa) is mandated to undertake and promote research and development (R&D) in the field of nuclear energy and radiation sciences and technology. The company is also responsible for processing source material, special nuclear material and restricted material and to reprocess and enrich these. Apart from its main activities at Pelindaba, which include operation and utilisation of the SAFARI-1 Research Reactor, Necsa also manages and operates the Vaalputs National Radioactive Waste Disposal Facility in the Northern Cape on behalf of the National Radioactive Waste Disposal Institute (NRWDI).

Necsa engages in commercial business mainly through its wholly owned commercial subsidiaries NTP Radioisotopes SOC Ltd (NTP), which is responsible for a range of radiation-based products and services for healthcare, life sciences and industry, and Pelchem SOC Ltd (Pelchem), which supplies fluorine and fluorine-based products. Both subsidiaries, together with their subsidiaries, supply local and foreign markets, earning valuable foreign exchange for South Africa.

2. Review of financial results and activitiesNecsa derives its mandate from the Nuclear Energy Act, No. 46 of 1999 and the Minister of Energy (the Minister) to manage and operate certain of the Republic’s nuclear-related functions and facilities.

Necsa has been assigned the responsibility for managing certain institutional obligations of the Republic as defined in the Act. The main functions of the Company are:

¢ To undertake and promote research and development in the field of nuclear energy and radiation sciences and technology and subject to the Safeguards agreement, to make these generally available.

¢ To process source material, special nuclear material and restricted material and to process and enrich source material and nuclear material and

¢ To co operate with any person or institution in matters falling within these functions subject to the approval of the Minister.

¢ Ancillary powers and functions may be granted to the Group.

¢ In connection with its main functions.

¢ In order to create and utilise viable business opportunities in commerce and industry.

¢ In order to undertake the development and/or exploitation of nuclear technology or nuclear-related technology.

With regard to its nuclear-related activities Necsa is governed by Nuclear Installations Licences (NILs) issued by the National Nuclear Regulator (NNR) in terms of the Nuclear Regulator Act 47 of 1999.

The subsidiary companies in turn, have a mandate from Necsa to operate in a self-sustainable manner and to remain competitive in the industries within which they operate.

Full details of the financial position, results of operations and cash flows of the Group are set out in these Consolidated Financial Statements.

3. Share capitalThere have been no changes to the authorised or issued share capital during the year under review.

4. DividendsRefer to the Statement of Changes in Equity for dividends declared and paid to shareholders during the year.

5. DirectorateDetails of the Directors in office during the year and to the date of this report are as follows:

Directors Designation AppointedMr RM Adam Necsa Group Chairperson Appointed 05 December 2018, Resigned 04 July 2019

Mr DG Robertson Acting Group Chief Executive Officer Appointed 10 December 2018, Resigned 30 June 2019

Mr A Myoli Acting Group Chief Executive Officer Appointed 09 July 2019, Acting until 31 December 2019

Mr L Tyabashe Group Chief Executive Officer Appointed 01 January 2021

Mr A Patel Non executive Appointed 05 December 2018, Resigned 19 August 2019

Mr B Singh Non executive Appointed 05 December 2018, Resigned 14 January 2020

Dr PE Molokwane Non executive Appointed 05 December 2018, Resigned 14 January 2020

Ms MV Ngwenya Non executive Appointed 05 December 2018, Resigned 14 January 2020

Ms PN Kingston Non executive Appointed 05 December 2018, Resigned 14 January 2020

Mr DR Nicholls Chairperson of the Necsa Board Appointed 17 January 2020

Dr NT Magau Non executive Appointed 17 January 2020

Ms L Noge Tungamirai Non executive Appointed 17 January 2020

Dr GJ Davids Non executive Appointed 17 January 2020

Mr MJ Maboa Non executive Appointed 17 January 2020

Mr LJ Shayi Non executive Appointed 17 January 2020

Ms SKN Masango Non executive Appointed 17 January 2020

Ms A Chowan Non executive Appointed 17 January 2020

Mr GP Tshelane Group Chief Executive Officer Resigned 07 July 2019

Ms BM Makgopa Executive DMRE

Ms PE Monale Executive DMRE

Mr JP Ndhlovu Non executive Appointed 05 December 2018, Resigned 04 July 2019

Dr R Masango Non executive Appointed 05 December 2018, Resigned 02 August 2019

6. Directors' interests in contractsDuring the financial year, no contracts were entered into which Directors or officers of the Group had an interest and which significantly affected the business of the Group.


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9. ShareholderThe Company’s sole shareholder is the State, represented by the Minister of Mineral Resources and Energy.

10. Events after the reporting period ¢ COVID-19:

| The World Health Organization declared COVID-19 a pandemic before the Group's financial year ended. Nonetheless, the Group's operations were not significantly affected and as such the impact of COVID-19 has not been treated as a subsequent event. While every effort has been made to quantify the future impact that the virus will have on the business, there is still a lot of uncertainty as to how the pandemic will impact on the Group's operations.

¢ Reclassifications of trade debt due by Pelchem SOC Limited

Pelchem SOC Limited, a 100% subsidiary of Necsa, owed a trade debt of R211 million to Necsa at 31 March 2020. A credit loss allowance was recognised by Necsa for the full amount. On 31 July 2020, the board resolved that the aforementioned trade debt be converted to a zero interest long term loan with no specific repayment terms. This event will be recorded in the 2021 financial year of Necsa and will have the result that trade and other receivables and the credit loss allowance recognised in respect thereof will be reduced by R211 million and that the loans to group companies and the credit loss allowance recognised in respect thereof, will be increased by the same amount.

¢ The Board resolved that NTP pays over to Necsa an amount of R56 million invested for Necsa’s Safari Fuel Elements disposal.

Mr L Tyabashe was permanently appointed as Group Chief Executive Officer on 1 January 2021.

11. Going concernThe Annual Financial Statements have been prepared on the basis of accounting policies applicable to a going concern. According to the Conceptual Framework of Financial Reporting, the Annual Financial Statements are prepared using the underlying assumption 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.

We draw attention to the fact that as at 31 March 2020, the company had accumulated losses of R615 million and that the company's total liabilities exceed its assets by R11.8 million.

12. AuditorsThe Auditor-General of South Africa continued in office as auditors for the company and its subsidiaries for 2020.

13. Company secretaryMr MZ Jantjie (Acting Company Secretary).

Postal address PO Box 582

Pretoria

0001

Business address Elias Motsoaledi Street Extension (Church Street West)

R104 Pelindaba


North West Province

0240


Directors' Report (continued)


14. Compliance with legislationThe Directors believe the Group has complied, in all material respects, with the provisions of the Companies Act, PFMA and the Nuclear Energy Act and other applicable legislation during the year under review.

Report of the Auditor-General to Parliament on South African Nuclear Energy Corporation SOC Limited for the year ended 31 March 2020

Disclaimer of opinion1. I was engaged to audit the consolidated and separate financial statements of the South African Nuclear Energy Corporation SOC

Limed and its subsidiaries (the group) set out on pages 114 to 119, which comprise the consolidated and separate Statement of Financial Position as at 31 March 2020, the consolidated and separate Statement of Comprehensive Income, the consolidated and separate Statement of Changes in Equity, and the consolidated and separate Statement of Cash Flows for the year then ended, as well as the notes to the financial statements, including a summary of significant accounting policies

2. I do not express an opinion on the financial statements of the group. Because of the significance of the matters described in the basis for disclaimer of opinion section of this auditor’s report, I was unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these consolidated and separate financial statements

Basis for disclaimer of opinionConsolidated financial statements

3. I was unable to obtain sufficient appropriate audit evidence that the consolidated financial statements and the notes thereto have been properly prepared as required by International Financial Reporting Standard (IFRS) 10, Consolidated financial statements, as the consolidation could not be substantiated with supporting workings that reconcile and agree to the consolidated financial statements. The public entity did not have adequate systems of internal control in place for the preparation of the consolidated financial statements. I was unable to audit the consolidated financial statements by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to the consolidated financial statements as a whole.

Going concern for consolidated and separate financial statements

4. I was unable to obtain sufficient appropriate audit evidence to confirm the reasonableness of management’s cash flow forecasts and the related assumptions, conditions and events to support management’s assessment of the group's viability to continue as going concern. Furthermore, the consolidated and separate financial statements contain material misstatements and limitations of scope, as has been reported in the basis for disclaimer of opinion section of this auditor’s report, which creates an uncertainty about the reliability of evidence obtained and of the accounting records upon which the group’s forecasts are based. I therefore noted a material uncer-tainty in the group’s ability to continue as a going concern. I was unable to confirm the extent of this material uncertainty by alternative means.

5. The disclosure in note 39 to the consolidated and separate financial statements is incomplete as it does not clarify that the group is substantially dependent on its shareholder for the funding of its operations and therefore that its ability to continue as a going concern is dependent on continued financial support from its shareholder, nor does it disclose that the extent of financial support from its share-holder is contingent on approval of its annual budget and corporate plan and turn-around strategies proposed to the shareholder

Decommissioning and decontamination stage 1 liability

6. I was unable to obtain sufficient appropriate audit evidence for the Decommissioning and decontamination stage 1 liability due to the lack of appropriate audit evidence to support management’s estimated cash flows in determining the liability. The group did not have adequate systems of internal control in place in respect of record keeping and the recording of transactions in the financial statements to substantiate the budget used as a basis for the calculation of the Decommissioning and decontamination stage 1 liability. I was un-able to confirm the liability by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Decommissioning and decontamination stage 1 liability stated at R4 346 295 000 (2019: R4 561 755 000) in note 41 to the consolidat-ed and separate financial statements.

7. I was unable to determine whether any adjustments were necessary to Acceptance of decommission and decontamination stage 1 stated at R522 636 000 (2019: R–1 302 963 000) in the consolidated and separate financial statements due to the limitation placed on Decommissioning and decontamination stage 1 liability, related to the lack of appropriate audit evidence to support management’s es-timated cash flows in determining the liability, which informs the calculation of the Acceptance of decommission and decontamination stage 1. Furthermore, as a result of the limitation placed on the Decommissioning and decontamination stage 1 liability, related to the lack of appropriate audit evidence to support management’s estimated cash flows in determining the liability, I was unable to determine whether any adjustments were necessary to Government Grant Income (Decommissioning and Decontamination Stage 1) stated at R–522 636 000 (2019: R1 038 694 000) in the consolidated and separate financial statements, which is a movement to release the government grant to profit or loss based on the Decommissioning and decontamination stage 1 liability.

Decommissioning and decontamination stage 1 asset

8. I was unable obtain sufficient appropriate audit evidence for the Decommission and decontamination stage 1 asset due non-submis-sion of information, related to management’s estimated cash flows and assumptions applied in determining the asset. I was unable to confirm the asset by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Decom-missioning and decontamination stage 1 asset stated at R4 346 295 000 (2019: R4 561 755 000) in note 41 to the consolidated and separate financial statements.




Revenue

9. I was unable to obtain sufficient appropriate audit evidence for Revenue, because the group could not provide me with information or documents to support the amount recorded for Revenue. The group did not have adequate systems of internal control in place for record keeping of all documents to support transactions and events recorded in the consolidated and separate financial statements. I could not confirm the income by alternative means. Consequently, I was unable to determine if any further adjustments were necessary to Revenue stated at R1 790 847 000 (2019: R2 132 528 000) and R1 137 351 000 (2019: R1 058 956 000) in the consolidated and separate financial statements, respectively.

10. I was unable to obtain sufficient appropriate audit evidence for Sale of goods, because management could not provide me with infor-mation or documents to support intergroup sales, foreign sales and local sales, which form part of Sale of goods. Consequently, I was unable to determine if any further adjustments were necessary to Sale of goods stated at R1 095 978 000 (2019: R1 485 991 000) and R414 850 000 (2019: R419 949 000) in note 26 of the consolidated and separate financial statements, respectively.

11. I was unable to obtain sufficient appropriate audit evidence for Government grants, because the group could not provide me with infor-mation or documents to support the amount reported for Government grants. of goods. Consequently, I was unable to determine if any further adjustments were necessary to Government grants stated at R628 056 000 (2019: R601 189 000) and R628 056 000 (2019: R600 087 000) in note 26 of the consolidated and separate financial statements, respectively.

12. I was unable to obtain sufficient appropriate audit evidence for Other grants, because the group could not provide me with information or documents to support the amount reported for Other grants. Consequently, I was unable to determine of any further adjustments were necessary to Other grants stated at R94 445 000 (2019: R26 218 000) and R94 445 000 (2019: R38 920 000) in note 26 of the consolidated and separate financial statements, respectively.

13. The financial statements of a subsidiary, Pelchem, were materially misstated as I identified transactions within Revenue that related to the prior period that were recorded in the current year with a projected amount of R7 227 754. I was unable to determine the full extent of the overstatement of Revenue because Pelchem could not provide an updated revenue population to allow me to quantify the full extent of the error. Consequently, I was unable to determine if any further adjustments were necessary to Revenue stated at R1 790 847 000 (2019: R2 132 528 000) in the consolidated financial statements.

14. The group did not conduct an adequate assessment of the impact of International Financial Reporting Standard (IFRS) 15, Revenue from contracts with customers on revenue and made no adjustment to account for the adoption of IFRS 15. Due to the lack of an assessment I was unable to quantify the extent to which adjustments might be necessary to Revenue. I could not confirm the financial statement item by alternative means. Consequently, I was unable to determine if any further adjustments were necessary to Revenue stated at R1 790 847 000 (2019: R2 132 528 000) and R1 137 351 000 (2019: R1 058 956 000) in the consolidated and separate financial statements, respectively.

Employee costs

15. I was unable to obtain sufficient appropriate audit evidence for Employee costs because the group was unable to provide information and supporting documents to support the amount recorded for Employee costs. The group did not have adequate systems of internal control in place for the recording of all transactions and events and to ensure that documents are available for audit. I could not confirm the expense by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Employee costs stated at R1 041 332 000 (2019: R1 085 250 000) and R774 204 000 (2019: R777 489 000) in note 27 of the consolidated and separate financial statements, respectively.

Cost of sales

16. I was unable to obtain sufficient appropriate audit evidence for the Cost of sales because the group was unable to provide information or documents required to audit Cost of sales. The group did not have adequate systems of internal control in place for the recording of all transactions and events and to ensure that documents are available for audit. I could not confirm the financial statement item by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Cost of sales stated at R799 683 000 (2019: R1 517 651 000) and R311 835 000 (2019: R261 879 000) in the consolidated and separate financial statements.

Other operating expenses

17. I was unable to obtain sufficient appropriate audit evidence for the other operating expenses due to the status of the accounting records and non-submission of information in support of other operating expenses. I could not confirm the financial statement item by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to other operating expenses stated at R1 037 718 000 (2019: R1 206 049 000) and R821 151 000 (2019: R800 619 000), in the consolidated and separate finan-cial statements, respectively.

Property plant and equipment

18. I was unable to obtain sufficient appropriate audit evidence for Property plant and equipment as the group did not perform an adequate impairment assessment as required by International Accounting Standards (IAS) 36, Impairment of Assets, for all of the classes of Property, plant and equipment that had indicators of impairment. Additionally, the group did not perform a useful life reassessment as required by International Accounting Standards (IAS) 16, Property, plant and equipment, despite having a large volume of fully depre-ciated assets still in use. The group did not provide me with sufficient appropriate audit evidence to support the recoverable amount determined by the group in concluding that no impairment was necessary. I was unable to determine the impact on the net carrying amount of Property, plant and equipment as it was impracticable to do so. Consequently, I was unable to determine whether any ad-justments were necessary to Property, plant and equipment stated at R1 318 404 000 and R825 596 000 in note 5 to the consolidated and separate financial statements.

19. I was unable to obtain sufficient appropriate audit evidence for the reclassification of Land and buildings to Investment property, be-cause the group did not have adequate systems of internal control in place to maintain adequate records that substantiate the change in use of property, plant and equipment from owner occupied to rented out to external parties. I was unable to confirm the reclassifica-tion of these assets by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Land and buildings stated at R799 269 000 and R591 847 000 in note 5 to the consolidated and separate financial statements.

20. I was unable to obtain sufficient appropriate audit evidence to confirm additions to Property, plant and equipment, as there was no adequate system of internal control in place to substantiate additions. In addition, contrary to the requirements of IAS 16, the group did not commence with depreciation of Property, plant and equipment when the assets were available for use. I was unable to confirm the additions by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Property, plant and equipment stated at R1 318 404 000 and R825 596 000 in note 5 to the consolidated and separate financial statements. Since the Property, plant and equipment balance is included in the determination of net cash flows from investing activities reported in the consolidated and separate Statement of Cash Flows, I was unable to determine whether cash flows from investing activities were accurate and complete. Additionally, as a result of the limitation imposed, I was unable to determine whether any adjustments were necessary to Depreciation on property, plant and equipment stated at R89 139 000 (2019: R85 437 000) and R61 238 000 (2019: R58 697 000) in note 27 of the consolidated and separate financial statements, respectively.

21. I was unable to obtain sufficient appropriate audit evidence to confirm Land and buildings, as I was not provided with supporting doc-umentation to ascertain whether the revaluation considerations on Land and buildings were in line with IAS 16. I was unable to confirm Land and buildings by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Land and buildings stated at R799 269 000 and R591 847 000 in note 5 to the consolidated and separate financial statements.

Deferred income

22. I was unable to obtain sufficient appropriate audit evidence for Deferred income, due to the status of the accounting records. The group did not have adequate systems of internal control in place for the recording of all transactions and events and further could not reconcile the transactions and events to the consolidated and separate financial statements, due to a lack of supporting documents for journal entries processed in the financial statements. I could not confirm the financial statement item by alternative means. Conse-quently, I was unable to determine whether any adjustments were necessary to Deferred income stated at R763 763 000 (2019: R580 838 000) and R744 465 000 (2019: R562 651 000) in note 19 of the consolidated and separate financial statements, respectively.

Provisions - Decommissioning and waste disposal

23. I was unable to obtain sufficient appropriate audit evidence for Provisions - Decommissioning and waste disposal due to an inability of management to provide a detailed calculation, which indicates the timing of cash flows, used to determine recorded amount. The group did not have adequate systems of internal control in place for the recording of all transactions and events in the financial state-ments. I could not confirm the liability by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Provisions - Decommissioning and waste disposal stated at R584 850 000 (2019: R579 485 000) and R498 731 000 (2019: R464 373 000) in note 20 of the consolidated and separate financial statements, respectively.

24. I was unable to obtain sufficient appropriate audit evidence for the Decommissioning and decontamination provision of a subsidiary, Pelchem, due to a lack of information and documents to support the inputs and assumptions used in the calculation of the Decom-missioning and decontamination provision for the subsidiary. Consequently, I was unable to determine whether any adjustments were necessary to Provisions - Decommissioning and waste disposal stated at R584 850 000 (2019: R579 485 000) in note 20 of the consolidated financial statements.

25. As a result of these limitations on the Provisions - Decommissioning and waste disposal, I was also unable to determine whether any further adjustments were necessary to Provisions stated at R659 411 000 (2019: R651 699 000) and R563 597 000 (2019: R526 689 000) in note 20 of the consolidated and separate financial statements.




Decommissioning and decontamination stage 2 liability

26. I was unable to obtain sufficient appropriate audit evidence for the Decommissioning and decontamination stage 2 liability due to an inability of management to provide the auditors with information and documents to support management’s estimated cash flows in determining the liability. The group did not have adequate systems of internal control in place in respect of record keeping and the re-cording of transactions in the financial statements to substantiate the budget used as basis for the calculation of the Decommissioning and decontamination stage 2 liability. I was unable to confirm the liability by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Decommissioning and decontamination stage 2 liability stated at R241 800 000 (2019: R277 203 000) in note 41 the consolidated and separate financial statements.

Decommissioning and decontamination stage 2 asset

27. I was unable to obtain sufficient appropriate audit evidence for the Decommissioning and decontamination stage 2 asset due to non-submission of information in support of management’s assessment that the group has an enforceable and unconditional right to be reimbursed in full by government for the Decommissioning and decontamination stage 2 liability. I was unable to confirm the asset by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Decommissioning and decontamination stage 2 asset stated at R241 800 000 (2019: R277 203 000) in note 41 to the consolidated and separate financial statements.

28. I was unable to obtain sufficient appropriate audit evidence for the Decommissioning and decontamination stage 2 asset due to non-submission of information and documents to support management’s estimated cash flows in determining the corresponding liability upon which the asset’s value is based. The group did not have adequate systems of internal control in place in respect of record keeping and the recording of transactions in the financial statements to substantiate the budget used as basis for the calculation of the Decommissioning and decontamination stage 2 asset. I was unable to confirm the asset by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Decommissioning and decontamination stage 2 asset stated at R241 800 000 (2019: R277 203 000) in note 41 to the consolidated and separate financial statements.

Trade and other receivables

29. I was unable to obtain sufficient appropriate audit evidence for Trade receivables, because the group’s calculation of expected credit losses (ECLs) was not performed in accordance with IFRS 9, Financial Instruments. The group could not provide the historically observed default rates over the expected life of the Trade receivables, adjusted for current conditions and forward-looking estimates. I could not confirm the asset by alternative means. The matter was also reported in the previous year. Consequently, I was unable to determine whether any adjustments were necessary to Trade receivables stated at R267 887 000 (2019: R327 905 000) and R38 496 000 (2019: R91 405 000) in note 12 of the consolidated and separate financial statements, respectively.

30. I was unable to obtain sufficient appropriate audit evidence for Trade and other receivables because management could not provide information or documents to support the amount of other receivables reported. Also, the group did not have adequate systems of internal control in place for the reconciliation of all transactions and events to the consolidated and separate financial statements. Consequently, I was unable to determine whether any adjustments were necessary to Trade and other receivables stated at R327 086 000 (2019: R406 173 000) and R42 731 000 (2019: R93 351 000) in the consolidated and separate financial statements, respectively. Since the Trade and other receivables balance is included in the determination of net cash flows from operating activities reported in the consolidated and separate Statement of Cash Flows, I was unable to determine whether cash flows from operating activities were accurate and complete

Inventories

31. I was unable to obtain sufficient appropriate audit evidence for Inventories due to the status of the accounting records. The group did not have adequate systems of internal control in place that would enable it to provide me with information and documentation that would allow me to undertake an inventory count. Additionally, the group could not provide me with documentation to perform a roll-for-ward calculation of inventory. Consequently, I was unable to determine whether any adjustments were necessary to Inventories stated at R364 864 000 (2019: R309 440 000) and R65 187 000 (2019: R41 389 000) in the consolidated and separate financial statements, respectively. Furthermore, as a result of the limitation on Inventories l was unable to determine whether any adjustments were neces-sary to Cost of sales stated at R799 683 000 (2019: R1 517 651 000) and R311 835 000 (2019: R261 879 000) in the consolidated and separate financial statements, respectively.

32. I was unable to obtain sufficient appropriate evidence for Inventories, because the key assumptions applied by a subsidiary, Pelchem, in calculating the net realisable value of its inventories were not supported by detailed calculations and assumptions. I was unable to confirm the extent of the impact on the consolidated financial statements by alternative means. Consequently, I was unable to deter-mine whether any adjustment was necessary to Inventories stated at R364 864 000 (2019: R309 440 000) in the consolidated financial statements, respectively. Furthermore, as a result of the limitation on Inventories l was unable to determine whether any adjustment was necessary to Cost of sales stated at R799 683 000 (2019: R1 517 651 000) in the consolidated financial statements, respectively. Since the Inventories balance is included in the determination of net cash flows from operating activities reported in the consolidated and separate Statement of Cash Flows, I was unable to determine whether cash flows from operating activities were accurate and complete.

Interest expensed

33. I was unable to obtain sufficient appropriate audit evidence for the Interest expensed, calculated in relation to the Decommissioning and decontamination stage 1 and stage 2 liabilities as well as the Vaalputs after care liability, due to numerous limitations placed on the audit of the calculation these liabilities. Interest expense is calculated for and recognised on these liabilities and therefore the limitation imposed on my audit of the liabilities impedes my ability to conclude on the amount presented for Interest expensed. I could not con-firm the amount by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Interest expensed stated at R278 650 000 (2019: R-10 424 000) in note 29 of the consolidated and separate financial statements. Further-more, I was unable to determine whether any adjustments were necessary to Finance costs stated at R293 494 000 (2019: R994 000) and R282 400 000 (2019: R–5 219 000) in the consolidated and separate financial statements, respectively.

Interest income

34. I was unable to obtain sufficient appropriate audit evidence for the Interest income related to Stage 1 decommissioning and decontam-ination stated at R271 919 000 (2019: R214 347 000) and R271 773 000 (2019: R213 589 000) in note 28 of the consolidated and separate financial statements, respectively, because this interest income is calculated in relation to the Decommissioning and decon-tamination stage 1 asset, which is subject to several limitations. Consequently, I was unable to determine whether any adjustments were necessary to the Interest Income: Stage 1 decommissioning and decontamination stated at R271 919 000 (2019: R214 347 000) and R271 773 000 (2019: R213 589 000) in note 28 of the consolidated and separate financial statements, respectively. Furthermore, I was unable to determine whether any adjustments were necessary to Investment income stated at R323 705 000 (2019: R300 344 000) and R311 447 000 (2019: R270 716 000) in the consolidated and separate financial statements, respectively.

Amounts received in advance

35. I was unable to obtain sufficient appropriate audit evidence for the Amounts received in advance due to the status of the accounting records. The group did not have adequate systems of internal control in place for the reconciliation of all transactions and events to the consolidated and separate financial statements. I could not confirm the liability by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to the Amounts received in advance stated at R125 530 000 (2019: R152 963 000) and R156 567 000 (2019: R228 140 000) in the consolidated and separate financial statements, respectively.

Administration and fees

36. I was unable to obtain sufficient appropriate audit evidence for administration and fees, because the group was unable to provide the information and supporting documentation required to conduct the audit of administration and fees. I could not confirm the financial statement item by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to admin-istration and fees stated at R144 747 000 (2019: R127 283 000) and R132 628 000 (2019: R133 097 000) in the consolidated and separate financial statements, respectively.

Trade and other payables

37. I was unable to obtain sufficient appropriate audit evidence for the Trade and other payables due to the status of the accounting records and non-submission of information in support of the recorded balance. I could not confirm the financial statement item by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Trade and other payables stated at R198 754 000 (2019: R516 577 000) and R121 144 000 (2019: R62 554 000) in the consolidated and separate financial statements, respectively. Since the Trade and other payables balance is included in the determination of net cash flows from operating activities reported in the consolidated and separate Statement of Cash Flows, I was unable to determine whether cash flows from operating activities were accurate and complete.

Vaalputs after care liability

38. I was unable to obtain sufficient appropriate audit evidence for the Vaalputs after care liability due to management’s inability to provide supporting information on the calculation of the liability. Additionally, management was unable to provide sufficient appropriate audit evidence to substantiate the difference between the useful life period of Vaalputs and the discounting period used in the calculation of the liability. I could not confirm the financial statement item by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Vaalputs after care liability stated at R101 076 000 (2019: R94 199 000) in the consolidated and separate financial statements.

Investment property

39. I was unable to obtain sufficient appropriate audit evidence for the reclassification of Investment property to Land and buildings, be-cause the group did not have adequate systems of internal control in place to maintain adequate records that substantiate the change in use of investment property from rented out to external parties to owner occupied. I was unable to confirm the reclassification of these assets by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Investment property stated at R53 654 000 (2019: R42 990 000) and R215 183 000 (2019: R214 433 000) in the consolidated and separate financial statements, respectively.




40. The group also did not perform a valuation of Investment property as required by its accounting policy and IAS 40, Investment property, as read with International Financial Reporting Standard (IFRS) 13, Fair value measurement, which requires the fair value of an item to be determined annually where that item is measured using the fair value model. Furthermore, the group did not provide me with informa-tion or documents to support management’s assessment that no valuation adjustments were necessary. I was unable to satisfy myself by alternative means that Investment property is fairly stated. Consequently, I was unable to determine whether any adjustments were necessary to Investment property stated R53 654 000 (2019: R42 990 000) and R215 183 000 (2019: R214 433 000) in the consoli-dated and separate financial statements, respectively.

Right of use asset

41. I was unable to obtain sufficient appropriate audit evidence for the Right of use asset, recognised in relation to leased assets, because management could not provide information or documents to support the Right of use asset reported. Additionally, I was unable to agree the underlying rented assets from supporting documents to the leased asset register and therefore was unable to determine if the Right of use asset is complete. I was unable to confirm the line item by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to the Right of use asset stated at R85 368 000 and R10 107 000 in the consolidated and separate financial statements, respectively. As a result of the limitation reported in Right of use asset, I could also not verify the non-cur-rent Lease liability stated at R75 751 000 (2019: R3 819 000) and R1 841 000 (2019: R1 385 000) in the consolidated and separate financial statements. Additionally, I could not verify the current Lease liability stated at R11 131 000 (2019: R3 070 000) and R3 411 000 (2019: R1 840 000) in the consolidated and separate financial statements.

Investment contributions for future liabilities

42. I was unable to obtain sufficient appropriate audit evidence for the Investment contributions for future liabilities, because management was unable to provide the detailed cash flow assessment to support the calculation of the liability. Furthermore, management was unable to provide information or documents to support the methodology and assumptions used for the valuation of the liability. I could not confirm the liability by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Investment contributions for future liabilities stated at R43 660 000 (2019: R40 014 000) in both the consolidated and separate financial statements.

Irregular expenditure

43. Section 55 of the Public Finance Management Act no 1 of 1999 (PFMA) requires the financial statements to include disclosure of any material losses through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during the financial year. The group understated irregular expenditure, stated at R416 537 000 and R322 150 000 in note 40 to the consolidated and separate financial statements, respectively, by R114 657 498 as a result of not identifying and disclosing all expenditure that meets the definition of irregular expenditure. The understatement relates mainly to the use of specifically and exclusively appropriated funds for a purpose other than what those funds were appropriated for, without obtaining the requisite approval for the alternative use.

44. Additionally, due to the limitation of scope imposed on Cost of sales, Other operating expenditure, Administration and fees and Trade and other payables, I am unable to determine whether any further adjustments were necessary to Irregular expenditure stated at R416 537 000 and R322 150 000 in note 40 to the consolidated and separate financial statements, respectively.

Fruitless and wasteful expenditure

45. Section 55 of the Public Finance Management Act no 1 of 1999 (PFMA) requires the financial statements to include disclosure of any material losses through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during the financial year. Due to the limitation of scope imposed on Cost of sales, Other operating expenditure, Administration and fees and Trade and other payables I am unable to determine whether any further adjustments are required to Fruitless and wasteful expenditure stated at R257 000 (2019: R468 000) and R156 000 (2019: R364 000) in note 40 to the consolidated and separate financial statements, respectively.

Contingent liabilities

46. The group did not provide any disclosure in relation to contingent liabilities in the consolidated and separate financial statements, despite circumstances at the group indicating contingent liabilities amounting to R21 024 552 related to outstanding litigation and claims. Consequently, the consolidated and separate financial statements do not comply with the disclosure requirements of Interna-tional Accounting Standard (IAS) 37, Provisions, contingent liabilities and contingent assets, which requires the disclosure of the nature and estimated financial impact of any contingent liabilities. I have not included the omitted information in this auditor’s report as it was impracticable to do so.

Related parties

47. The group did not disclose the terms and conditions of outstanding balances and transactions with related parties in the consolidated and separate financial statements. Additionally, the group did not disclose guarantees between it and its subsidiaries in favour of third parties in the consolidated and separate financial statements. Consequently, the consolidated and separate financial statements do not comply with the disclosure requirements of IAS 24, Related party disclosures. I have not included the omitted information in this auditor’s report as it was impracticable to do so.

Deferred tax

48. I was unable to obtain sufficient appropriate audit evidence for Deferred tax for the current year due to the status of the accounting re-cords of a subsidiary, Pelchem. The subsidiary did not have adequate systems of internal control in place for the recording of all trans-actions and events. The matter was also reported for the subsidiary in the previous year. Additionally, due to the limitations experienced in auditing significant balances in the financial statements of the subsidiary, I was unable to audit the effect that any misstatements in those amounts would have on the Deferred tax balances in the financial statements of the subsidiary. I could not confirm the financial statement item by alternative means. Consequently, I was unable to determine whether any adjustment was necessary to Deferred tax asset stated at R168 888 000 (2019: R79 979 000) and the Deferred tax liability stated at R49 348 000 (2019: R4 683 000) in note 10 to the consolidated financial statements. The separate financial statements are not affected.

Prior period errors

49. I was unable to obtain sufficient appropriate audit evidence to support restatements of corresponding amounts made in respect of the Prior period errors disclosed in note 38 in the consolidated and separate financial statements. This was as a result of the limitations reported in the prior and current year on assets, liabilities, income and expenses. I was unable to confirm these amounts by alterna-tive means. Consequently, I was unable to determine whether any adjustments were necessary to Prior period errors restatements disclosed in note 38 of the consolidated and separate financial statements.

Consolidated Statement of Cash Flows

50. Due to the limitations imposed on various balances and line items in the consolidated and separate financial statements in the pre-ceding basis for disclaimer paragraphs of this audit report I was unable to confirm the amounts presented in the Consolidated and Separate Statement of Cash Flows. Consequently, I was unable to determine whether any adjustments were necessary to the amounts presented in the Consolidated and Separate Statement of Cash Flows.

Disclosures in the consolidated and separate financial statements

51. The consolidated and separate financial statements did not include all disclosures required by various IFRS and were not presented to achieve fair presentation. I have not included the omitted disclosure, because it is impractical to do so.

Emphasis of matter52. I draw attention to the matter below. My disclaimer opinion is not modified in respect of this matter.

Event after the reporting period

53. I draw attention to note 45 of the consolidated and separate financial statements, which deals with events after the reporting date and specifically the possible effects of the future implications of Covid-19 on the group’s performance.

Other matters

54. I draw attention to the matters below. My disclaimer opinion is not modified in respect of these matters.

55. The numerous misstatements identified in the consolidated and separate financial statements are indicative of significant deficiencies in the internal control environment which compromises the credibility of the accounting records and the reliability of the documenta-tion submitted for auditing. As a result of these deficiencies, there is an increased risk of breaches of legislation, internal policies and processes and an increased susceptibility of the public entity to the possible misuse of funds and assets.

56. Furthermore, due to the material uncertainties regarding the going concern and financial distress of the group, there is an increased risk that the public entity may not be trading appropriately in accordance with governance prescripts.

Responsibilities of the accounting authority for the consolidated and separate financial statements57. The board of directors, which constitutes the accounting authority is responsible for the preparation and fair presentation of the consol-

idated and separate financial statements in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA) and Companies Act of South Africa, 2008 (Act No. 71 of 2008) (Companies Act), and for such internal control as the accounting authority determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

58. In preparing the consolidated and separate financial statements, the accounting authority is responsible for assessing the group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the appropriate governance structure either intends to liquidate the group or to cease operations, or has no realistic alternative but to do so.




Auditor-General’s responsibilities for the audit of the consolidated and separate financial statements59. My responsibility is to conduct an audit of the consolidated and separate financial statements in accordance with the International

Standards on Auditing and to issue an auditor’s report. However, because of the matters described in the basis for disclaimer of opin-ion section of this auditor’s report, I was unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

60. I am independent of the group in accordance with sections 290 and 291 of the Code of ethics for professional accountants and parts 1 and 3 of the International Code of Ethics for Professional Accountants of the International Ethics Standards Board for Accountants (including International Independence Standards) (IESBA codes) as well as the ethical requirements that are relevant to my audit of the consolidated and separate financial statements in South Africa. I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA codes.

Report on the audit of the annual performance reportIntroduction and scope

61. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general notice issued in terms thereof, I have a responsibility to report material findings on the reported performance information against predetermined objectives for the cluster presented in the annual performance report. I was engaged to perform procedures to identify findings but not to gather evidence to express assurance.

62. I performed procedures to determine whether the reported performance information was consistent with the approved performance planning documents. I performed further procedures to determine whether the indicators and related targets were measurable and relevant, and assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

63. I was engaged to evaluate the usefulness and reliability of the reported performance information in accordance with the criteria developed from the performance management and reporting framework, as defined in the general notice, for the following the cluster presented in the annual performance report of the public entity for the year ended 31 March 2020:

Cluster Pages in annual performance report

NECSA as a host of nuclear programmes cluster 17-18

64. The material finding in respect of the usefulness and reliability of the selected cluster is as follows

NECSA as a host of nuclear programmes cluster

Execution of annual plan of action as submitted and approved by DOE (% achievement)

65. The method of calculation for measuring the planned indicator was not clearly defined and related systems and processes were not adequate to enable consistent measurement and reliable reporting of performance against the predetermined indicator definitions. As a result, limitations were placed on the scope of my work and I was unable to audit the reliability of the achievement of 88,67% reported against target 100% in the annual performance report.

Other matters

66. I draw attention to the matters below.

Achievement of planned targets

67. Refer to the annual performance report on pages x to x for information on the achievement of planned targets for the year. This information should be considered in the context of the material findings on the usefulness and reliability of the reported performance information in paragraph(s) 65 of this report.

Adjustment of material misstatements

68. I identified material misstatements in the annual performance report submitted for auditing. These material misstatements were on the reported performance information of NECSA as a host of nuclear programmes cluster. As management subsequently corrected only some of the misstatements, I raised material findings on the usefulness and reliability of the reported performance information. Those that were not corrected are reported above.

Report on the audit of compliance with legislationIntroduction and scope

69. In accordance with the PAA and the general notice issued in terms thereof, I have a responsibility to report material findings on the public entity’s compliance with specific matters in key legislation. I performed procedures to identify findings but not to gather evidence to express assurance.

70. The material findings on compliance with specific matters in key legislation are as follows:

Annual financial statements, performance reports and annual reports

71. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records, as required by section 55(1) (a) and (b) of the PFMA. Material misstatements of, current and non-current liabilities, other income, expenditure and disclosure items identified by the auditors in the submitted financial statements were corrected, but the uncorrected material misstatements and supporting records that could not be provided resulted in the financial statements receiving a disclaimer of opinion.

Strategic planning and performance management

72. The corporate plan did not cover a period of three years as required by section 52(b) of the PFMA and treasury regulation 29.1.1.

73. An annual shareholder’s compact was not concluded in consultation with the executive authority as required by treasury regulation 29.2.1.

74. The key performance measures and indicators included in the shareholder's compact were not agreed between the accounting author-ity and the executive authority, as required by treasury regulation 29.2.2.

75. The corporate plan did not include the objectives and outcomes as agreed in the shareholder's compact and key performance mea-sures and indicators, as required by treasury regulation 29.1.1(a) and (c).

Expenditure management

76. Effective and appropriate steps were not taken to prevent irregular expenditure, as required by section 51(1)(b)(ii) of the PFMA. As reported in the basis for the disclaimer of opinion, the full extent of the irregular expenditure could not be quantified and the disclosure was understated. The majority of the irregular expenditure was caused by the use of ring-fenced funds that were specifically and exclu-sively appropriated for decommissioning and decontamination for purposes other than for which it was appropriated, without obtaining the requisite approval for the change in use for those funds.

77. Effective and appropriate steps were not taken to prevent fruitless and wasteful expenditure, as required by section 51(1)(b)(ii) of the PFMA. As reported in the basis for the disclaimer of opinion, the full extent of the fruitless and wasteful expenditure could not be quan-tified. The majority of the fruitless and wasteful expenditure disclosed in the financial statements was caused by incurring avoidable penalties and interest.

78. I was unable to obtain sufficient appropriate audit evidence that the resources of the public entity were utilised economically, as required by section 57(b) of the PFMA. Due to the disclaimer of opinion on the consolidated and separate financial statements I was unable to confirm whether assets were used economically, and goods and services paid for were actually required, received and used.

Consequence management

79. I was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irreg-ular expenditure as required by section 51(1)(e)(iii) of the PFMA. This was because investigations into irregular expenditure were not performed.

Other information80. The accounting authority is responsible for the other information. The other information comprises the information included in the an-

nual report which includes the directors’ report, the audit committee’s report and the company secretary’s certificate as required by the Companies Act of South Africa 2008 (Act No. 71 of 2008) (Companies Act). The other information does not include the consolidated and separate financial statements, the auditor’s report and those selected cluster presented in the annual performance report that has been specifically reported in this auditor’s report.

81. My disclaimer of opinion on the financial statements and findings on the reported performance information and compliance with legisla-tion do not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon.

82. In connection with my audit, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements and the selected cluster as presented in the annual performance report, or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

83. As a result of the disclaimer of opinion expressed on the consolidated and separate financial statements, I do not conclude on material misstatements of the other information relating to the consolidated and separate financial statements. If, based on the work I have per-formed relating to the audit of performance information and compliance with legislation, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

Internal control deficiencies

84. I considered internal control relevant to my audit of the consolidated and separate financial statements, reported performance informa-tion and compliance with applicable legislation; however, my objective was not to express any form of assurance on it. The matters re-ported below are limited to the significant internal control deficiencies that resulted in the basis for the disclaimer of opinion, the findings on the annual performance report and the findings on compliance with legislation included in this report.




Annexure – Auditor-General’s responsibility for the audit1. As part of an audit in accordance with the ISAs, I exercise professional judgement and maintain professional scepticism throughout my

audit of the consolidated and separate financial statements and the procedures performed on reported performance information for selected cluster and on the public entity’s compliance with respect to the selected subject matters.

Financial statements

2. In addition to my responsibility for the audit of the consolidated and separate financial statements as described in this auditor’s report, I also:

¢ identify and assess the risks of material misstatement of the consolidated and separate 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 my 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, forgery, intentional omissions, misrepresentations or the override of internal control

¢ 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 public entity’s internal control

¢ evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of directors, which constitutes the accounting authority.

¢ conclude on the appropriateness of the board of directors, which constitutes the accounting authority’s use of the going concern basis of accounting in the preparation of the financial statements. I also conclude, based on the audit evidence obtained, whether a material uncertainty exists relating to events or conditions that may cast significant doubt on the ability of NECSA and its subsidiaries to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements about the material uncertainty or, if such disclosures are inadequate, to modify my opinion on the financial statements. My conclusions are based on the information available to me at the date of this auditor’s report. However, future events or conditions may cause the public entity to cease operating as a going concern

¢ evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and determine whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation

¢ obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. I am responsible for the direction, supervision and performance of the group audit. I remain solely responsible for my audit opinion.

Communication with those charged with governance

3. I communicate with the accounting authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

4. I also confirm to the accounting authority that I have complied with relevant ethical requirements regarding independence and commu-nicate all relationships and other matters that may reasonably be thought to have a bearing on my independence and, where applica-ble, actions taken to eliminate threats or safeguards applied.

85. The accounting authority and senior management did not exercise adequate oversight responsibility regarding financial reporting, per-formance reporting and compliance with laws and regulations and related internal controls, and consequently the following significant internal control deficiencies were identified:

¢ Inadequate record keeping, which resulted in limitations of scope

¢ Action plans were not developed to address prior year findings, which resulted in repeat findings being reported in the current year and as a consequence resulted in a stagnation of the audit outcomes, material findings on the annual performance and instances of non-compliance with laws and regulations.

¢ A weakened control environment and a tone at the top that does not promote a culture of excellence, performance management, accountability and consequence management.

86. Management did not ensure that effective internal controls are in place for the preparation of accurate annual financial statements and a performance report that were supported by reliable evidence, resulting in a disclaimed audit opinion on the financial statements, material findings on the annual performance report and instances of non-compliance with laws and regulations

Johannesburg02 March 2021


Consolidated and Separate Statement of Financial Position for the year ended 31 March 2020

Note(s)

Group Company

2020 2019 2018 2020 2019 2018

Restated * Restated * Restated * Restated *

R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Assets

Non-current assets

Property, plant and equipment 5 1,318,404 1,364,172 1,309,839 825,596 867,662 904,905

Investment property 4 53,654 42,99 46,007 215,183 214,433 126,328

Right-of-use assets 17 85,368 - - 10,107 - -

Goodwill 51,558 37,514 37,514 - - -

Intangible assets 26,017 31,728 37,219 - - -

Investments in subsidiaries 6 - - - 220,701 220,701 220,701

Investments in associates 7 4,927 4,333 148 2 2 2

Loans to group companies 8 - - - 84,709 50,351 -

Other financial assets 9 219,226 197,259 853,634 219,201 197,223 443,883

Fair value of plan assets 18 4,903 10,562 13,198 4,903 10,562 13,198

Deferred tax 10 168,888 79,979 19,509 - - -

Decommissioning and Decontamination of Stage 1 41 4,346,295 4,561,755 3,309,472 4,346,295 4,561,755 3,309,472

Decommissioning and Decontamination of Stage 2 41 241,8 277,203 198,064 241,8 277,203 198,064

Vaalputs After Care 42 3,013 3,389 3,766 3,013 3,389 3,766

6,524,053 6,610,884 5,828,370 6,171,510 6,403,281 5,220,319

Current assets

Inventories 11 364,864 309,44 278,749 65,187 41,389 61,641

Loans to group companies 8 - 3,31 66,149 72 - 1,515

Trade and other receivables 12 327,086 406,173 455,065 42,731 93,351 118,738

Other financial assets 9 337,338 318,93 719,106 335,38 317,191 282,003

Prepayments 194 6,033 57,656 194 6,033 56,006

Current tax receivable 12,917 15,429 26,072 - - -

Cash and cash equivalents 14 193,846 369,683 507,693 16,629 16,717 14,822

1,236,245 1,428,998 2,110,490 460,193 474,681 534,725

Disposal group assets 180 3,448 - - - -

Total assets 7,760,478 8,043,330 7,938,860 6,631,703 6,877,962 5,755,044

Equity and Liabilities

Equity

Equity Attributable to Equity Holders of Parent

Share capital 15 2,205 2,205 2,205 2,205 2,205 2,205

Reserves 621,617 617,109 539,47 601,119 601,679 534,843

Accumulated loss 117,989 69,487 932,44 (615,166) (471,406) (608,761)

741,811 688,801 1,474,115 (11,842) 132,478 (71,713)

Non-controlling interest 68,733 62,279 59,949 - - -

810,544 751,08 1,534,064 (11,842) 132,478 (71,713)


Note(s)

Group Company

2020 2019 2018 2020 2019 2018


R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Liabilities

Non-current liabilities

Vaalputs After Care 42 101,076 94,199 88,193 101,076 94,199 88,193

Other financial liabilities 16 2,319 4,408 5,757 - - -

Lease liabilities 17 75,751 3,819 2,3 1,841 1,385 2,239

Retirement benefit obligation 18 270,281 326,885 358,87 249,741 301,608 329,84

Deferred income 19 744,465 539,209 442,85 744,465 539,209 442,85

Deferred tax 10 49,348 4,683 259 - - -

Provisions 20 576,332 571,949 516,11 503,851 469,493 428,535

Investment contributions for future liabilities 43 43,66 40,014 37,693 43,032 40,014 37,693

Decommissioning and Decontamination of Stage 1 41 4,346,295 4,561,755 3,309,472 4,346,295 4,561,755 3,309,472

Decommissioning and Decontamination of Stage 2 41 241,8 277,203 541,754 241,8 277,203 541,754

6,451,327 6,424,124 5,303,258 6,232,101 6,284,866 5,180,576

Current liabilities

Trade and other payables 21 198,754 516,577 466,66 121,144 62,554 93,854

Loans from group companies 8 - 3,31 66,149 46,223 42,533 59,081

Other financial liabilities 16 14,234 1,963 8,094 83 1,118 5,949

Lease liabilities 17 11,131 3,07 649 3,411 1,84 450

Retirement benefit obligation 18 25,128 23,795 33,489 24,082 23,795 33,489

Deferred income 19 19,298 41,629 137,097 - 23,442 137,097

Current tax payable - - 282 - - -

Provisions 20 82,451 79,75 93,729 59,746 57,196 51,023

Amounts received in advance 49 125,53 152,963 263,389 156,567 228,14 260,238

Bank overdraft 14 21,965 44,774 32 188 20 5

498,491 867,831 1,101,538 411,444 460,618 646,181

Disposal group liabilities 116 295 - - - -

Total liabilities 6,949,934 7,292,250 6,404,796 6,643,545 6,745,484 5,826,757

Total equity and liabilities 7,760,478 8,043,330 7,938,860 6,631,703 6,877,962 5,755,044

Continuing operations

Revenue 26 1,790,847 2,132,528 2,501,355 1,137,351 1,058,956 1,084,836

Cost of sales 11 (799,683) (1,517,651) (1,445,341) (311,835) (261,879) (256,013)

Gross profit 991,164 614,877 1,056,014 825,516 797,077 828,823

Other income 48 51,598 470,617 137,006 18,444 364,611 79,425

Expected credit loss trade receivables 12 (46,388) 31,11 -3,012 (102) (149,539) -

Other operating expenses (1,037,718) (1,206,049) (1,138,012) (821,151) -800,619 (1,005,896)

Government Grant Income (Decommissioning &Decontamination Stage 1 & 2) 41 (522,636) 1,038,694 368,82 (522,636) 1,038,694 368,82

Acceptance of Decommission and Decontamination Stage 1 & 2

41 522,636 (1,302,963) (368,82) 522,636 (1,302,963) (368,82)

Administration and fees (144,747) (127,283) -154,492 (132,628) (133,097) (185,802)



Note(s)

Group Company

2020 2019 2018 2020 2019 2018


R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Operating loss 27 (186,091) (480,997) (102,496) (211,819) (185,836) (283,45)

Investment income 28 323,705 300,345 305,348 311,447 270,716 364,659

Fair value adjustments (6,909) 3,022 (38,699) (6,909) 9,33 (27,928)

Finance costs 29 (293,494) 994 (262,119) (282,4) 5,219 (256,498)

Income from equity accounted investments 627 514 - - - -

(Loss) profit before taxation (162,162) (176,122) (97,966) (189,681) 99,429 (203,217)

Taxation 30 25,167 55,407 (37,742) - - -

(Loss) profit from continuing operations Discontinued operations (136,995) (120,715) (135,708) (189,681) 99,429 (203,217)

Profit (loss) from discontinued operations 5,482 (1,168) (41) - - -

(Loss) profit for the year (131,513) (121,883) (135,749) (189,681) 99,429 (203,217)

Other comprehensive income:

Items that will not be reclassified to profit or loss:

Remeasurements on net defined benefit liability/asset 45,921 37,926 561 45,921 37,926 (16,647)

Gains on property revaluation 288 73,3 51,754 - 66,172 50,386

Total items that will not be reclassified to profit or loss 46,209 111,226 52,315 45,921 104,098 33,739

Items that may be reclassified to profit or loss:

Exchange differences on translating foreign operations 417 (1,051) - - - -

Fair value through other comprehensive income adjustments 3,803 5,389 1,245 (560) 664 1,245

Total items that may be reclassified to profit or loss 4,22 4,338 1,245 (560) 664 1,245

Other comprehensive income for the year net of taxation 31 50,429 115,564 53,56 45,361 104,762 34,984

Total comprehensive (loss) income for the year (81,084) (6,319) (82,189) (144,32) 204,191 (168,233)

Loss attributable to:

Owners of the parent (131,513) (121,883) (135,749) (189,681) 99,429 (203,217)

Non-controlling interest (4,788) 3,517 5,999 - - -

(136,301) (118,366) (129,75) (189,681) 99,429 (203,217)

Total comprehensive (loss) income attributable to:

Owners of the parent (81,084) (6,319) (82,189) (144,32) 204,191 (168,233)

Non-controlling interest (4,788) 3,517 5,999 - - -

(85,872) (2,802) (76,19) (144,32) 204,191 (168,233) Shar

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aid)

-

- -

- -

(25,

09)

(25,

09)

- (2

5,09

)

Tota

l cha

nges

-

(1,0

51)

73,3

5,38

977

,638

(862

,953

)(7

85,3

15)

2,33

(782

,985

)

Ope

ning

bal

ance

as

prev

ious

ly re

porte

d 2,

205

31,3

0763

3,29

4(7

93,1

51)

(128

,55)

885,

068

758,

723

(1,5

92)

757,

131

Adju

stm

ents

Prio

r yea

r adj

ustm

ents

-

(33,

106)

(27,

128)

805,

893

745,

659

(815

,581

)(6

9,92

2)63

,871

(6,0

51)

Bala

nce

at 3

1 M

arch

201

9 2,

205

(1,7

99)

606,

166

12,7

4261

7,10

969

,487

688,

801

62,2

7975

1,08

Profi

t for

the

year

-

- -

- -

- -

- -

Oth

er c

ompr

ehen

sive

inco

me

- 41

728

83,

803

4,50

8(8

5,59

2)(8

1,08

4)(4

,788

)(8

5,87

2)

Prio

r yea

r inc

orre

ct

cons

olid

atio

n of

Gam

mat

ec

Gro

up: G

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ill

- -

- -

- 14

,044

14,0

44-

14,0

44

Oth

er m

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-

- -

- -

144,

365

144,

365

11,2

4215

5,60

7

Div

iden

ds re

ceiv

ed/(p

aid)

-

- -

- -

(24,

548)

(24,

548)

- (2

4,54

8)

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idia

ry d

iffer

ence

s on

OCI

m

ovem

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-

- -

- -

233

233

- 23

3

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-

417

288

3,80

34,

508

48,5

0253

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6,45

459

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at M

arch

31,

202

0 2,

205

(1,3

82)

606,

454

16,5

4562

1,61

711

7,98

974

1,81

168

,733

810,

544

Consolidated and Separate Statement of Changes in Equity for the year ended 31 March 2020


Shar

e ca

pita

l

Fore

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curre

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trans

latio

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serv

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valu

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her

com

preh

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ve

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the

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R ‘0

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R ‘0

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R ‘0

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R ‘0

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1524

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25

Com

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ning

bal

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as

prev

ious

ly re

porte

d 2,

205

- 52

7,79

17,

052

534,

843

(593

,163

)(5

6,11

5)-

(56,

115)

Adju

stm

ents

Prio

r per

iod

erro

r -

- -

- -

(15,

598)

(15,

598)

- (1

5,59

8)

Rest

ated

* Ba

lanc

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Ap

ril 1

, 201

8 as

rest

ated

2,

205

- 52

7,79

17,

052

534,

843

(608

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)(7

1,71

3)-

(71,

713)

Tota

l com

preh

ensi

ve in

com

e fo

r the

yea

r -

- 66

,172

664

66,8

3612

7,80

419

4,64

- 19

4,64

Adju

stm

ents

to c

orre

ct p

rior

perio

d er

rors

-

- -

- -

9,55

19,

551

- 9,

551

Tota

l com

preh

ensi

ve in

com

e fo

r the

yea

r *Re

stat

ed

- -

66,1

7266

466

,836

137,

355

204,

191

- 20

4,19

1

Ope

ning

bal

ance

as

prev

ious

ly re

porte

d 2,

205

- 59

3,96

37,

716

601,

679

(465

,359

)13

8,52

5-

138,

525

Adju

stm

ents

Prio

r yea

r adj

ustm

ents

-

- -

- -

(6,0

47)

(6,0

47)

- (6

,047

)

Bala

nce

at 3

1 M

arch

201

9 2,

205

- 59

3,96

37,

716

601,

679

(471

,406

)13

2,47

8-

132,

478

Oth

er c

ompr

ehen

sive

inco

me

* R

esta

ted

- -

- (5

60)

(560

)(1

43,7

6)(1

44,3

2)-

(144

,32)

Tota

l com

preh

ensi

ve in

com

e fo

r the

yea

r -

- -

(560

)(5

60)

(143

,76)

(144

,32)

- (1

44,3

2)

Bala

nce

at M

arch

31,

202

0 2,

205

- 59

3,96

37,

156

601,

119

(615

,166

)(1

1,84

2)-

(11,

842)

Not

e(s)

1524

&31

* R

esta

ted,

for f

urth

er d

etai

ls re

fer t

o no

te

Consolidated and Separate Statement of Changes in Equity for the year ended 31 March 2020

Consolidated and Separate Statement of Cash Flows for the year ended 31 March 2020

Note(s)

Group Company

2020 2019 2018 2020 2019 2018


R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Cash flows from operating activities

Cash receipts from customers 1,887,223 2,541,253 2,374,893 1,158,127 1,019,754 1,188,811

Cash paid to suppliers and employees (2,282,779) (2,912,872) (1,192,272) (1,262,321) (1,135,621) (1,225,803)

Cash (used in) generated from operations 32 (395,556) (371,619) 1,182,621 (104,194) (115,867) (36,992)

Interest income 51,786 85,998 98,53 39,128 36,638 52,106

Finance costs (5,069) (8,917) (7,323) (3,24) (4,844) (947)

Dividends received/(paid) - - (17,221) - - -

Tax (paid) received 33 (16,565) 9,722 (51,348) - - -

Cash flows from discontinued operations - - - - - -

Net cash from operating activities (365,404) (284,816) 1,205,259 (68,306) (84,073) 14,167

Cash flows from investing activities

Purchase of property, plant and equipment 5 (47,836) (21,927) (59,359) (21,603) (32,093) (26,104)

Proceeds from sale of property, plant and equipment

54,103 452 2,745 - - 18,728

Purchase of other intangible assets - - (162) - - -

Movement in financial assets 122,498 249,362 (334,94) (38,971) 218,966 (25,548)

Loan to group companies 3,31 62,839 - (34,43) (48,836) -

Proceeds/(payments) of related party loans - - - - - (1,165)

Sale of financial assets - - 96,726 - - (749)

Purchase of financial assets - - (335,1659 - - (3,613)

Movement in Goodwill (14,044) - - - - -

Dividends received - - 235 546 20,489 107,216

Net cash from investing activities 68,031 290,726 (629,92) (94,458) 158,526 68,765

Cash flows from financing activities

Proceeds on share issue 15 - - 9 - - -

Change in loans from group companies (3,31) (62,839) 683 3,69 (16,548) 5,193

Other financial liabilities 10,182 (7,48) - (1,0359 (4,831) -

Movement in investment contributions for future liabilities

3,646 2,321 (5,46) 3,018 2,321 2,04

Movement in deferred Grant Income 19 182,925 (17,296) (14,415) 181,814 (17,296) (14,415)

Movement in loans to directors, managers and employees

- - - - - 48,306

Dividends paid (24,548) (25,09) 1 - - -

Lease payments (20,752) 3,427 (6,003) (4,809) (1,776) (1,059)

Operating lease payments (3,798) (49,737) (49,271) (190) (49,428) (48,56)

Net cash from financing activities 144,345 (156,694) (74,456) 182,488 (87,558) (8,495)

Total cash movement for the year (153,028) (150,784) 500,883 19,724 (13,105) 74,437

Cash at the beginning of the year 324,909 475,693 (25,190 (3,283) 9,822 (64,615)

Total cash at end of the year 14 171,881 324,909 475,693 16,441 (3,283) 9,822


Significant Accounting Policiesfor the year ended 31 March 2020

The principal accounting policies applied in the preparation of these financial statements are set out below.

1. Basis of preparationStatement of complianceThe consolidated and separate Annual Financial Statements have been prepared in accordance with International Financial Reporting Standards("IFRS"), the requirements of the Public Finance Management Act of South Africa, 1999 (Act No.1 of 1999) (PFMA) and the Companies Act of South Africa, 2008( Act No 71 of 2008) (Companies Act). The Annual Financial Statements have been prepared on the historical cost basis except for certain properties and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. These accounting policies are consistent with the previous period.

Accordingly, the Group has prepared Annual Financial Statements, which comply with IFRS applicable for periods ending on or after 31 March 2020, together with the comparative period data as at and for the year ended 31 March 2019, as described in the accounting policies.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purpose in these consolidated financial statements is determined on such a basis, except for share based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair values measurements are observable and the significance of the inputs to the fair value measurements in its entirety, which are described as follows:

¢ Level 1 Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

¢ Level 2 Inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.

¢ Level 3 inputs are observable inputs for the asset or liability.

¢ The principal accounting policies are set out below.

The draft Annual Financial Statements that are submitted to the Auditor-General on 31 July for the financial year end 2020 due to COVID-19 are final.

1.1 Consolidation

Basis of consolidation

The consolidated Annual Financial Statements incorporate the Annual Financial Statements of the Necsa and its subsidiaries.

Control is achieved when Necsa or its Subsidiaries:

¢ has power over the investee.

¢ is exposed, or has rights, to variable returns from its involvement with the investee.

¢ has the ability to use its power to affect its returns.

When Necsa or its Subsidiaries has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. Necsa considers all relevant facts and circumstances in assessing whether or not Necsa or its Subsidiaries' voting rights in an investee are sufficient to give power, including:

¢ the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders.

¢ potential voting rights held by the Company, other vote holders or other parties.

¢ rights arising from other contractual arrangements.

¢ any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings.

Consolidation of a subsidiary begins when Necsa or its Subsidiaries obtains control over the subsidiary and ceases when Necsa or its Subsidiaries loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date Necsa or its Subsidiaries gains control until the date when Necsa or its Subsidiaries ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of Necsa and to the non controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Necsa and to the non controlling interests.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Investment in associates

An associate is an entity over which the Group has significant influence and which is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results of assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate. When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are classified as liabilities when recognised, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

The requirements ofIFRS 9are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance withIAS 36 Impairment of Assetsas a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

When a Group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognised in the Group's consolidated financial statements only to the extent of interests in the associate that are not related to the Group.

1.2 Investment property

Investment properties are properties held to earn rentals.

Investment property is initially recognised at cost. Transaction costs are included in the initial measurement.

Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or service a property. If a replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised.

Fair value

Subsequent to initial measurement investment property is measured at fair value.

A gain or loss arising from a change in fair value is included in net profit or loss of the period in which it arises.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.

1.3 Property, plant and equipment

Property, plant and equipment is initially measured at cost.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the entity is obliged to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories.

Plant and equipment is stated at cost less accumulated depreciation and any impairment losses.

Land and buildings is carried at revalued amount, being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value as the end of the reporting period.

The frequency of revaluations depends upon the changes in fair values of the items of property, plant and equipment being revalued. Some items of property, plant and equipment experience significant and volatile changes in fair value, thus necessitating annual revaluation. Such frequent revaluations are unnecessary for items of property, plant and equipment with only insignificant changes in fair value. Instead, it may be necessary to revalue the item every three to five years.

When an item of property, plant and equipment is revalued, any accumulated depreciation at the date of the revaluation is eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset.

Any increase in an asset's carrying amount, as a result of a revaluation, is recognised to other comprehensive income and accumulated in the revaluation surplus in equity. The increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss.

Any increase in an asset's carrying amount, as a result of a revaluation, is recognised in profit or loss in the current period. The decrease is recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in the revaluation surplus in equity.

Notes to the Financial Statements (continued)for the year ended 31 March 2020


The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred directly to retained earnings when the asset is derecognised.

Property, plant and equipment is depreciated on the straight line basis over their expected useful lives to their estimated residual value.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Range of useful lives

Land indefinite

Buildings 10 50 years

Plant 5 50 years

Furniture and fixtures 2 22 years

Motor vehicles and transport containers 2 26 years

Office equipment 2 22 years

IT equipment 2 22 years

Research facilities 2 22 years

Leasehold improvements 2 10 years

Machinery and equipment 2 22 years

Component spares 2 10 years

Small capital items (less than R7000) Not applicable Depreciated immediately

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.

Plant utilisation at the Group was not impacted by the lockdown regulations implemented in South Africa due to the unique nature of its operations. As the Group's operations were classified as essential services, the mplementation of lockdowns was not considered to be an indicator for impairment. Additionally, as the Group's major customers are medical companies that rely mainly on the Group for goods and services, the COVID-19 implications were minimal at the reporting date.

1.4 Intangible assets

An intangible asset is recognised when:

¢ It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity.

¢ The cost of the asset can be measured reliably.

Intangible assets are initially recognised at cost.


Internally generated intangible assets research and development expenditureExpenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognised when all of the following have been demonstrated:

¢ The technical feasibility of completing the intangible asset so that it will be available for use or sale.

¢ The intention to complete the intangible asset and use or sell it.

¢ The ability to use or sell the intangible asset.

¢ It will generate probable future economic benefits.

¢ How the intangible asset will generate probable future economic benefits.

¢ The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.

¢ The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful life.

The amortisation period and the amortisation method for intangible assets are reviewed at the end of each reporting period.

Re assessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life.

Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.

Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:

Item Useful lives

Patents, trademarks and other rights 20 years

Computer software 3 years

1.5 Investments in subsidiaries

Company financial statements

In the Company’s separate Financial Statements, investments in subsidiaries are carried at cost less any accumulated impairment.

The cost of an investment in a subsidiary is the aggregate of:

¢ the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Company; plus

¢ any costs directly attributable to the purchase of the subsidiary.

1.6 Investments in associates

Company Financial Statements

An investment in an associate is carried at cost less any accumulated impairment.



1.7 Financial instruments IFRS 9

Financial instruments held by the Group are classified in accordance with the provisions of IFRS 9 Financial Instruments.

Broadly, the classification possibilities, which are adopted by the Group, as applicable, are as follows:

Financial assets which are equity instruments:

¢ Mandatorily at fair value through profit or loss; or

¢ Designated as at fair value through other comprehensive income. (This designation is not available to equity instruments which are held for trading or which are contingent consideration in a business combination).

Financial assets which are debt instruments:

¢ Amortised cost. (This category applies only when the contractual terms of the instrument give rise, on specified dates, to cash flows that are solely payments of principal and interest on principal, and where the instrument is held under a business model whose objective is met by holding the instrument to collect contractual cash flows); or

¢ Fair value through other comprehensive income. (This category applies only when the contractual terms of the instrument give rise, on specified dates, to cash flows that are solely payments of principal and interest on principal, and where the instrument is held under a business model whose objective is achieved by both collecting contractual cash flows and selling the instruments); or

¢ Mandatorily at fair value through profit or loss. (This classification automatically applies to all debt instruments which do not qualify as at amortised cost or at fair value through other comprehensive income); or

¢ Designated at fair value through profit or loss. (This classification option can only be applied when it eliminates or significantly reduces an accounting mismatch).

Derivatives which are not part of a hedging relationship:

¢ Mandatorily at fair value through profit or loss.

Financial liabilities:

¢ Amortised cost; or

¢ Mandatorily at fair value through profit or loss. (This applies to contingent consideration in a business combination or to liabilities which are held for trading); or

¢ Designated at fair value through profit or loss. (This classification option can be applied when it eliminates or significantly reduces an accounting mismatch; the liability forms part of a group of financial instruments managed on a fair value basis; or it forms part of a contract containing an embedded derivative and the entire contract is designated as at fair value through profit or loss).

Note 46 Financial instruments and risk management presents the financial instruments held by the Group based on their specific classifications.

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

The specific accounting policies for the classification, recognition and measurement of each type of financial instrument held by the Group are presented below:

Loans receivable at amortised costClassification

Loans to /(from) group companies (note 8), are classified as financial assets subsequently measured at amortised cost.

They have been classified in this manner because the contractual terms of these loans give rise, on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding, and the Group's business model is to collect the contractual cash flows on these loans.

Recognition and measurementLoans receivable are recognised when the Group becomes a party to the contractual provisions of the loan. The loans are measured, at initial recognition, at fair value plus transaction costs, if any.

They are subsequently measured at amortised cost.

The amortised cost is the amount recognised on the loan initially, minus principal repayments, plus cumulative amortisation (interest) using the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.

Application of the effective interest methodInterest income is calculated using the effective interest method, and is included in profit or loss in investment income (note 28).

The application of the effective interest method to calculate interest income on a loan receivable is dependent on the credit risk of the loan as follows:

¢ The effective interest rate is applied to the gross carrying amount of the loan, provided the loan is not credit impaired. The gross carrying amount is the amortised cost before adjusting for a loss allowance.

¢ If a loan is purchased or originated as credit impaired, then a credit adjusted effective interest rate is applied to the amortised cost in the determination of interest. This treatment does not change over the life of the loan, even if it is no longer credit impaired.

¢ If a loan was not purchased or originally credit impaired, but it has subsequently become credit impaired, then the effective interest rate is applied to the amortised cost of the loan in the determination of interest. If, in subsequent periods, the loan is no longer credit impaired, then the interest calculation reverts to applying the effective interest rate to the gross carrying amount.

Loans denominated in foreign currenciesWhen a loan receivable is denominated in a foreign currency, the carrying amount of the loan is determined in the foreign currency. The carrying amount is then translated to the Rand equivalent using the spot rate at the end of each reporting period. Any resulting foreign exchange gains or losses are recognised in profit or loss in the other operating gains (losses) (note 47).

Details of foreign currency risk exposure and the management thereof are provided in the specific loan notes and in the financial instruments and risk management (note 46).

ImpairmentThe Group recognises a loss allowance for expected credit losses on all loans receivable measured at amortised cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective loans.

The Group measures the loss allowance at an amount equal to lifetime expected credit losses (lifetime ECL) when there has been a significant increase in credit risk since initial recognition. If the credit risk on a loan has not increased significantly since initial recognition, then the loss allowance for that loan is measured at 12 month expected credit losses (12 month ECL).

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a loan. In contrast, 12 month ECL represents the portion of lifetime ECL that is expected to result from default events on a loan that are possible within 12 months after the reporting date.

In order to assess whether to apply lifetime ECL or 12 month ECL, in other words, whether or not there has been a significant increase in credit risk since initial recognition, the Group considers whether there has been a significant increase in the risk of a default occurring since initial recognition rather than at evidence of a loan being credit impaired at the reporting date or of an actual default occurring.

Credit riskDetails of credit risk related to loans receivable are include in the financial instruments and risk management (note 46).

DerecognitionRefer to the "derecognition" section of the accounting policy for the policies and processes related to derecognition.

Any gains or losses arising on the derecognition of a loan receivable is included in profit or loss.

Debt instruments at fair value through other comprehensive income

ClassificationThe Group holds certain investments in bonds and debentures which are classified as subsequently measured at fair value through other comprehensive income (note 31).

They have been classified in this manner because the contractual terms of these debt instruments give rise, on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding, and the objectives of the Group's business model is achieved by both collecting the contractual cash flows on these instruments and by selling them.

Recognition and measurementThese debt instruments are recognised when the Group becomes a party to the contractual provisions. They are measured, at initial recognition, at fair value plus transaction costs, if any.

They are subsequently measured at fair value.

Even though they are measured at fair value, the Group determines the amortised cost of each instrument as if they were measured at amortised cost. The difference, at reporting date, between the amortised cost and the fair value of the debt instruments, is recognised in other comprehensive income and accumulated in equity in the reserve for valuation of investments.

The amortised cost is the amount recognised on the loan initially, minus principal repayments, plus cumulative amortisation (interest) using the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.




Application of the effective interest methodInterest income is calculated using the effective interest method, and is included in profit or loss in investment income (note 28).

The application of the effective interest method to calculate interest income on debt instruments at fair value through other comprehensive income is dependent on the credit risk of the instrument as follows:

¢ The effective interest rate is applied to the gross carrying amount of the instrument, provided the instrument is not credit impaired. The gross carrying amount is the amortised cost before adjusting for a loss allowance.

¢ If a debt instrument is a purchased or originated as credit impaired, then a credit adjusted effective interest rate is applied to the amortised cost in the determination of interest. This treatment does not change over the life of the instrument, even if it is no longer credit impaired.

¢ If a debt instrument was not purchased or originally credit impaired, but it has subsequently become credit impaired, then the effective interest rate is applied to the amortised cost of the instrument in the determination of interest. If, in subsequent periods, the instrument is no longer credit impaired, then the interest calculation reverts to applying the effective interest rate to the gross carrying amount.

Debt instruments denominated in foreign currenciesWhen a debt instrument measured at fair value through other comprehensive income is denominated in a foreign currency, the amortised cost and the fair value (carrying amount) of the investment is determined in the foreign currency. The amortised cost and fair value is then translated to the Rand equivalent using the spot rate at the end of each reporting period. Any foreign exchange gains or losses arising on the amortised cost of the instrument are recognised in profit or loss in the other operating gains (losses) (note 47). The remaining foreign exchange gains or losses relate to the valuation adjustment and are included in other comprehensive income and are accumulated in equity in the reserve for valuation of investments.

Details of foreign currency risk exposure and the management thereof are provided in the specific loan notes and in the financial instruments and risk management note (note 46).

ImpairmentThe Group recognises a loss allowance for expected credit losses on all debt instruments measured at fair value through other comprehensive income. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective instruments.

The Group measures the loss allowance at an amount equal to lifetime expected credit losses (lifetime ECL) when there has been a significant increase in credit risk since initial recognition. If the credit risk on a debt instrument has not increased significantly since initial recognition, then the loss allowance for that instrument is measured at 12 month expected credit losses (12 month ECL).

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of the instrument. In contrast, 12 month ECL represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date.

In order to assess whether to apply lifetime ECL or 12 month ECL, in other words, whether or not there has been a significant increase in credit risk since initial recognition, the Group considers whether there has been a significant increase in the risk of a default occurring since initial recognition rather than at evidence of a debt instrument being credit impaired at the reporting date or of an actual default occurring.

Credit riskDetails of credit risk related to debt instruments at fair value through other comprehensive income are included in the specific notes and the financial instruments and risk management (note 46).

DerecognitionRefer to the derecognition section of the accounting policy for the policies and processes related to derecognition.

On derecognition of a debt instrument at fair value through other comprehensive income, the cumulative gain or loss on that instrument which was previously accumulated in equity in the reserve for valuation of investments is reclassified to profit or loss.

Trade and other receivablesClassificationTrade and other receivables, excluding, when applicable, VAT and prepayments, are classified as financial assets subsequently measured at amortised cost (note 12).

They have been classified in this manner because their contractual terms give rise, on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding, and the Group's business model is to collect the contractual cash flows on trade and other receivables.

Recognition and measurementTrade and other receivables are recognised when the Group becomes a party to the contractual provisions of the receivables. They are measured, at initial recognition, at fair value plus transaction costs, if any.

They are subsequently measured at amortised cost.

The amortised cost is the amount recognised on the receivable initially, minus principal repayments, plus cumulative amortisation (interest) using the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.

Application of the effective interest methodFor receivables which contain a significant financing component, interest income is calculated using the effective interest method, and is included in profit or loss in investment income (note 28).

The application of the effective interest method to calculate interest income on trade receivables is dependent on the credit risk of the receivable as follows:

¢ The effective interest rate is applied to the gross carrying amount of the receivable, provided the receivable is not credit impaired. The gross carrying amount is the amortised cost before adjusting for a loss allowance.

¢ If a receivable is a purchased or originated as credit impaired, then a credit adjusted effective interest rate is applied to the amortised cost in the determination of interest. This treatment does not change over the life of the receivable, even if it is no longer credit impaired.

¢ If a receivable was not purchased or originally credit impaired, but it has subsequently become credit impaired, then the effective interest rate is applied to the amortised cost of the receivable in the determination of interest. If, in subsequent periods, the receivable is no longer credit impaired, then the interest calculation reverts to applying the effective interest rate to the gross carrying amount.

Trade and other receivables denominated in foreign currenciesWhen trade and other receivables are denominated in a foreign currency, the carrying amount of the receivables are determined in the foreign currency. The carrying amount is then translated to the Rand equivalent using the spot rate at the end of each reporting period. Any resulting foreign exchange gains or losses are recognised in profit or loss in other operating gains (losses) (note 47).

Details of foreign currency risk exposure and the management thereof are provided in the financial instruments and risk management (note 46).

ImpairmentThe Group recognises a loss allowance for expected credit losses on trade and other receivables, excluding VAT and prepayments. The amount of expected credit losses is updated at each reporting date.

The Group measures the loss allowance for trade and other receivables at an amount equal to lifetime expected credit losses (lifetime ECL), which represents the expected credit losses that will result from all possible default events over the expected life of the receivable.

Credit riskDetails of credit risk are included in the trade and other receivables note (note 12) and the financial instruments and risk management note (note 46).


Any gains or losses arising on the derecognition of trade and other receivables is included in profit or loss in the line item.

Investments in equity instruments

ClassificationInvestments in equity instruments are presented in note 47. They are classified as mandatorily at fair value through profit or loss. As an exception to this classification, the Group may make an irrevocable election, on an instrument by instrument basis, and on initial recognition, to designate certain investments in equity instruments as at fair value through other comprehensive income.

The designation as at fair value through other comprehensive income is never made on investments which are either held for trading or contingent consideration in a business combination.

Recognition and measurementInvestments in equity instruments are recognised when the Group becomes a party to the contractual provisions of the instrument. The investments are measured, at initial recognition, at fair value. Transaction costs are added to the initial carrying amount for those investments which have been designated as at fair value through other comprehensive income. All other transaction costs are recognised in profit or loss.

Investments in equity instruments are subsequently measured at fair value with changes in fair value recognised either in profit or loss or in other comprehensive income (and accumulated in equity in the reserve for valuation of investments), depending on their classification. Details of the valuation policies and processes are presented in note 44.

Fair value gains or losses recognised on investments at fair value through profit or loss are included in other operating gains (losses) (note 47).

Dividends received on equity investments are recognised in profit or loss when the Group's right to received the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in investment income (note 28).




Investments denominated in foreign currenciesWhen an investment in an equity instrument is denominated in a foreign currency, the fair value of the investment is determined in the foreign currency. The fair value is then translated to the Rand equivalent using the spot rate at the end of each reporting period. Any resulting foreign exchange gains or losses are recognised in profit or loss as part of the fair value adjustment for investments which are classified as at fair value through profit or loss. Foreign exchange gains or losses arising on investments at fair value through other comprehensive income are recognised in other comprehensive income and accumulated in equity in the reserve for valuation of investments.


ImpairmentInvestments in equity instruments are not subject to impairment provisions.


The gains or losses which accumulated in equity in the reserve for valuation of investments for equity investments at fair value through other comprehensive income are not reclassified to profit or loss on derecognition. Instead, the cumulative amount is transferred directly to retained earnings.

Investments in debt instruments at fair value through profit or lossClassificationCertain investments in debt instruments are classified as mandatorily at fair value through profit or loss. These investments do not qualify for classification at amortised cost or at fair value through other comprehensive income because either the contractual terms of these instruments do not give rise, on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding, or the objectives of the Group business model are met by selling the instruments rather than holding them to collect the contractual cash flows.

The Group hold investments in debentures and corporate bonds (note 9) which are mandatorily at fair value through profit or loss.

The Group has designated certain investments in debt instruments as at fair value through profit or loss. The reason for the designation is to reduce or eliminate an accounting mismatch which would occur if the instruments were not classified as such. Refer to note 9) for details.

Recognition and measurement

Investments in debt instruments at fair value through profit or loss are recognised when the Group becomes a party to the contractual provisions of the instrument. The investments are measured, at initial recognition and subsequently, at fair value. Transaction costs are recognised in profit or loss.

Fair value gains or losses are included in other operating gains (losses) (note 47). Details of the valuation policies and processes are presented in note 44.

Interest received on debt instruments at fair value through profit or loss are included in investment income (note 28).

Investments denominated in foreign currenciesWhen an investment in a debt instrument at fair value through profit or loss is denominated in a foreign currency, the fair value of the investment is determined in the foreign currency. The fair value is then translated to the Rand equivalent using the spot rate at the end of each reporting period. Any resulting foreign exchange gains or losses are recognised as part of the fair value adjustment in profit or loss.


ImpairmentInvestments in debt instruments at fair value through profit or loss are not subject to impairment provisions.


Non-hedging derivativesClassificationNon-hedging derivatives are classified as mandatorily at fair value through profit or loss.

The Group enters into a variety of derivative financial instruments in order to manage its exposure to foreign exchange risk and cash flow interest rate risk. Derivatives held by the Group which are not in designated hedging relationships, include forward exchange contracts and interests rate swaps.

Recognition and measurementDerivatives are recognised when the Group becomes a party to the contractual provisions of the instrument. They are measured, at initial recognition and subsequently, at fair value. Transaction costs are recognised in profit or loss.

Fair value gains or losses are included in other operating gains (losses) (note 47). Details of the valuation policies and processes are presented in note 44.


Borrowings and loans from related parties

Recognition and measurementBorrowings and loans from related parties are recognised when the Group becomes a party to the contractual provisions of the loan. The loans are measured, at initial recognition, at fair value plus transaction costs, if any.

They are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

Interest expense, calculated on the effective interest method, is included in profit or loss in finance costs (note 29)

Borrowings expose the Group to liquidity risk and interest rate risk. Refer to note 46 for details of risk exposure and management thereof.

Loans denominated in foreign currencies

When borrowings are denominated in a foreign currency, the carrying amount of the loan is determined in the foreign currency. The carrying amount is then translated to the Rand equivalent using the spot rate at the end of each reporting period. Any resulting foreign exchange gains or losses are recognised in profit or loss in the other operating gains (losses) (note 47).

Details of foreign currency risk exposure and the management thereof are provided in the specific loan notes and in the financial instruments and risk management (note 46).


Trade and other payablesClassificationTrade and other payables (note 21), excluding VAT and amounts received in advance, are classified as financial liabilities subsequently measured at amortised cost.

Recognition and measurementThey are recognised when the Group becomes a party to the contractual provisions, and are measured, at initial recognition, at fair value plus transaction costs, if any.

They are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

If trade and other payables contain a significant financing component, and the effective interest method results in the recognition of interest expense, then it is included in profit or loss in finance costs (note 29).

Trade and other payables expose the Group to liquidity risk and possibly to interest rate risk. Refer to note 46 for details of risk exposure and management thereof.

Trade and other payables denominated in foreign currenciesWhen trade payables are denominated in a foreign currency, the carrying amount of the payables are determined in the foreign currency. The carrying amount is then translated to the Rand equivalent using the spot rate at the end of each reporting period. Any resulting foreign exchange gains or losses are recognised in profit or loss in the other operating gains (losses) (note 47).

Details of foreign currency risk exposure and the management thereof are provided in the financial instruments and risk management note (note 46).

DerecognitionRefer to the "derecognition" section of the accounting policy for the policies and processes related to derecognition.

Financial liabilities at fair value through profit or loss




Classification

Financial liabilities which are held for trading are classified as financial liabilities mandatorily at fair value through profit or loss. Refer to note 16.

When a financial liability is at contingent consideration in a business combination, the Group classifies it as a financial liability at fair value through profit or loss. Refer to note 16.

The Group, does, from time to time, designate certain financial liabilities as at fair value through profit or loss. The reason for the designation is to reduce or significantly eliminate an accounting mismatch which would occur if the instruments were not classified as such; or if the instrument forms part of a group of financial instruments which are managed and evaluated on a fair value basis in accordance with a documented management strategy; or in cases where it forms part of a contract containing an embedded derivative and IFRS 9 permits the entire contract to be measured at fair value through profit or loss. Refer to note 16 for details.

Recognition and measurementFinancial liabilities at fair value through profit or loss are recognised when the Group becomes a party to the contractual provisions of the instrument. They are measured, at initial recognition and subsequently, at fair value. Transaction costs are recognised in profit or loss.

Fair value gains or losses recognised on investments at fair value through profit or loss are included in other operating gains (losses) (note 47).

For financial liabilities designated at fair value through profit or loss, the portion of fair value adjustments which are attributable to changes in the Group's own credit risk, are recognised in other comprehensive income and accumulated in equity in the reserve for valuation of liabilities, rather than in profit or loss. However, if this treatment would create or enlarge an accounting mismatch in profit or loss, then that portion is also recognised in profit or loss.

Interest paid on financial liabilities at fair value through profit or loss is included in finance costs (note 29).

Financial liabilities denominated in foreign currenciesWhen a financial liability at fair value through profit or loss is denominated in a foreign currency, the fair value of the instrument is determined in the foreign currency. The fair value is then translated to the Rand equivalent using the spot rate at the end of each reporting period. Any resulting foreign exchange gains or losses are recognised as part of the fair value adjustment in profit or loss. To the extent that the foreign exchange gain or loss relates to the portion of the fair value adjustment recognised in other comprehensive income, that portion of foreign exchange gain or loss is included in the fair value adjustment recognised in other comprehensive income.



The changes in fair value attributable to changes in own credit risk which accumulated in equity for financial liabilities which were designated at fair value through profit or loss are not reclassified to profit or loss. Instead, they are transferred directly to retained earnings on derecognition.

Financial guarantee contractsA financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.

Financial guarantee contracts issued by the Group are initially measured at their fair values and, if not designated as at FVTPL and do not arise from a transfer of a financial asset, are subsequently measured at the higher of:

¢ The amount of the loss allowance determined in accordance with IFRS 9.

¢ The amount initially recognised less, where appropriate, cumulative amount of income recognised in accordance with the revenue recognition policies.

Commitments to provide a loan at a below market interest rate.Commitments to provide a loan at a below market interest rate are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:

¢ The amount of the loss allowance determined in accordance with IFRS 9.

¢ The amount initially recognised less, where appropriate, cumulative amount of income recognised in accordance with the revenue recognition policies.

¢ Refer to note 34 for details of commitments to provide a loan at a below market interest rate.

¢ Cash and cash equivalents.

Cash and cash equivalents comprise cash on hand and demand deposits, and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Bank overdraftsBank overdrafts are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

DerecognitionFinancial assetsThe Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilitiesThe Group derecognises financial liabilities when, and only when, the Group obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non cash assets transferred or liabilities assumed, is recognised in profit or loss.

ReclassificationFinancial assetsThe Group only reclassifies affected financial assets if there is a change in the business model for managing financial assets. If a reclassification is necessary, it is applied prospectively from the reclassification date. Any previously stated gains, losses or interest are not restated.

The reclassification date is the beginning of the first reporting period following the change in business model which necessitates a reclassification.

Financial liabilitiesFinancial liabilities are not reclassified.The patents, trademarks and other rights relate to intellectual property internally generated by a subsidiary of the company, which is used in the purification of Fluorine.`

Computer software has been specifically developed for Gammatec. Management has assessed that no impairment indicators exist as the subsidiary is generating healthy cash flows.

1.8 Leases IFRS 16The company assesses whether a contract is, or contains a lease, at the inception of the contract.

A contract is, or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

In order to assess whether a contract is, or contains a lease, management determine whether the asset under consideration is "identified", which means that the asset is either explicitly or implicitly specified in the contract and that the supplier does not have a substantial right of substitution throughout the period of use. Once management has concluded that the contract deals with an identified asset, the right to control the use thereof is considered. To this end, control over the use of an identified asset only exists when the company has the right to substantially all of the economic benefits from the use of the asset as well as the right to direct the use of the asset.

In circumstances where the determination of whether the contract is or contains a lease requires significant judgement, the relevant disclosures are provided in the significant judgments and sources of estimation uncertainty section of these accounting policies.

Company as lesseeA lease liability and corresponding right of use asset are recognised at the lease commencement date, for all lease agreements for which the company is a lessee.

The various lease and non lease components of contracts containing leases are accounted for separately, with consideration being allocated to each lease component on the basis of the relative stand alone prices of the lease components and the aggregate stand alone price of the non lease components (where non lease components exist).

However as an exception to the preceding paragraph, the company has elected not to separate the non lease components for leases of land and buildings.

Details of leasing arrangements where the company is a lessee are presented in note 5 Leases (company as lessee).

Lease liabilityThe lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the company uses its incremental borrowing rate.Lease payments included in the measurement of the lease liability comprise the following.

¢ Fixed lease payments, including in substance fixed payments, less any lease incentives. ¢ Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date. ¢ The amount expected to be payable by the company under residual value guarantees. ¢ The exercise price of purchase options, if the company is reasonably certain to exercise the option. ¢ Lease payments in an optional renewal period if the company is reasonably certain to exercise an extension option. ¢ Penalties for early termination of a lease, if the lease term reflects the exercise of an option to terminate the lease.




Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability (or right of use asset). The related payments are recognised as an expense in the period incurred and are included in operating expenses (note x).

The lease liability is presented as a separate line item on the Statement of Financial Position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect lease payments made. Interest charged on the lease liability is included in interest expense (note 17).

The company remeasures the lease liability (and makes a corresponding adjustment to the related right of use asset) when:

¢ There has been a change to the lease term, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

¢ There has been a change in the assessment of whether the company will exercise a purchase, termination or extension option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

¢ There has been a change to the lease payments due to a change in an index or a rate, in which case the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).

¢ There has been a change in expected payment under a residual value guarantee, in which case the lease liability is remeasured by discounting the revised lease payments using the initial discount rate.

¢ A lease contract has been modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised payments using a revised discount rate.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right of use asset, or is recognised in profit or loss if the carrying amount of the right of use asset has been reduced to zero.

Right of use assetsRight of use assets are presented as a separate line item on the Statement of Financial Position.

Lease payments included in the measurement of the lease liability comprise the following:

¢ The initial amount of the corresponding lease liability.

¢ Any lease payments made at or before the commencement date.

¢ Any initial direct costs incurred.

¢ Any estimated costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, when the company incurs an obligation to do so, unless these costs are incurred to produce inventories.

¢ Less any lease incentives received.

Right of use assets are subsequently measured at cost less accumulated depreciation and impairment losses.

Right of use assets are depreciated over the shorter period of lease term and useful life of the underlying asset.The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting year. If the expectations differ from previous estimates, the change is accounted for prospectively as a change in accounting estimate. Each part of a right of use asset with a cost that is significant in relation to the total cost of the asset is depreciated separately.

The depreciation charge for each year is recognised in profit or loss unless it is included in the carrying amount of another asset.

Company as lessorLeases for which the company is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

Lease classification is made at inception and is only reassessed if there is a lease modification.

When the company is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sublease is classified as a finance or operating lease by reference to the right of use asset arising from the head lease. If the head lease is a short term lease to which the company applies the exemption described previously, then it classifies the sub lease as an operating lease.

The various lease and non lease components of contracts containing leases are accounted for separately, with consideration being allocated by applying IFRS 15.

Finance leasesAmounts due from lessees are recognised from commencement date at an amount equal to the the company net investment in the lease. They are presented as lease receivables (note 5) on the statement of financial position.

The interest rate implicit in the lease is used to measure the net investment in the lease. If the interest rate implicit in a sublease cannot be readily determined for a sublease, then the discount rate used for the head lease (adjusted for any initial direct costs associated with the sublease) is used to measure the net investment in the sublease.

Modifications made to operating leases are accounted for as a new lease from the effective date of the modification. Any prepaid or accrued lease payments relating to the original lease are treated as part of the lease payments of the new lease.

The interest rate implicit in the lease is defined in a manner which causes the initial direct costs to be included in the initial measurement of the net investment in the lease.

Lease payments included in the measurement of the net investment in the lease comprise the following:

¢ Fixed lease payments, including in substance fixed payments, less any lease incentives payable.

¢ Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date.

¢ The amount expected to be receivable by the company from the lessee, a party related to the lessee or a third party unrelated to the company under residual value guarantees (to the extent of third parties, this amount is only included if the party is financially capable of discharging the obligations under the guarantee).

¢ The exercise price of purchase options, if the lessee is reasonably certain to exercise the option.

¢ Penalties for early termination of a lease, if the lease term reflects the exercise of an option to terminate the lease.

The company recognises finance income over the lease term, based on a pattern that reflects a constant periodic rate of return on the net investment in the lease. Finance income recognised on finance leases is included in investment income in profit or loss (note 29).

The company applies the impairment provisions of IFRS 9 to lease receivables. Refer to the accounting policy for trade and other receivables as lease receivables are impaired on a consistent basis with that accounting policy.

Leases (Comparatives under IAS 17)Finance leases – lesseeFinance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

The assets are depreciated over the useful life on a straight line basis consistent with the property, plant and equipment within the Group.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Operating leases lessorOperating lease income is recognised as an income on a straight line basis over the lease term.

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income.

Income for leases is disclosed under revenue in profit or loss.

Operating leases – lesseeOperating lease payments are recognised as an expense on a straight line basis over the lease term except when another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. The difference between the amounts recognised as an expense and the contractual payments is recognised as an operating lease asset. This liability is not discounted.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Any contingent rents are expensed in the period they are incurred.

1.9 InventoriesInventories are measured at the lower of cost and net realisable value.

Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects is assigned using specific identification of the individual costs.

The cost of inventories is assigned using the weighted average cost formula. The same cost formula is used for all inventories having a similar nature and use to the entity.

When inventories are sold, the carrying amount of those inventories are recognised as an expense in the period in which the related revenue is recognised. The amount of any write down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write down or loss occurs. The amount of any reversal of any write down of inventories, arising from an increase in net realisable value, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.




1.10 Non-current assets held for sale Non-current assets and disposal Groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

In the statement of comprehensive income, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a non controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in the statement of comprehensive income as part of comprehensive income.

Non-current assets held for sale (or disposal Group) are measured at the lower of its previous carrying amount and fair value less costs to sell.

A non-current asset is not depreciated (or amortised) while it is classified as held for sale, or while it is part of a disposal group classified as held for sale.

Interest and other expenses attributable to the liabilities of a disposal Group classified as held for sale are recognised in profit or loss.

Any gain or loss on the remeasurement on a non-current asset classified as held for sale that does not meet the definition of a discontinued operation is included in profit or loss from continuing operations.

Any impairment loss is recognised for any initial or subsequent write down of the asset to fair value less cost to sell.

A gain shall be recognised for any subsequent increase in fair value less costs to sell of the asset, but not in excess of the cumulative impairment loss that has been recognised previously.

1.11 Impairment of tangible and intangible assets other than goodwillThe Group assesses at the end of the reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Irrespective of whether there is any indication of impairment, the Group also:

¢ tests intangible assets with an indefinite useful life or intangible assets not yet available for use annually for impairment by comparing its carrying amount with its recoverable amount. This impairment test is performed during the annual period and at the same time every period.

¢ tests goodwill acquired in a business combination annually for impairment.

¢ If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash generating unit is the higher of its fair value less costs to sell and its value in use.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.

Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash generating units, or groups of cash generating units, that are expected to benefit from the synergies of the combination.

An impairment loss is recognised for cash generating units if the recoverable amount of the units is less than the carrying amount of the units. The impairment loss is allocated to reduce the carrying amount of the assets of the unit in the following order:

¢ first, to reduce the carrying amount of any goodwill allocated to the cash generating unit and

¢ then, to the other assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.

The carrying amount of an asset included in a cash generating unit may not be reduced below the highest of (1) Its fair value less cost to sell; (2) Its value in use or (3) zero.

An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.

1.12 Share capital and equityAn equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Ordinary shares are classified as equity and measured at cost.

1.13 Employee benefitsShort term employee benefits

The cost of short term employee benefits, those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non monetary benefits such as medical care, are recognised in the period in which the service is rendered and are not discounted.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non accumulating absences, when the absence occurs.

The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

Defined contribution plans

The companies operate a provident fund on behalf of its employees. The schemes are generally funded through payments to insurance companies or trustee administered funds, determined by periodic actuarial calculations. A defined contribution plan is a plan under which the company pays fixed contributions into a separate entity. The company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefit relating to employee service in the current and prior periods.

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Defined benefit plans

Some Group companies provide post retirement healthcare benefits to their retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. For defined benefit plans the cost of providing the benefits is determined using the projected unit credit method.

Actuarial valuations are conducted on an annual basis by independent actuaries.

Consideration is given to any event that could impact the funds up to the end of the reporting period where the interim valuation is performed at an earlier date.

Past service costs are recognised immediately to the extent that the benefits are already vested, and are otherwise amortised on a straight line basis over the average period until the amended benefits become vested.

Actuarial gains and losses are recognised in the year in which they arise, in other comprehensive income.

Gains or losses on the curtailment or settlement of a defined benefit plan are recognised when the Group is demonstrably committed to curtailment or settlement.

When it is virtually certain that another party will reimburse some or all of the expenditure required to settle a defined benefit obligation, the right to reimbursement is recognised as a separate asset. The asset is measured at fair value. In all other respects, the asset is treated in the same way as plan assets. In profit or loss, the expense relating to a defined benefit plan is presented as the net of the amount recognised for a reimbursement.

The amount recognised in the statement of financial position represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service costs and reduces by the fair value of plan assets.

Any asset is limited to unrecognised actuarial losses and past service costs, plus the present value of available refunds and reduction in future contributions to the plan.

1.14 Provisions and contingenciesProvisions are recognised when:

¢ the Group has a present obligation as a result of a past event;

¢ it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

¢ a reliable estimate can be made of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount of the provision.

Provisions are not recognised for future operating losses.

Onerous contracts

If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.

An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Rental income relating to Pelchem has resulted in an onerous contract.




Contingent assets and liabilities

After their initial recognition, contingent liabilities recognised in business combinations that are recognised separately are subsequently measured at the higher of:

Contingent assets and contingent liabilities are not recognised on the face of the Annual Financial Statements however they are disclosed in note 35 Contingencies.

1.15 Government grants and deferred grant incomeGovernment grants are recognised when there is reasonable assurance that:

¢ the Group will comply with the conditions attaching to them; and

¢ the grants will be received.

Government grants are recognised as income over the periods necessary to match them with the related costs that they are intended to compensate.

Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs is recognised as income of the period in which it becomes receivable.

Government grants related to assets, including non monetary grants at fair value, are presented in the statement of financial position by setting up the grant as deferred income.

Grants related to income are presented as a credit in the profit or loss (separately).

Repayment of a grant related to income is applied first against any un amortised deferred credit set up in respect of the grant. To the extent that the repayment exceeds any such deferred credit, or where no deferred credit exists, the repayment is recognised immediately as an expense.

Repayment of a grant related to an asset is recorded by reducing the deferred income balance by the amount repayable. The cumulative additional depreciation that would have been recognised to date as an expense in the absence of the grant is recognised immediately as an expense.

1.16 RevenueNECSA derives revenue from the following major sources:

¢ Sale of Goods to Customers

¢ Services rendered to customers

¢ Contract revenue

¢ Interest

¢ Dividends

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product or service to a customer.

Sale of Goods to customers

The Group sells goods directly to customers. Revenue is recognised at a point in time for sales of goods. For sales of goods to customers, revenue is recognised when control of the goods has transferred, being at the point the customer purchases the goods. Payment of the transaction price is due immediately at the point the customer purchases the goods. A receivable is recognised for account holding customers. Delivery occurs when the goods have been shipped to the customer’s specific location. When the customer initially purchases the goods the transaction price received by the company is recognised as a contract liability until the goods have been delivered to the customer.

Services Rendered

The Group renders services for its customers. Revenue from providing services is recognised in the accounting period in which the services are rendered. For fixed price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided. Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management. In case of fixed price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered by the company exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

Contract Revenue

Contract revenue comprises:

¢ the initial amount of revenue agreed in the contract; and

¢ variations in contract work, claims and incentive payments:

¢ to the extent that it is probable that they will result in revenue; and

¢ they are capable of being reliably measured.

Interest Income

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

Dividends

Dividends are recognised, in profit or loss, when the shareholder's right to receive payment has been established provided that it is probable that the economic benefits will flow to the entity and that the amount of dividend income can be measured reliably. Service fees included in the price of a product are recognised as revenue over the period during which the service is performed.

1.17 Construction contracts and receivablesWhen the outcome of a construction contract cannot be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

When contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included in the consolidated statement of financial position, as a liability, as advances received. Amounts billed for work performed but not yet paid by the customer are included in the consolidated statement of financial position under trade and other receivables.

Necsa does not enter into construction contracts greater than 12 months.

1.18 Cost of salesWhen inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write down or loss occurs. The amount of any reversal of any write down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

The related cost of providing services recognised as revenue in the current period is included in cost of sales.

Contract costs comprise:

¢ costs that relate directly to the specific contract;

¢ costs that are attributable to contract activity in general and can be allocated to the contract; and

¢ 0 such other costs as are specifically chargeable to the customer under the terms of the contract.

1.19 Translation of foreign currenciesFunctional and presentation currency

Items included in the Financial Statements of each of the Group entities are measured using the currency of the primary economic environment in which the entity operates.

The consolidated Financial Statements are presented in Rand which is the Group functional and presentation currency.

Foreign currency transactions

In preparing the financial statements of each individual Group entity, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for:

¢ exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;

¢ exchange differences on transactions entered into in order to hedge certain foreign currency risks; and

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous Financial Statements are recognised in profit or loss in the period in which they arise.




When a gain or loss on a non monetary item is recognised to other comprehensive income and accumulated in equity, any exchange component of that gain or loss is recognised to other comprehensive income and accumulated in equity. When a gain or loss on a non monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.

Necsa is exposed to foreign currency translation risks relating to Euro, Malaysian Ringgit and Dirham currencies.

Necsa, NTP and Pelchem enter into FEC's for all procurement transactions over R300 000 and they enter into FEC contracts for exposure to income receivable.

Investments in subsidiaries, joint ventures and associates

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated into Rands using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to non controlling interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over a jointly controlled entity that includes a foreign operation, or a disposal involving loss of significant influence over an associate that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re attributed to non controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. reductions in the Group's ownership interest in associates or jointly controlled entities that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in equity.

1.20 Related partiesThe Group operates in an economic environment currently dominated by entities directly or indirectly owned by the South African Government. As a result of the constitutional independence of all three spheres of government in South Africa, only parties within the national sphere of government are considered to be related parties.

Key management is defined as being individuals with the authority and responsibility for planning, directing and controlling the activities of the entity. All individuals from the level of Acting Chief Executive Officer up to the Board of Directors are regarded as key management.

Close family members of key management personnel are considered to be those family members who may be expected to influence or be influenced by key management individuals or other parties related to the entity.

1.21 Fruitless and wasteful, irregular and unauthorised expenditureFruitless and wasteful expenditure in terms of the Public Finance Management Act means expenditure which was made in vain and would have been avoided had reasonable care been exercised are recorded in the notes to the financial statements.

Irregular expenditure is recorded in the notes to the financial statements. The amount recorded in the notes are equal to the value of the irregular expenditure incurred unless it is impracticable to determine the value thereof.

Unauthorised expenditure, when confirmed, must be recorded in the Statement of Financial Position. The amount recorded must be equal to the overspending within the division or the expenditure incurred that was not in accordance with the purpose of the division.

1.22 RoundingUnless otherwise stated all financial figures are rounded off to the nearest one thousand Rands (R'000).

2. Significant judgements and sources of estimation uncertaintySignificant judgement and estimates in assessing the impairment of Financial assets

Financial assets, other than those at FVPL, are assessed for indicators of impairment at the end of each reporting period. The Group uses significant judgement in determining whether financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For Annual Financial Statements equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. This determination requires significant judgement by Group.

For certain categories of financial assets, such as trade receivables, assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

Allowance for slow moving, damaged and obsolete inventory

An allowance is made to write inventory down to the lower of cost or net realisable value.

Management have made estimates of the selling price and direct cost to sell on certain inventory items. The write down is included in the operating profit note 27.

Fair value estimation

Some of the Group assets and liabilities are measured at fair value for financial reporting purposes. The Chief Financial Officer's determines appropriate valuation techniques based on the accounting standards.

The fair value of financial instruments traded in active markets (such as trading and available for sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the end of the reporting period. In estimating the fair value of an asset or liability, the Group uses market observable data to the extent that it is available. Where level 1 inputs are not available, the Group engages valuers to establish the appropriate valuation techniques and inputs into the model.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. The assumption is based on the management expectation that outstanding balances will be collected or paid within twelve months, therefore the time value of money will not have an impact as it is considered to be immaterial.

Information about valuation techniques, inputs used in determining fair values of various assets and liabilities are disclosed in notes.

Impairment testing of Goodwill and tangible assets

The recoverable amounts of cash generating units and individual assets have been determined based on the higher of value in use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions. It is reasonably possible that an assumption may change which may then impact estimations and may then require a material adjustment to the carrying value of goodwill and tangible assets.

The Group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. In addition, goodwill is tested on an annual basis for impairment. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of goodwill and tangible assets are inherently uncertain and could materially change over time.

Provisions

Provisions are estimated by management based on the available information. Additional disclosure of these estimates are included in note 20 Provisions.

Taxation

Necsa is not a tax paying entity however subsidiaries are income tax paying entities.

Judgement is required in determining the provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The Group recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the Group to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at the end of the reporting period could be impacted.

Useful lives and residual values of property, plant and equipment

The useful lives of assets are based on management's estimation. Management considers the following factors to determine the optimum useful life expectation for each of the individual items of property, plant and equipment.

¢ Expected usage of the asset. Usage is assessed by reference to the assets expected capacity or physical output.

¢ Expected physical wear and tear, which depends on operational factors such as the number of shifts for which the asset is to be used and the repair and maintenance programme, and the care and maintenance of the asset while idle.

¢ Technical or commercial obsolescence arising from changes or improvement in production or from a change in the market demand for the product or service output of the asset.

¢ Exit policy of the Company.

The estimation of residual value of assets is also based on management's judgement that the assets will be sold and what its condition will be like at the end of its useful life. For assets that incorporate both a tangible and intangible portion, management uses judgement to assess which element is more significant to determine whether it should be treated as property, plant and equipment or intangible assets.




Post retirement benefit obligation

Judgement is required when recognizing and measuring the retirement benefit obligation of the Group and the Company. The obligation is valued by an independent actuary at each reporting date. The actuarial valuation method is used to value the obligation and the projected unit credit method is used. Future benefit values are projected using specific actuarial assumptions and the liability to in service members is accrued over the expected working lifetime. The most significant of which are subsidy inflation, longevity, cash flow risk, changes in bond yields and CPI as well as further changes in legislation.

Lease classification

Lessors

The company is party to leasing arrangements, as a lessor. The treatment of leasing transactions in the annual financial statements is mainly determined by whether the lease is considered to be an operating lease or a finance lease. In making this assessment, management considers the substance of the lease, as well as the legal form, and makes a judgement about whether substantially all of the risks and rewards of ownership are transferred.

Significant judgement was applied by management in concluding the correct lease classification. Management therefore determines whether or not the lease should be classified as an operating or finance lease.

Lessees

IFRS 16 estimation and uncertainty:

¢ calculating discount rate

¢ estimating lease term

¢ estimating variable lease payments dependent on index or rate

Other IFRS 16 judgements:

¢ judgement in identifying whether a contract includes a lease.

¢ establishing whether or not it is reasonably certain that an extension option will be exercised

¢ considering whether or not it is reasonably certain that a termination option will not be exercised

¢ determining whether or not variable lease payments are truly variable or insubstance fixed

Critical judgements in determining the lease term

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option: or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee. During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was an increase in recognised lease liabilities and right of use assets of R94million

Impact of COVID-19

COVID-19 was declared a global pandemic in March 2020. The note below describes the impact on the Group’s local and international operations.

During March 2020, the first case of COVID-19 was reported in South Africa. In response, the South African government enforced a 21 day lockdown beginning Friday, 27 March 2020 and later extended it for a further 14 days ended Thursday, 30 April 2020.

Locally, certain restrictions on economic activities and movement were lifted from 1 May 2020. Similar announcements easing restrictions in other countries were made as the governments of those countries introduced measures to revive their economies. The relaxation of restrictions has enabled the Group to ramp up existing operations provided that strict health and safety guidelines mandated by the government is adhered to.

The Group’s financial year concluded on 31 March 2020, three weeks after the World Health Organization recognised COVID-19 as a global pandemic and a few days after lockdown restrictions were implemented in South Africa. The impact of COVID-19 has ,however, not been recognised as an adjusting subsequent event in preparing these financial statements as it did not impact materially on the Group’s performance. While every effort has been made to quantify the future impact that the virus will have on the business, there is a lot of uncertainty on how the pandemic will eventually fold out.

Business interruption

The Group supplies critical products and services to the medical industry. The Group’s products are key inputs for medical and similar service providers. As such, the products are classified as essential services. The COVID-19 impact on the Group’s business operations was minimal at financial year end.

The Group’s management of the COVID-19 crisis

As the business operates mainly in South Africa, the response to the COVID-19 crisis has been guided by the national authorities and international guidelines issued by the World Health Organization. The Group is working under strict conditions, across all its operations, to limit and minimise the potential for COVID-19 transmission, and will continue to support and educate employees on the appropriate hygiene standards to follow. The Group continues to prioritise the health and safety of all employees and, where possible, has arranged for many employees to work remotely.

The extent of the effect of COVID-19 on business operations is continually being reassessed, with business continuity plans being prepared and executed to deal with anticipated outcomes. Additionally, the Group’s internal policies and risk management practices are continuously being updated to ensure that they remain aligned to the rapidly evolving situation.

Impact on the annual financial statements

The Group has assessed the impact of COVID-19 on the Annual Financial Statements.

Necsa’s business model leverages Necsa’s knowledge base, legacy infrastructure investment, and on going research and development in the fulfilment of the State’s nuclear obligations as well as the pursuit of commercial ventures in addition to its other business model objectives. However, due to the limited impact of the COVID-19 pandemic at the Group’s financial year end, the results of the Group did not include any adjusting events.

Impairment of financial assets

The Group assesses impairment of financial assets by calculating the expected credit loss allowance on trade and other receivables. Forward looking information included the market impact of COVID-19 by adjusting the credit risk of receivables for macro economic conditions that impact credit risk. As the Group operates in a niche market with a reliable customer base, the impact was not significant to warrant any significant adjustments to financial assets.

Inventory obsolescence

The Group’s inventory is continuously considered for obsolescence due to the nature of the group’s business. The amount of any write down of inventories to net realizable value and losses of inventories are recognised as an expense in the period the write down or loss occurs. Hence,the COVID-19 impact had minimal impact on inventory valuations.

Cash flows and liquidity

The Group assessed the impact of the lockdown on the cash resources on hand and available from committed facilities together with the possibility of default by customers. The Group is prioritising its spending with a focus on reducing non essential costs and making operations more efficient. The Group is further committed to minimising the impact on salaries and job losses.

The Group’s liquidity and access to facilities is continuously monitored to ensure that sufficient funds are available to meet the group’s commitments. The group has overdraft facilities with local banks and other funding institutions. In addition, the company can rely on financial support from its shareholder should the need arise.

3. New Standards and Interpretations3.1 Standards and interpretations effective and adopted in the current yearIn the current year, the Group has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations:

Standard/ Interpretation:Effective date:Years beginning on or after Expected impact:

¢ IFRIC 23 Uncertainty over Income Tax Treatments 01 January 2019 (1)

¢ IFRS 16 Leases 01 January 2019 (2)

¢ Annual Improvements to IFRS Standards 2015 2017 Cycle various standards 01 January 2019

¢ 01 January 2019 01 January 2019

¢ Amendments to refer to Conceptual Framework in IFRS Standards 01 January 2019 Impact is not material

¢ Amendment to IFRS 9: Prepayment features with negative compensation 01 January 2019 Impact is not material

¢ Amendments to IAS 19: Plan amendments, curtailment of settlement January 1, 2021 Impact is not material

¢ Insurance Contracts January 1, 2019 Unlikely there will be a material impact

¢ Uncertainty over Income Tax Treatments January 1, 2019

¢ IFRS 16 Leases January 1, 2019

3.2 Standards and interpretations not yet effective

The following standards and interpretations have been published and are mandatory for the Group’s accounting periods beginning on or after April 1, 2020 or later periods but are not relevant to its operations:

Standard/ Interpretation: Effective date:Years beginning on or after

Expected impact:

¢ Presentation of Financial Statements: Disclosure initiative 01 January 2020 Impact not expected to be material

¢ Accounting Policies, Changes in Accounting Estimatesand Errors: Disclosure initiative

01 January 2020 Impact not expected to be material




(1) IFRIC 23 Uncertainty over Income Tax Treatments

IFRIC 23 clarifies the accounting for income tax treatments that have yet to be accepted by tax authorities. Specifically, IFRIC 23 provides clarity on how to incorporate this uncertainty into the measurement of tax as reported in the financial statements.

IFRIC 23 does not introduce any new disclosures but reinforces the need to comply with existing disclosure requirements about:

¢ Judgments made.

¢ Assumptions and other estimates used.

¢ The potential impact of uncertainties that are not reflected.

The Group's current tax practice is to comply with all tax legislation and regulations.

Management has performed a high level assessment of the impact of the standard on its financial statements. The impact of the standard is not material.

(2)IFRS 16 Leases

IFRS 16 was published in January 2016. It sets out the principles for recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’). IFRS 16 replaces the previous leases Standard, IAS 17 Leases, and related interpretations. IFRS 16 includes a single model for lessees which will result in almost all leases being included in the Statement of Financial Position. No significant changes have been included for lessors. IFRS 16 also includes extensive new disclosure requirements for both lessees and lessors.

The financial statement disclosure has been updated to ensure compliance with IFRS 16 requirements, including the implications of adoption of the various transaction options.

Management has performed an assessment of the impact of the standard on its financial statements. The impact of this standard is not material.

The standard is effective for annual periods beginning on or after 1 January 2019.

4. Investment property Other disclosures

The impact of Covid19 was taken into account when investment property were assessed for indications to impairment. There was no impact on the valuation of investment property due to the Covid19 pandemic.

A register containing the information required by Regulation 25(3) of the Companies Regulations, 2011 is available for inspection at the registered office of the Company.

Details of valuation

The fair value of the Group's investment property as at 31 Mach 2020 have not been revalued.

The fair value of the Group's investment property as at 31 March 2019 and 31 March 2018 has been arrived at on the basis of a valuation carried out on the respective dates by Mr M Fitchet from Knight Frank. Mr M Fitchet is a registered Professional Valuer in terms of section 19 of the Property Valuers Act, 2000. The valuers meet the requirements of RICS valuation Professional standards VS 1.6, having sufficient current knowledge of the particular market and the skills to undertake the valuation completely

Knight Frank is not a related party to the Group and is independent.

The Investment (or Income) Approach to Valuation has been applied in terms of IFRS13. The valuation is made on the basis that the prop-erty’s Highest and Best Use would be for a mixed use industrial park providing facilities management for security, fire & safety as well as existing steam and compressed air services to tenants, including Necsa.

Gross rentals range from R20/m² for yard area to between R30 R45/m² for workshop/warehouse and R35 R85/m² for offices.

The valuers adopted the Income or Investment Approach to value for purposes of establishing fair value. The approach relies on value inputs including the application of market-related rentals; the assessment of property expenses; consideration for future vacancies and the application of a market-related capitalisation rate. There is also value in the surplus farm land value in existing use. In this regard, the valuers have been advised that development restriction exists which disallows housing township development to take place within a 5km radius of NECSA. The full farm falls within this radius. The capitalisation rate adopted is made by reference to the yield rates observed by the valuers for similar properties in the locality and adjusted based on the valuers' knowledge of factors specific to the respective properties.

The Group's investment property falls into level 2 of the fair value hierarchy.

There were no transfers between levels 1, 2 or 3 during the year.

5.

Pro

per

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men

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Com

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Reconciliation of investment property - Group - Year ended 31 March 2018

Opening balanceTransfers from

Property, plant and equipment

Fair value adjustments

Total

R ‘000 R ‘000 R ‘000 R ‘000

Investment property 18,027 27,989 -9 46,007

Reconciliation of investment property - Company -Year ended 31 March 2020



Total

R ‘000 R ‘000 R ‘000

Investment property 214,433 750 215,183




Fair value adjust-ments

Total

R ‘000 R ‘000 R ‘000 R ‘000

Investment property 126,328 78,775 9,33 214,433




Fair value adjust-ments

Total

R ‘000 R ‘000 R ‘000 R ‘000

Investment property 63,212 61,756 1,36 126,328

Group Company

2020 2019 2018 2020 2019 2018

R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Fair value of investment properties

53,654 42,99 46,007 215,183 214,433 126,328

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Rec

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9




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tions

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Tran

sfer

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ecia

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ases

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e eq

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nd m

otor

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s.Ex

pens

es in

curr

ed in

the

cons

truct

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of p

rope

rty, p

lant

and

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ipm

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tem

s ha

ve n

ot b

een

capi

talis

ed to

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asse

ts.

All c

lass

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f pro

perty

, pla

nt a

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ms

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r tha

n la

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hav

e be

en re

cogn

ised

on

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cost

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dged

as

secu

rity

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asse

ts h

ave

been

ple

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as

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and

are

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the

leas

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s.

Rec

onci

liatio

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pro

pert

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lant

and

equ

ipm

ent G

roup

201

8

Details of properties

Land and buildings consist of the following properties:

Necsa: Farm 567, Weldaba; Erf 1150, 1153, 1155 and 1156 . The properties were revalued as at 31 March 2019 by an independent valuator. Please refere revaluation below.

Albertinia; Erf 4473 and 4474 Riverdale; Erf 1115, 1224, 1916, 1917, 1919, 1921, 1922, 1924, 1926, 1928 and 1929. These assets are measured at cost less accumulated depreciation.

Springbok; Farm 369 and 380 Vaalputs. The rest of the assets are measured at cost less accumulated depreciation.

Gammatec NDT: Portion 91 of Farm 601 Klipplaatdrif, Vereeniging. The property is encumbered as disclosed in note of Gammatec NDT Annual Financial Statements. The property was revalued as at 25 March 2019 by an independent valuer.

AEC Amersham: Erf 176, 100 Indianapolis Street, Kyalami. The property was revalued as at 31 March 2019 by an independent valuer.

The estimation of the useful lives of property, plant and equipment is based on historic performance as well as expectations about future use and therefore requires a significant degree of judgement to be applied by management. These depreciation rates represent management’s current best estimate of the useful lives of the assets.

Transfer of property, plant and equipment not only relates to investment property, but also include transfers to other asset classes.

The revaluation reserve may not be distributed to shareholders.

A register containing the information required by Regulation 25(3) of the Companies Regulations, 2011 is available for inspection at the registered office of the Company.

Other information

The impact of Covid19 was taken into account when property, plant and equipment were assessed for indications to impairment. There was no impact on the valuation of property, plant and equipment due to the Covid19 pandemic.




6.

Inve

stm

ents

in s

ubsi

dia

ries

The

carr

ying

am

ount

s of

sub

sidi

arie

s ar

e sh

own

net o

f im

pairm

ent l

osse

s.

The

Dire

ctor

s’ v

alue

of t

he in

vest

men

t in

subs

idia

ries

is e

qual

to it

s ca

rryi

ng v

alue

Com

pany

Nam

e of

com

pany

%

hol

ding

202

0%

hol

ding

201

9%

hol

ding

201

8Ca

rryin

g am

ount

20

20Ca

rryin

g am

ount

20

19Ca

rryin

g am

ount

20

18

Pel

chem

SO

C L

imite

d 10

0%10

0%10

0%-

- -

NTP

Rad

iois

otop

es S

OC

Lim

ited

100%

100%

100%

220,

722

0,7

220,

7

Cyc

lofil

SO

C L

imite

d 10

0%10

0%10

0%-

- -

Are

csa

SO

C L

imite

d 51

%51

%51

%1

11

The

impa

ct o

f Cov

id19

was

take

n in

to a

ccou

nt w

hen

dete

rmin

ing

the

fair

valu

e of

the

inte

rest

in s

ubsi

diar

ies.

The

re w

as n

o im

pact

on

the

fair

valu

e of

the

inve

stm

ent i

n su

bsid

iarie

s du

e to

the

Cov

id19

pan

dem

ic

7.

Inve

stm

ents

in a

sso

ciat

esTh

e fo

llow

ing

tabl

e lis

ts a

ll of

the

asso

ciat

es in

the

Gro

up:

Grou

p

Nam

e of

com

pany

H

eld

by

%

owne

rshi

p in

tere

st

2020

%

owne

rshi

p in

tere

st

2019

%

owne

rshi

p in

tere

st

2018

Carry

ing

amou

ntCa

rryin

g am

ount

Carry

ing

amou

nt

2018

Fair

valu

eFa

ir va

lue

2020

2019

2020

2019

R ‘0

00R

‘000

R ‘0

00R

‘000

R ‘0

00

Bus

ines

s Ve

ntur

e In

tern

atio

nal N

o.33

(Pty

) Ltd

N

ecsa

SO

C 42

.00%

42

.00%

42

.00%

2

22

22

Gam

wav

e (fo

rmer

ly C

yclo

tope

, a s

ubsi

diar

y)

NTP

40

.00%

40

.00%

40

.00%

-

- -

- -

Ose

rix

Gam

maT

ec N

DT

25.0

0%

25.0

0%

25.0

0%

4,92

54,

331

148

- 4,

331

Elem

ent 4

2 N

ecsa

SO

C 50

.00%

50

.00%

50

.00%

-

- -

- -

4,92

74,

333

150

24,

333

4,92

74,

333

150

24,

333

The

impa

ct o

f Cov

id19

was

take

n in

to a

ccou

nt w

hen

the

inve

stm

ents

in a

ssoc

iate

s w

ere

asse

ssed

for

indi

catio

ns to

impa

irmen

t. Th

ere

was

no

impa

ct o

n th

e in

vest

men

ts

in a

ssoc

iate

s du

e to

the

Cov

id19

pan

dem

ic.

(1) A

ssoc

iate

of G

amm

atec

ND

T S

uppl

ies

SO

C L

td. G

amm

atec

ND

T S

uppl

ies

SO

C L

td h

olds

25%

of O

serix

issu

ed s

hare

cap

ital.

NTP

Rad

iois

otop

es S

OC

Ltd

hol

ds 5

5%

of G

amm

atec

ND

T S

uppl

ies

SO

C L

td th

eref

ore

resu

lting

in th

e gr

oup

havi

ng s

igni

fican

t infl

uenc

e ov

er th

e as

soci

ate.

The

carr

ying

am

ount

s of

Ass

ocia

tes

are

show

n ne

t of i

mpa

irmen

t los

ses.




The Directors’ value of the investment in associates is equal to its carrying value.

Material associates

The following associates are material to the Group:

Summary of the group’s interest in associate Oserix S.A.

Summarised statement of profit and loss and other comprehensive income

2020

R '000

2019

R '000

2018

R '000

Revenue 132,795 211,020 -

Other income and expenses (129,290) (208,691) -

Tax expense (996) (158) -

Profit from continuing operations 2,509 2,171 -

Dividends Received from associate 32 - -

Summarised Statement of Financial Position

2020

R '000

2019

R '000

2018

R '000

Assets

Non-current 4,922 6,819 -

Current 57,684 61,269 -

Total Assets 62,606 68,088 -

Liabilities

2020

R '000

2019

R '000

2018

R '000

Non-current (2,475) (3,191) -

Current (36,955) (37,807) -

Total Liabilities (39,429) (40,997) -

Total Net Assets 23,177 27,090 -

Reconciliation of equity accounted investments in associates

2020

R '000

2019

R '000

2018

R '000

Investment at beginning of period 4,331 3,816 -

Share of profit 627 514 -

Dividends received from associate 33 - -

Investment at end of period 4,991 4,331 -

The end of the reporting year of Oserix S.A is 31 December 2019. It was impracticable to obtain financial statements as at

31 March 2020.

8. Loans to (from) group companiesGroup Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Subsidiaries

Pelchem SOC Limited Medical Aid Cost Paid by Necsa on behalf of the subsidiaries. These funds recovered from the subsidiaries. The balance outstanding is due to over/under payment made by subsidiaries.

- (3,31) - (679) (13) 1,403

NTP Radioisotopes SOC Limited Medical Aid Cost Paid by Necsa on behalf of the subsidiaries. These funds recovered from the subsidiaries. The balance outstanding is due to over/under payment made by subsidiaries.

- - - 72 (58) 112

NTP Radioisotopes SOC Limited NTP initially granted Necsa an Intercompany Loan of R58.5 million at Prime minus 2% payable on 31 March 2019 with main condition that any future dividends will be offset against the loan. Necsa has not being in a position to pay the entire loan however a R20 million dividend was declared by NTP during May 2018 and was offset against the loan resulting in the principal loan being reduced to R38.5 million. The loan repayment date was extended to 31 March 2021.

- 3,31 (3,31) (45,544) (42,462) (59,081)

NTP - FED NTP transfers its liability for discharging Safari Fuel Elements and Control Rods to Necsa as a nuclear licence holder.The liability is then discharged to Necsa and funds are deposited to Necsa to discharge this waste in future.In October 2018, NTP notified Necsa that the funds will no longer be transferred to Necsa and the debt of R30.6 million for 2017/18 going forward will not be paid. The total amount owing as at 31 March 2020 is R84.7 million.

- - - 84,709 50,351 -

- - (3,31) 38,558 7,818 (57,566)

Non-current assets - - - 84,709 50,351 -

Current assets - 3,31 66,149 72 - 1,515

Current liabilities - (3,31) (66,149) (46,223) (42,533) (59,081)

- - - 38,558 7,818 (57,566)

The impact of Covid19 was taken into account when loans to/from group companies were assessed for indications to impairment. There was no impact on the valuation of loans to/from group companies due to the Covid19 pandemic

Credit quality of loans to group companies

The credit quality of loans to Group companies that are neither past due nor impaired can be assessed by reference to historical information about counterparty default rates, as external credit ratings are not available. Loans to Associates are considered medium high quality as no defaults occurred in the past. The credit quality of the loan to Pelchem SOC Limited is considered medium to low due to the fact that Pelchem SOC Limited has an accumulated loss at year end and predicts a loss for the ensuing financial year. The loan from NTP Radioisotopes is considered a medium quality loan as Necsa has not been in a position to pay back the entire loan, with an agreement that was reached stating that any dividends declared by NTP Radioisotopes be offset against the loan with Necsa. The loan repayment date was extended to 31 March 2021.




9. Other financial assetsGroup Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

At fair value through profit or loss

Unit trusts The reduction of financial assets measured at fair value through other comprehensive income from R408 million in 2018 to R193.8 million in 2019 emanates from the withdrawal of R265 million which was earmarked for discharging of safari, fuel, elements, disposal funds to pay financial operational obligations for 2018/19 financial years.

216,672 193,939 408,287 216,672 193,939 408,287

Foreign-exchange contract asset - - 1,502 - - -

216,672 193,939 409,789 216,672 193,939 408,287

Financial assets measured at fair value through other comprehensive income

Listed shares 881 1,452 409,815 856 1,416

Trade and other receivables-instruments at fair value through profit or loss

- - 1,71 - - -

Unit trusts The reduction of financial assets measured at fair value through other comprehensive income from R408 million in 2018 to R193.8 million in 2019 emanates from the withdrawal of R265 million which was earmarked for discharging of safari, fuel, elements, disposal funds to pay financial operational obligations for 2018/19 financial year.

- - - - - 1,528

881 1,452 411,525 856 1,416 1,528

Financial assets measured at amortised costs

Ringfenced and 3rd party funds and other short term investmentsR100 million was used to pay Necsa’s financial obligations during the 2018/19 financial year.

337,338 318,93 703,414 335,38 317,191 265,195

Loans and receivables

Retention fees receivable (1) 1,673 1,868 48,012 1,673 1,868 50,876

Total other financial assets 556,564 516,189 1,572,740 554,581 514,414 725,886

Ringfenced, 3rd party funds and other short term investments are investments that are ringfenced and must be used for a specific purpose, or are held on behalf of 3rd parties. These are all investments linked to various bank accounts and no expected credit losses can therefore apply as the values cannot decrease due to economic factors.

(1) Retention fees receivable relates to contracts with clients where an amount is withheld until the quality conditions of the contracts have been fulfilled. The fair value approximates the carrying value.

The Directors’ value of the investment in associates is equal to its carrying value.

Material associates

The following associates are material to the Group:

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Non-current assets

Designated as at Fair Value through profit or loss 216,672 193,939 409,789 216,672 193,939 408,287

Financial assets meausred at fair value through other comprehensive income

881 1,452 411,525 856 1,416 1,528

Loans and receivables 1,673 1,868 32,32 1,673 1,868 34,068

219,226 197,259 853,634 219,201 197,223 443,883

Current assets

Short term investments 337,338 318,93 703,414 335,38 317,191 265,195

Loans and receivables - - 15,692 - - 16,808

337,338 318,93 719,106 335,38 317,191 282,003

556,564 516,189 1,572,740 554,581 514,414 725,886

Fair value informationFinancial assets at fair value through profit or loss are recognised at fair value, which is therefore equal to their carrying amounts.

The following classes of financial assets at fair value through profit or loss are measured to fair value using quoted market prices:

¢ Listed shares

¢ Unit trusts

Fair values are determined annually as at the end of the reporting period.

Fair value hierarchy of financial assets at fair value through profit or loss

For financial assets recognised at fair value, disclosure is required of a fair value hierarchy which reflects the significance of the inputs used to make the measurements.

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Level 1

Sanlam - Ordinary shares 66 - - 41 59 68

Old Mutual - Ordinary shares 428 - - 428 790 1,46

Quilter Ordinary Shares 309 - - 309 330 -

Nedbank - Ordinary Shares 78 - - 78 237 -

Unit Trusts - Collective Investment Schemes

216,673 193,939 408,287 216,673 193,939 408,287

217,554 193,939 408,287 217,529 195,355 409,815




10. Deferred taxGroup Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Deferred tax liabilities

Property plant and equipment (30,8490 (25,364) 18,369 - - -

Prepayments (165) (207) - - - -

Doubtfull debt allowance (2,498) 769 - - - -

Revaluation of property (4,858) (4,7450 - - - -

Right of use asset (7,743) - - - - -

Section 24C (2,193) (630) - - - -

Forex adjustment s24j (1,042) (1,042) - - - -

Other deferred tax liability - - 364 - - -

(49,348) (31,219) 18,733 - - -

Deferred tax asset

Property plant and equipment - - (17,901) - - -

Provisions, allowances and PRML Liability - - 16,869 - - -

Trade receivables with credit balances 84 505 - - - -

Provision for expected credit losses 1,683 1,177 - - - -

Tax Loss carried forward 70,285 55,588 - - - -

Inventory impairment 1,631 2,017 - - - -

Provision for leave pay 5,149 4,525 - - - -

Provision for bad debts 7,645 7,266 - - - -

Provision for 13th cheque 880 829 - - - -

Fair value and IFRS adjustments 228 4 4,573 - - -

Provision for waste disposal 52,619 33,784 - - - -

Income received in advance 7,062 4,967 - - - -

Effective interest rate adjustment 92 154 - - - -

Provision for bonus 871 2,613 - - - -

Other personnel provisions 11,321 12,089 - - - -

Lease liability 9,281 - - - - -

Finance lease liability 57 - - - - -

168,888 125,518 3,541 - - -

Please refer to note 38 as deferred tax was restated due to a prior year error.

The deferred tax assets and the deferred tax liability relate to income tax in the same jurisdiction, and the law allows net settlement. Therefore, they have been offset in the statement of financial position as follows:

Deferred tax asset 168,888 79,979 19,509 - - -

Deferred tax liability (49,3480 (4,683) 259 - - -

Total net deferred tax asset 119,54 75,296 19,768 - - -

11. InventoriesGroup Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Raw materials 6,458 11,005 36,605 - - -

Work in progress 24,073 4,479 26,013 20,43 917 25,13

Finished goods 32,609 28,871 27,261 - - -

Life science products and equipment 14,376 10,226 5,691 - - -

Production supplies 16,265 25,629 916 - - -

Goods in transit 239,134 197,174 12,111 - - -

Consumables 50,432 50,136 182,368 49,271 43,92 39,193

Other inventories for sale 1,047 626 - - - -

384,394 328,146 290,965 69,701 44,837 64,323

Allowance for slow moving stock (19,53) (18,706) (12,216) (4,514) (3,448) (2,682)

364,864 309,44 278,749 65,187 41,389 61,641

Total inventories at the lower of cost and net realisable value 364,864 309,44 278,749 65,187 41,389 61,641

During the financial year end March 31, 2020 R311,834 (2019: R261,879) (2018 : R256 013) was recognised as an expense in cost of sales and cost of providing services for the Company and R 799,683 (2019: R1,517,651) (2018 : R1 445 341) for the Group.

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Impaired amount of categories of inventory

Raw materials 1,841 365 - - - -

Finished goods 17,689 18,341 12,216 4,514 3,448 2,682

Amounts recognised in profit or loss 19,530 18,706 12,216 4,514 3,448 2,682

Amounts recognised in profit or loss

Write downs for slow moving inventories to net realisable value amounted to R4 514 000 (2019 : R3 448 000) (2018 : R2 682 000) for the company and R19 530 000 (2019 : R18 706 000) (2018 : (R12 216 000) for the Group. These were recognised as an expense during the year ended 31 March 2020 and was recognised in cost of sales.

The impact of Covid19 was taken into account when the net realisable value of inventories was assessed. There was no impact on the valuation of inventory due to the Covid19 pandemic

Please refer to note 38 as inventories and cost of sales were restated due to a prior year error.




12. Trade and other receivables Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Financial Instruments

Trade receivables 267,887 327,905 370,292 38,496 91,405 116,513

Employee costs in advance - 25 - - - -

Prepayments 2,126 41,554 58,115 (80) (207) (207)

Deposits 79 79 121 18 18 18

Staff fuel debtors 505 1,566 1,569 505 1,566 1,569

Other receivables 26,526 12,790 8,802 3,151 569 845

VAT 29,963 22,254 16,166 641 - -

327,086 406,173 455,065 42,731 93,351 118,738

Trade and other receivables pledged as security

No trade and other receivables have been pledged as security.

Classification as Trade ReceivablesTrade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days and are therefore all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Details about the Group’s impairment policies and the calculation of the loss allowance are provided below.

Included in other receivables are sundry debtors and other miscellaneous items, of which sundry debtors form the biggest part of the total

Trade receivablesGroup Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Fair value of trade and other receivables

Trade and other receivables 327,086 406,173 455,065 42,731 93,351 118,738

Trade and other receivables are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method.

Due to the short term nature of the current receivables, their carrying amount is considered to be the same as their fair value.

Trade and other receivables impaired

Information about the impairment of trade receivables and the Group's exposure to credit risk are provided below and foreign currency risk can be found in Note 48.

The impact of Covid19 was taken into account when the fair value of trade receivables was assessed. There was no impact on the fair value of trade receivables due to the Covid19 pandemic.

Please refer to note 38 as trade and other receivables were restated due to a prior year error.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables

The recoverability of customers with outstanding balances of over R 100 000 were individually assessed, taking each individual customer’s circumstances into account. Balances which were older than 90 days for customers with a balances of less than R 100 000 each, were provided for as expected credit losses. The recoverability of customers with outstanding balances of over R 100 000 were individually assessed, taking each individual customer’s circumstances into account. Balances which were older than 90 days for customers with a balances of less than R 100 000 each, were provided for as expected credit losses.

On that basis, the loss allowance as at 31 March 2020 was determined as follows for trade receivables:

Trade Receivables Credit Risk2020

Group Current 1 30 days 31 60 days 61 90 days over 90 days Total

Gross Carrying amount 149,942 51,062 11,425 15,371 192,437 418,239

Expected loss rate 7.52% 10.46% 35.04% 41.96% 33.38%

Loss allowance 11,125 5,343 4,004 6,449 64,233 91,154

NECSA Current 1 30 days 31 60 days 61 90 days over 90 days Total

Gross Carrying amount 51,243 5,857 1,821 4,546 291,292 354,760

Expected Loss Rate 21.36% 80.07% 193% 104% 99% 88

Loss Allowance 10,946 4,690 3,515 4,708 288,317 312,177

The Group writes off debtors based on a line by line basis on amounts greater than R100 000 in the over 90 days aging bracket, taking into consideration whether the debtor is in severe financial difficulty and whether there is no realistic prospect of recovery.

The loss allowances for trade receivables as at 31 March 2020 reconcile to the opening loss allowances as follows:

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Increase in loss allowance recognised in profit or loss during the year 46,388 - 3,012 102,000 149,540 60,637-

Unused amounts reversed (5,248) (31,110) - - - -

Revaluation 199 - - - - -

91,154 49,815 80,925 312,177 210,177 60,637

Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period of greater than 90 days past due.

These definitions for defaults as aforementioned were selected, because they are expected to result in the most accurate measurement of the expected credit loss.

Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.




13. Cash and cash equivalentsCash and cash equivalents consist of:

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Cash on hand 66 105 90 36 59 45

Bank balances 80,162 104,640 83,775 16,593 16,658 14,777

Short term deposits 113,618 264,938 423,828 - - -

Bank overdraft (21,965) (44,774) (32,000) (188) (20,000) (5,000)

171,881 324,909 475,693 16,441 (3,283) 9,822

Current assets 193,846 369,683 507,693 16,629 16,717 14,822

Current liabilities (1) (21,965) (44,774) (32,000) (188) (20,000) (5,000)

171,881 324,909 475,693 16,441 (3,283) 9,822

(1) The current liabilities are made up as follows:

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Current liabilities

Gammatec (7,777) (7,962) (7,000) - - -

Pelchem (14,000) (16,812) (20,000) - - -

Necsa (1) (188) (20,000) (5,000) (188) (20,000) (5,000)

(21,965) (44,774) (32,000) (188) (20,000) (5,000)

(1) The Necsa bank overdraft has been classified as level 1 in the Fair Value Hierarchy, the main reason thereof is that all variables were known and agreed up front. To fund the financial obligations relating to the second quarter of 2018/19 financial year, Necsa utilized R20 000 000 of the Overnight Loan Facility during August 2018 (2018/19 Financial year) and utilized R5million in the 2017/18 financial year.

Please refer to note 38 as cash and cash equivalents was restated due to a prior year error. Details of facilities

Details of facilities

The overdraft facility was revoked during the 2019/20 financial year. The negative balance of R188 000 in the current year is related to forex losses that were recognised at year end. This was due to market fluctuations during the height of the COVID-19 pandemic influencing on the markets. There is no set repayment terms of the overdraft and interest is charged at prime less 1.5%. There is no restrictions on the realisability of any of the cash and cash equivalents. The credit quality of cash at bank and short term deposits, excluding cash on hand that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or historical information about counterparty default rates:

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Overnight loan facility 14,000 20,000 20,000 - 20,000 20,000

Asset based financing 4,000 8,000 8,000 4,000 8,000 8,000

Bills of exchange 100 100 100 - - -

CFC 2,000 2,000 2,000 - - -

Forex potential future exposure trading limits 1,280 1,280 - - - -

Commitments regarding gaurantees (local) - - 11,300 - - -

Corporate credit card 115 115 115 5,000 - -

FEC's 68,835 92,115 117,115 38,000 60,000 60,000

Fleet management service 145 145 145 - - -

Forex cancellation limit 750 750 750 - - -

Forex settlement limit 7,000 7,000 7,000 - - -

General short term banking facility 50,200 55,200 75,200 5,000 15,000 15,000

Gaurantees by bank - 11,300 11,300 - - -

Letter of credit 450 450 450 - - -

Medium term loan - - 433 - - -

Overdraft 11,500 11,500 11,500 - - -

Vehicle and asset finance 5,290 5,290 5,290 - - -

14. Discontinued operationsThe Board of Gammatec Middle East General Trading LLC and the Board of Gammatec NDT Supplies SOC Ltd resolved to discontinue all direct operations of Gammatec Middle East General Trading LLC during the 2018 financial year. The assets and liabilities as at 31 March 2020 are set out below. The decision was made to discontinue operations due to the lack of return and suitable profitable trading activities.

At year end R nill (2019: R619) is included in trade receivables as the outstanding balance of the sales transaction.

The Board of Gammatec Aseana NDT Supplies SDN.BHD and the Board of Gammatec NDT Supplies SOC Ltd resolved to discontinue all direct operations of Gammatec Aseana NDT Supplies SDN.BHD during the 2018 financial year. The assets and liabilities as at 31 March 2020 are set out below. The decision was made to discontinue operations due to the lack of return and suitable profitable trading activities.

At year end R27 (2019: R1,420) is included in trade receivables as the outstanding balance of the sales transaction.

It is expected that the trade receivables of both companies will be settled by the relevant customers within the next 12 months. Trade payables will also be




Profit and loss

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Revenue - (103) - - - -

Cost of Sales 42 (483) - - - -

Gross profit 42 (586) - - - -

Other income 6,048 567 - - - -

Operating expenses (608) (1,1) - - - -

Operating profit/ (loss) 5,482 (1,119) - - - -

Taxation - (19) - - - -

Profit/ (Loss) from discontinued operations 5,482 (1,138) - - - -

Assets and liabilities

Assets of discontinued operations

Trade and other receivables 27 3,333 - - - -

Tax receivable 153 115 - - - -

180 3,448 - - - -

Liabilities of discontinued operations

Trade and other payables 116 295 - - - -

15. Share capitalGroup Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Authorised

500 000 000 ordinary shares at R1 each

500,000 500,000 500,000 500,000 500,000 500,000

There were no changes in authorised share capital.

Reconciliation of number of shares issued:

Reported as at 01 April 2019 2,205 2,205 2,205 2,205 2,205 2,205

Issued:

Ordinary 2,205 2,205 2,205 2,205 2,205 2,205

16. Other financial liabilitiesGroup Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

At fair value through profit (loss) designated

Foreign exchange contract 11,543 1,963 7,861 83 1,118 5,949

Held at amortised cost

Standard Bank - Australia Investment This loan is secured by an unrestricted cession of book debts and a unrestricted multiple pledge of calls, notice and SBSA fixed deposit accounts. Interest is charged at prime rate. The loan has to be repaid in equal monthly installments of R 33,333.33 over 60 months.

- - 233 - - -

First National Bank - Mortgage This loan is secured by a first mortgage bond registered over land and buildings Portion 91 of Farm 601, Klipplaatdrif, Vereeniging (Note 4). Interest is charged at prime rate minus 1%. The bond is repayable in equal monthly installments of R150,162 over 120 months.

5,010 4,408 5,757 - - -

5,01 4,408 5,99 - - -

16,553 6,371 13,851 83 1,118 5,949


At amortised cost 2,319 4,408 5,757 - - -

Current liabilities

Fair value through profit or loss 11,543 1,963 7,861 83 1,118 5,949

At amortised cost - 2,691 - 233 - -

14,234 1,963 8,094 83 1,118 5,949

16,553 6,371 13,851 83 1,118 5,949




17. Lease liabilities

Right of use asset

Group 2020 2019

Cost / Valuation

Accumulated Depreciation Carrying value

Cost / Valuation


R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Right-of-use assets - Vehicles 6,700 (340) 6,360 - - -

Right-of-use assets - Equipment 5,295 (1,548) 3,747 - - -

Right-of-use assets - Land 84,645 (9,384) 75,261 - - -

Total 96,64 (11,272) 85,368 - - -

Company 2020 2019

Cost / Valuation


Cost / Valuation


R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Right-of-use assets - Vehicles 6,700 (340) 6,360 - - -

Right-of-use assets - Equipment 5,295 (1,548) 3,747 - - -

Total 11,995 (1,888) 10,107 - - -

Reconciliation of Right of use asset - Group - Year ended 31 March 2020

Opening balance

First Time Adoption of

IFRS 16 Additions Depreciation Total

R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Right-of-use assets - Vehicles - 1,019 5,681 (340) 6,360

Right-of-use assets - Equipment - 4,650 645 (1,548) 3,747

Right-of-use assets - Land - 80,966 3,679 (9,384) 75,261

- 86,635 10,005 (11,272) 85,368

Reconciliation of Right of use asset - Company- Year ended 31 March 2020

Opening balance

First Time Adoption of

IFRS 16 Additions Depreciation Total

R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Right-of-use assets - Vehicles - 1,019 5,681 (340) 6,360

Right-of-use assets - Equipment - 4,650 645 (1,548) 3,747

- 5,669 6,326 (1,888) 10,107

Details pertaining to leasing arrangements, where the group is lessee are presented below:

The Group adopted IFRS 16 for the first time in the current financial period. Comparative figures have been accounted for in accordance with IAS 17 and accordingly, any assets recognised under finance leases in accordance with IAS 17 for the comparative have been recognised as part of property, plant and equipment. The information presented in this note for right of use assets therefore only includes the current period.

IFRS 16 Leases

Necsa adopted IFRS 16 Leases with effect from 1 April 2019. The new standard replaces IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a lease, SIC 15 Operating leases – Incentives and SIC 27 Evaluating the substance of transactions involving the legal form of a lease.

Finance leases consist of vehicles leased from Avis and Electronic Office Equipment leased from Nedbank

As Lessee

As a lessee, Necsa previously classified leases as operating or finance lease based on its assessment of whether the lease transferred all the risks incidental to ownership of the underlying assets. IFRS 16 introduces a single, on balance sheet lease accounting model for lessees. A lessee is required to recognise a right of use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments.

Approach

IFRS 16 can be applied using either a retrospective approach or a modified retrospective approach with optional practical expedients for lessees. Necsa has applied the modified retrospective approach on adoption of IFRS 16 and as a result comparative information will not be restated.

The following practical expedients were applied when applying IFRS 16;

Applied the exemption not to recognise right of use asset and liabilities for leases with of low value assets and

Applied the exemption not to recognise right of use asset and liabilities for leases with lease terms of 12 months or less

Existing leases with a remaining period of 12 months will be reported as short term leases

The right of use asset for all existing finance leases will be measured using the carrying amount of the finance lease asset and liability under IAS 17.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lessees are required to separately recognise the interest expense on the lease liability and the depreciation expense on the right of use of the asset.

Lessor

IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating or finance leases, and to account for those two types of leases differently. Impact

Impact

On adoption of IFRS 16 Necsa recognised additional R 5.6 Million of right of use asset and R5.6 Million of lease liability, and recognised the difference of nil in retained earnings. In measuring the lease liability Necsa has applied its incremental borrowing rates at 1 April 2019. The rates applied range from 10.25% to 13%.

The lease terms ranges from 15 Months to 40 Months and there are no expected renewals

The lease liabilities as at 1 April 2019 can be reconciled to the operating lease commitments as of 31 March 2019, as follows:

Accounting StandardIAS 17 (Beginning of

the year) IFRS 16

¢ Operating expenses 3,514 -

¢ Depreciation 1,834 2,468

¢ Finance charges 367 396

Sub total 5,715 2,864

Difference Decrease in profit and loss - (2,851)

Liabilities Finance leases 3,225 5,225

The impact of Covid19 was taken into account when right of use assets were assessed for indications to impairment.

There was no impact on the valuation of right of use assets due to the Covid19 pandemic

Other disclosures

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Interest expense on lease liabilities 11,802 - - 510 - -




Lease liabilities

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

¢ within one year 19,740 3,645 2,267 3,571 2,093 2,054

¢ in second to fifth year inclusive 64,922 4,164 1,669 2,076 1,499 1,597

¢ later than five years 41,615 - - - - -

126,277 7,809 3,936 5,647 3,592 3,651

less: future finance charges (39,395) (9200 (987) (3960 (367 (3650

86,882 6,889 2,949 5,251 3,225 3,286

Present value of minimum lease payments due

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

¢ within one year 11,131 3,070 649 3,411 1,840 450

¢ in second to fifth year inclusive 75,751 3,819 2,300 1,841 1,385 2,239

¢ later than five years - - - - - -

86,882 6,889 2,949 5,252 3,225 2,689

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Non-current liabilities 75,751 3,819 2,300 1,841 1,385 2,239

Current liabilities 11,131 3,070 649 3,411 1,84 450

86,882 6,889 2,949 5,252 3,225 2,689

18. Retirement benefitsThe Company and its two major subsidiaries, NTP Radioisotopes and Pelchem, operates a provident fund scheme which is governed by the Pensions Fund Act No. 24 of 1956. The scheme is generally funded through payments to insurance companies or trustee administered funds, determined by periodic actuarial calculations.The Company has defined contribution plans established in 1994. These contribution plans are compulsory for every permanent employee employed in accordance with the conditions of employment, primarily by means of monthly contributions to the Necsa Retirement Fund. A defined contribution plan is a provident fund under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee services in the current and prior periods. The contributions are recognised as an expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

The Necsa Retirement Fund is revalued by an independent Actuary on an annual basis. The last actuarial valuation was performed in April 2020 for the year ending 31 March 2020. The conclusion made in the latest actuarial valuation was that the Fund is currently in a good financial position and should remain so, based on the contribution rates payable in terms of the rules of the Fund, until the next actuarial valuation.

Defined benefit plan

NECSA and its two major subsidiaries, NTP Radioisotopes and Pelchem's post employment health care liabilities consists of a commitment to pay a portion of the members’ post employment medical scheme contributions. This liability is also generated in respect of 7dependants who are offered continued membership of the medical scheme on the death of the primary member. The schemes have been valued per individual entity namely NECSA, NTP Radioisotopes and Pelchem, which reflects the group figures. These schemes have been disclosed separately below.

Members employed before 1 September 2004 are entitled to a 100% subsidy of medical scheme contributions in retirement, provided they have been members of the medical scheme for at least 10 years. Should a member be on the medical scheme for less than 10 years at retirement, they will be entitled to a 10% subsidy for each year they were active on the medical scheme during employment at NECSA.

Eligible members receive a Rand amount based on the Essential Core option’s contributions in 2005, increasing annually in line with consumer price inflation (‘CPI’). The Rand amounts for 2020 are R1,340 for a single member and R2,208 for a married member. The child dependant subsidy for 2020 is R560.

If a member qualifies to upgrade to a Comprehensive option as per the subsidy rules then NECSA will subsidise an additional Rand amount for the upgrade. The additional Rand amounts for members on the Classic Comprehensive option in 2020 are R749 for a single member and R1,359 for a married member. The additional Rand amounts for members on the Essential Comprehensive option in 2020 are R758 for a single member and R1,372 for a married member.

Members who do not qualify for an upgrade to a Comprehensive option or who do not belong to a Comprehensive option receive an additional Rand amount for the Medical Savings Account (MSA) contributions. The additional Rand amount for 2020 is R649 per member, irrespective of marital status.

Members who retired before 1 July 1990, referred to as the “Old 100% Group”, receive an additional Rand amount of R250 for 2020, irrespective of marital status.

NECSA and its two major subsidiaries, NTP Radioisotopes and Pelchem's subsidy of its current employees’ future post employment medical scheme contributions and current pensioners’ medical scheme contributions presents certain risks to the Company, the most significant of which are summarised below. The majority of these risks mainly apply to the Pelchem group only.




Subsidy inflation The post employment health care liability is linked to consumer price inflation. Higher consumer price inflation than expected will lead to higher liabilities.

Longevity The employer’s subsidy covers the post employment medical scheme contributions in retirement until the main pensioner’s death. On the main pensioner’s death the subsidy will continue at a reduced level based on the contributions for the remaining dependants.The longevity risk is the risk that pensioners will live longer than expected. Possible contributing factors are medical advances, better health care and greater emphasis on following healthier lifestyles. This would lead to benefits being payable for longer than expected.

Cash flow risk The employer pays the subsidy amounts in respect of the pensioners either directly to the pensioner or to the medical aid.There is a risk to the employer that, due to unforeseen circumstances, funds may not be available at the time that they are required.

Changes in bond yields and CPI A decrease in the bond yields used to determine the discount rate will increase the employer’s reported post employment health care liability. An increase in CPI will result in a higher subsidy inflation assumption, which consequently will lead to a higher reported post employment health care liability.High volatility in the above rates may lead to volatile balance sheet and income statement disclosures.

Future changes in legislation The Government’s stated intention to implement a National Health Insurance system in the near future may lead to a requirement to provide some level of compensation to eligible members or to fund additional amounts into the system. Furthermore, changes in tax legislation affecting the subsidy may also pose a risk to both the employer and the recipients of the subsidy.

Company developments:

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at 31 March 2020 by Mrs. Talita Jacobs, Fellow of the Institute of Actuaries of South Africa. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method. MCA also undertook the previous valuation for NECSA and its two major subsidiaries, NTP Radioisotopes and Pelchem as at 31 March 2020.

Momentum Consultants and Actuaries (‘MCA’) quantify the present value of post employment health care liabilities in terms of IAS19 for:

¢ Current continuation members

¢ Future continuation members emanating from the current active medical scheme members employed by NECSA

In particular,the funded status of the post employment plan as at the valuation date will be determined and compared to the projected liability calculated as at 31 March 2019. An expense for the 2019/20 financial year will be derived and a projected expense for the forthcoming year will be calculated for budget purposes. The report complies with the relevant professional guidance from the Actuarial Society of South Africa as described in Advisory Practice Note APN301.

The principal assumptions used for the purposes of the actuarial valuations for NECSA and its two major subsidiaries, NTP Radioisotopes and Pelchem were as follows.

Economic assumptions:

Valuation at

2020 2019 2018

Discount rate (D) 12.50% 10.00% 8.90%

Consumer Price Index (CPI)* 7.10% 6.50% 6.50%

Subsidy contribution increase rate (H) 7.10% 6.50% 6.50%

Net discount rate ((1+D)/(1+H) 1) 5.04% 3.29% 2.25%

Expected return in Plan Assets 12.50% 10.00% 8.90%

* This is the market expectation of long term CPI.

We have estimated the total duration of the liability to be 11.2 years, based on the previous valuation results.

The rates derived are based on prevailing yields as at 31 March 2020. We used a convention of rounding the derived rates to the nearest 0.1%, similar to the previous valuation.

While it is essential that the assumptions are individually justifiable, it is the relative levels of the discount rate and health care cost inflation to one another that are important in the determination of the liability, rather than the nominal values.

Discount rate

We have derived the discount rate from the BEASSA zero coupon yield curve. We used the spot rate on the nominal curve with duration equal to the rounded liability duration of 11.25 years to derive the discount rate of 12.50% per annum.

Consumer price index inflationThe risk free market expectation of long term Consumer Price Inflation (CPI) of 7.10% per annum was derived from the differential between the nominal yield curve and real yield curve at the same duration.

Subsidy contribution increase rateThe subsidy contribution increase rate was set at CPI.

Expected return on Plan AssetsThe expected return on Plan Assets was set at the discount rate.

Comparison to previous valuationThe financial assumptions have been set on a consistent basis with the previous year’s valuation.

Valuation at

Demographic assumptions: 2020 2019 2018

Expected retirement age (Males and females) 65.00 65.00 65.00

Family structure

Current valuation

Active members Pensioners

Age difference between husband and wife Actual ages used if available / Husband 4 years older than wife

Actual ages used

Proportion married Assumed 90% married at retirement Actual marital status used

In valuing the death in service healthcare liability, it is necessary to make a number of additional assumptions. We assumed that the percent-age married of active members increases from 0% at age 21 to 90% at age 45 and stays at 90% until retirement. We have assumed the following percentage married for valuing death in service healthcare liability

Example at stated age Proportion married

21 0%

25 15%

30 34%

35 53%

40 71%

45+ 90%

We have assumed that pensioner’s children and orphans will be subsidised until the age of 21. We have not made any allowance for active members to have child dependants in retirement.

Continuation percentages: We assumed that 0% of current in service members eligible for a retirement subsidy would discontinue medical scheme membership upon reaching retirement with NECSA on the grounds of affordability. Similarly, we assumed that 0% of dependants of current in service members eligible for a death in service subsidy would discontinue medical scheme membership on the grounds of affordability upon the death in service of the principal member.

The demographic assumptions are the same as those used in the previous valuation.

Decrement assumptions:

Mortality rates

Valuation at

2020 2019 2018

Active members SA 85 90 (Light) SA 85 90 (Light) SA 85 90 (Light)

Pensioners PA (90) rated down 2 years PA (90) rated down 2 years PA (90) rated down 2 years

In addition to the above pensioner mortality assumption, we have made allowance for 1.00% p.a. improvement in mortality. We have used a base year of 2006 (i.e. as at valuation date there has been 14 years of mortality improvements).




Withdrawal rates

Example at stated age Proportion married

20 15%

25 10%

30 7%

35 4%

40 2%

45+ 0%

The decrement assumptions are the same as those used in the previous valuation.

Reconciliation of assets and liabilities recognised on the Statement of financial position

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Present value of the defined benefit obligation wholly unfunded 295,409 370,430 413,738 273,823 325,403 363,329

Present value of the defined benefit obligation partially or wholly funded (4,903) (30,312) (34,577) (4,903) (10,562) (13,198)

Fair value of plan assets 290,506 340,118 379,161 268,920 314,841 350,131

Net liability/(asset) in statement of comprehensive income 290,506 340,118 379,161 268,920 314,841 350,131

Non-current assets 4,903 10,562 13,198 4,903 10,562 13,198

Non-current liabilities (270,281) (326,885) (358,870) (249,741) (301,608) (329,840)

Current liabilities (25,128) (23,795) (33,489) (24,082) (23,795) (33,489)

(290,506) (340,118) (379,161) (268,920) (314,841) (350,131)

Reconciliation of net liability recognised on the balance sheet

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Opening balance 340,118 379,161 395,761 314,841 350,131 369,123

Interest cost 33,773 35,672 36,433 31,293 31,254 33,823

Current service cost 3,117 4,420 2,112 2,676 3,397 3,405

Expected return on Plan Assets (2,969) (4,695) - (2,969) (2,825) (2,995)

Past service cost recognized - - - - - (28,539)

Net annual cost recognised in profit or loss 33,921 35,397 38,545 31,000 31,826 5,694

Actuarial (gains/loss recognised through OCI (48,088) (39,722) (561) (42,439) (33,627) 7,160

Expected employer benefit (25,919) (25,863) (54,584) (24,956) (24,315) (23,746)

Benefit payments fromPlan Asset 24,956 25,057 - 24,956 24,315 23,746

Employer prefunding / additional contibutions (34,482) (33,912) - (34,482) (33,489) (31,846)

Closing balance 290,506 340,118 379,161 268,920 314,841 350,131

Reconciliation of present value of obligations in excess of Plan Assets

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Opening balance 340,118 379,161 368,020 314,841 350,131 340,584

Interest cost 35,706 35,672 36,433 31,293 31,254 33,823

Current service costs 3,439 4,420 - 2,676 3,397 3,405

Expected return on Plan Assets (4,902) (4,695) - (2,969) (2,825) (2,995)

Actuarial (gain)/loss (48,088) (39,722) (7,721) (42,439) (33,627) 7,160

Expected employer benefit payments from Plan Assets 25,804 25,057 - 24,956 24,315 23,746

Expected employer benefit payments (26,767) (25,863) 4,112 (24,956) (24,315) (23,746)

Employer prefunding contributions (34,804) (33,912) (21,683) (34,482) (33,489) (31,846)

Current service cost 290,506 340,118 379,161 268,920 314,841 350,131

Reconciliation of unrecognised past service cost

Company

2020 2019 2018

R '000 R '000 R '000

Opening unrecognised past service cost - - 28,539

Past service cost recognized - - (28,539)

Total unrecognised past service cost at year end - - -

Sensitivity analysis:

Company:

The liability derived by this valuation is dependent on the assumptions set out above, which may or may not be borne out in practice. Variations from these assumptions will emerge in future years as experience gains or losses and will be recognised by NECSA in accordance with its accounting policies.

The valuation results are sensitive to changes in the underlying assumptions. The effects of varying these assumptions are illustrated below.

The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. This is a limitation of a sensitivity analysis.

Discount rate

The table below shows the impact of a 1% increase and decrease in the discount rate.

1% decrease R’000

Valuation basis R’000

1% increase R’000

Employer’s accrued liability 298,194 273,824 252,740

Employer’s service and interest cost 34,292 34,479 34,120

Therefore, a 1% increase in the discount rate assumption will result in a 7.7% decrease in the accrued liability. Similarly, a 1% decrease in the discount rate assumption will result in an 8.9% increase in the accrued liability.




Consumer price inflation

The valuation basis assumes that the employer’s medical subsidy contribution rate will increase in line with consumer price inflation annually. The effect of a 1% increase and decrease in the inflation rate is as follows:

1% decrease R’000


1% increase R’000



Therefore, a 1% increase in the inflation rate assumption will result in an 9.0% increase in the accrued liability. Similarly, a 1% decrease in the inflation rate assumption will result in a 7.9% decrease in the accrued liability.

Mortality

The table below shows the impact of changing the mortality basis from PA(90) 2 with a 1.0% improvement, to PA(90) 3 with a 1.0% improvement and PA(90) 1 with a 1.0% improvement.

PA(90) – 1* R’000


PA(90) – 3* R’000



*The mortality basis includes mortality improvements of 1.0% per annum, with a base year of 2006.

Therefore, a one year down rating in the post retirement mortality assumption will result in a 3.1% increase in accrued liability. Similarly, a one year upward rating in the post retirement mortality assumption will result in a 3.1% decrease in the accrued liability.

A one year down rating of the mortality assumption, assumes that a person currently aged x will experience mortality equivalent to that of a person aged x 1.

Expected retirement age

The table below shows the impact of a 1 year increase and decrease in the average retirement age assumption (which is the age that the liability is assumed to be fully accrued). The impact of reducing the average retirement age by two years is also shown in the table below. The average retirement age is assumed to be 65 years.

1 year younger

R’000

Valuation basis

R’000

1 year older

R’000



Therefore, an increase of 1 year in the average retirement age assumption will result in a 1.6% decrease in the accrued liability. Similarly, a decrease of 1 year in the average retirement age assumption will result in a 1.4% increase in the accrued liability.

Group:

Discount rate


1 year younger

R’000

Valuation basis

R’000

1 year older

R’000



Therefore, a 1% increase in the discount rate assumption will result in a 8.0% decrease in the accrued liability. Similarly, a 1% decrease in the discount rate assumption will result in a 9.3% increase in the accrued liability.



1% decrease R’000


1% increase R’000



Therefore, a 1% increase in the inflation rate assumption will result in a 9.4% increase in the accrued liability. Similarly, a 1% decrease in the inflation rate assumption will result in a 8.2% decrease in the accrued liability

Mortality


PA(90) – 1* R’000


PA(90) – 3* R’000R








1% decrease R’000


1% increase R’000



Therefore, an increase of 1 year in the average retirement age assumption will result in a 1.8% decrease in the accrued liability. Similarly, a decrease of 1 year in the average retirement age assumption will result in a 1.6% increase in the accrued liability. A reduction of 2 years in the average retirement age assumption will result in a 10.2% increase in the accrued liability.

NTP RadioisotopesDiscount rate


1% decrease R’000


1% increase R’000



Therefore, a 1% increase in the discount rate assumption will result in a 9.4% decrease in the accrued liability. Similarly, a 1% decrease in the discount rate assumption will result in a 11.2% increase in the accrued liability.






1% decrease R’000


1% increase R’000



Therefore, a 1% increase in the inflation rate assumption will result in a 11.4% increase in the accrued liability. Similarly, a 1% decrease in the inflation rate assumption will result in a 9.7% decrease in the accrued liability.

Mortality


PA(90) – 1* R’000


PA(90) – 3* R’000R








1% decrease R’000


1% increase R’000




PelchemDiscount rate

The table shows the impact of a 1% increase and decrease in discount rate.

PA(90) – 1* R’000


PA(90) – 3* R’000R



Therefore, a 1% increase in the discount rate assumption will result in a 10.4% decrease in the accrued liability. Similarly, a 1% decrease in the discount rate assumption will result in a 12.6% increase in the accured liability.



1% decrease R’000


1% increase R’000

Employer’s accrued liability 19 264 21 585 24 356

Employer’s service and interest cost 2 610 2 947 3 350

Therefore, a 1% increase in the inflation rate assumption will result in a 12.8% increase in the accrued liability. Similarly, a 1% decrease in the inflation rate assumption will result in a 10.8% decrease in the accrued liability.

Mortality


PA(90) – 1* R’000


PA(90) – 3* R’000R

Employer’s accrued liability 22 018 21 585 21 143

Employer’s service and interest cost 3 007 2 947 2 886

The mortality basis includes mortality improvements of 1.0% per annum, with a base year of 2006.

Therefore, a one year down rating in the post retirement mortality assumption will result in a 2.0% increase in accrued liability.Similarly, a one year upward rating in the post retirement mortality assumption will result in a 2.% decrease in the accrued liabilty.




1% decrease R’000


1% increase R’000




Fair valueCompany

NECSA purchased an insurance policy in the form of a company owned annuity policy, which qualifies as a Plan Asset, effective as at 1 March 2011. Following this, six further policies were purchased with effective dates of 1 July 2012, 1 May 2013, 1 May 2014, 1 May 2015 and 1 May 2016, 1 May 2017 and 1 May 2018.

As at 31 March 2020, the policy value of the Plan Asset provided by the insurer was R5,791,727.

The annuity portfolio is made up of a Growth Account and a Guaranteed Account. Increases are guaranteed at a minimum of CPI per annum. Funds may be transferred from the Growth Account to the Guaranteed Account annually to fund any increase in Employer Contributions in excess of the guaranteed annuities. Furthermore, the Growth Account is used for interim subsidies for new retirees until the annual annuity purchase.




31 March

2020

R’000

31 March

2019

R’000

31 March

2018

R’000

Guaranteed account 5,729 5,397 9,649

Growth account 64 114 388

Market value of Plan Asset 5,793 5,511 10,037

IAS 19 requires Plan Assets to be accounted for at fair value. To ensure comparability and consistency between the asset and liability valuation, the fair valueof the Guaranteed Account was calculated as the present value of the liabilities (only for pensioners already on the Momentum annuity policy) using current valuation assumptions, less the present value of future outstanding premiums (after deducting administration costs, solvency and profit margins in the future premiums). For this, we have assumed admin costs of 2.8% and another 8.35% margin to cover solvency and profit margins. The fair value of the Growth Account was set at the market value.

The fair value of the Plan Asset is therefore set as follows:

31 March

2020

R’000

31 March

2019

R’000

31 March

2018

R’000


Growth account 64 114 388

Fair value of Plan Asset 4,903 10,562 13,198

Group

Pelchem:We are not aware of any assets set aside for post employment medical aid funding that qualify as Plan Assets in terms of the requirements of IAS19. As such we have ascribed a nil value to the fair value of Plan Assets.

NTP Radioisotopes: NTP purchased an insurance policy in the form of a company owned annuity policy, which qualifies as a Plan Asset, effective as at 1 March 2011.

As at 31 March 2020, the policy value of the Plan Asset provided by the insurer was R19,112,112

The annuity portfolio is made up of a Growth Account and a Guaranteed Account. Increases are guaranteed at a minimum of CPI per annum. Funds are transferred from the Growth Account to the Guaranteed Account to fund the purchase of annuities for new retirees. The account may also be used to fund any increase in Employer Contributions in excess of the guaranteed annuities.

At the current and previous valuation date, the values of each of these accounts were as follows:

31 March

2020

R’000

31 March

2019

R’000

31 March

2018

R’000


Growth account 7,053 9,216 12,478

Market value of Plan Asset 19,112 21,028 20,486

IAS 19 requires Plan Assets to be accounted for at fair value. To ensure comparability and consistency between the asset and liability valuation, the fair value of the Guaranteed Account was calculated as the present value of the liabilities with increases at CPI using current valuation assumptions. The fair value of the Growth Account remains at market value (this was limited to the value of accrued liability as this also funds future service liabilities).

The fair value of the Plan Asset is therefore set as follows:

31 March

2020

R’000

31 March

2019

R’000

31 March

2018

R’000


Growth account - - -

Fair value of Plan Asset 15,828 19,750 19,584

19. Deferred incomeGovernment grants for future expenditure:

Group Company

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

2020

R '000

2019

Restated *

R '000

2018

Restated *

R '000

Current liabilities 19,298 41,629 137,097 - 23,442 137,097

763,763 580,838 579,947 744,465 562,651 579,947

At 1 April 2019 580,838 579,947 594,362 562,651 579,947 594,362

Received during the year 809,761 609,752 582,380 808,650 591,565 582,380

Released to the statement of comprehensive income (628,056) (601,189) (600,964) (628,056) (600,087) (596,991)

Other movements (Note 1) 1,220 (7,672) 4,169 1,220 (8,774) 196

At 31 March 2020 763,763 580,838 579,947 744,465 562,651 579,947

20. ProvisionsReconciliation of provisions Group 2020

Opening balanceR '000

AdditionsR '000

Utilised during the yearR '000

Reversed during the yearR '000

TotalR '000

Decommissioning and waste disposal

579,485 22,468 (15,889) (1,214) 584,850

Employee benefit accruals 66,674 49,104 (46,519) (446) 68,813

Provision for loss on contracts 420 208 - - 628

After reactor management cycle 5,120 - - - 5,120

651,699 71,780 (62,408) (1,660) 659,411

Reconciliation of provisions Group 2019


AdditionsR '000



TotalR '000


511,580 114,856 (1,789) (45,162) 579,485

Employee benefit accruals 91,904 58,170 (79,950) (3,450) 66,674

Provision for loss on contracts - 420 - - 420

Provision for gratuities - 9,018 (8,389) (629) -

After reactor management cycle 6,355 590 - (1,825) 5,120

609,839 183,054 (90,128) (51,066) 651,699

Reconciliation of provisions Group 2018


AdditionsR '000



TotalR '000


226,048 336,556 (60,368) 11,770 (2,426) 511,580

Legal proceedings 33,232 - (9,428) (23,804) - -

Employee benefit accruals 100,861 72,526 (83,558) 2,076 (1) 91,904

Provision for loss on contracts - 3,294 (3,294) - - -

Provision for gratuities 669 - (669) - - -

After reactor management cycle 1,676 2,854 - 1,825 - 6,355

362,486 415,230 (157,317) (8,133) (2,427) 609,839




Reconciliation of provisions Company 2020

Opening balance

R '000

Additions

R '000

Utilised during the year

R '000

Reversed during the year

R '000

Change in discount factor

R '000

Total

R '000

Decommissioning and waste disposal 464,373 34,358 - - - 498,731

Employee benefit accruals 57,196 32,531 (29,981) - - 59,746

After reactor management cycle 5,120 - - - - 5,120

526,689 66,889 (29,981) - - 563,597


Opening balance

R '000

Additions

R '000


R '000


R '000


R '000

Total

R '000

Decommissioning and waste disposal 424,005 52,473 (12,105) - - 464,373

Employee benefit accruals 51,023 37,745 (31,572) - - 57,196

After reactor management cycle 4,530 590 - - - 5,120

479,558 90,808 (43,677) - - 526,689


Opening balance

R '000

Additions

R '000


R '000


R '000

Total

R '000

Decommissioning and waste disposal 380,169 40,941 - 2,895 424,005

Employee benefit accruals 45,894 33,772 (28,012) (631) 51,023

After reactor management cycle 1,676 2,854 - - 4,530

427,739 77,567 (28,012) 2,264 479,558

Opening balance

R '000

Additions

R '000


R '000


R '000


R '000

Total

R '000

Non-current liabilities 576,332 571,949 516,110 503,851 469,493 428,535

Current liabilities 82,451 79,750 93,729 59,746 57,196 51,023

658,783 651,699 609,839 563,597 526,689 479,558

Provision for decommissioning and waste disposal:

Provision is made for the decommissioning of purely commercial plants and disposal of the resulting waste. The annual transfer is based on the latest available cost information. The Company was awarded a license from the National Nuclear Regulator to transport the waste to Vaalputs on 15 March 2011. The assessment methodology provides an estimate of the total cost associated with the decommissioning of commercial plants currently existing at Necsa to the point where they can be reused or released from regulatory control, and the total cost to manage (treat, condition, store and/or dispose) all the existing and future waste created by these activities. In order to estimate the cost and scheduling of the various decommissioning and waste management activities the following assumptions were made:

¢ i) In view of the fact that the Necsa site will remain a licensed site for the foreseeable future, the decommissioning of facilities to the point of release from regulatory control is not necessarily regarded as the required endpoint, as that may depend on the potential future re use of the nuclear facility.

¢ ii) Only liabilities associated with existing facilities identified during the assessment cycle, and future facilities identified as essential for the discharge of these liabilities are included in the assessment.

¢ iii) The following costs are included in the assessment:

The cost to decommission all facilities to the point where they can be released from regulatory control (The cost exclude future demolishing cost of buildings). Rehabilitation of the site was not included in the assessment, except in cases where this was considered to be the most viable option to achieve release from regulatory control.

A potential benefit (cost decrease) may be achieved as a result of technological progress in the fields of decommissioning and waste management. There are, however, many uncertainties that may impact the accuracy of cost estimates for discharging nuclear liabilities, mainly due to the long time periods over which the cost estimates must be done. Some of these uncertainties are listed below:

Non technical aspects, such as socio political factors and changes in laws or regulations in nuclear safety and waste management, are difficult to quantify in terms of impact on cost estimates.

Decommissioning cost for many projects occur some years in the future. The lifetime of some processes may also be extended resulting in the postponement of decommissioning activities and cost.

Future developments in the nuclear industry (up scaling or down scaling) may result in the reuse of contaminated or previously decommissioned facilities. Refer note 41 and 43 for further disclosure on the nature of Decommissioning and decontaminating liability.

Accrual for employee benefits:

The cost of leave days due to employees as well as thirteenth cheque's payable has been accrued for. The accrual will be realised during the following year.

General:

It is envisaged that, based on the current information available, any additional liability in excess of the amounts provided will not have a material adverse effect on the Group’s financial position, liquidity or cash flow.

The effect of time value of money has been omitted when calculating provisions where the effect was immaterial.

Investment contributions for future liabilities were previously included in provisions, these have been reclassified to Investment contributions for future liabilities, on the face of the statement of financial position and therefore prior year provision figures have changed. Please refer to note 43. This represents contributions invested or ring fenced for the future decommissioning of facilities.

The impact of Covid19 was taken into account when determining the fair value of provisions There was no impact on the fair value of provisions due to the Covid19 pandemic.

21. Trade and other payablesFinancial Instruments

Group Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Amounts received in advance 10,784 3,533 3,840 (6) 4 (4)

Other payables 1 - 35,733 31,730 - - -

Funds held on behalf of NRWDI 47 - - - - -

Accrued expenses 7,384 2,888 118,737 372 1,157 1,199

Payroll accruals 631 - 68 - - -

Other payables 98,761 12,087 40,525 95,728 15,564 43,254

VAT - 5,899 1,026 - 5,696 864

198,754 516,577 466,660 121,144 62,554 93,854

Fair value of trade and other payables

Trade and other payables 198,754 516,577 466,660 121,144 62,554 93,854

The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short term nature.

Trade and other payables are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method.

The average credit period on purchases is between 30 and 60 days from date of statement. The Company and Group settle payments to creditors on average 30 days from receipt of the statements. Interest is sometimes charged on trade payables based on the payment policy of the Group. The Company and Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

The impact of Covid19 was taken into account when determining the fair value of trade payables. There was no impact on the fair value of trade payabales due to the Covid19 pandemic.

Included in Other payables are sundry creditors and other miscellaneous items, of which outstanding cheque deposits form the biggest part of the total.

Please refer to note 38 as trade and other payables were restated due to a prior year error.




22. Financial assets by categoryThe accounting policies for financial instruments have been applied to the line items below:

Group 2020

Loans and receivables Fair value through profit or loss

Fair value through other comprehensive income Total

R '000 R '000 R '000 R '000

Other financial assets 339,012 216,672 881 556,565

Cash and cash equivalents 193,847 - - 193,847

Trade and other receivables 327,086 - - 327,086

859,945 216,672 881 1,077,498

Group 2019



R '000 R '000 R '000 R '000

Other financial assets 320,798 193,939 1,452 516,189


Trade and other receivables 406,173 - - 406,173

1,096,654 193,939 1,452 1,292,045

Group 2018



R '000 R '000 R '000 R '000

Trade and other receivabless 455,065 - - 455,065

Other financial assets 751,426 409,789 411,525 1,572,740


1,714,184 409,789 411,525 2,535,498

Company 2020


Fair value through profit or loss

Fair value through other

comprehensive income Total

R '000 R '000 R '000 R '000

Loans to (from) group companies 38,558 - - 38,558

Other financial assets 337,053 216,672 856 554,581


Trade and other receivables (excl. prepayments, deposits and VAT receivable) 38,858 - - 38,858

431,098 216,672 856 648,626

Company 2019


Fair value through profit or loss



R '000 R '000 R '000 R '000

Loans to (from) group companies 7,818 - - 7,818




436,945 193,939 1,416 632,300

Company 2018


Fair value through profit

or loss



R '000 R '000 R '000 R '000

Loans to (from) group companies (57,566) - - (57,566)




392,254 408,287 1,528 802,069

23. Financial liabilities by categoryThe accounting policies for financial instruments have been applied to the line items below:

Group 2020

Financial liabilities at amortised cost

Fair value through profit or loss Total

R '000 R '000 R '000

Other financial liabilities 5,010 11,543 16,553

Trade and other payables (excl. amounts received in advance, deferred grants and VAT payable)

198,754 - 198,754

Bank overdraft 21,965 - 21,965

Lease liabilities 86,882 - 86,882

312,611 11,543 324,154

Group 2019



R '000 R '000 R '000



516,577 - 516,577



572,648 1,963 574,611




Group 2018



R '000 R '000 R '000



466,660 - 466,660



507,599 7,861 515,460

Company 2020

Financial liabilities at amortised cost Total

R '000 R '000

Trade and other payables (excl. amounts received in advance, deferred grants and VAT payable) 121,150 121,150

Bank overdraft 188 188

121,338 121,338

Company 2019

Financial liabilities at amortised cost Total

R '000 R '000

Trade and other payables (excl. amounts received in advance, deferred grants and VAT payable) 62,550 62,550

Bank overdraft 20,000 20,000

83,668 83,668

24.Revaluation reserveRevaluation reserveThe revaluation reserve consists of fair value adjustments to the land and buildings of the Company and Group.

Group Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Fair value adjustment to land and buildings 606,454 606,166 532,866 593,963 593,963 527,791

25. Financial assets measured at fair value through other comprehensive income reserveThe fair value through other comprehensive income reserve comprises all fair value adjustments on financial instruments designated as financial assets measured at fair value through other comprehensive income . When an asset or liability is derecognised, the fair value adjustment relating to that asset or liability is transferred to profit or loss.

Group Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Financial assets measured at fair value through other comprehensive income 16,545 12,742 7,352 7,156 7,716 7,052

26. RevenueThe government grant relating to operating activities is primarily utilised to fund research and development expenses, non commercial overheads and supplementary activities as required by the Nuclear Energy Act, costs for discarding radioactive waste and for storage of irradiated nuclear fuel.

The South African Government has an obligation to discharge nuclear liabilities resulting from previous strategic nuclear programme's which includes decommissioning and decontamination of disused historic facilities. The Minister of Department of Energy is charged with this responsibility on behalf of government. A Nuclear Liabilities Management Plan (NLMP) was approved by cabinet in February 2007.

Necsa, as a statutory body created in terms of the Nuclear Energy Act (Act 46 of 1999) has been delegated with certain responsibilities in this regard. It annually receives funds to apply to the decommissioning and decontamination process in terms of the NLMP. Funds received by Necsa for this purpose and not utilised at year end are accounted for as deferred grants.

Please refer to note 38 as revenue was restated due to a prior year error.

Group Company2020 2019 2018 2020 2019 2018

R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Sale of goods 1,095,978 1,485,991 1,810,673 414,85 419,949 383,598

Rendering of services (27,632) 19,13 - - - -

Construction contracts - - 34,499 - - 34,499

Government grants 628,056 601,189 600,964 628,056 600,087 596,991

Other grants 94,445 26,218 55,219 94,445 38,92 69,748

1,790,847 2,132,528 2,501,355 1,137,351 1,058,956 1,084,836

IFRS15 Disclosure

The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines:

Figures in Rand thousand Group Company2020 2019 2018 2020 2019 2018

Revenue from the Sale of Goods 1,095,978 1,485,991 1,810,673 414,85 419,949 383,598

¢ Services to External Tenants 8,491 3,27 4,977 8,491 4,256 4,977

¢ Sales: Local 469,373 541,155 522,296 127,611 157,864 90,889

¢ Sales: Local - Ir-192 (4,718) 318,407 20,151 - (13,064) -

¢ Sales: Foreign 574,5 630,455 967,961 27,012 29,663 25,026

¢ Sales: Inter Group sales 48,332 (7,296) 295,288 251,736 241,23 262,706

Revenue from the Rendering of Services (27,632) 19,13 - - - -

Rendering of services (27,632) 19,13 - - - -

Revenue from Contracts with Customers - - 34,499 - - 34,499

Construction contracts - - 34,499 - - 34,499

Figures in Rand thousand Group Company2020 2019 2018 2020 2019 2018

Revenue from Grants 722,501 627,407 656,183 722,502 639,007 666,739

Government Grants 628,056 601,189 600,964 628,056 600,087 596,991

Other Grants 94,445 26,218 55,219 94,446 38,92 69,748

1,790,847 2,132,528 2,501,355 1,137,352 1,058,956 1,084,836

The amount included in revenue arising from government grants is as follows:

Operating activities 511,015 493,469 495,711 511,015 492,367 491,737

Decommissioning of strategic plants 77,848 77,165 73,473 77,848 77,165 73,474

LEU Fuel and conversion 28,625 19,967 21,344 28,625 19,967 21,344

Security 10,406 9,851 9,394 10,406 9,851 9,394

Deferred R&D Safari Grant Used 8 49 276 8 49 276

Deferred MTEF Grant utilised for Activities 154 688 766 154 688 766

628,056 601,189 600,964 628,056 600,087 596,991




The government grant relating to operating activities is primarily utilised to fund research and development expenses, non commercial overheads and supplementary activities as required by the Nuclear Energy Act, costs for discarding radioactive waste and for storage of irradiated nuclear fuel.

The South African Government has an obligation to discharge nuclear liabilities resulting from previous strategic nuclear programme's which includes decommissioning and decontamination of disused historic facilities. The Minister of Department of Energy is charged with this responsibility on behalf of government. A Nuclear Liabilities Management Plan (NLMP) was approved by cabinet in February 2007.

Necsa, as a statutory body created in terms of the Nuclear Energy Act (Act 46 of 1999) has been delegated with certain responsibilities in this regard. It annually receives funds to apply to the decommissioning and decontamination process in terms of the NLMP. Funds received by Necsa for this purpose and not utilised at year end are accounted for as deferred grants.

Please refer to note 38 as revenue was restated due to a prior year error.

27. Operating profit (loss)Operating loss for the year is stated after charging (crediting) the following, amongst others:

Group Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Income from subsidiaries (other than investment income)

Dividends (1) - - 20,000 106,982

Leases

Operating lease charges

Premises 3,481 3,324 468 179 164 150

Equipment 863 3,652 3,500 - 3,364 3,373

Lease rentals 92 45,944 45,303 - 45,900 45,037

Operating lease other 11 - - 11 - -

4,447 52,920 49,271 190 49,428 48,560

Contingent rentals on operating leases

Operating lease 1 (63) 5,494 - - -

Operating lease other 22 - - - -

(41) 5,494 - - -

Total operating lease charges 52,879 54,765 190 49,428 48,560

Less: Operating lease charges included in cost of merchandise sold and inventories

(3,142) (5,494) - - -

Total operating lease charges expensed 49,737 49,271 190 49,428 48,560

Auditor's remuneration external

Audit fees 9,485 17,278 8,029 - 12,723 5,824

Auditor's remuneration internal 1,736 663 343 - - -

Other

Loss on sale of property, plant and equipment (191) 1,766 19,477 (50) (38) 18,002

Profit on sale of other financial assets - 4,156 - - 4,156 -

Group Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Reversal of impairment on property, plant and equipment

- - (16) - - -

Impairment of subsidiary - 3,389 - - - -

Impairment on loans to group companies - - 1,087 - - -

Impairment of trade and other receivables 23 - - - - -

Profit/(Loss) on exchange differences (940) 190 - - - -

Depreciation on property, plant and equipment 89,139 85,437 97,530 61,238 58,697 70,191

Employee costs 1,041,332 1,085,250 985,583 774,204 777,489 731,506

Consulting and professional fees 46,425 64,689 55,113 13,902 38,339 30,806

Impairment of inventory 19,530 18,706 12,216 4,514 3,448 2,682

Repairs and maintenance 2,871 1,523 (296) - - -

Research and development costs 11,812 3,520 1,532 - - -

Amortisation on Intangible assets 5,825 5,702 5,316 - - -

Plant Impairment 2,150 - (82,818) 2,150 - (82,802)

Depreciation and amortisation

Depreciation of property, plant and equipment 79,517 85,461 105,054 59,350 58,697 70,191

Depreciation of right of use assets 11,272 - - 1,888 - -

Amortisation of intangible assets 5,825 5,702 5,316 - - -

Total depreciation and amortisation 96,614 91,139 100,754 61,238 58,697 64,446

Less: Depreciation included in cost of merchandise sold and inventories

(21,403) (17,418) (21,778) - - -

Total depreciation and amortisation expensed 75,211 73,721 78,976 61,238 58,697 64,446

Rental income

Finance lease contingent rental income - - - - - -

Operating lease rental income

Investment property 8,962 6,588 50,991 7,114 4,719 49,661

Contingent rental income - - - - - -

8,962 6,588 50,991 7,114 4,719 49,661




28. Investment incomeGroup Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Dividend income

Subsidiaries Local - (1) - - 20,000 106,982

Unlisted investments Local 798 814 - - - -


546 489 235 546 489 234

Total dividend income 1,344 1,302 235 546 20,489 107,216

Interest income

From investments in financial assets:

Bank 50,621 76,024 96,741 37,704 34,743 37,577

Interest charged on trade and other receivables 1,486 5,190 750 1,424 5,081 630

Fair value adjustments (2,493) (794) 22,717 - (3,186) 5,647

Interest received from SARS - (2,538) (13,388) - - -

Stage 1 decommissioning and decontamination 271,919 214,347 213,589 271,773 213,589 213,589

Impaired financial assets - - - - - -

Local listed investment income 828 6,813 (15,296) - - -

Total interest income 322,361 299,042 305,113 310,901 250,227 257,443

Total investment income 323,705 300,344 305,348 311,447 270,716 364,659

29. Finance costsGroup Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Group - - - 3,082 3,381 581

Non-current borrowings - - 2 - - -

Trade and other payables 81 41 18 54 - 13

Finance leases 9,265 152 91 - - -

Bank overdraft 5,715 7,523 3,769 104 1,300 524

Interest on lease liabilities 510 361 423 510 361 423

Interest expensed 278,650 (10,424) 252,998 278,650 (10,424) 252,998

Amortisation of held to maturity liabilities (1,214) 1,215 - - - -

Fair value adjustments (1) 487 138 4,818 - 163 1,959

Total finance costs 293,494 (994) 262,119 282,400 (5,219) 256,498

Necsa did not capitalise borrowing costs in the current or prior year presented.

(1) Fair value adjustments relate to imputed interest.

Please refer to note 38 as finance costs was restated due to a prior year error.

30. TaxationMajor components of the tax (income) expense

Group Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Current

Local income tax current period 1,050 (1,939) 34,043 - - -

Local income tax recognised in current tax for prior periods 502 91 - - - -

Current tax - - 46 - - -

Capital gains tax - 336 - - - -

Foreign income tax or witholding tax current period - 4,298 - - - -

1,552 2,786 34,089 - - -

Deferred

Originating and reversing temporary differences (13,661) (8,088) 3,653 - - -

Arising from previously unrecognised tax loss / tax credit / temporarary

differences

(12,359) (55,671) - - - -

Deferred tax prior year (361) - - - - -

Current tax prior year (336) - - - - -

(25,165) (60,973) 37,742 - - -

Current

Local income tax current period 1,050 (1,939) 23,461 - - -

Local income tax recognised in current tax for prior periods 502 92 (90) - - -

Deferred tax current year (26,718) (63,759) 10,694 - - -

Foreign income tax for current year - 4,298 - - - -

Originating from reversing temporary differences - - 3,677 - - -

Capital Gains Tax - 336 - - - -

(25,166) (60,972) 37,742 - - -

Reconciliation of the tax expense

Reconciliation between accounting profit and tax expense.

Accounting loss (338,727) (181,625) (97,966) (189,681) 99,429 (203,217)

Tax at the applicable tax rate of 28% (2019: 28%) (41,733) (78,695) 27,430 - - -

Tax effect of adjustments on taxable income

Permanent differences due to non taxable income and non deductible

expenses

(216) 3,702 (56,901) - - -

Capital gains tax - 376 - - - -

Prior year correction 11 (88) - - - -

Under/(Over) provision of tax in prior year (92) 74 - - - -

Differences due to group transactions 1,674 (615) - - - -

Income from equity accounted investments (176) (144) - - - -

Tax losses 15,366 14,418 - - - -

(25,166) (60,972) (29,471) - - -

The South African Revenue Services has approved an exemption in respect of The South African Nuclear Energy Corporation SOC Limited under section 10(1)(cA)(i) of the Income Tax Act subject to certain conditions. No provision is therefore made for tax for Necsa Company




31. Other comprehensive incomeComponents of other comprehensive income Group 2020

Gross

R '000

Tax

R '000

Net

R '000

Items that will not be reclassified to profit (loss)

Remeasurements on net defined benefit liability/asset

Remeasurements on net defined benefit liability/asset 45,921 - 45,921

Movements on revaluation

Gains (losses) on property revaluation 288 - 288

288 - 288

Total items that will not be reclassified to profit (loss) 46,209 - 46,209

Items that may be reclassified to profit (loss)

Exchange differences on translating foreign operations

Exchange differences arising during the year 417 - 417

417 - 417

Financial assets measured at fair value through other comprehensive income adjustments

Gains (losses) arising during the year 3,803 - 3,803


3,803 - 3,815

Total items that may be reclassified to profit (loss) 4,220 - 4,232

Total 50,429 - 50,441

Components of other comprehensive income Group 2019

Net

R '000

Tax

R '000

Net

R '000





Gains (losses) on property revaluation 73,300 - 73,300

73,300 - 73,300



Exchange differences on translating foreign operations

Exchange differences arising during the year (1,051) - (1,051)

(1,051) - -



5,389 - 5,389

Total items that may be reclassified to profit (loss) 4,338 - 4,338

Total 115,564 - 115,564

Components of other comprehensive income Group 2018

Net

R '000

Tax

R '000

Net

R '000



Remeasurements on net defined benefit liability/asset 561 - 561







Total 53,560 - 53,560

Components of other comprehensive income Company 2020

Net

R '000

Tax

R '000

Net

R '000






Gains (losses) arising during the year (560) - (560)

Total 45,361 - 45,361

Components of other comprehensive income Company 2019

Net

R '000

Tax

R '000

Net

R '000









Effect of tax rate changes 664 - 664

Total 104,762 - 104,762




Revaluation reserve

The properties revaluation reserve arises on the revaluation of land and buildings. When revalued land or buildings are sold, the portion of the properties revaluation reserve that relates to that asset is transferred directly to retained earnings. Items of other comprehensive income included in the properties revaluation reserve will not be reclassified subsequently to profit or loss. Necsa does not intend to sell the land and buildings before the decommissioning and decontamination takes place. An exercise will need to be conducted in order to ensure that the decommissioning and decontamination takes place. Necsa shareholders will not distribute the revaluation reserve to shareholders.

Foreign currency translation reserve

Exchange differences relating to the translation of the results and net assets of the Group's foreign operations from their functional currencies to the Group's presentation currency (i.e. Currency Units) are recognised directly in other comprehensive income and accumulated in the foreign currency translation reserve. Gains and losses on hedging instruments that are designated as hedging instruments for hedges of net investments in foreign operations are included in the foreign currency translation reserve. Exchange differences previously accumulated in the foreign currency translation reserve (in respect of translating both the net assets of foreign operations and hedges of foreign operations) are reclassified to profit or loss on the disposal of the foreign operation.


Listed redeemable notes held by the Group that are traded in an active market are classified as financial assets measured at fair value through other comprehensive income and are stated at fair value at the end of each reporting period. Changes in the carrying amount of financial assets measured at fair value through other comprehensive income relating to changes in foreign currency rates, interest income calculated using the effective interest method and dividends on available for sale equity investments are recognised in profit or loss. Other changes in the carrying amount of financial assets measured at fair value through other comprehensive income are recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments

revaluation reserve is reclassified to profit or loss.

Components of other comprehensive income - Company - 2018

Gross Tax Net



Remeasurements on net defined benefit liability/asset (16,647) - (16,647)






Effect of tax rate changes 1,245 - 1,245

Total 34,984 - 34,984

32. Cash (used in) generated from operationsGroup Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Loss before taxation (162,162) (176,122) (97,966) (189,681) 99,429 (203,217)

Adjustments for:

Depreciation 81,996 85,461 85,489 59,350 58,647 70,191

Depreciation on Right of use assets 11,272 - - 1,888 - -

Amortisation - 5,491 5,316 - - -

Profit/ (Loss) on sale of assets - - (19,477) 50 38 (18,002)

Profit/(Loss) on sale of other financial assets - - - - (4,156) -

Group Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Losses (gains) on foreign exchange 4,610 - (11,112) (8,665) (2,675) 6,174

Dividend income (1,344) (1,302) (235) (546) (20,489) (107,216)

Interest income (50,442) (88,077) (305,113) (39,128) (36,638) (257,443)

Finance costs 5,069 12,298 262,119 3,240 4,844 256,498

Fair value losses (gains) 6,909 - 38,699 6,909 (9,330) 27,928

Impairment loss or reversal on PPE (2,121) 10,760 - (2,150) - -

Other movements in PPE and investment property (6,708) - - - - -

Movements in retirement benefit assets and liabilities (3,691) (1,117) (16,600) - 2,636 726

Bad debts written off - - 1,735 - - -

Amortisation: Decommissioning and decontamination - 13,135 14,425 377 12,746 14,170

Movement in intangible assets 5,711 - - - - -

Movements in assets and liabilities from discontinuing operations

3,089 (3,153) - - - -

Movements in provisions 7,084 60,047 242,525 36,908 47,131 56,698

Income from discontinued operations not included under loss before taxation

5,482 (1,168) (41) - - -

Movement in non controlling interest (4,788) 3,517 - - - -

Income from associates (594) (514) - - - -

Adjustment to accumulated loss opening balance - - - - - (4,878)

Other non cash flow movements 7,253 (350,442) 662,029 6,876 (350,053) (73,177)

Imputed interest debtors - - (8,769) - - -

Imputed interest creditors - - 7,676 - - -

Fair value adjustments on other financial assets - - (1,303) - - (1,303)

Impairment loss - - 82,801 - - 82,801

Operating lease payments 3,798 49,737 49,271 190 49,428 48,560

Other non cash items 3 - - - - - 42,001

Investment contributions for future liabilities - - 5,460 - - 2,632

Finance lease interest 9,775 513 - 510 361 -

Changes in working capital:

Inventories (55,424) (30,691) (40,681) (23,798) 20,252 (38,877)

Trade and other receivables 79,087 48,892 (256,705) 50,620 25,387 24,549

Prepayments 5,839 51,623 (50,904) 5,839 49,973 (55,928)

Trade and other payables (317,823) 49,917 385,473 58,590 (31,300) (27,171)

Deferred income - - 5,316 - - -

Amounts received in advance (27,433) (110,424) 149,634 (71,573) (32,098) 117,292

Deposits received - - (1,125) - - -

(395,556) (371,619) 1,182,621 (104,194) (115,867) (36,992)




33. Tax (paid) refundedGroup Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Balance at beginning of the year 15,429 25,790 9,633 - - -

Current tax for the year recognised in profit or loss 25,167 55,160 (34,088) - - -

Movement in deferred tax (44,244) (55,799) (1,103) - - -

Balance at end of the year (12,917) (15,429) (25,790) - - -

(16,565) 9,722 (51,348) - - -

34. CommitmentsAuthorised capital expenditure

Group Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Already contracted for but not provided for

¢ Property, plant and equipment 22,644 24,356 35,290 13,388 14,617 13,096

¢ Investment property - 19 106 - - -

This committed expenditure relates to plant and equipment and will be financed through ordinary trading operations.Operating leases – as lessee (expense)

Group Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Minimum lease payments due

¢ within one year - 9,746 7,355 - 3,513 1,662

¢ in second to fifth year inclusive - 30,830 25,204 - 3,812 221

- 40,576 32,559 - 7,325 1,883

Lease payments represent rentals payable by the Group for certain of its motor vehicles and electronic office equipment. Leases are negotiated for an average term of 3.0 years (2019: 3.0 years).

From 1 January 2019, the group has recognised right if used assets for these leases, except for short term and low value leases, see note 17 for further information.

35. ContingenciesBy their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of such contingencies inherently involve the exercise of significant judgement and estimates of the outcome of future events.

Litigation and other judicial proceedings as a rule raise difficult and complex legal issues and are subject to uncertainties and complexities including, but not limited to, the facts and circumstances of each particular case, issues regarding the jurisdiction in which each suit is brought and differences in applicable law. Upon resolution of any pending legal matter, the Company may be forced to incur charges in excess of the presently established provisions and related insurance coverage. It is possible that the financial position, results of operations or cash flows of the Company could be materially affected by the unfavourable outcome of litigation.

No Matter name Matter description Amount Claimed Status

1. Sino Pro Claim for damages Service provider claiming R600 000.00

for unlawful termination.

Necsa has a counter claim exceeding the amount claimed

by the plaintiff. Potential liability is in the region of R600

000.00

2. Jan van Rensburg Claim for damages The amount claimed R15 000 000.00

for injuries incurred.

Former employee got injured at work. He instituted a

claim against Necsa for damages suffered. Necsa is

disputing the claim on the basis that the employee should

rather submit a claim against the workman compensation

fund. The potential liability to be incurred is R15 000 000

00

3. Lapa La Africa Claim for damages Amount claimed is R4 500 000.00,

being the amount for the remainder of

the contract.

Necsa offered R200 000.00 for services already rendered

but this was rejected. Approaching the court to review and

set contract aside.

No Matter name Matter description Amount Claimed Status

4. Khutso Semetjane

v Necsa Labour

Court Case No:

JR2535/19

Review CCMA

award whereby the

CCMA ruled that

the dismissal of

the employee was

procedurally and

substantively fair

The employee was dismissed on

29 January 2019. At the time of his

dismissal the employee was earning

R865 512.00 per annum. Depending

on the outcome of the review, Necsa

may be ordered to reinstate the

employee with retrospective payment.

On 11 November 2019, Necsa received a Notice of

Motion. Matter still pending.

5. Herald Malapane

v Necsa Labour

Court Case No:

JR2488/19

Review CCMA

award whereby the

CCMA ruled that

the dismissal of

the employee was

procedurally and

substantively fair

The employee was dismissed on

07 August 2018. At the time of his

dismissal the employee was earning

R113 448.00 per annum. Depending

on the outcome of the review, Necsa

may be ordered to reinstate the

employee with retrospective payment.

On 31 October 2019, Necsa received a Notice of Motion

form the Applicant. Matter still pending

Guarantees:Guarantees of R6 803 (2019: R4 540) were issued to financial institutions as collateral security for housing loans granted by financial institutions to employees.Guarantees of R1,868 (2018: R 1,518) were issued by Nedbank on behalf of NTP Logistics SOC Limited in favour of suppliers.The guarantee were issued in favour of specific suppliers as required through negotiations or industry requirements.Legal claims:Possible quantifiable legal obligations exist for the Group totaling an estimated R19,831 (2019: R27,437) in connection with disputes with delivery of goods, arrear rentals receivable, unfair labour practice, CCMA disputes and services rendered. These cases are currently being investigated by the Necsa Legal division.Suretyship:A limited deed of suretyship for an amount of up to R20, 000 (2019: R20, 000) has been given to Pelchem SOC Limited for a Nedbank facility. R14, 000 (2019: R14, 000) relates to an overnight facility and R6, 000 (2019: R6, 000) to an asset based finance.NTP Radioisotopes SOC LimitedIn May 2018, NTP Radioisotopes SOC Limited, a 100% owned subsidiary of Necsa, signed a R30 million guarantee in favour of the IDC for a loan granted to Pelchem SOC Limited, on condition that the current letter of support issued to Pelchem be withdrawn. Pelchem is a 100% owned subsidiary of Necsa SOC Limited. On 25 May 2018 the board of NTP Radioisotopes SOC Limited approved a guarantee of R 20 million in favour of the Nedbank for the overdraft granted to Pelchem SOC Limited. The letter of support and the approval for issuing of both guarantees expired.An extraordinary shareholders meeting of NTP Radioisotopes Europe SA was held 31 August 2017 wherein a decision regarding the dissolution of NTP Radioisotopes Europe SA was taken. The liquidator in his report of 20 March 2018 has indicated that NTP undertook to cover liabilities up to an amount of EUR 733,500 of which EUR 2017,107 has been paid to date. The liquidation process is ongoing.




36. Related parties

Relationships

Holding entity Department of Mineral Resources and Energy

Subsidiaries Refer to note 6

Associates Refer to note 7

National government All national government departments are regarded to be related parties in accordance with circular 4 of 2005: Guidance on the term “State controlled entities” in the context of IAS 24 Related Parties, issued by the South African Institute of Chartered Accountants. No transactions are implied simply by the nature of existence of the relationship between entities. All Directors have given general declarations of interest in terms of the Companies Act.

Directors and members of key management Details of Directors and key management remuneration paid are disclosed in note 37

The following is a summary of transactions with related parties during the year and balances due at year end

Group Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

National public entities

Services rendered 3,957 4,584 4,259 3,957 4,792 4,185

Services recieved 52,578 48,910 47,994 52,578 48,910 47,993

Trade amount due (to)/ from (8,109) 5,146 (8,127) (8,109) 5,355 (8,127)

National Government Departments

Services rendered 775,625 593,664 582,986 775,625 593,664 582,986

Gross trade amount due (to)/from 1,538 - 433 1,538 - 433

Expected credit loss (1,538) - - (1,538) - -

Nett trade amount due (to)/from - - 433 - - 433

Associates

Services rendered - 3,026 2,983 - - -

Services recieved 13,580 15,875 10,921 - - -

Loans to/from associates 38,232 - 3,310 - - -

Trade amount due (to)/ from 13,940 2,657 808 - - -

Subsidiaries

Loan accounts due (to) / from - - - 38,558 7,818 (57,566)

Gross Trade amounts due (to) / from - - - 227,182 219,565 178,458

Expected credit loss allowance - - - (211,709) - -

Goods and services rendered - - - 276,237 336,817 363,616

Goods and services received - - - 4,856 4,120 2,147

FED Waste received - - - (34,358) - -

Interest Paid - - - 3,082 3,381 -

Dividends Received - - - - 20,000 -

Compensation to Directors and other key management

Short term employee benefits 32,073 89,126 137,746 491 2,028 2,669

Trade amount due to/from subsidiaries are gross values reflected prior to provisions for bad debts. A provision for bad debts relating to Pelchem was raised R 211 million (2019: R164.7 million; 2018: R107.2 million).Trade debtors (Gammatec and NTP) have payment terms of 60 days. Pelchem trade debtors have payment terms of 120 days. The remaining accounts have payment terms of 30 days.

37. Directors' and prescribed officer's emolumentsGroup Executives 2020

Taxable allowanceRetirement fund

contributionsOther company

contribution Salary Total

R '000 R '000 R '000 R '000 R '000

MR HJ Viljoen 111 - 20 1,466 1,597

Mr MA Rasweswe 484 291 26 1,429 2,230

Mr TJ Tselane 702 309 29 1,508 2,548

Ms HNB Khumalo 194 449 29 1,875 2,547

Mr MA Mondi 339 297 25 1,466 2,127

Mr MU Ramatsui 644 283 28 1,465 2,420

2,474 1,629 157 9,209 13,469

2019




R '000 R '000 R '000 R '000 R '000

Mr MU Ramatsui 650 290 27 1,382 2,349

Mr HJ Viljoen 229 46 14 839 1,128

Mr MA Rasweswe 488 300 26 1,429 2,243

Mr TJ Tselane 968 317 32 1,508 2,825

Ms HNB Khumalo 208 475 28 1,849 2,560

Mr BM Mphahlele 654 220 23 1,047 1,944

Mr MA Mondi 322 317 25 1,471 2,135

3,519 1,965 175 9,525 15,184

Non executive 2020

Directors' feesCompany

Contributions Other fees Total

R '000 R '000 R '000 R '000

Ms A Chowan 35 - 1 36

Dr GJ Davids 23 - - 23

MS PN Kingston 47 1 - 48

Mr MJ Maboa 31 - - 31

Dr NT Magau 49 - - 49

Dr R Masango 22 - - 22

Ms SKN Masango 35 - - 35

Dr PE Molokwane 51 1 6 58

MR JP Ndhlovu 7 - - 7

Mr ENN Ngcobo - - 1 1

Ms MV Ngwenya 27 - - 27

Mr Dr Nicholls 58 1 4 63

Mr A Patel 5 - - 5

Mr LJ Shayi 39 - 7 46

Ms L Tungamirai 39 - 2 41

468 3 21 492




2019

Directors' feesCompany

Contributions Other fees Total

R '000 R '000 R '000 R '000

Ms P Bosman 290 3 - 293

Dr GJ Davids 215 3 - 218

Dr KR Kemm 240 2 2 244

Ms PN Kingston 30 - - 30

Dr NT Magau 215 3 - 218

Dr R Masango 22 - - 22

Mr AN Mhlongo 52 - - 52

Dr PE Molokwane 22 - - 22

Mrs RP Mosia 182 2 - 184

Mr JP Ndhlovu 22 - - 22

Mr ENN Ngcobo - - 3 3

Mr ZC Ngidi 233 3 - 236

Ms MV Ngwenya 22 - - 22

Mr A Patel 22 - 2 24

Mr MS Sekgota 182 2 - 184

Mr B Singh - - 2 2

Mr MPK Tshivhase 214 3 - 217

Prof Z Vilakazi 44 - - 44

2,007 21 9 2,037

Group Executives 2020




R '000 R '000 R '000 R '000 R '000

Mr AB Myoli 778 254 27 1,239 2,298

Mr GP Tshelane - 479 9 276 764

Mr DG Robertson - 160 11 834 1,005

778 893 47 2,349 4,067

2019

Taxable allowanceOther company


R '000 R '000 R '000 R '000

Mr GP Tshelane 1,704 49 2,492 4,245

Mr DG Robertson 36 12 1,035 1,083

1,740 61 3,527 5,328

Mr N.A Mhlongo (Co opted Chair of Audit Risk Committee of NTP Radioisotopes, a Nesca Subsidiary), not Necsa Board member.

Details of service contracts

No director has a notice period in excess of one year and no director’s contract makes provision for predetermined compensation on termination exceeding one year’s salary and benefits in kind. No directors are proposed for election or re election at the forthcoming annual general meeting. All the directors have a service contract.

38. Prior period errors38.1. Summary of differences in the state of financial position and statement of Comprehensive income due to restatement

The tables below illustrates the differences on the impacted accounts in the statement of financial position and statement of comprehensive income due to the restatements of the 2018 figures

Consolidated

Effect on the Consolidated Statement of Financial Position - Group - 2018 Previously stated 2018 Restatement 2018 Net movement

Fair Value of Plan Assets (8) - 13,198 13,198

Total Non-Current assets - 13,198 13,198

Inventories (1) 66,115 61,641 (4,474)

Trade and other receivables (5) 12 123,152 118,738 (4,414)

Total Current Assets 189,267 180,379 (8,888)

Vaalputs after care (2) 83,314 88,193 4,879

Retirement Benefit obligation (8) 316,642 329,84 13,198

Total Non-current liabilities 28 399,956 418,033 18,077

Trade and other payables (3) 21 93,473 93,854 381

Amounts received in advance (4) 49 258,788 260,238 1,45

Total current liabilities 352,261 354,092 1,831

Effect on Consolidated Statement of Comprehensive Income - Group - 2018 Previously stated 2018 Restatement 2018 Net movement

Revenue (6) 26 1,090,760 1,084,836 (5,924)

Other operating expenses (7) (1,005,282) (1,005,896) (614)

85,478 78,94 (6,538)

Effect on the Consolidated Cash Flows - Group - 2018 Previously stated 2018 Restatement 2018 Net movement

Cash paid to suppliers and employees 1,280,286 1,274,362 (5,923)

Cash receipts from customers (1,194,734) (1,188,810) 5,923

Changes in working capital : Inventory (43,35M) (38,877) (4,473)

Loss before tax (196,679) (208,096) 11,416

Movement in provisions 51,819 56,698 (4,879)

Amounts Received in advance 115,842 117,292 (1,45)

Trade and other payables (27,785) (21,171) (614)

(2) In the 2019 AFS, D&D was included in Other financial assets and this was corrected by disclosing the Asset value separately on the face of the Statement of Financial Position in the 2020 AFS.

(3) Audit fees was not provided for 2019 in the 2019 AFS this was corrected retrospectively by bringing in the provision for 2019, in 2019, in the 2020 AFS.

(4)Amounts were withdrawn from the Numeri Call Account, however the Payment Received in Advance was not reduced. Journals were processed to ensure that the Call Account matches the Payment Received in Advance

(5) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the D&D in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The liability value increased from R3.5billion to R4.5billion.

(6) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the D&D in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The asset value decreased from R541million to R277million.

(7) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability for Vaalputs in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. ?The liability was increased from R 89 Million to R 91 Million.

(8) Retirement benefit plan asset was reclassified to a non-current asset




Effect on the Consolidated Statement of Financial Position Group 2019Previously stated

2019 Restatement 2019 Net movement

Decommissioning and Decontamination of Stage 1 asset (8) 11 3,556,000 4,561,755 1,005,755

Decommissioning and Decontamination of Stage 2 asset (9) 12 151,163 277,203 126,040

Reserve for valuation of liabilities - (5,012) (5,012)

Financial assets measured at fair value through other comprehensive income (17) (13) 3

Fair Value of Plan Assets (15) - 10,562 10,562

Deferred tax - 18,260 18,260

Total non-current assets 3,707,146 4,862,755 1,155,608

Other financial assets (2) 28 673,798 312,074 (361,724)

Trade and other receivables 57,223 66,523 9,299

Total current assets 731,021 378,597 (352,425)


Decommissioning and Decontamination of Stage 1 liability (5) 49 3,556,000 4,561,755 1,005,755

Decommissioning and Decontamination of Stage 2 liability (6) 541,472 277,203 (264,269)

Retirement benefit obligation (15) 280,359 290,921 10,562

Total non-current liabilities 4,469,285 5,224,078 754,793

Trade and othe payables (3) (206,318) (215,605) (9,286)

Amounts Received in advance (4) 237,839 228,140 (9,699)

Total Current liabilities 31,520 12,534 (18,986)

Effect on Consolidated Statement of Comprehensive Income Group 2019Previously stated

2019 Restatement 2019 Net movement

Revenue (11) 26 1,196,343 1,225,300 28,957

Cost of sales 11 (204,593) (199,245) 5,348

Other income 6,095 4,729 (1,365)

Government Grant Income (Decommissioning and 41 (6) (5) 1

Decontamination Stage 1)

Acceptance of Decommission and Decontamination Stage 1 41 6,600 3,064 (3,536)

Investment income (13) 28 294,081 270,716 (23,365)

Finance cost (10) 29 (279,162) 5,219 284,381

Other operating expenses (14) (937,767) (950,158) (12,391)

81,591 359,620 278,030

Effect on Consolidated Statement of Cash flows - Group - 2019 Previously stated 2019 Restatement 2019 Net movement

Cash receipts from customers 226,738 2,544,634 (2,317,896)

Cash payments to suppliers (1,368,758) (2,919,770) 1,551,012

Interest income 77,771 88,077 (10,306)

Finance cost (9,262) (12,298) 3,036

Net movement in financial assets - 252,878 (252,878)

Sale of financial assets 265 - 265

Purchase of financial assets 766,355 - 766,355

Finance lease payments 536 175 361

(loss) profit before taxation (201,66) (176,122) (25,538)

Interest income (325,788) (88,077) (237,711)

Finance costs 286,768 12,298 274,47

Other non-cash flow movements (1,082,589) (350,442) (732,147)

Fair Value adjustments to other financial assets (599 ) - (599 )

Inventories (26,217) (30,691) 4,474


Trade and other payables 51,623 49,917 1,706

Amounts received in advance (99,277) (110,424) 11,147

- - -

(1) Goodwill for Gammatec group was increased with R14 044 million in the current year. The prior year adjustment was made prospectively in the current year.(2) In the Annual Financial Statements for the year ended 31 March 2019, Decommissioning and Decontamination was included in Other financial assets and this was corrected by disclosing the Asset value separately on the face of the Statement of Financial Position in the Annual Financial Statements for the year ended 31 March 2020. (3) Audit fees was not provided for 2019 in the 2019 Annuall Financial Statements for the year ended 31 March 2019 this was corrected retrospectively by bringing in the provision for 2019, in 2019, in the Annual Financial Statements ended 31 March 2020. (4) Amounts were withdrawn from the Numeri Call Account, however the Payment Received in Advance was not reduced. Journals were processed to ensure that the Call Account matches the Payment Received in Advance(5) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the D&D in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The liability value increased from R3.5billion to R4.5billion. (6) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the D&D in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The asset value decreased from R541million to R277million. (7) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability for Vaalputs in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. ?The liability was increased from R 89 Million to R 91 Million. (8) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the D&D in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The asset value increased from R3.5billion to R4.5billion. (9) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the D&D in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The asset value increased from R151million to R277million. (10) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the D&D in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The adjustment to the 2019 figures was to accommodate this recommendation. (11) Amounts were withdrawn from the Numeri Call Account, however the Payment Received in Advance was not reduced. Journals were processed to ensure that the Call Account matches the Payment Received in Advance(12) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the Decommissioning and Decontamination in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The adjustment to the 2019 figures was to accommodate this recommendation. (13) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the Decommissioning and Decontamination in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The adjustment to the 2019 figures was to accommodate this recommendation. (14) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the Decommissioning and Decontamination in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The adjustment to the 2019 figures was to accommodate this recommendation.(15) Retirement benefit plan asset was reclassified to a non-current asset




Company

Effect on the Statement of Financial Position - Company - 2018 Previously stated 2018 Restatement 2018 Net movement

Fair value of plan assets (8) - 13,198 13,198

Total non-current assets - 13,198 13,198

Inventories (1) 66,115 61,641 (4,474)

Trade and other receivables (5) 12 123,152 118,738 (4,414)

Total Current Assets 189,267 180,379 (8,888)


Retirement benefit obligation (8) 316,642 329,84 13,198

Total Non-current liabilities 28 399,956 418,033 18,077

Trade and other payables (3) 21 93,473 93,854 381

Amounts received in advance (4) 49 258,788 260,238 1,45

Total current liabilities 352,261 354,092 1,831

Effect on Statement of Comprehensive Income - Company - 2018 Previously stated 2018 Restatement 2018 Net movement

Revenue (6) 26 1,090,760 1,084,836 (5,924)

Other operating expenses (7) (1,005,282) (1,005,896) (614)

85,478 78,94 (6,538)

Effect on the Cash Flows - Company - 2018 Previously stated 2018 Restatement 2018 Net movement

Cash paid to suppliers and employees 1,280,286 1,274,362 (5,923)

Cash receipts from customers (1,194,734) (1,188,810) 5,923

Changes in working capital : Inventory (43,35) (38,877) (4,473)

Loss before tax (196,679) (208,096) 11,416

Movement in provisions 51,819 56,698 (4,879)

Amounts Received in advance 115,842 117,292 (1,45)

Trade and other payables (27,785) (21,171) (614)

(1)Inventory adjustment captured in the wrong period

(2)Opening balance of Vaalputs corrected

(3)Legal Fees provisions

(4)Adjustment of Numeri amount to match Call Account for 2017/18

(5) Reclassification

(6) Adjustments ot the Decommissioning grant income

(7) Provision for Expenses

(8) Reclassificaiton of Fair Value plan asset to non-current assets

Effect on the Statement of Financial Position - Company - 2019 Previously stated 2019 Restatement 2019 Net movement

Decommissioning and Decontamination of Stage 1 asset (8) 11 3,556,000 4,561,755 1,005,755

Decommissioning and Decontamination of Stage 2 asset (9) 12 151,163 277,203 126,04

Other financial assets (2) 230,925 197,223 33,702

Fair value of plan asset - 10,562 10,562

Total Non-Current assets 3,938,088 5,046,743 1,176,059

Other financial assets (2) 28 673,798 312,074 (361,724)

Total Current assets 673,798 312,074 (361,724)


Decommissioning and Decontamination of Stage 1 liability (5) 49 3,556,000 4,561,755 1,005,755

Decommissioning and Decontamination of Stage 2 liability (6) 541,472 277,203 (264,269)

Retirement benefit obligation 280,359 301,608 21,249

Total non-current liabilities 4,469,285 5,234,765 765,48

Trade and othe payables (3) 49,761 62,554 12,793

Amounts Received in advance (4) 237,839 228,14 (9,699)

Retirement benefit obligation 34,482 23,795 (10,687)

Total current liabilities 322,082 314,489 (7,593)

Effect on Statement of Comprehensive Income - Company - 2019 Previously stated 2019 Restatement 2019 Net movement

Revenue (11) 26 1,030,271 1,058,956 28,685

Cost of sales (1) 11 (258,389) (261,879) (3,49)

Government Grant Income (Decommissioning and 41 18,431 1,038,694 1,020,263

Decontamination Stage 1) (5 & 6)

Acceptance of Decommission and Decontamination Stage 1 (5) 41 (18,431) (1,302,963) (1,284,532)

Investment income (13) 28 294,081 270,716 (23,365)

Finance cost (10) 29 (279,162) 5,219 (284,381)

Other operating expenses (14) (937,767) (950,158) (12,391)

(150,966) (141,415) (559,211)




Effect on Statement of Cash flows - Company - 2019 Previously stated 2019 Restatement 2019 Net movement

Cash receipts from customers 1,085,618 1,019,754 65,864

Cash payments to suppliers (1,232,523) (1,135,621) (96,902

Interest income 47,445 36,638 10,807

Finance cost (1,661) (4,844) 3,183

Net movement in financial assets - 218,966 (224,083)

Loan to group companies (50,351) (48,836) (1,515)

Proceeds to related party loans 1,515 - 1,515

Sale of financial assets 265 - 265

Purchase of financial assets (78,724) - (78,724)

Movement in loans to employees (16,549) (16,548) 1

Finance lease payments 536 (1,776) 2,312

Operating lease payments - (49,428) (49,428)

(loss) profit before taxation 89,878 99,429 (9,551)

Interest income (273,592) (36,638) (236,954)

Finance costs 279,162 4,844 274,318

Other non-cash flow movements (365,984) (350,053) (15,931)

Fair Value adjustments to other financial assets (599) - (599)

Inventories 24,726 20,252 4,474


Trade and other payables (43,712) (31,3) (12,412)

Amounts received in advance (20,949) (32,098) 11,149

(1) Reversal of the 2018/2019 imputed interest on creditors and transferred to the 2020 financial year.

(2) In the Annual Financial Statements ended 31 March 2019, Decommissioning and Decontamination was included in Other financial assets and this was corrected by disclosing the Asset value separately on the face of the Statement of Financial Position in the Annual Financial Statements ended 31 March 2020.

(3) Audit fees was not provided for 2019 in the Annual Financial Statements ended 31 March 2019 this was corrected retrospectively by bringing in the provision for 2019, in 2019, in the Annual Financial Statements ended 31 March 2020.

(4) Amounts were withdrawn from the Numeri Call Account, however the Payment Received in Advance was not reduced. Journals were processed to ensure that the Call Account matches the Payment Received in Advance

(5) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the Decommissioning and Decontamination in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The liability value increased from R3.5billion to R4.5billion.

(6) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the Decommissioning and Decontamination in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The asset value decreased from R541million to R277million.

(7) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability for Vaalputs in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. ?The liability was increased from R 89 Million to R 91 Million.

(8) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the Decommissioning and Decontamination in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The asset value increased from R3.5billion to R4.5billion.

(9) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the Decommissioning and Decontamination in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The asset value increased from R151million to R277million.

(10) The Nominal Zero Coupon Swap rate was not used to calculate the adjusted liability and asset of the Decommissioning and Decontamination in the 2019 AFS. This was corrected by means of an adjustment to the 2019 figures in the 2020 AFS. The adjustment to the 2019 figures was to accommodate this recommendation.

(11) Amounts were withdrawn from the Numeri Call Account, however the Payment Received in Advance was not reduced. Journals were processed to ensure that the Call Account matches the Payment Received in Advance




(15) Retirement benefit plan asset was reclassified to a non-current asset

Disclosure to note 36, related party transactions, was amended to include balances owing to/from subsidiaries, both-long term and short-term, as well as including transactions that took place with the subsidiaries during the year. The disclosure was amended retrospectively.

39. Going concernThe Annual Financial Statements have been prepared on the basis of accounting policies applicable to a going concern. According to the Conceptual Framework of Financial Reporting, the financial statements are prepared using the underlying assumption 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.

40. Public Finance Management ActGroup Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Fruitless and wasteful expenditure:

Opening balance 468 271 506 364 130 459

Overpayments not recoverable 1 13 275 228 13 237 134

Recoveries made (224) (6) (5) (221) (3) (5)

Written off to the statement of

comprehensive income - (72) (458) - - (458)

Fruitless and wasteful expenditure unresolved 257 468 271 156 364 130

Irregular expenditure:

Opening 409,046 74,195 74,195 314,659 28,364 -

Non adherence to procurement process (2) 7,491 69,863 - 7,491 21,295 28,364

Ring fenced funds utilised (1) - 265,000 - - 265,000 -

Less: Amounts condoned - (12) - - - -

416,537 409,046 74,195 322,150 314,659 28,364

Note 1: The Auditor-General stated that a Board resolution or Minister approval was not obtained, when the NTP Fuel Elements disposal funds were withdrawn from investments and was instead used for financial operational expenses, as is required by the Nuclear Energy Act section 18(4), Nuclear Energy Act sction 26 and section 27 of the Companies Act. The Company had obtained the permission to utilise these funds for operational expenditure from both the Board and the Minister. However, the Minister approved the submission without appending his signature to the approval. This constitute a restatement from 2018/19 year of assessment.

Note 2:The irregular expenditure that was incurred in the current financial year and prior financial year for the group and company was a result of the contravention with supply chain management processes and legislation. Pelchem was erroneously included in the prior year figure as a consequence figures have been restated to exclude Pelchem figures.




41. Decommissioning and DecontaminationThe South African Nuclear Energy Corporation Ltd (Necsa) has been established for the Republic in terms of the Nuclear Energy Act 46 of 1999 to manage and operate the Republic’s nuclear and related objectives. Necsa derives its mandate (powers and functions) solely from the Act and the Minister of Energy via the Department of Minerals and Energy (DMRE), and is subjected to the Policies and Procedures designed by the DMRE.

The National Nuclear Regulator (NNR), an organ of the State, was established in terms of the National Nuclear Regulator Act 47 of 1999. Section 1 (xiv) of the NNR Act makes provision for the granting of nuclear authorisations, also known as Nuclear Installations Licenses (NILs). Section 20 (1) of the Act states that “No person may site, construct, operate, decontaminate or decommission a nuclear installation, except under the authority of a Nuclear Installation Licence”.

Section 21 (1) requires that any person wishing to site, construct, operate, decontaminate or decommission a nuclear installation may apply in the prescribed format to the Acting Chief Executive Officer of the NNR for a nuclear installation licence and must furnish such information as the NNR Board of Directors requires. Necsa is currently the license holder of forty one (41) Nuclear Installation Licenses (NILs) that was issued by the NNR. The NNR approved NILs issued to Necsa, govern all nuclear activities undertaken in the disused and operational nuclear facilities.

The Republic of South Africa announced its intention to abandon the Nuclear Weapons Programme in 1989 and acceded to the Non Proliferation of Nuclear Weapons on 10 July 1991. Stemming from this announcement Necsa started in 1995 with the shutdown of the various strategic nuclear facilities directly linked to the Nuclear Weapons Programme while the other strategically related operating nuclear facilities were excluded to continue the maintenance of the Necsa site license and to support some of the current operating facilities to date.

These shutdown facilities (some have been Decommissioned & Decontaminated (D&D) while others are scheduled to be Decommissioned & Decontaminated) are currently known as past disused strategic nuclear facilities. All the other ancillary nuclear facilities that were strategically used for the Nuclear Weapons Programme have been kept operational for the new Non Weapons (peaceful application of nuclear energy) mandate and are currently known as the Past Operational Strategic Nuclear facilities.

In terms of Section 55 (2) read with Section 1 (xiia) of the Nuclear Energy Act, 1999 (Act No. 46 of 1999), the D&D of Past Strategic Nuclear facilities, including the management of related radioactive material and waste, is an institutional nuclear obligation that vests in the Minister of Mineral Resources and Energy. Necsa is responsible for discharging of the liabilities and government is responsible for funding thereof.

In 2000 Necsa was requested by the then DMRE to quantify the total nuclear and related liability at the Pelindaba site arising from the nuclear weapons/strategic programme. Necsa then submitted to Cabinet, in April 2004, through the DMRE, a Nuclear Liabilities Management Plan (NLMP). The NLMP differentiated between three stages of D&D, namely:

¢ Stage 1 Decommissioning and Decontamination of all disused historical nuclear facilities;

¢ Stage 2 Decommissioning and Decontamination of all remaining (currently operating as at 2004) nuclear facilities

In November 2005 Cabinet approved funding of approximately R1,8 billion (2004/05 Rand values) as reflected below:

The D&D of disused historical nuclear facilities (Stage 1) of the Nuclear Liabilities Management Plan (R1,5 billion) and

Decommissioning and remediation of Thabana waste trenches & waste storage facilities, which were excluded from the NLMP, R270 million.

In order to provide a monitoring mechanism for effective oversight of the implementation of the approved 2005 Cabinet resolutions, DMRE issued a Policy Procedure on the Management of Nuclear Liabilities arising from Past Strategic Nuclear Facilities in May 2008. According to the policy procedure, Necsa must submit to DMRE a formal reassessment of the liabilities every five years or at a shorter frequency if so required by the Minister. The initial methodology for reassessing the liabilities and any changes to the methodology thereafter must be agreed with the DMRE prior to implementation.

The re assessment takes in account the following and is subjected to international experts benchmarking and validation:

¢ Review of variables and values used in the assessment model (e.g. interest rates, inflation rates, waste inventories, processing cost, etc.)

¢ Review assumptions made in the model.

¢ Appropriateness of model used.

¢ Adjustments due to liabilities discharged in previous years.

The assessed amount is adjusted for inflation annually until the next re assessment. Since 2007/08 NECSA has been receiving annually ring fenced grants from the State to discharge this liability on behalf of the DMRE.

Stage 1 Liabilities

In 2013/14 financial year, all the parties considered that the Decommissioning and Decontamination liability vested in the Minister and was recognised in the financial statements of the DMRE; and NECSA was acting as an agent of the Minister with regard to D&D. A Senior Counsel opinion, obtained in March 2016, confirmed that the liability to Decommission and Decontaminate past strategic nuclear facilities rests with NECSA with regard to both disused and currently in use facilities; and that the State is obligated to fund these liabilities.

The Minister has accepted this opinion and has transferred this liability as well as Cabinet’s approval to fund the Stage 1 liability to NECSA; to be recognised in NECSA”s financial statements as from the 2014/15 financial year.

An independent international expert, Crossland Consulting Ltd, has confirmed that the assessment methodology used to determine the liability was in line with international best practice and that the amount was sound and reasonable.

After adjusting for inflation and the costs already incurred this liability has been determined to be R4.3 billion as at 31 March 2020 and in terms of IAS 37 this liability is recognised as a provision (liability) and the State’s funding obligation, approved by Cabinet is recognised as an asset.

The initial 2018/19 liability reassessment that was conducted by Necsa was not accepted by the 2019 independent review team (Crosland Consulting) for the following reasons:

a. Concern that the methodology assumed end date of 2033 is not realistic and attainable

b. No justification/detailed long term plan to substantiate the remaining years of the 2033 end date

c. Indirect/overhead cost not sufficient (was less than 2013/14 +CPI). This approach was based on the 2013/14 methodology as agreed to base 2 018/19 assessment.

d. Queries in the facility inventory and D&D assessments

The above, required corrective measures to be implemented, another 2018/19 reassessment conducted and reviewed by the 2020 independent review team, The R5.5 Billion was confirmed/accepted as a reasonable estimates compared to the previously assessed R3.6 Billion that was rejected by the review team6. The reason for the increase was mainly due to the following:

¢ The high level long term plans for Waste Management and Decommissioning activities that were developed, after being identified as a shortcoming by the independent expert reviewer from the previous reassessment that was not accepted by the independent review team.

¢ These long term plans pushed the projects from 2033 to 2040 increasing the project end date by seven (7) years.

¢ The negative impact of the underfunding over the past years that delayed the execution of the projects also contributed to this estimate although additional funding was provided in 2018.

An independent international expert, Crossland Consulting Ltd, has confirmed that the 2020 assessment methodology used to determine the liability provides a reasonable central estimate of the ongoing liability, as such it provides a reasonable figure for the purpose of securing government funding

Disused facilities

¢ Cabinet approval was obtained for Stage 1 Decommissioning and decontamination facilities, therefore an asset has been recognised with the matching liability.

Group Company

2020R '000

2019*R '000

2018R '000

2020R '000

2019R '000

2018R '000

Non-current assets

Decommissioning & decontamination Stage 1 4,346,295 4,561,755 3,309,472 4,346,295 4,561,755 3,309,472


Decommissioning & decontamination Stage 1 (4,346,295) (4,561,755) (3,309,472) (4,346,295) (4,561,755) (3,309,472)

Government grant income (Decommissioning & decontamination Stage 1 & 2)

(522,636) 1,038,694 368,820 (522,636) 1,038,694 368,820

Acceptance of Decommissioning & decontamination Stage 1 & 2

522,636 (1,302,963) (368,820) 522,636 (1,302,963) (368,820)

- (264,269) - - (264,269) -

2020 Opening Additions Utilised ReversedChange in discount factor Total

Assets 4,561,755 - - - 215,460 4,346,295

Liabilities (4,561,755) - - - (215,460) (4,346,295)- - - - - -

2019 Opening Additions Utilised ReversedChange in

discount factor Total

Assets 3,309,472 - - - 1,252,283 4,561,755

Liabilities (3,309,472) - - - (1,252,283) (4,561,755)

- - - - - -



Assets 2,727,063 - - - 582,409 3,309,472

Liabilities (2,727,063) - - - (582,409) (3,309,472)

- - - - - -




Stage 2 Liabilities

The Stage 2 facilities are currently in operation and these facilities will only be Decommissioned and Decontaminated once operations cease.

Strategic Operational Nuclear Facilities currently in use

¢ The asset can only be recognised to the extent of the letter of grant (Medium Term Expenditure Framework) received from the shareholder (Department of energy).

Strategic Operational Nuclear Facilities currently in use:

During 2013/14, the D&D Stage 2 liability assessment by management was calculated at R478 million. The formal assessment of liability is done periodically. In between the formal assessment, applicable economic indicators such as inflation are utilized to calculate the liability.

The Stage 2 Liability has been assessed on the basis of the same methodology as for Stage 1. The re assessment is conducted every five (5) years and the assessed amount will be adjusted for inflation until the next re assessment. The last assessment was conducted in 2015/2016 financial year. An independent international expert, Crossland Consulting Ltd, has confirmed that the assessment methodology used to determine the liability was in line with international best practice and that the amount of R512 million was sound and reasonable as on 30 March 2017.

Up to 2017/18, the asset could only be recognised to the extent of the allocation letter of grant for the Medium Term Expenditure Framework (MTEF) period received from the shareholder Department of energy. However, in June 2018, the Minister of Finance through the Cabinet Memo 04 of 2018 accepted the funding obligation for Stage 2. To this extent, the Stage 2 liability matches the asset with effect from 2018/19 financial year. To address the incongruity between liabilities exceeding the asset with regard to D&D Stage 2, Necsa through the Department of Minerals and Energy (DRME) drafted a Cabinet Memorandum 04 of 2018 requesting the Cabinet to approve in writing the funding commitment of Stage 2 liability for Operational Nuclear Facilities at Necsa.

To this extent, the cabinet approved the funding of Stage 2 and requested the DMRE and National Treasury to finalize the matter in such a way that the AGSA will be satisfied that the funding obligation of Stage 2 lies with the state. Therefore, with effect from 2018/19 the Cabinet memo read with the Minister of Finance’s letter complies with IFRS9 i.e. definition of a financial asset.

Notwithstanding the letter from the Minister of Finance providing a letter stating that the government will fund the Decommissioning and Decontamination of Stage 2 liability for an amount of approximately R576 million over thirty (30) year period ( excluding inflationary increases), the AGSA has rejected this letter citing that minister change over time.

The National Treasury has allocated funding in terms of the Medium Term Expenditure Framework as follows (Inclusive of VAT) for Stage 2 as follows:

2015/16: R 16.1 million (received)


2017/18: R 18.1million (received)




2021/22: R 22.5 million (committed)

2022/23: R 23.3 million (committed)

Please refer to note 38 as Decommissioning and Decontamination on stage 1 and 2 for both the assets and liabilities were restated due to a prior year error.

Group Company

2020R '000

2019*R '000

2018R '000

2020R '000

2019R '000

2018R '000

Non-current assets

Decommissioning & decontamination Stage 1 241,800 277,203 198,064 241,800 277,203 198,064


Decommissioning & decontamination Stage 1 (241,800) (277,203) (541,754) (241,800) (277,203) (541,754)

- - (343,690) - - (343,690)


Assets 277,203 - - -- (35,403) 241,800

Liabilities (277,203) - - -- 35,403 (241,800)

- - -- -- - -

2019 ReversedChange in


Assets 198,064 - 79,139 277,203

Liabilities (198,064) - (79,139) (277,203)

- - - - - -



Assets 152,941 - 45,123 198,064

Liabilities (152,941) - (45,123) (198,064)

- - - - - -

42. Vaalputs After CareGroup Company

2020R '000

2019*R '000

2018R '000

2020R '000

2019R '000

2018R '000

Non-current assets 3,013 3,389 3,766 3,013 3,389 3,766

Non-current liabilities (101,076) (94,199) (88,193) (101,076) (94,199) (88,193)

(98,063) (90,810) (84,427) (98,063) (90,810) (84,427)


Vaalputs After Care non-current liabilities (94,199) - - -- (6,877) (101,076)

- - -- -- - -

2019 ReversedChange in


Vaalputs After Care non-current liabilities (88,193) - (6,006) (94,199)

- - - - - -



Assets (81,672) - (6,521) (88,193)




Vaalputs institutional control

In terms of Section 50 of the Nuclear Energy Act, the responsibility for the Republic’s institutional nuclear obligations vests in the Minister of Mineral Resources and Energy. The management of nuclear waste disposal on a national basis is one of these obligations as defined in Section 1(xii) of the Act.

The management of radioactive waste disposal on a national basis is assigned to the National Radioactive Waste Disposal Institute. The Institute is an independent entity established by statute under the provision of section 55(2) of the Nuclear Energy Act to fulfil the institutional obligation of the Minister of Mineral Resources and Energy. Although the institute was established through the statutes and that Board of Directors were appointed, it is still not fully operational.

In terms of section 30(8) of the Disposal Institute Act, DRME subsequently appointed Necsa on 7 March 2010 to maintain the Nuclear. Installation License for Vaalputs (NIL28) until such time as the NRWDI is in a position to take over these functions to the satisfaction of the NNR.

The liability associated with the “after care” was previously treated as a contingent liability due to the various uncertainties regarding the reasonableness and plausibility of the cost estimate as well as the uncertainty regarding the radiological end,state of these facilities.

It is envisaged that an assessment of the long term safety of the site will be conducted at the end of the operational period to determine whether the remaining facilities and the environmental pathways should continue to be monitored after site closure, taking into account the total nuclide inventory as well as updated safety assumptions and conditions at the time. This safety assessment will form the basis according to which post closure residual risks (engineering and environmental) will be managed in the institutional control period.

The “after care” liability assessment should follow the same methodology and adhere to the agreed governance processes that were applicable for the past strategic disused facilities to ensure the reasonableness and accuracy of the liability estimate. Such process will have to follow the required Governance processes and expert review and verification process to pass the test of being “measured with sufficient reliability”.

Vaalputs institutional control In terms of Section 50 of the Nuclear Energy Act, the responsibility for the Republic’s institutional nuclear obligations vests in the Minister of Mineral Resources and Energy. The management of nuclear waste disposal on a national basis is one of these obligations as defined in Section 1(xii) of the Act.

The management of radioactive waste disposal on a national basis is assigned to the National Radioactive Waste Disposal Institute (NRWDI). The Institute is an independent entity established by statute under the provision of section 55(2) of the Nuclear Energy Act to fulfil the institutional obligation of the Minister of Mineral Resources and Energy. Although the institute was established through the statutes and that Board of Directors were appointed, it is still not fully operational.

In terms of section 30(8) of the Disposal Institute Act, DRME subsequently appointed Necsa on 7 March 2010 to maintain the Nuclear. Installation License for Vaalputs (NIL28) until such time as the NRWDI is in a position to take over these functions to the satisfaction of the NNR.

The liability associated with the “after care” was previously treated as a contingent liability due to the various uncertainties regarding the reasonableness and plausibility of the cost estimate as well as the uncertainty regarding the radiological end, state of these facilities.

It is envisaged that an assessment of the long term safety of the site will be conducted at the end of the operational period to determine whether the remaining facilities and the environmental pathways should continue to be monitored after site closure, taking into account the total nuclide inventory as well as updated safety assumptions and conditions at the time. This safety assessment will form the basis according to which post closure residual risks (engineering and environmental) will be managed in the institutional control period.

Please refer to note 38 as Vaalputs Aftercare was restated due to a prior year error.

43. Investment contributions for future liabilitiesThis represents contributions invested / ring fenced for the future decommissioning of facilities.

The Stage 2 facilities include the SAFARI 1 Reactor which NTP Radioisotopes SOC Ltd (NTP), a subsidiary of Necsa, is contracted to manage and operate. In terms of the manage and operate agreement NTP and Necsa will share the Decommissioning and Decontamination costs of SAFARI-1; and NTP will be charged based on the commercial utilisation of the SAFARI-1 by NTP. NTP’s contribution is ring fenced and invested to be utilised when Decommissioning and Decontamination commences. Refer to note 41 for further information on Decommissioning and Decontamination costs.

2020 Opening Additions Utilised Reversed

Change in discount factor Total

NTP Decommissioning and Decontamination of buildings exclusively utilised

(22,229) (1,650) - -- - (23,879)

NTP Contribution to the Decommissioning and Decontamination of the Reactor / Safari-1

(17,785) (1,368) - - - (19,153)

(40,014) (3,018) -- -- - (43,032)

2019 Reversed

Change in discount

factor Total

NTP Decommissioning and Decontamination of buildings exclusively utilised

(21,254) (975) - -- - (23,879)

NTP Contribution to the Decommissioning and Decontamination of the Reactor / Safari-1

(16,439) (1,346) - - - (17,785)

(37,693) (2,321) -- -- - (40,014))

44. Fair value informationFair value hierarchy

This note provides information about how the Group determines fair values of various financial assets and financial liabilities.

The table below analyses assets and liabilities carried at fair value. The different levels are defined as follows:

Level 1: Quoted unadjusted prices in active markets for identical assets or liabilities that the Group can access at measurement date.

Level 2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

Levels of fair value measurements

Level 1

Recurring fair value measurements

Assets Note(s)


9

Listed shares 881 1,452 1,569 856 1,416 1,528

Unit trusts 216,672 193,939 408,287 216,672 193,939 408,287

Total financial assets measured at fair value through other comprehensive income

217,553 195,391 409,856 217,528 195,355 409,815

Liabilities Note(s)

Other

Bank overdraft 21,965 44,774 32,000 188 20,000 5,000

Total 195,588 364,249 370,747 217,340 175,355 404,815




(1) The following classes of financial assets at fair value through profit or loss are measured to fair value using quoted market prices:

¢ Listed shares

¢ Unit trusts

Financial assets at fair value through profit or loss are recognised at fair value, which is therefore equal to their carrying amounts.

(3) The loan is secured by a first mortgage bond registered over land and buildings Portion 91 of Farm 601, Klipplaatdrif, Vereeniging. Interest is charged at prime rate minus 1%.

Level 2

Recurring fair value measurements

Group Company

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

2020

R '000

2019Restated *

R '000

2018Restated *

R '000

Assets Note(s)

Liabilities Note(s)

Other Note(s)

Standard bank Australia Investment - - 233 - -

Other financial liabilities 5,010 5,884 7,109 - -

Leases 86,882 6,889 3,546 5,252 3,225 3,286

Total other 91,892 12,773 10,888 5,252 3,225 3,286

Total (91,892) 24,206 217,070 (5,252) (197,164) (3,286)

All are recurring fair value measurements except Pelchem.

Highest and best use

All of the assets' current use are the highest and best use.

45. Events after the reporting periodNon adjusting events after the reporting period:

The following events, which are indicative of conditions that arose after the reporting period, occurred after the reporting period:

¢ Reclassifications of trade debt due by Pelchem SOC Limited

Pelchem SOC Limited, a 100% subsidiary of Necsa, owed a trade debt of R211 million to Necsa at 31 March 2020. A credit loss allowance was recognised by Necsa for the full amount. On 31 July 2020, the Board resolved that the aforementioned trade debt be converted to a zero interest long-term loan with no specific repayment terms. This event will be recorded in the 2021 financial year of Necsa and will have the result that trade and other receivables and the credit loss allowance recognised in respect thereof will be reduced by R211 million and that the loans to group companies and the credit loss allowance recognised in respect thereof, will be increased by the same amount.

¢ COVID-19

The World Health Orginisation declared COVID-19 a pandemic before the Group's financial year ended. Nonethless, the Group's operations were not significantly affected and as such the impact of COVID-19 has not been treated as a subsequent event. While every effort has been made to quantify the future impact that the virus will have on the business, there is still a lot of uncertainty as to how the pandemic will impact on the Group's operations.

The Board resolved that NTP pays over to Necsa an amount of R56 million invested for Necsa’s Safari Fuel Elements disposal.

¢ Mr L Tyabashe was permanently appointed as Group Chief Executive Officer on 1 January 2021.

46. Financial instruments and risk managementCapital risk management

The Group's objective when managing capital (which includes share capital, borrowings, working capital and cash and cash equivalents) is to maintain a flexible capital structure that reduces the cost of capital to an acceptable level of risk and to safeguard the Group's ability to continue as a going concern while taking advantage of strategic opportunities in order to maximise stakeholder returns sustainability.

The Group manages capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain the capital structure, the Group may adjust the amount of dividends paid to the shareholder, return capital to the shareholder, repurchase shares currently issued, issue new shares, issue new debt, issue new debt to replace existing debt with different characteristics and/or sell assets to reduce debt.

Loans from group companies - 3,310 66,149 46,223 42,533 59,081

Other financial liabilities 16 16,553 6,371 13,851 83 1,118 5,949

Lease liabilities 17 86,882 6,889 2,949 5,252 3,225 2,689

Trade and other payables 21 198,754 516,577 466,664 89,243 62,554 93,854

Total borrowings 302,189 533,147 549,613 140,801 109,430 161,573

Net cash and cash equivalents 14 (171,881) (324,911) (475,693) (16,441) 3,283 (9,822)

Net borrowings 130,308 208,236 73,920 124,360 112,713 151,751

Equity 810,544 751,080 1,534,064 (11,842) 132,478 (71,713)

Gearing ratio 16% 43% 12% (1,050)% 138% (486)%

Financial risk management

Overview

The Group is exposed to the following risks from its use of financial instruments:

¢ Credit risk.

¢ Liquidity risk.

¢ Market risk (currency risk, interest rate risk and price risk).

The Board has overall responsibility for the establishment and oversight of the Group's risk management framework. The Board has established the risk committee, which is responsible for developing and monitoring the Group's risk management policies. The committee reports quarterly to the Board on its activities.

The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

The maximum exposure to credit risk is presented in the table below:




Grou

p 20

2020

1920

18

Gros

s ca

rryin

g am

ount

Cred

it lo

ss

allo

wanc

eAm

ortis

ed

cost

/ fa

ir va

lue

Gros

s ca

rryin

g am

ount

Cred

it lo

ss

allo

wanc

eAm

ortis

ed

cost

/ fa

ir va

lue

Gros

s ca

rryin

g am

ount

Cred

it lo

ss

allo

wanc

eAm

ortis

ed

cost

/ fa

ir va

lue

Loan

s to

gro

up c

ompa

nies

8

- -

- 3,

31-

3,31

66,1

49-

66,1

49

Trad

e an

d ot

her r

ecei

vabl

es

1241

8,23

9(9

1,15

4)32

7,08

537

7,72

(49,

815)

327,

905

451,

217

(80,

925)

370,

292

Cash

and

cas

h eq

uiva

lent

s 14

193,

846

- 19

3,84

636

9,68

3-

369,

683

507,

697

- 50

7,69

7

612,

085

(91,

154)

520,

931

750,

713

(49,

815)

700,

898

1,02

5,06

3 (8

0,92

5)94

4,13

8

Com

pany

2020

2019

2018

Gros

s ca

rryin

g am

ount

Cred

it lo

ss

allo

wanc

eAm

ortis

ed

cost

/ fa

ir va

lue

Gros

s ca

rryin

g am

ount

Cred

it lo

ss

allo

wanc

eAm

ortis

ed

cost

/ fa

ir va

lue

Gros

s ca

rryin

g am

ount

Cred

it lo

ss

allo

wanc

eAm

ortis

ed

cost

/ fa

ir va

lue

Loan

s to

gro

up c

ompa

nies

8

84,7

81-

84,7

8150

,351

- 50

,351

- -

-

Trad

e an

d ot

her r

ecei

vabl

es

1235

4,76

(312

,177

)42

,583

301,

581

(210

,176

)91

,405

177,

15(6

0,63

7)11

6,51

3

Cash

and

cas

h eq

uiva

lent

s 14

14,4

48-

14,4

4821

,834

- 21

,834

14,8

22-

14,8

22

453,

989

(312

,177

)14

1,81

237

3,76

6(2

10,1

76)

163,

5919

1,97

2(6

0,63

7)13

1,33

5 Liquidity risk

The maturity profile of contractual cash flows of non derivative financial liabilities, and financial assets held to mitigate the risk, are presented in the following table. The cash flows are un discounted contractual amounts.

Group - 2020

Less than 1 to 2

2 to 5 years Total Carrying amount1 year years


Financial liabilities at amortised cost 16 - 2,319 - 2,319 2,319

Finance lease liabilities 17 - - 75,751 75,751 75,751

Current liabilities

Trade and other payables 21 198,754 - - 198,754 191,323

Financial liabilities at fair value 16 14,234 - - 14,234 14,234

Finance lease liabilities 17 11,131 - - 11,131 11,131

Bank overdraft 14 21,965 - - 21,965 23,721

246,084 2,319 75,751 324,154 318,479

Group - 2019

Less than 1 to 5

Total Carrying amount1 year years


Financial liabilities at amortised cost 16 - 4,408 4,408 4,408

Finance lease liabilities 17 - 3,819 3,819 3,819

Current liabilities

Trade and other payables 17 507,146 - 507,146 507,145

Loans from group companies 8 3,407 - 3,407 3,407

Financial liabilities at fair value 16 1,963 - 1,963 1,963

Finance lease liabilities 17 3,07 - 3,07 3,07

Bank overdraft 14 44,775 - 44,775 44,775

560,361 8,227 568,588 568,587

Company - 2020

Less than 1 to 2

Total Carrying amount1 year years


Finance lease liabilities 17 - 1,841 1,841 1,841

Current liabilities

Trade and other payables 89,262 89,262 89,262

Loans from group companies 17 46,223 46,223 46,223

Financial liabilities at fair value 16 83 83 83

Finance lease liabilities 17 3,411 3,411 3,411

138,979 140,82 140,82




Company - 2019

Less than

Total Carrying amount1 year


Finance lease liabilities 17 - 1,385 1,385

Current liabilities

Trade and other payables 21 62,554 62,554 62,554

Loans from group companies 42,533 42,533 42,533

Financial liabilities at fair value 16 1,118 1,118 1,118

Finance lease liabilities 17 1,84 1,84 1,84

Bank overdraft 14 20 20 20

128,045 129,43 129,43

Foreign currency riskThe Group is exposed to foreign currency risk as a result of certain transactions and borrowings which are denominated in foreign currencies. Exchange rate exposures are managed within approved policy parameters utilising foreign forward exchange contracts where necessary. The foreign currencies in which the Group deals primarily are US Dollars, Euros and Yen.

Exposure in RandThe net carrying amounts, in Rand, of the various exposures, are denominated in the following currencies. The amounts have been presented in Rand by converting the foreign currency amounts at the closing rate at the reporting date.

US Dollar exposure:

Current assets:


Cash and cash equivalents 14 7,078 1,907 (88) 1,605 - (88)

Current liabilities:

Trade and other payables 21 (10,239) (893) (64) (7) (4) (64)

Net US Dollar exposure 126,456 67,781 12,684 43,728 8,697 12,684

Euro exposure:

Current assets:

Trade and other receivables 12 41,877 32,066 (313) (309) 945 (313)

Cash and cash equivalents 14 - - - 108 74 10


Trade and other payables 21 (2,825) (3,27) (10) (27) (472) (10)

Net Euro exposure 39,052 28,796 (323) (228) 547 (313)

Net exposure to foreign currency in Rand 165,508 96,577 12,361 43,5 9,244 12,371

Foreign currency riskThe Group is exposed to foreign currency risk as a result of certain transactions and borrowings which are denominated in foreign currencies. Exchange rate exposures are managed within approved policy parameters utilising foreign forward exchange contracts where necessary. The foreign currencies in which the Group deals primarily are US Dollars, Euros and Yen.

Exposure in RandTThe net carrying amounts, in Rand, of the various exposures, are denominated in the following currencies. The amounts have been presented in Rand by converting the foreign currency amounts at the closing rate at the reporting date.

US Dollar exposure:

Current assets:


Cash and cash equivalents 14 7,078 1,907 (88) 1,605 - (88)


Trade and other payables 21 (10,239) (893) (64) (7) (4) (64)

Net US Dollar exposure 126,456 67,781 12,684 43,728 8,697 12,684

Euro exposure:

Current assets:

Trade and other receivables 12 41,877 32,066 (313) (309) 945 (313)

Cash and cash equivalents 14 - - - 108 74 10


Trade and other payables 21 (2,825) (3,270) (10) (27) (472) (10)

Net Euro exposure 39,052 28,796 (323) (228) 547 (313)

Net exposure to foreign currency in Rand

165,508 96,577 12,361 43,500 9,244 12,371

Foreign currency sensitivity analysisThe following information presents the sensitivity of the Group to an increase or decrease in the respective currencies it is exposed to. The sensitivity rate is the rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated amounts and adjusts their translation at the reporting date. No changes were made to the methods and assumptions used in the preparation of the sensitivity analysis compared to the previous reporting period.

At 31 March 2020, if the Rand/Dollar exchange rate had been 10% (2019: 10% ; 2018: 10%) higher or lower during the period, with all other variables held constant, profit or loss for the year would have been R46 248 (2019: R22 128) higher.

Interest rate riskThe Group policy with regards to financial assets, is to invest cash at floating rates of interest and to maintain cash reserves in short term investments in order to maintain liquidity, while also achieving a satisfactory return for shareholders.

Interest rate profile

The interest rate profile of interest bearing financial instruments at the end of the reporting period was as follows:

Company 2020 2019 2018

Variable rate instruments:

Liabilities

Standard bank - Australia Investment @ Prime 16 - - 233

First National Bank - Mortgage @ Prime less 1 16 4,562 5,884 7,109

4,562 5,884 7,342




47. Other operating gains (losses)Group Company

2020R '000

2019*R '000

2018R '000

2020R '000

2019R '000

2018R '000

Gains (losses) on disposals, scrappings and settlements

Property, plant and equipment -191 1,766 748 -50 -38 -727

Other asset 2 2,321 -1,509 - - - -

2,13 257 748 -50 -38 -727

Reversal of impairment losses

Property, plant and equipment - - -16 - - -

Investments in subsidiaries, joint arrangements and associates

- -3,31 - - - -

- -3,31 -16 - - --

Foreign exchange gains (losses)

Net foreign exchange (losses) gains -5,55 -6,303 -11,112 8,665 2,675 -6,174

Total other operating gains (losses) -3,42 -9,356 -10,38 8,615 2,637 -6,901

48. Other operating incomeGroup Company

2020R '000

2019*R '000

2018R '000

2020R '000

2019R '000

2018R '000

Administration and management fees received (10) 231 91 - - -

Commissions received 56 47 2,432 56 47 46

Discount received 11 9 6 - - -

Government Grant Stage 1 (522,636) 1,038,694 368,820 (522,636) 1,038,694 368,820

Government Grant Stage 2 164 341,301 2,669 - 341,301 2,669

Other income 9,568 25,793 (1,065) 2,683 11,774 15,237

Other income 1 14,643 - - - - -

Other recoveries (24) (23) (15) (24) (23) (16)

Other rental income 8,962 6,588 50,991 7,114 4,719 49,661

Royalties received 10,548 85,955 73,547 - - -

(478,718) 1,498,595 497,476 (512,807) 1,396,512 436,417

49. Change in accounting policyAs indicated in note 17 above, the Group has adopted IFRS 16 Leases retrospectively from 1 April 2019, but has not restated comparatives for the 2019 reporting period, as permitted under the specific transition provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 April 2019. The new accounting policies are disclosed in note 1.8.

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 April 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 April 2019 was 10.25%.

For leases previously classified as finance leases the entity recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right of use asset and the lease liability at the date of initial application. The measurement principles of IFRS 16 are only applied after that date. The remeasurements to the lease liabilities were recognised as adjustments to the related right of use assets immediately after the date of initial application.

Practical expedients applied

In applying IFRS 16 for the first time, the group has used the following practical expedients permitted by the standard:

a) Applying a single discount rate to a portfolio of leases with reasonably similar characteristics.

b) Relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review – there were no onerous contracts as at 1 January 2019.

c) Accounting for operating leases with a remaining lease term of less than 12 months as at 1 April 2019 as short term leases.

d) Excluding initial direct costs for the measurement of the right of use asset at the date of initial application.

e) Using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Group relied on its assessment made applying IAS 17 and Interpretation 4 Determining whether an Arrangement contains a Lease.




11 Knowledge dissemination

SECTION12. AH Mdlophane, T Ebenhan, B Marjanovic-Painter, JR Zeevaart, T Govender and M Sathekge. (2019). Comparison of DOTA and NODAGA as chelates for 68Ga-labelled CDP1 as novel infection PET imaging agents. Journal of Radioanalytical and Nuclear Chemistry. 322: pp 629-638. https://doi.org/10.1007/s10967-019-06693-5

13. S Nair and M Engelbrecht. (2019). The Impact of Dose Rate on DNA Double-Strand Break Formation and Repair in Human Lymphocytes Exposed to Fast Neutron Irradiation. International Journal of Molecular Sciences. 20: article no 5350. https://doi.org/10.3390/ijms20215350

14. A Nengovhela, J Braga, C Denys, F de Beer, C Tenailleau, PJ Taylor. (2019). Associated tympanic bullar and cochlear hypertrophy define adaptations to true deserts in African gerbils and laminate-toothed rats (Muridae: Gerbillinae and Murinae). Journal of Anatomy. 234: pp 179-192. https://doi.org/10.1111/joa.12906

15. NM Nzama, E Stassen and P Crouse. (2019). Batch studies on adsorptive removal of Co ions by CoTreat® in acidic media. Journal of Radioanalytical and Nuclear Chemistry. 322: pp 605-611. https://doi.org/10.1007/s10967-019-06773-6

16. P Mohanty, AM Venter, CJ Sheppard and ARE Prinsloo. (2020). Structure and magnetic phase transitions in (Ni1xCox) Cr2O4 spinel nanoparticles. Journal of Magnetism and Magnetic Materials. 498: article no 166217. https://doi.org/10.1016/j.jmmm.2019.166217

17. M Potgieter, JC Barry, DJ van der Westhuizen and HM Krieg. (2019). Extraction of uranium from synthetic nuclear conversion plant waste. Solvent Extraction and Ion Exchange. 37: pp 360-375. http://doi.org/10.1080/07366299.2019.1656850

18. TE Ramadwa, MD Awouafac, MS Sonopo and JN Eloff. (2019). Antibacterial and Antimycobacterial Activity of Crude Extracts, Fractions, and Isolated Compounds From Leaves of Sneezewood, Ptaeroxylon obliquum (Rutaceae). Natural Product Communications. 14: pp 1-7. https://doi.org/10.1177/1934578X19872927

19. S Holt, LK Horwitz, D Codron and J Hoffman. (2019). Structural density of the leopard tortoise (Stigmochelys pardalis) shell and its implications for taphonomic research. Journal of Archaeological Science. Reports. 26: article no 101819. https://doi.org/10.1016/j.jasrep.2019.04.008

20. SH Connell, SK Mtingwa, T Dobbins, N Khumbah, B Masara, EP Mitchell, L Norris, P Ngabonziza, T Ntsoane, H Winick. (2019). Towards an African Light Source. Biophysical Reviews. 11: pp 499–507. https://doi.org/10.1007/s12551-019-00578-3

21. M Tsemane, R Matjie, J Bunt, H Neomagus, C Strydom, F Waanders, N Wagner and J Hoffman. (2020). Significance of coal properties on the caking degree of coarse coal particles mined at Limpopo Province, Republic of South Africa. International Journal of Coal Preparation and Utilization. 40: pp 297-319. https://doi.org/10.1080/19392699.2020.1722657

22. R van der Merwe, LA Cornish and JW van der Merwe. (2020) Effect of nitric acid contamination on mild steel corrosion in hydrofluoric acid at 25 °C. Corrosion Engineering Science and Technology. 55: pp 349-359. https://dx.doi.org/10.1080/1478422X.2020.1734738

23. N Dlamini, HE Mukaya, RA van Zyl, CT Chen, JR Zeevaart and XY Mbianda. (2019). Synthesis, characterization, kinetic drug release and anticancer activity of bisphosphonates multi-walled carbon nanotube conjugates. Materials Science & Engineering: C. 104: article no 109967. https://doi.org/10.1016/j.msec.2019.109967

Refereed journal and other research publications ISI publications: 1. AM Venter, V Luzin, D Marais, N Sacks, EN Ogunmuyiwa and PH Shipway. (2019). Interdependence of slurry erosion wear performance and residual stress in WC-12wt%Co and WC-10wt%VC-12wt%Co HVOF coatings. International Journal of Refractory Metals and Hard Materials. 87: article no 105101. https://doi.org/10.1016/j.ijrmhm.2019.105101

2. A Beaudet, RJ Clarke, JL Heaton, TR Pickering, KJ Carlson, RH Crompton, T Jashashvili, L Bruxelles, K Jakata, L Bam, L Van Hoorebeke, K Kuman and D Stratford. (2020). The atlas of StW 573 and the late emergence of human-like head mobility and brain metabolism. Scientific Reports (Nature). 10: article no 4285. https://doi.org/10.1038/s41598-020-60837-2

3. A Beaudet, G Fleury, E Gilissen, J Dumoncel, JF Thackeray, L Bruxelles, B Duployer, C Tenailleau, L Bam, J Hoffman, F de Beer, and J Braga. (2019). 3D Models Related to the Publication: Upper Third Molar Internal Structural Organization and Semicircular Canal Morphology in Plio-Pleistocene South African Cercopithecoids. MorphoMuseuM. 5: article no e86. doi: 10.18563/journal.m3.86

4. PM Bokov and PA Selyshchev. (2019). Simulation of self-sustained relaxation of a two-dimensional metastable medium by means of a travelling wave. Procedia Manufacturing. 37: pp 30-37. https://doi.org/10.1016/j.promfg.2019.12.008

5. C Minnaar, F de Beer and D Bessarabov. (2019). Current Density Distribution of Electrolyzer Flow Fields: In Situ Current Mapping and Neutron Radiography. Energy Fuels. 34: pp 1014-1023. https://doi.org/10.1021/acs.energyfuels.9b03814

6. M Cazenave, A Oettlé, JF Thackeray, M Nakatsukasa,, FC De Beer, J Hoffman, and R Macchiarelli. (2019). The SKX 1084 hominin patella from Swartkrans Member 2, South Africa: an integrated analysis of its outer morphology and inner structure. Comptes Rendus Palevol. 18: pp 223–235. https://doi.org/10.1016/j.crpv.2018.06.002

7. D Marais, ZN Sentsho and AM Venter. (2019) Numerical neutron attenuation correction for partially illuminated powder samples. Materials Characterization. 153: pp 234–239. https://doi.org/10.1016/j.matchar.2019.05.011

8. J Duvenhage, T Ebenhan, JR Zeevaart, S Garny, R Price, IH Gonzalez, RL Montana, and L Birkholtz. (2019). Molecular Imaging of a Zirconium-89 Labeled Antibody Targeting Plasmodiumfalciparum–Infected Human Erythrocytes. Molecular Imaging and Biology. 22: pp 115-123. https://doi.org/10.1007/s11307-019-01360-3

9. P Kunyane, MS Sonopo and MA Selepe. (2019). Synthesis of Isoflavones by Tandem Demethylation and Ring-Opening/Cyclization of Methoxybenzoylbenzofurans. Journal of Natural Products. 82: pp 3074-3082. https://doi.org/10.1021/acs.jnatprod.9b00681

10. J Le Roux, S Rubow, T Ebenhan, and CCP Wagener. (2019). An automated synthesis method for 68Ga-labelled ubiquicidin 29-41. Journal of Radioanalytical and Nuclear Chemistry. 323: pp 105-116. https://doi.org/10.1007/s10967-019-06910-1

11. M Cazenave, J Braga, A Oettlé, T Pickering, J Heaton, M Nakatsukasa, F Thackeray, F de Beer, J Hoffman, J Dumoncel, R Macchiarelli. (2019). Cortical bone distribution in the femoral neck of Paranthropus Robustus. Journal of Human Evolution. 135: article no 10266. https://doi.org/10.1016/j.jhevol.2019.102666


Dr PAB Carstens as client. UBD-ENR-REP-20002

FC de Beer. Non-destructive Characterization of aTitanium Phantom for the Medical Industry (Feb 2020) Part-1, RS-RAD-REP-20001

JS Gama and JC Barry, (2020). (Confidential client report). Nuclear material. AC-AMINM-RPI-20001

C Jacobs. OSCAR validation and verification for SAFARI-1 model version 2. RRT SAFA REP 20005. January 2020.

R Koen, SJ Lotter, M Nete and TM Masikhwa, (2019). (Confidential client report). DSI. AC-ESRDI01-REP-18003

JP le Roux, (2019). (Confidential client report). DSI FEI program. AC-FEIF227-REP-19001

MDS Lekgoathi, (2020). (Confidential client report). DSI. AC-LIPF6TECH-REP-20001

MDS Lekgoathi, (2020). (Confidential client report). DSI. AC-LIPF6TECH-REP-20002

SJ Lotter, (2020). (Confidential client report). Department of Science and Innovation through the AMI. AC-AMI-REP-20004

S Ngobeni, (2019). (Confidential client report). NTP. AC-NTPXeP6-REP-18001

HF Niemand, (2019). (Confidential client report). DSI. AC-FEIF227-REP-19002

RH Prinsloo. OSCAR calculationz. (Confidential client report). SAFARI-1. RRT SAFA REP-19031. July 2019.

E Stassen, A Goede, JJ Badenhorst, PAB Carstens, MTS Britton, R van der Merwe and TP Ntsoane, (2019). (Confidential client report). Argonne National Laboratory. NWR-UMo01-REP-19002.

R van der Merwe, (2019). (Confidential client report). DST-AMI 's Nuclear Materials Development Network (NMDN). AC-AMI-REP-19005 .

FA van Heerden and C Jacobs, Criticality assessment of the fresh fuel storage vault. RRT SAFA-REP-19049.

TJ van Rooyen, SA Groenewald, Koeberg Original Steam Generators (OSGs): shielding studies for on-site transient storage. RRT SHLD-REP 19004. Rev 03. August 2019.

TJ van Rooyen. (Confidential client report). NTP.. RRT NTP REP-20003. February 2020.

TJ van Rooyen. Koeberg Original Steam Generators (OSGs): shielding studies for on-site transient storage. RRT SHLD-REP 19004. June 2019.

TJ van Rooyen. Results of a feasibility assessment for reactor-produced Ac-225. RRT NTP MEM-19002. November 2019.

TJ van Rooyen. Source term and dose rate calculations for steam generator disposal at Koeberg. RRT SHLD-REP 19003. May 2019.

TJ van Rooyen, Dependence of the peak dose-rate outside a mausoleum containing 3 Koeberg OSGs, on the density of the concrete. RRT-SHLD-REP-19007. September 2019.

CCP Wagener, MS Sonopo, AH Mdlophane, TS Sello and CL Sepini, (2019). (Confidential client report). NTP. RC-NTPGEN-REP-190.

OM Zamonsky. MCNP SAFARI-1 Calculation Model Description. Rev. 03. RRT SAFA REP 13004. November 2019.

24. N Gracheva, C Mueller, Z Talip, S Heinitz, U Koester, JR Zeevaart, A Voegele, R Schibli and N van der Meulen. (2019). Production and characterization of no carrier-added 161Tb as an alternative to the clinically-applied 177Lu for radionuclide therapy. European Journal of Nuclear Medicine and Molecular Imaging Radiopharmacy and Chemistry. 4: article no 12 (2019). https://doi.org/10.1186/s41181-019-0063-6

25. V Mandiwana, M Sathekge, LK Kalombo,Y Lemmer, P Labuschagne, B Semete-Makokotlela, T Ebenhan and JR Zeevaart. (2019). Preclinical assessment of 68Ga-PSMA-617 entrapped in a microemulsion delivery system for applications in prostate cancer PET/CT imaging. Journal of Labelled Compounds and Radiopharmaceuticals. 62: pp 332-345. https://doi.org/10.1002/jlcr.3747

26. C Mueller, N Van der Meulen, C Umbricht, N Cracheva, VJ Tschan, G Pellegrini, P Bernhardt, JR Zeevaart, UK Köster and R Schibli. (2019). Terbium-161 for PSMA-targeted radionuclide therapy of prostate cancer. European Journal of Nuclear Medicine and Molecular Imaging: 46: pp 1919-1930. https://doi.org/10.1007/s00259-019-04345-0

Other (non-ISI) peer-reviewed publications:27. H Bissett, MM Makhofane, R van der Merwe and SJ Lotter. (2019). Plasma dissociation of monazite. IOP Conference Series: Materials Science and Engineering. 655: article no 012040. https://doi.org/10.1088/1757-899X/655/1/012040

28. PM Bokov, D Botes and DI Tomaševic. Estimation of corner flux in rectangular geometry. (2019). International Conference on Mathematics and Computational Methods Applied to Nuclear Science and Engineering, Portland, Oregon, USA, 25–29 August. pp 2002–2012. https://www.gbv.de/dms/tib-ub-hannover/1692685805.pdf

29. F de Beer, T Modise, R Nshimirimana, D Marais, J Van Rooyen, G Schalkwyk, J Hanekom, and G Nothnagel. (2020). Overview of the Conceptual Design of the Upgraded Neutron Radiography Facility (INDLOVU) at the SAFARI-1 Research Reactor in South Africa. Materials Research Proceedings. 15: pp 11-16. https://doi.org/10.21741/9781644900574-2

30. F Bouchet, A Ribéron, JL Heaton, J Hoffman, L Bam, K Jakata, M Tawane, C Tenailleau, B Zipfel, A Beaudet. (2019). The inner craniodental anatomy of the Papio specimen U.W. 88-886 from the Early Pleistocene site of Malapa, Gauteng, South Africa. Palaeontologia Africana. 53: pp 192–206. https://hdl.handle.net/10539/26721

31. R Koen, IJ van der Walt, AA Jansen and P Crouse. (2019). Controlled etching of the SiC layer in TRISO coated particles using CF4 in a non-thermal plasma. South African Journal of Science and Technology. 39: article no 1 (2020). http://www. satnt.ac.za/index.php/satnt/ article/view/748

32. J Kleynhans, D Elgar, T Ebenhan, JR Zeevaart, A Kotze and A Grobler. (2019). A toxicity profile of the Pheroid® technology in rodents. Toxicology Reports. 6: pp 940-950. https://doi.org/10.1016/j.toxrep.2019.08.012

Contract (substantive) research reports L Bam, Porosity quantification within Titanium samples, RS-RAD-REP-20002

H Bissett, (2020). (Confidential client report). DSI AMI program. AC-AMI-REP-20003

HW Carpenter, (2020). (Confidential client report). Accepted by Dr PAB Carstens as client. UBD-ENR-REP-20001

HW Carpenter, (2020). (Confidential client report). Accepted by

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