Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 General Information Country of incorporation and domicile South Africa Legal form of entity Schedule 3C Public Entity in terms of the Public Finance Management Act Nature of business and principal activities Biodiversity Conservation and Tourism Management Accounting Authority Dr N Mzilikazi Ms P Loyilane Adv. S Mancotywa Ms N Mxunyelwa** Mr L Bevile Mr C Sparg Dr A Muir Ms V Mantyi* **Controlled entities employee, not remunerated * Shareholder representative, not remunerated Registered office 17 - 25 Fleet Street East London 5201 Postal address P.O. Box 11235 Southernwood East London 5213 Bankers First National Bank Limited Auditors Office of the Auditor General Website www.visiteasterncape.co.za 1 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Index Page Accounting Authority's Responsibilities and Approval 3 Report of the Auditor General 4 Statement of Financial Position 5 Statement of Financial Performance 6 Statement of Changes in Net Assets 7 Cash Flow Statement 8 Statement of Comparison of Budget and Actual Amounts 9 Accounting Policies 10 - 20 Notes to the Annual Financial Statements 21 - 67 Abbreviations used: CATHSSETA Culture, Arts, Tourism, Hospitality and Sports Sector Education and Training Authority COID Compensation for Occupational Injuries and Diseases DEDEAT Department of Economic Development, Environmental Affairs and Tourism DFFE Department of Forestry, Fisheries and the Environment ECPTA Eastern Cape Parks and Tourism Agency GRAP Generally Recognised Accounting Practice NDT National Department of Tourism 2 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Authority's Responsibilities and Approval The members are required by the Public Finance Management Act (Act 1 of 1999), 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 the responsibility of the members to ensure that the annual financial statements fairly present the state of affairs of the ECPTA as at the end of the financial year and the results of its operations and cash flows for the period then ended. The external auditors are engaged to express an independent opinion on the annual financial statements and was given unrestricted access to all financial records and related data. The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. The annual financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The members acknowledge that they are ultimately responsible for the system of internal financial control established by the entity and place considerable importance on maintaining a strong control environment. To enable the members to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of error or deficit 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 entity and all employees are required to maintain the highest ethical standards in ensuring the entity’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the entity is on identifying, assessing, managing and monitoring all known forms of risk across the entity. Whilst operational risk cannot be fully eliminated, the entity endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The members are of the opinion, based on the information and explanations given by management, 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 deficit. The members have reviewed the entity’s cash flow forecast for the year to 31 March 2024 determined through the DEDEAT MTEF budget and, in the light of this review and the current financial position, they are satisfied that the ECPTA's has access to adequate resources to continue in operational existence for the foreseeable future. The ECPTA is wholly dependent on the DEDEAT for continued funding of operations. The annual financial statements are prepared on the basis that the entity is a going concern and that the entity has neither the intention nor the need to liquidate or curtail materially the scale of the entity. Although the Accounting Authority is primarily responsible for the financial affairs of the entity, they are supported by the ECPTA's CEO, Audit and Risk Committee and external auditors. The external auditors are responsible for independently reviewing and reporting on the ECPTA's annual financial statements. The annual financial statements have been examined by the ECPTA's external auditors and their report is presented on page 4. The annual financial statements set out from page 5, which have been prepared on the going concern basis, were approved by the board on 29 May 2023 and were signed on its behalf by: Dr N Mzilikazi Chairperson of the Board 3 Report of the Auditor General To the Provincial Legislature of Eastern Cape Parks and Tourism Agency 4 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Statement of Financial Position Figures in Rand thousand Note(s) 2023 2022 Restated* Assets Current Assets Inventories 2 2 164 3 338 Receivables from exchange transactions 3 782 980 Receivables from non-exchange transactions 4 7 768 4 168 Cash and cash equivalents 5 113 887 101 633 Game held for sale 6 5 448 5 794 130 049 115 913 Non-Current Assets Intangible assets 7 697 1 275 Property, plant and equipment 8 373 193 355 852 Service concession assets 9 47 240 38 709 Heritage assets 10 22 991 22 991 Investment property 11 19 695 19 673 463 816 438 500 Total Assets 593 865 554 413 Liabilities Current Liabilities Finance lease obligation 12 571 45 Payables from exchange transactions 13 29 043 31 249 Social responsibility projects 14 73 82 Provisions 15 7 231 7 131 Unspent grants and receipts 16 116 778 88 271 Employee benefit obligation 17 618 577 Game held for sale 6 5 448 5 794 159 762 133 149 Non-Current Liabilities Finance lease obligation 12 1 022 - Employee benefit obligation 17 17 593 16 450 18 615 16 450 Total Liabilities 178 377 149 599 Net Assets 415 488 404 814 Accumulated surplus 415 488 404 814 Total Net Assets 415 488 404 814 * See Note 42 5 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Statement of Financial Performance Figures in Rand thousand Note(s) 2023 2022 Restated* Revenue Revenue from exchange transactions Wildlife income 18 5 666 4 674 Rendering of services 19 9 522 9 207 Rental income 1 679 1 535 Interest received - investment 20 6 888 5 611 Actuarial gains 551 2 380 Total revenue from exchange transactions 24 306 23 407 Revenue from non-exchange transactions Transfer revenue Government grants & subsidies 22 296 623 328 354 Donations 21 9 960 10 661 Fines and Penalties 63 403 Total revenue from non-exchange transactions 306 646 339 418 Total revenue 330 952 362 825 Expenditure Employee related costs 23 (175 361) (169 238) Depreciation and amortisation 24 (31 468) (21 696) Impairment of assets (648) (717) Finance costs 25 (1 905) (2 330) Debt Impairment 29 (736) (295) Loss on disposal of assets (6) (837) General Expenses 26 (105 007) (94 109) Repairs and maintenance 27 (5 147) (5 199) Total expenditure (320 278) (294 421) Surplus for the year 10 674 68 404 * See Note 42 6 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Statement of Changes in Net Assets Accumulated Total net Figures in Rand thousand surplus / deficit assets Opening balance as previously reported 336 202 336 202 Adjustments Prior year adjustments - Note 42 208 208 Balance at 01 April 2021 as restated* 336 410 336 410 Changes in net assets Surplus for the year 68 404 68 404 Total changes 68 404 68 404 Restated* Balance at 01 April 2022 404 814 404 814 Changes in net assets Surplus for the year 10 674 10 674 Total changes 10 674 10 674 Balance at 31 March 2023 415 488 415 488 * See Note 42 7 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Cash Flow Statement Figures in Rand thousand Note(s) 2023 2022 Restated* Cash flows from operating activities Receipts Sale of goods and services 17 076 16 812 Grants 320 846 292 700 Interest income 6 888 5 611 344 810 315 123 Payments Employee costs (175 440) (171 819) Suppliers (111 137) (104 292) Finance costs (40) (7) (286 617) (276 118) Net cash flows from operating activities 30 58 193 39 005 Cash flows from investing activities Purchase of property, plant and equipment 8 (47 014) (85 319) Purchase of investment property 11 (478) - Proceeds from sale of service concession assets 9 14 - Net cash flows from investing activities (47 478) (85 319) Cash flows from financing activities Movement in social responsibility projects (9) (551) Finance lease payments 1 548 (103) Net cash flows from financing activities 1 539 (654) Net increase/(decrease) in cash and cash equivalents 12 254 (46 968) Cash and cash equivalents at the beginning of the year 101 633 148 601 Cash and cash equivalents at the end of the year 5 113 887 101 633 * See Note 42 8 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Statement of Comparison of Budget and Actual Amounts Budget on Cash Basis Approved Adjustments Final Budget Actual amounts Difference Note 40 budget on comparable between final basis budget and Figures in Rand thousand actual Statement of Financial Performance Receipts Revenue from exchange transactions Sale of goods 5 843 - 5 843 5 666 (177) Rendering of services 17 887 600 18 487 9 522 (8 965) Rental income 1 599 - 1 599 1 679 80 Other - - - 223 223 Interest received - investment 5 219 - 5 219 6 888 1 669 Total revenue from exchange 30 548 600 31 148 23 978 (7 170) transactions Revenue from non-exchange transactions Transfer revenue Government grants & subsidies 215 027 4 141 219 168 219 168 - Other grants 111 031 60 139 171 170 77 455 (93 715) Total revenue from non- 326 058 64 280 390 338 296 623 (93 715) exchange transactions Total receipts 356 606 64 880 421 486 320 601 (100 885) Payments Compensation of employees (175 701) 1 076 (174 625) (175 440) (815) Goods and services (137 937) 99 (137 838) (111 137) 26 701 Capital expenditure (42 968) (66 055) (109 023) (47 492) 61 531 Total payments (356 606) (64 880) (421 486) (334 069) 87 417 Deficit - - - (13 468) (13 468) Deficit for the year - - - (13 468) (13 468) Revenue from exchange 391 transactions Donations 9 960 Compensation of employees 79 Depreciation and amortisation (31 468) Impairment loss (648) Finance charges (1 905) General expenses 240 capital expenditure 47 492 Actual Amount in the 10 673 Statement of Financial Performance 9 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Policies Figures in Rand thousand Note(s) 2023 2022 1. Presentation of Annual Financial Statements These annual financial statements are for the year ended 31 March 2023. Comparisons are for the year ended 31 March 2022. They have been prepared and are in compliance in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), issued by the Accounting Standards Board in accordance with Section 91(1) of the Public Finance Management Act (Act 1 of 1999). These annual financial statements are presented in South African Rand. All financial information presented has been rounded to the nearest thousand. A summary of the significant accounting policies, which have been consistently applied in the preparation of these annual financial statements, are disclosed below. 1.1 Going concern assumption These annual financial statements have been prepared based on the expectation that the ECPTA will continue to operate as a going concern for at least the foreseeable future. 1.2 Significant judgements and sources of estimation uncertainty The preparation of the Annual Financial Statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. 1.3 Basis of measurement The Annual Financial Statements have been prepared on an accrual basis of accounting and are in accordance with historical cost unless stated otherwise. 1.4 Offsetting Financial assets and liabilities are set off and the net amount presented in the statement of financial position when, and only when, the entity has a legal right to set off amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Revenues and expenses have not been offset except when offsetting is required or permitted by a Standard of GRAP. 1.5 Comparative information Comparative information is presented on the same basis as current year information. There were no changes in accounting policies in the current financial year. 1.6 Inventories Inventories are initially measured at cost. Subsequently inventories are measured at the lower of cost and net realisable value. Inventories are measured at the lower of cost and current replacement cost where they are held for; Ÿ distribution at no charge or for a nominal charge; or Ÿ consumption in the production process of goods to be distributed at no charge or for a nominal charge. Net realisable value is the estimated selling price in the ordinary course of operations less the estimated costs of completion and the estimated costs necessary to make the sale, exchange or distribution. The cost of inventories is assigned using the first-in, first-out (FIFO) formula. The same cost formula is used for all inventories having a similar nature and use to ECPTA. 10 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.7 Financial instruments The ECPTA classified all its financial assets and liabilities as assets and liabilities to be measured at amortised cost. Financial assets at amortised cost are included in receivables from exchange transactions (note 3), receivables from non- exchange transactions (note 4) and cash and cash equivalents (note 5). All financial assets measured at amortised cost, or cost, are subject to an impairment review. Financial liabilities at amortised cost are included in payables from exchange transactions (note 13). The entity has the following types of financial assets and liabilities (classes and category) as reflected on the face of the statement of financial position or in the notes thereto: Receivables from exchange transactions Financial asset Receivables from non-exchange transactions Financial asset Cash and cash equivalents Financial asset Trade payables Financial liability The ECPTA recognises a financial asset or a financial liability in its statement of financial position when the entity becomes a party to the contractual provisions of the instrument. The ECPTA measures these financial assets and financial liabilities initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Receivables from exchange and non-exchange transactions are assessed at least annually for possible impairment. Impairment adjustments are made through the use of an allowance account. An estimate is made for doubtful receivables based on a review of all outstanding amounts at year-end. Use of available information and the application of the Debt Management Policy guided by the PFMA is used in the formation of estimates. Cash and cash equivalents Cash includes cash on hand (including petty cash) and cash with banks derived from own revenue, grants transfers and conditional grants. For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise cash on hand and bank account balances. All funds received for specific projects are separately managed and used only for such funds unless written permission is obtained from the relevant funder. The ECPTA derecognises a financial asset only when either the entity's contractual rights to the asset's cash flows have expired or the asset has been transferred to a third party along with the risks and rewards of ownership. The ECPTA removes a financial liability (or a part of a financial liability) from its statement of financial position when it is extinguished - i.e., when the obligation specified in the contract is discharged, cancelled, expires or waived. 1.8 Intangible assets An asset is identifiable as an intangible asset if it either: Ÿ is separable, i.e. is capable of being separated or divided from an entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable assets or liability, regardless of whether the entity intends to do so; or Ÿ arises from binding arrangements (including rights from contracts), regardless of whether those rights are transferable or separable from the entity or from other rights and obligations. An intangible asset is recognised when: Ÿ it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the entity; and Ÿ the cost or fair value of the asset can be measured reliably. Intangible assets are carried at cost less any accumulated amortisation and any impairment losses. The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date. Amortisation is provided to write down the intangible assets, on a straight-line basis, to their residual values as follows: 11 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.8 Intangible assets (continued) Item Depreciation method Useful life Computer software licences Straight-line 3 years Intangible assets are derecognised: Ÿ on disposal; or Ÿ when no future economic benefits or service potential are expected from its use or disposal. The gain or loss arising from the derecognition of Intangible assets is included in surplus or deficit when the asset is derecognised. No change was made to the estimate of useful life as management considered the assessment still in line with the expected period of use. 1.9 Property, plant and equipment The cost of an item of property, plant and equipment is recognised as an asset when: Ÿ it is probable that future economic benefits or service potential associated with the item will flow to the entity; and Ÿ the cost of the item can be measured reliably. Property, plant and equipment is initially measured at cost. Land accounted for as property, plant and equipment has an indefinite useful life and is not depreciated. Water tanks, septic tanks, geysers and ablutions attached to buildings; or fencing surrounding buildings and infrastructure are presumed to be part of the buildings or infrastructure unless specifically identified; and otherwise stated. The cost of storm water drainage is included in the cost of the road where this takes the form of minimal transverse culverts and open drains alongside the road. Where local topography requires more than minimal drainage, the cost will be shown separately. Road signs are included in the cost of roads. Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value. At each reporting date the Entity assesses whether there is any indication that expectations about the residual value and the useful life of an asset may have changed since the preceding reporting date. If any such indication exists, the expected residual value and useful life are revised and the effect of any changes in estimate are accounted for on a prospective basis. Work in progress represents capital projects in progress at year-end. Expenditure incurred on WIP projects is recognised at cost and is only transferred to the relevant asset category on completion of the project. Work in progress is not depreciated. The useful lives of items of property, plant and equipment have been assessed as follows: Item Depreciation method Average useful life IT equipment Straight-line 3 years Motor vehicles Straight-line 4 years Plant and machinery Straight-line 5 years Office equipment Straight-line 5 years Building Attachments Straight-line 5 years Furniture and fixtures Straight-line 6 years Field Equipment Straight-line 2 -30 years Buildings Straight-line 5 - 50 years Fencing Straight-line 10 - 40 years Roads and storm water Straight-line 10 - 60 years Sanitation infrastructure Straight-line 10 - 60 years Electricity infrastructure Straight-line 30 - 40 years Water Supply infrastructure Straight-line 30 - 50 years 12 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.9 Property, plant and equipment (continued) Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. Changes in residual value, depreciation method and useful life represents changes in estimates and are accounted for prospectively. The carrying values of property, plant and equipment are reviewed for impairment on an indicator basis. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash generating units are written down to their recoverable amount. The entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for an asset may no longer exist or may have decreased. If any such indication exists, the entity estimates the recoverable service amount of that asset. No evidence was identified in the current year that suggests prior year impairment had to be reversed. A reversal of an impairment loss for an asset shall be recognised immediately in surplus or deficit. The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit 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. 13 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.10 Service concession arrangements Service concession assets The entity recognises an asset provided by the operator and an upgrade to an existing asset of the entity as a service concession asset if: Ÿ the entity controls or regulates what services the operator must provide with the asset, to whom it must provide them, and at what price; Ÿ the entity controls (through ownership, beneficial entitlement or otherwise) any significant residual interest in the asset at the end of the term of the arrangement; Ÿ it is probable that future economic benefits or service potential associated with the asset will flow to the entity; and Ÿ the cost of the asset can be measured reliably. Service concession assets are measured at their fair value on initial recognition except where the assets are reclassified in which case they will only be reclassified in accordance with the applicable asset related GRAP Standard. Except where an asset was reclassified by the entity to a service concession asset, the entity initially measures the corresponding liability at the same amount as the service concession asset adjusted for any cash consideration from either the entity or operator to either the entity or operator Reclassified service concession assets are accounted for in accordance with the Standards of GRAP on investment property, property, plant and equipment, intangible assets, or heritage assets, as appropriate. Where the asset and service components of a service concession arrangement are separately identifiable, the service components of payments from the entity to the operator are allocated by reference to the relative fair values of the service concession asset and the services. Where the asset and service components are not separately identifiable, the service component of payments from the entity to the operator is determined using estimation techniques. After initial recognition, the entity applies the accounting policies on investment property, property, plant and equipment, intangible assets and heritage assets to the subsequent measurement and derecognition of similar items of service concession assets. For the purposes of applying the accounting policies on investment property, property, plant and equipment, intangible assets and heritage assets, service concession assets are treated as a separate class of assets. Land is not depreciated. The useful lives of items of service concession assets have been assessed as follows: Item Depreciation method Average useful life IT equipment Straight line method 3 years Plant and machinery Straight line method 5 years Office equipment Straight line method 5 years Furniture and fixtures Straight line method 6 years Buildings Straight line method 5 - 50 years Sanitation infrastructure Straight line method 10 - 60 years Electricity infrastructure Straight line method 30 - 40 years Water Supply infrastructure Straight line method 30 - 50 years At each reporting date the Entity assesses whether there is any indication that expectations about the residual value and the useful life of a service concession asset may have changed since the preceding reporting date. If any such indication exists, the expected residual value and useful life are revised and the effect of any changes in estimate are accounted for on a prospective basis. Service concession assets are derecognised: - on disposal; or - when no future economic benefits or service potential are expected from its use or disposal The gain or loss arising from the derecognition of service concession assets is included in surplus or deficit when the asset is derecognised. 14 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.10 Service concession arrangements (continued) Service concession liabilities A deferred revenue - service concession liability is initially measured at the same amount as the service concession asset adjusted for any additional consideration from the entity to operator or vice versa. Subsequently, the entity recognises revenue and reduces the liability recognised in accordance with the substance of the service concession arrangement. Service concession revenue The operator accounts for revenues from service concession arrangements in accordance with the revenue from exchange transactions principle. Revenue from a service concession arrangement is recognised as it accrues over the period of the agreement. The timing of the revenue recognition is determined based on the substance of the service concession arrangement. When the conditions for revenue recognition are met, the liability is reduced as the revenue is recognised accordingly. 1.11 Heritage assets The entity recognises a heritage asset as an asset if it is probable that future economic benefits or service potential associated with the asset will flow to the entity, and the cost or fair value of the asset can be measured reliably. Heritage assets are measured at cost. Where a heritage asset is acquired through a non-exchange transaction, its cost is measured at its fair value as at the date of acquisition. After recognition as an asset, a class of heritage assets is carried at its cost less any accumulated impairment losses. After recognition as an asset, a class of heritage assets, whose fair value can be measured reliably, is carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent impairment losses. The entity assesses at each reporting date whether there is an indication that it may be impaired. If any such indication exists, the entity estimates the recoverable amount or the recoverable service amount of the heritage asset. The entity derecognises heritage asset on disposal, or when no future economic benefits or service potential are expected from its use or disposal. The gain or loss arising from the derecognition of a heritage asset is included in surplus or deficit when the item is derecognised (unless the Standard of GRAP on leases requires otherwise on a sale and leaseback). 1.12 Investment property Investment property is recognised as an asset when, it is probable that the future economic benefits or service potential that are associated with the investment property will flow to the entity, and the cost or fair value of the investment property can be measured reliably. Investment property is carried at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided to write down the cost, less estimated residual value over the useful life of the property, which is as follows: Item Useful life Property - land indefinite Property - buildings 50 years 15 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.13 Social responsibility projects ECPTA is the implementing agent for projects undertaken on behalf of other state organs. The bank balances held on behalf of the various projects are included as cash and cash equivalents in the Annual Financial Statements, and the corresponding project liabilities as a result of uncompleted projects at reporting date are recorded as a current liability. 1.14 Conditional grants and receipts Revenue received from conditional grants, donations and funding are recognised as revenue to the extent that the entity has complied with any of the criteria, conditions or obligations embodied in the agreement. To the extent that the criteria, conditions or obligations have not been met a liability is recognised. 1.15 Provisions and contingencies The ECPTA recognises provisions on the entity’s present obligations for legal proceedings, professional fees, natural disasters and performance bonus resulting from such past events. The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date. These provisions are disclosed in Note 16. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required, to settle the obligation. A provision is used only for expenditures for which the provision was originally recognised. Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 32. A contingent asset is disclosed where an inflow of economic benefits or service potential is probable. Contingent assets are assessed continually to ensure that developments, whose existence is confirmed by the occurrence or non-occurrence of uncertain future events that are not wholly within the control of the entity, are appropriately reflected in the Annual Financial Statements. The ECPTA discloses for each class of contingent assets and liabilities, unless the possibility of any cash flow is remote, at the end of the reporting period a brief description of the nature of the contingent liability and contingent asset and where practicable, an estimate of its financial effect, an indication of uncertainties relating to the amount or timing of any cash flow and the possibility of any reimbursement. 1.16 Employee benefits Short-term employee benefits When an employee has rendered service to the entity during a reporting period, the entity recognises the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service: Ÿ as a liability (accrued expense), after deducting any amount already paid. If the amount already paid exceeds the undiscounted amount of the benefits, the entity recognises that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and Ÿ as an expense, unless another Standard requires or permits the inclusion of the benefits in the cost of an asset. 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 entity measures the expected cost of accumulating compensated absences as the additional amount that the entity expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The entity recognises the expected cost of bonus, incentive and performance related payments when the entity has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when the entity has no realistic alternative but to make the payments. Post-employment benefits The ECPTA utilizes actuarial valuations for the determination of post-employment benefits, other than pension distributions, paid to employees after completion of employment. These benefits include long service award and medical aid contributions. 16 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.16 Employee benefits (continued) Post-employment benefits: Defined benefit plans 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 separately for each plan. Consideration is given to any event that could impact the funds up to end of the reporting period where the annual valuation is performed at an earlier date. Post 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. 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. 1.17 Revenue from exchange transactions The ECPTA's revenue from exchange transactions is derived from sources of activities done at the Reserves. Exchange Revenue comprises principally of wildlife income, reserve activities - services rendered, accommodation and camping, concession income. Other revenue from exchange transactions is derived from rental of properties income, implementers fees from projects, interest in respect of bank accounts held, these as well as any other income. Sale of goods Revenue from the sale of goods is recognised when all the following conditions have been satisfied: Ÿ the entity has transferred to the purchaser the significant risks and rewards of ownership of the goods; Ÿ the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; Ÿ the amount of revenue can be measured reliably; Ÿ it is probable that the economic benefits or service potential associated with the transaction will flow to the entity; and Ÿ the costs incurred or to be incurred in respect of the transaction can be measured reliably. Rendering of services When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: Ÿ the amount of revenue can be measured reliably; Ÿ it is probable that the economic benefits or service potential associated with the transaction will flow to the entity; and Ÿ the costs incurred for the transaction and the costs to complete the transaction can be measured reliably. When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. Interest Interest revenue arising from investments is recognised using the effective interest rate method for financial instruments and using the nominal interest rate method for statutory receivables. Interest levied on transactions arising from exchange or non- exchange transactions is classified based on the nature of the underlying transaction. 1.18 Revenue from non-exchange transactions An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to the extent that a liability is also recognised in respect of the same inflow. As the entity satisfies a present obligation recognised as a liability in respect of an inflow of resources from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability recognised and recognises an amount of revenue equal to that reduction. 17 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.18 Revenue from non-exchange transactions (continued) Revenue from a non-exchange transaction is measured at the amount of the increase in net assets recognised by the entity. Receivables that arise from statutory (non-contractual) arrangements are initially measured in accordance with this accounting policy, as well as the accounting policy on Statutory Receivables. The entity applies the accounting policy on Statutory Receivables for the subsequent measurement, derecognition, presentation and disclosure of statutory receivables. Recognition An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to the extent that a liability is also recognised in respect of the same inflow. As the entity satisfies a present obligation recognised as a liability in respect of an inflow of resources from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability recognised and recognises an amount of revenue equal to that reduction. Measurement An asset acquired through a non-exchange transaction shall initially be measured at its fair value as at the date of acquisition. 1.19 Budget information The approved budget is prepared on an accrual basis and presented by economic classification linked to performance outcome objectives. The amounts for the reporting period have been included in the Statement of comparison of budget and actual amounts. 1.20 Related parties The ECPTA operates in an economic sector whereby it interacts with other entities within the national and provincial sphere of government. Such entities are considered to be related parties. Key management is defined as persons having authority and responsibility for planning, directing and controlling the activities of the entity whether directly or indirectly. The Board, Audit Committee, Executive Management as well as the Legal Advisor / Board secretary are considered to be key management per the definition of the financial reporting standard. Close family members of key management personnel are considered to be those family members who may be expected to influence or to be influenced by key management. Transactions between the entity and key management personnel are disclosed in related party disclosures. Compensation paid to key management personnel is included in the emoluments disclosure notes. 1.21 Commitments Commitments relate to outstanding capital purchase orders for projects at year-end. Where contracts are funded in the Medium -Term Expenditure Framework period through explicit contracts, these are also recorded as commitments as the funds are set out in contractual arrangements. Commitments are not recognised as a liability in the statement of financial position or as expenditure in the statement of financial performance but are included in the disclosure notes. 1.22 Irregular, Fruitless and wasteful expenditure Fruitless and wasteful expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised. All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance. Irregular expenditure is expenditure that is contrary to legislation and has not yet been condoned or regularised by management. Irregular expenditure is accounted for as an expense in the statement of financial performance and where recovered it is subsequently accounted for as revenue in the statement of financial performance. 18 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.22 Irregular, Fruitless and wasteful expenditure (continued) Fruitless and wasteful and irregular expenditure is disclosed in the notes to the Annual Financial Statements when confirmed. The amount disclosed is equal to the total value of the fruitless and wasteful or irregular expense unless it is impracticable to determine in which case reasons therefore is provided in the disclosure note. The expenditure is removed from the disclosure note when it is either condoned by the relevant authority or transferred to receivables for recovery. 1.23 Surrenders to provincial revenue fund Amount due to provincial revenue fund relates to unspent funds which means the positive balance in “cash and cash equivalents” as per cash flow statement as at the end of the financial year plus current receivables, less any accruals and other current payables relating to that financial year and/or surpluses approved for accumulation in terms of section 53(3) of Public Finance Management Act (Act 1 of 1999). 1.24 Game held for sale Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Large mammals which are identified through the ECPTA game census process as being excess game, are classified as "held for sale" and are reflected in the Annual Financial Statements at fair value less estimated point of sale costs of disposal. The ECPTA classifies excess game identified for off take (disposal), as “held for sale” as their fair value will be recovered principally through a sale transaction rather than through continuing use. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. The fair values and estimated point of sale costs for game classified as "held for sale" are determined annually by management by considering: . Ÿ excess game quantities as approved by the Board of Directors for off take (disposal); Ÿ auction reserve prices established by reference to historical data and industry conditions for live game sales; Ÿ target selling prices set by management for hunting packages; Ÿ animal weights and prices as mutually agreed with service providers for external culling game, by a bidding process; Ÿ average animal weights and management set venison prices for internal culling game; and Ÿ significant costs of disposal, where such costs can be separately identifiable from normal biodiversity conservation costs. The ECPTA is responsible for biodiversity conservation in defined protected areas and the biological assets consists of a large variety of species and it is thus not practical to list such species, their quantities or their values. The Annual Game Census for some protected areas is done a rotational basis. Attaching a reliable "fair value" to all biodiversity not "held for sale" is not possible, for the following reasons: The key drivers for successful biodiversity conservation include scientific management of the entire ecosystem in terms of flora and fauna (from the smallest organism to the largest) as well as the processes that maintain these patterns. It is not possible to place a reliable fair value on all material aspects of biodiversity. Valuing certain animal species without taking into account the contribution of other organisms and other aspects of the ecosystem is not in line with biodiversity conservation principles. Fauna move naturally from one place to the other in search of preferred habitat and are therefore unpredictable in terms of their availability for counting. This issue is further complicated by short term responses of game to weather conditions. While fences are used as artificial barriers to control movement of some species, this is not an ideal situation, and some species move freely despite these barriers, which make counting impractical. Game counts are also extremely expensive processes, as these frequently require the use of sophisticated technology (helicopters, GPS, GIS) and data analysis. In addition, the complexity in counting different species varies, such that elephants are easier to census than small species such as the blue duiker. Applying a uniform accounting approach to this range of species will not be practical. In terms of the Framework for Preparation and Presentation of Financial Information, the ECPTA does not recognise its biodiversity assets and only reflect the excess game identified for off take (disposal) as additional disclosure for the benefit of users to the Annual Financial Statements. 19 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.24 Game held for sale (continued) By virtue of these species being included in the defined protected areas they form part of the legislative mandate of the ECPTA to conserve biodiversity in these areas. 20 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 2. Inventories Maintenance materials 2 119 3 291 Fuel 45 47 2 164 3 338 During the year, no fencing materials has been purchased for projects funded by DFFE. An amount of R 1,17 million (2022: R1,87 million) was transferred from inventory to property, plant and equipment. Fuel purchased directly from suppliers and accordingly expensed amounted to R240 thousand (2022: R235 thousand). 3. Receivables from exchange transactions Trade debtors 644 893 Operating lease receivables - 6 Rent receivable 138 81 782 980 Trade and other receivables There were no trade and other receivables pledged as security. ECPTA considers that the carrying amount of trade receivables and other receivables approximates their fair value. 21 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 4. Receivables from non-exchange transactions Grants receivable 6 355 2 071 SARS 191 243 Staff debts 400 265 Social projects 773 773 Deposits 665 637 Prepaid expenses 876 935 Impairment allowance (1 492) (756) 7 768 4 168 The receivable from Social projects consists of amounts owed in respect of the National Department of Forestry, Fisheries and the Environment funded Double Drift Project and Youth Environmental Services Programme. Grants receivable Grants receivable comprise of: National Lotteries Commission 99 - Marine and Coastal Management 4 756 571 South African Tourism (SAT) 1 500 1 500 6 355 2 071 Reconciliation of movement in grants receivable 31 March 2023 Balance Current year Transfers to Total receivable at receipts revenue start of year South African Tourism (SAT) 1 500 - - 1 500 National Lotteries Commission - - 99 99 Marine and Coastal Management 571 - 4 185 4 756 2 071 - 4 284 6 355 31 March 2022 Balance Current year Transfers to Total receivable at receipts revenue start of year South African Tourism (SAT) - - 1 500 1 500 Marine and Coastal Management - - 571 571 - - 2 071 2 071 Receivables from non-exchange transactions pledged as security There were no other receivables from non-exchange transaction pledged as security. Receivables from non-exchange transactions past due but not impaired Other receivables from non-exchange transactions which are less than 6 months past due are not considered to be impaired. At 31 March 2023, - (2022: 28) were past due but not impaired. The ageing of amounts past due but not impaired is as follows: 1 year past due - 28 22 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 4. Receivables from non-exchange transactions (continued) Receivables from non-exchange transactions impaired As of 31 March 2023, other receivables from non-exchange transactions of R1 492 (2022: R 757) were impaired and provided for. The ageing of these loans is as follows: 6 months 757 295 Over 1 year 735 462 Reconciliation of provision for impairment of receivables from non-exchange transactions Opening balance (757) (462) Provision for impairment (735) (295) (1 492) (757) 5. Cash and cash equivalents Cash and cash equivalents consist of: Cash on hand 146 173 Bank balances 113 671 101 381 Other cash and cash equivalents 70 79 113 887 101 633 The ECPTA had the following bank accounts with First National Bank ` Account number / description Bank statement balances Cash book balances 31 March 2023 31 March 2022 31 March 2023 31 March 2022 Main account 2 037 6 835 2 037 6 835 Revenue account 41 12 242 41 12 242 African Wildlife Foundation 2 1 2 1 BANKSSETA 720 1 720 1 CATHSSETA 137 1 137 1 DFFE - Environmental Monitors 50 1 50 1 DFFE - Environmental Protection and Infrastructure Programme 56 907 43 025 56 907 43 025 Economic Stimulus Fund 12 212 19 905 12 212 19 905 Nedbank Green Trust 1 036 1 1 036 1 Marine Protected Areas - MPA 1 1 1 1 National Lotteries Commission 11 537 11 537 NDT - Baviaanskloof 4 584 10 433 4 584 10 433 NDT - Infrastructure 10 505 4 110 10 505 4 110 NDT - Tourism Monitors 2 17 2 17 NDT - Universal Accessibility 505 637 505 637 N2 Biodiversity Offset Project 3 748 1 116 3 748 1 116 Rhino Impact Bond 298 953 298 953 South African National Biodiversity Institute 746 407 746 407 SANBI GEF-7 2 266 - 2 266 - SANBI Presidential Youth Employment Intervention - PYEI 1 1 1 1 South African National Parks 1 1 156 1 1 156 Wildlife Conservation Bond 17 861 1 17 861 1 Total 113 671 101 381 113 671 101 381 The ECPTA’S Bankers First National Bank with credit rating BBB-, where duly appointed by the Board of Directors. 23 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 5. Cash and cash equivalents (continued) Cash relating to own revenue and the funds transferred from DEDEAT in respect of the mandate of the ECPTA as defined in the Eastern Cape Parks and Tourism Agency Act (Act 2 of 2010), is maintained from the Main and Revenue accounts for day to day activities. The ECPTA has accounts, including projects, totalling to R114 million (2022: R101 million), as Treasury allows. These approximate the monies unspent. Refer to notes 16 and 35. The unspent amounts of R116 million (2022: R88 million), read with grants receivable of R6 million (2022: R2 million) is less than the bank balances of R114 million (2022: R101 million) see note 4. Other cash and cash equivalents relate to social responsibility projects. These bank balances are held by the ECPTA in its capacity as the implementing agent and are ring fenced for application to activities within those projects, refer to note 14. Economic Stimulus Fund and Environmental Protection and Infrastructure Programme balance of R90 million relates to grant funding for multi year projects. The amounts received for these multi-year projects, were received in the prior financial years. The ECPTA's exposure to interest rate risk including risk to its financial assets and liabilities is disclosed in note 34. There were no cash and cash equivalents pledged as security. 6. Game held for sale Game held for sale 5 448 5 794 A census to determine the current numbers of game and to ensure that the veld carrying capacity is not exceeded, in line with biodiversity best practices, is held annually, over a 3-year cycle. Excess game are identified for sale in the following year and the sale comprises live game sale, hunting packages and culling. The table below gives an indicative number of animals to be disposed of. Management has the delegated authority to switch between the methods listed below to achieve the desired capacity. At the reporting date there were no movements relating to write-downs, Reversal or changes in fair value. There is no expenditure recognized as expense as off-take will be after the year end. Number of animals Live game 111 152 Hunting game 525 666 External culling game 857 1 635 Internal culling game 386 299 1 879 2 752 The number of animals for off-take (disposal) is approved by the ECPTA Board, and the value of game held for sale varies with the type of species identified for disposal. The Board has resolved at its board meeting during the year on the off-take (disposal) figures for the current year. The actual figures of wildlife sales made during the year are included in revenue, refer to note 18 Deferred revenue Game held for sale 5 448 5 794 Deferred revenue - game held for sale relates to the corresponding revenue for large mammals which are identified through the game census process as being excess game, and have been recognised as "held for sale" for deferral until when the sale has been concluded and the ECPTA has discharged its responsibilities in terms of the sale agreement. 24 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 7. Intangible assets 2023 2022 Cost / Accumulated Carrying value Cost / Accumulated Carrying value Valuation amortisation Valuation amortisation Computer Software licences 5 154 (4 457) 697 5 154 (3 879) 1 275 Reconciliation of intangible assets - 2023 Opening Amortisation Total balance Computer Software licences 1 275 (578) 697 Reconciliation of intangible assets - 2022 Opening Additions Amortisation Total balance Computer Software licences 131 1 527 (383) 1 275 The accumulated amortization and current carrying value adequately account for and address any impairment of intangible assets that has occurred. 25 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 8. Property, plant and equipment 2023 2022 Cost / Accumulated Carrying value Cost / Accumulated Carrying value Valuation depreciation Valuation depreciation and and accumulated accumulated impairment impairment Buildings 193 712 (57 048) 136 664 192 855 (53 245) 139 610 Plant and machinery 9 599 (8 159) 1 440 9 250 (7 459) 1 791 Furniture and fixtures 18 869 (16 810) 2 059 18 776 (16 196) 2 580 Motor vehicles 45 566 (32 513) 13 053 38 656 (25 982) 12 674 Office equipment 11 513 (6 980) 4 533 11 120 (5 307) 5 813 IT equipment 19 270 (13 935) 5 335 16 592 (11 151) 5 441 Roads and storm water 370 940 (323 008) 47 932 370 940 (316 123) 54 817 Building attachment 10 389 (7 329) 3 060 10 090 (5 788) 4 302 Fencing 76 293 (62 492) 13 801 75 363 (60 055) 15 308 Field equipment 3 567 (2 849) 718 3 586 (2 273) 1 313 Infrastructure - work in progress 126 534 - 126 534 93 461 - 93 461 Electricity infrastructure 11 961 (7 320) 4 641 11 262 (6 657) 4 605 Sanitation infrastructure 7 387 (4 283) 3 104 7 387 (4 061) 3 326 Water supply infrastructure 24 060 (13 741) 10 319 24 063 (13 252) 10 811 Total 929 660 (556 467) 373 193 883 401 (527 549) 355 852 26 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 8. Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2023 Opening Additions Transfers Depreciation Impairment Total balance loss Buildings 139 610 857 - (3 803) - 136 664 Plant and machinery 1 791 386 - (737) - 1 440 Furniture and fixtures 2 580 415 - (936) - 2 059 Motor vehicles 12 674 6 988 - (6 609) - 13 053 Office equipment 5 813 421 - (1 701) - 4 533 IT equipment 5 441 2 923 - (3 029) - 5 335 Roads and storm water 54 817 - - (6 885) - 47 932 Building attachments 4 302 298 - (1 540) - 3 060 Fencing 15 308 929 - (2 150) (286) 13 801 Field equipment 1 313 20 - (615) - 718 Infrastructure - work in progress 93 461 36 015 (2 942) - - 126 534 Electricity infrastructure 4 605 699 - (302) (361) 4 641 Sanitation infrastructure 3 326 - - (222) - 3 104 Water supply infrastructure 10 811 - - (492) - 10 319 355 852 49 951 (2 942) (29 021) (647) 373 193 Infrastructure - work in progress Opening Expenditure Transfers Total balance Fencing projects 3 584 4 757 (888) 7 453 Buildings 83 671 28 804 (462) 112 013 Various classes 6 206 1 685 (927) 6 964 Sanitation - 104 - 104 Electricity - 665 (665) - 93 461 36 015 (2 942) 126 534 27 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 8. Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2022 Opening Additions Disposals Transfers Depreciation Impairment Total balance loss Buildings 140 761 9 321 (5 070) - (5 084) (318) 139 610 Plant and machinery 1 641 576 (39) - (387) - 1 791 Furniture and fixtures 3 101 767 (195) - (725) (368) 2 580 Motor vehicles 11 523 4 375 (148) - (3 076) - 12 674 Office equipment 1 468 5 651 (3) - (1 277) (26) 5 813 IT equipment 2 352 4 765 (12) - (1 664) - 5 441 Roads and storm water 59 171 - - - (4 354) - 54 817 Building attachments 2 107 3 154 (8) - (951) - 4 302 Fencing 16 783 29 - - (1 504) - 15 308 Field equipment 1 528 88 - - (299) (4) 1 313 Infrastructure - work in progress 39 006 78 075 - (23 620) - - 93 461 Electricity infrastructure 4 829 36 - - (260) - 4 605 Sanitation infrastructure 3 481 13 - - (168) - 3 326 Water supply infrastructure 11 261 - - - (450) - 10 811 299 012 106 850 (5 475) (23 620) (20 199) (716) 355 852 Infrastructure - work in progress Opening Expenditure Transfers Total balance Fencing projects 1 714 1 870 - 3 584 Buildings 18 667 74 836 (9 832) 83 671 Various classes 18 625 1 369 (13 788) 6 206 39 006 78 075 (23 620) 93 461 28 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 8. Property, plant and equipment (continued) Pledged as security No property, plant and equipment is pledged as security. Property, plant and equipment amounting to R2,9 million (2022: R23,6 million) and included in additions was transferred from Infrastructure - work in progress. An amount of R1,17 million (2022: R1,87 million) was transferred from inventory to property, plant and equipment. Refer to note 2. The statement of cash flow accordingly states R47 million (2022: R85,4 million) as purchases of property, plant and equipment. In addition, the change in inventory is reflected as working capital per note 30 cash generated by from operations. A further transfer of Rnil (2022: R218 thousand) was made from infrastructure - property, plant and equipment to operating expenditure. Property, plant and equipment commitments are as per Commitments note. Refer to note 35 Assets subject to finance lease (Net carrying amount) IT equipment 1 581 35 29 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 9. Service concession assets 2023 2022 Cost / Accumulated Carrying value Cost / Accumulated Carrying value Valuation amortisation Valuation amortisation and and accumulated accumulated impairment impairment IT Equipment 1 021 (980) 41 1 021 (924) 97 Buildings 39 913 (3 457) 36 456 31 049 (2 660) 28 389 Furniture & Fixtures 650 (173) 477 639 (65) 574 Office Equipment 444 (376) 68 458 (288) 170 Plant and machinery 570 (528) 42 550 (414) 136 Electricity infrastructure 5 325 (777) 4 548 5 079 (644) 4 435 Building attachments 178 (4) 174 97 - 97 Sanitation infrastructure 1 646 (68) 1 578 1 203 (40) 1 163 Water supply infrastructure 4 320 (464) 3 856 4 025 (377) 3 648 Total 54 067 (6 827) 47 240 44 121 (5 412) 38 709 Reconciliation of service concession assets - 2023 Opening Additions Disposals Amortisation Total balance IT Equipment 97 - - (56) 41 Buildings 28 389 8 865 - (798) 36 456 Furniture & Fixtures 574 12 - (109) 477 Office Equipment 170 - (14) (88) 68 Plant and machinery 136 20 - (114) 42 Electricity infrastructure 4 435 246 - (133) 4 548 Building attachments 97 81 - (4) 174 Sanitation infrastructure 1 163 443 - (28) 1 578 Water supply infrastructure 3 648 294 - (86) 3 856 38 709 9 961 (14) (1 416) 47 240 30 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 9. Service concession assets (continued) Reconciliation of service concession assets - 2022 Opening Additions Transfers Amortisation Total balance IT Equipment 138 - - (41) 97 Buildings 16 805 12 099 (101) (414) 28 389 Furniture & Fixtures 9 615 (39) (11) 574 Office Equipment 129 64 - (23) 170 Plant and machinery 169 - - (33) 136 Electricity infrastructure 3 757 779 - (101) 4 435 Building attachments - 97 - - 97 Sanitation infrastructure 342 827 - (6) 1 163 Water supply infrastructure 2 683 1 025 - (60) 3 648 24 032 15 506 (140) (689) 38 709 31 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 9. Service concession assets (continued) Service concession arrangements Mthatha dam concession In 2015 the entity entered into a service concession agreement with Naritasan Koya Trading, trading as Mthatha Dam Amenities (the operator). The overall objective and purpose of the service concession arrangement is whereby the entity has granted the operator the right during the concession period to generate, charge and collect revenues from the operation of Mthatha dam facilities at Luchaba Nature Reserve during the concession period of twenty (20) years, with no renewal option. This facility was donated to ECPTA by the then National Department of Environmental Affairs, as a PFMA Section 42 transfer. Donated assets to the value of R 76,739 million (2022: R66,779 million); and consisting of service concession assets R47,677 million (2022:R37,717 million) and property,plant and equipment R nil (2022: R29,062 million) have been received from the DFFE (formally National Department of Environmental Affairs) by the ECPTA for this project. Service concession assets are maintained by the operator during the concession period; and after expiry of the concession period, the facilities are to be operated by the local community identified as beneficiaries in partnership with the entity. The concession payments, subject to annual review and payable by the operator are as follows:  Fixed rental of R85 thousand per annum with escalation linked to the consumer price index payable to the ECPTA;  Concession fee of four percent (4.00%) of net profit payable to the community development fund; and  Concession fee of four percent (4.00%) of net profit and fifty percent (50%) of gate takings profit payable to the ECPTA Baviaanskloof Leopard Trail concession: In 2014 the ECPTA entered into a service concession agreement with Another Way Trust (the operator). The overall objective and purpose of the service concession arrangement is whereby the ECPTA has granted the operator the right during the concession period to generate, charge and collect revenues from the multi-day hiking trail in the Baviaanskloof World Heritage Site during the concession period of ten (10) years, with no renewal option. The operator provided tented accommodation prior to the investment in 2021. In the 2020/21 financial year, Infrastructure on the hiking trial was completed (classified as property, plant and equipment) and formally handed to the operator in the 2021/22 financial year for R4,698 million and duly recorded as Service Concession Assets. This facility was funded by the National Department of Tourism. Service concession assets are maintained by the operator during the concession period. The operator is required to collect a daily permit fee for each hiker as part of the daily permit fee for Baviaanskloof and pay the fees to the ECPTA on a monthly basis. Permit fees will be subject to yearly increases and according to the approved ECPTA tariffs. At each reporting date the ECPTA assesses whether there is any indication that expectations about the residual value and the useful life of an asset may have changed since the preceding reporting date. If any such indication exists, the expected residual value and useful life are revised and the effect of any changes in estimate accounted for on the a prospective basis. 32 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 10. Heritage assets 2023 2022 Cost / Accumulated Carrying value Cost / Accumulated Carrying value Valuation impairment Valuation impairment losses losses Land 22 991 - 22 991 22 991 - 22 991 Reconciliation of heritage assets 2023 Opening Total balance Land 22 991 22 991 Reconciliation of heritage assets 2022 Opening Total balance Land 22 991 22 991 Repairs and maintenance on land has not taken place other than items disclosed as Property, plant and equipment as disclosed under note 8. 33 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 10. Heritage assets (continued) Heritage assets which fair values cannot be reliably measured Reserve Estimated area Estimated area in hectares in hectares Great Fish River Nature Reserve 43 417 43 417 - Comprising of Sam Knott and Double Drift Nature Reserves Baviaanskloof Nature Reserve 193 011 193 011 - Comprising of Baviaanskloof Wilderness Area, Stinkhoutberg and Cockscomb Formosa Nature Reserve 25 490 25 490 Groendal Nature Reserve 44 877 44 877 The Island Nature Reserve 495 495 Thomas Baines Nature Reserve 2 588 2 588 Waters Meeting Nature Reserve 4 217 4 217 Tsolwana Nature Reserve 7 796 7 796 Mpofu Nature Reserve 10 104 10 104 Fort Fordyce Nature Reserve 2 970 2 970 East London Coast Nature Reserve 3 827 3 827 Hamburg Nature Reserve 1 466 1 466 Dwesa – Cwebe Nature Reserve 5 529 5 529 Hluleka Nature Reserve 4 665 4 665 Silaka Nature Reserve 400 400 Nduli – Luchaba Nature Reserve 518 518 Mkhambathi Nature Reserve 7 736 7 736 Ongeluksnek Nature Reserve 11 540 11 540 Oviston Nature Reserve 1 455 1 455 Commando Drift Nature Reserve 5 746 5 746 377 847 377 847 34 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 10. Heritage assets (continued) Heritage assets measured at cost Heritage assets in the form of various provincial protected areas were transferred to ECPTA by the former Eastern Cape Parks Board. The fair values of these could not be determined due to the nature of ECPTA's activities. The total hectares of ground transferred is estimated at 20 592. For that reason ECPTA heritage assets acquired from non-exchange transactions could not be recognised in the Annual Financial Statements. Land purchased by the former Eastern Cape Parks Board to the cost of R 22,991 million was recognised as heritage assets at the fair value of the consideration paid on purchase by the ECPTA. The nature reserves, including land acquired subsequent to the transfer, comprise the following: Great Fish River Nature Reserve Comprising of Sam Knott and Double Drift Nature Reserves 5 659 5 659 - 1,605 hectares acquired at cost Baviaanskloof Nature Reserve Comprising of Sam Knott and Double Drift Nature Reserves 15 534 15 534 - 18160 hectares acquired at cost Mpofu Nature Reserve 827 hectares acquired at cost 1 798 1 798 35 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 11. Investment property 2023 2022 Cost Accumulated Carrying value Cost Accumulated Carrying value depreciation depreciation and and accumulated accumulated impairment impairment Investment property 23 031 (3 336) 19 695 22 554 (2 881) 19 673 Reconciliation of investment property - 2023 Opening Additions Depreciation Total balance Investment property-Buildings 19 673 478 (456) 19 695 Reconciliation of investment property - 2022 Opening Depreciation Total balance Investment property-Buildings 20 097 (424) 19 673 Pledged as security There was no investment property pledged as security. Impairment: Investment property is considered for impairment, on a case by case basis, during the year under review. Annual Property valuation reports, future intentions and the age of items is taken into account in determining impairment. 36 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 11. Investment property (continued) Details of property Unit 2 Bhisho Business Village 835 809 Tourism House Phalo Avenue 4 554 4 421 Somerset House 626 160 Cape Morgan multi-purpose facility 13 680 14 283 19 695 19 673 Unit 2 Bhisho Business Village: The property consists of an office block situated in the Bhisho Business Village and transferred to the ECPTA as at 1 July 2010. The building is currently occupied by the Provincial Department of Cooperative Governance and Traditional Affairs. Fair value of the investment property as determined by an independent valuer, P Lindstrom (Registration no 935/7 registered in terms of the Valuers Act No.47 of 2000) is R1,880 million (2022: R1,790 million). Tourism House Phalo Avenue: The property consists of an office block situated in Phalo Avenue in Bhisho and was transferred to the ECPTA as at 1 July 2010. It is currently being occupied by the National Prosecuting Authority (NPA). Fair value of the investment property as determined by an independent valuer, P Lindstrom (Registration no 935/7 registered in terms of the Valuers Act No.47 of 2000) is R11,110 million (2022: R10,720 million). Somerset House: The property consists of land with a recently renovated building situated in Somerset Street in Aliwal North and was transferred to the ECPTA as at 1 July 2010. It is currently not occupied. Fair value of the investment property as determined by an independent valuer, P Lindstrom (Registration no 935/7 registered in terms of the Valuers Act No.47 of 2000) is R1,140 million (2022: R nil - first valuation after completion of renovations). The ECPTA is in the process to obtain a tenant for this property. Cape Morgan multi-purpose facility: The property consists of land with a conference facility in Cape Morgan Bay and transferred from service concession assets in the 2019/20 financial year. The carrying amount at date of transfer was R14,796 million. It is currently not occupied. The property will be valued on completion of the public private partnership in the near term. From Investment property that generated rental revenue Rental revenue from Investment property 1 560 1 510 Repairs and maintenance 77 112 The depreciation method is reviewed at each reporting date, with the effect of any changes in estimate accounted for on a prospective basis. At each reporting date the ECPTA assesses whether there is any indication that expectations about the residual value and the useful life of an asset may have changed since the preceding reporting date. If any such indication exists, the expected residual value and useful life are revised and the effect of any changes in estimate accounted for on the a prospective basis. 37 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 12. Finance lease obligation Minimum lease payments due - within one year 660 45 - in second to fifth year inclusive 1 084 - 1 744 45 less: future finance charges (151) - Present value of minimum lease payments 1 593 45 Present value of minimum lease payments due - within one year 571 45 - in second to fifth year inclusive 1 022 - 1 593 45 Non-current liabilities 1 022 - Current liabilities 571 45 1 593 45 It is entity policy to lease certain equipment under finance leases. Interest rates are linked to prime at the contract date. All leases have fixed repayments and no arrangements have been entered into for contingent rent. The ECPTA has considered the following leases as significant: Ÿ Equipment located at East London head office is leased from Konica Minolta South Africa at a lease rental amount of R6,5 thousand per month for a period of two years ending 31 August 2022 with no escalation. The contract has since ended. Ÿ A new lease agreement, for a period of three years commencing on 01 February 2023 and ending 31 January 2026, at a lease rental of R23 thousand per month, with no escalation has been entered into. Ÿ Equipment located at nature reserves offices is leased from Bytes Document Solutions for a period of three years ending 31 August 2020, with an option to be extended at the sole discretion of the ECPTA for a maximum period of two years on same terms and conditions, except for a reduction in rental. The lease rental for the equipment is R13 thousand per month, which shall be reduced by seventy five (75%) on extension of the contract. The option to extend was considered with the change in lease rental to R2,6 thousand per month effective from September 2020 to 31 August 2022. The contract has since ended. Ÿ Equipment located at nature reserve offices is leased from Bytes Document Solutions for a period of three years ending 30 September 2025. The Parties must put a notice period to either in writing or system generated 60 (sixty) days prior to the expiry of the initial 36 (thirty-six) months lease period to effect a new lease extension of 24 (twenty- four) months. The lease rental for the equipment is R31,9 thousand per month. 13. Payables from exchange transactions Trade payables 5 929 11 017 Revenue received in advance 2 595 3 872 Other trade payables 31 28 Other payables - employee related 14 355 14 306 Accrued expense trade 6 088 2 026 Operating lease payments 45 - 29 043 31 249 The ECPTA, as a schedule 3C Public Finance Management Act (Act 1 of 1999) entity, is required to surrender surplus cash resources to the Provincial Treasury. Historically, the ECPTA has not retained cash to fully back the accrued leave pay accrual in light of this. The Provincial Treasury does however allow a retention based on prior year trends. The cash back portion is equivalent to the prior payments to employees leaving the ECPTA amounting to R1,2 million (2022: R1,2 million). The related leave pay provision is R12 million (2022: R11,9 million). 38 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 13. Payables from exchange transactions (continued) The ECPTA considers that the carrying amount of payables from exchange transactions approximates their fair value. The ECPTA's exposure to liquidity risk related to trade payables is disclosed in note 34 Salary control account consists of the following amounts: Salaries and wages 287 485 Skills development levy 152 148 Accrued leave pay 12 001 11 936 PAYE - 300 COID contributions 921 514 Pension and provident fund - 5 Medical aid 994 916 14 355 14 304 14. Social responsibility projects Social responsibility projects 73 82 This represents amounts available for social responsibility projects (formerly poverty alleviation projects) which are administered on behalf of the National Department of Forestry, Fisheries and the Environment, refer to note 5. These projects have been audited by the external auditors. 39 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 15. Provisions Reconciliation of provisions - 2023 Opening Additions Utilised during Total Balance the year Legal proceedings 135 - - 135 Professional fees 71 - - 71 Provision for climate change 200 100 - 300 Performance bonus 6 725 6 785 (6 785) 6 725 7 131 6 885 (6 785) 7 231 Reconciliation of provisions - 2022 Opening Additions Utilised during Total Balance the year Legal proceedings 135 - - 135 Professional fees 71 - - 71 Voluntary Severance Package 577 - (577) - Provision for climate change - 200 - 200 Performance bonus 9 603 6 886 (9 764) 6 725 10 386 7 086 (10 341) 7 131 Legal proceedings provisions The provision on legal proceedings represents management's best estimate of the entity's liability on legal costs relating to the following cases: Resettlement of people 20 20 Eviction of former employees 30 30 Public liability claim against employees 35 35 Employment dismissal 30 30 Reckless and negligent driving 20 20 135 135 The actual amounts to be paid will depend on the nature and extent of work performed by the attorneys in the litigation process. Professional fees provision The provision on professional fees represents the remaining proportion of fees anticipated to be paid to the Special Investigation Unit in respect of the special investigation services rendered to the entity. The Special Investigation Unit (SIU) was appointed, pursuant to the Presidential Proclamation to investigate activities surrounding the late President Mandela's funeral in 2013. The SIU have indicated that the report on the investigation has been submitted to the Office of the Presidency. The report will be released by the Presidency in due course. Performance bonus provision The provision on performance bonus of R6,7 million (2022: R6,7 million) relates to management's estimate on possible performance payments in terms of the entity's performance management policy. The payments of such bonuses is subject to the availability of funds and dependent on the outcome of performance evaluations which are conducted after financial yearend. Surrender of surpluses The ECPTA generates own revenues which then form part of its baseline budget for the year under review. The ECPTA therefore, doesn’t submit requests to the relevant Treasury to retain surpluses in terms of section 53(3) of the PFMA. The ECPTA applied for the Rollover of all unspent funds in April 2023, as duly required by the PFMA. 40 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 15. Provisions (continued) Provision for climate change The provision for climate change of R300 thousand (2022: R200 thousand) relates to management's estimate on possible natural disasters such as persistent dry conditions causing fires and excessive rainfall due to global warming causing flooding and destruction. The ECPTA has in prior periods expended monies on fire containment, mainly in the western part of the Province. The effects of climate change are also felt with sporadic and destructive rainfall especially in the Wild Coast region. 16. Unspent grants and receipts Unspent conditional grants and receipts comprises of: Unspent conditional grants and receipts DEDEAT - Economic Stimulus Fund 20 630 34 038 SANBI Presidential Youth Employment Intervention 664 275 South African National Biodiversity Institute 2 266 - South African National Parks 50 2 491 Green Trust - 5 CATHSSETA 203 88 National Lotteries Commission - 420 National Department of Tourism 14 158 10 209 DFFE - Environmental Protection and Infrastructure Programme 55 207 40 130 Rhino Impact Bond 134 204 South African National Roads Agency Limited 4 379 288 African Wildlife Foundation - 123 BANKSETA 720 - NEDBANK Green Trust 989 - Wildlife Conservation Bond 17 378 - 116 778 88 271 Movement during the year Balance at the beginning of the year 88 271 121 854 Additions during the year 325 132 294 771 Income recognition during the year (296 625) (328 354) 116 778 88 271 See note 22 for reconciliation of grants from National/Provincial Government. The ECPTA after due consideration of its current obligations at year end has no surplus funds to surrender to the Provincial Treasury. 17. Employee benefit obligations Defined benefit plan The ECPTA has unfunded defined benefit plans that relates to long service awards and post retirement medical aid benefits. An actuarial valuation was performed using the Projected Unit credit method. 41 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 17. Employee benefit obligations (continued) The amounts recognised in the statement of financial position are as follows: Non-current liabilities 17 593 16 450 Current liabilities 618 577 18 211 17 027 Carrying amounts Long service award Non-current 1 877 2 072 Current 214 196 Subtotal 2 091 2 268 Post employment medical aid Non-current 15 716 14 377 Current 404 381 Subtotal 16 120 14 758 18 211 17 027 Changes in the present value of the defined benefit obligation are as follows: Opening balance 15 173 13 693 Benefits paid 618 729 Net expense recognised in the statement of financial performance 1 802 751 17 593 15 173 Net expense recognised in the statement of financial performance Current service cost 488 808 Interest cost 1 865 2 323 Actuarial gains (551) (2 380) 1 802 751 Key assumptions used Assumptions used at the reporting date: Long service discount rate 6.83 % 10.00 % Benefit inflation rate 5.26 % 7.50 % Medical aid discount rate 11.05 % 11.05 % General inflation rate 9.49 % 6.55 % Salary inflation rate 7.55 % 7.55 % Medical inflation rate 9.49 % 8.55 % The discount rate has been determined with reference to market yields at the date of the valuation using the yield curve determined by the Bond Exchange of South Africa. No ill-health retirement assumption was made and it was assumed that all staff will retire at average age 65 (2022: 65 years). The results of the valuation are sensitive to the assumptions chosen. The ECPTA, as a schedule 3C Public Finance Management Act, (Act 1 of 1999) entity, is required to surrender surplus cash resources to the Provincial Treasury. Historically, the ECPTA has not retained cash to fully back the employee benefit obligation in light of this. In addition, the Provincial Treasury does not allow a retention of cash for this obligation. The entity, therefore, does not cash back employee benefit obligation. 42 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 18. Wildlife income Culling revenue - 1 093 Hunting and fishing income 2 974 2 275 Live game sales 2 568 1 121 Venison sales 124 185 5 666 4 674 19. Rendering of services Accommodation Fees 2 803 2 846 Camping Fees 901 1 232 Concession income 791 569 Commission 21 91 Ecological services income 25 44 Implementers fees 2 411 1 876 Sundry income 753 377 Conservation fees 1 263 1 532 Day tours and activities 500 620 Other services 55 20 9 523 9 207 20. Investment revenue Interest revenue Bank 6 888 5 611 21. Donations Donations 9 960 10 661 The Department of Forestry, Fisheries and the Environment transferred property, plant and equipment of R9,960 million (2022: R10,541 million) to the ECPTA as duly required by Section 42 of the PFMA. These assets form part of the Mthatha Dam Concession (see note 9). A further R120 thousand was classified as operating expenditure in the 2022 financial year. The ECPTA has been granted the use of assets and resources during the year for conservation and administration activities. The assets and resources are reflected below at cost as provided by the listed donors: DFFE - Salaries 211 672 Wilderness Foundation - Aerial Support 100 90 OTP - Salaries 108 134 University of Fort Hare - Salaries 160 - DWS - Salaries 60 - TVET Colleges - Salaries 103 - WWF - Interns - 120 742 1 016 The ECPTA and the Wilderness Foundation entered into a transfer agreement in 2018, for high value species and parcels of land known as portions of the farms "Bank Kop" and "OnverWacht". In 2019, the process started to transfer the land to the ECPTA, whilst a portion of a farm remained. The Board of Directors, in May 2022, approved that the remaining portion could now be transferred. Whilst the first transfer value was for R2,6 million, the remaining portion could not be determined at the reporting date. The parcels of land and any related infrastructure therein will be accounted for in terms of the applicable GRAP standards on completion of the transfer process. 43 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 22. Government grants & subsidies Operating grants DEDEAT - Equitable share 219 168 214 133 DEDEAT - Economic Stimulus Fund 13 408 3 694 DEDEAT - Tourism Relief Fund - 6 952 SANBI Presidential Youth Employment Intervention 951 2 405 South African National Biodiversity Institute - 201 South African National Parks 2 653 2 887 South African Tourism (SAT) - 1 500 CATHSSETA 108 763 National Lotteries Commission 519 406 Sarah Baartman District Municipality (SBDM) 300 300 National Department of Tourism 6 378 35 970 DFFE - Environmental Protection & Infrastructure Programme 26 095 41 143 Rhino Impact Bond 70 432 Dept of Sports, Recreation, Arts and Culture (DSRAC) - 1 000 Commission on the Restitution of Land Rights - 207 South African National Roads Agency Limited 11 935 8 901 Marine and Coastal Management MPA 4 185 4 460 NEDBANK Green Trust 411 - Wildlife Conservation Bond 6 942 - Department of Transport 3 500 3 000 296 623 328 354 Conditional and Unconditional Included in above are the following grants and subsidies received: Unconditional grants received 219 168 214 133 Conditional grants received 77 455 114 221 296 623 328 354 Spending on grants refers to instances where the entity receives the grant and subsequently spends thereon and the revenue is realised on the expenditure incurred. Re-imbursements refers to instances where the entity incurs expenditure on the applicable grant and is subsequently re-imbursed. Conditions still to be met - remain liabilities (see notes 4 and 16). DEDEAT - Equitable share Balance unspent at beginning of year - 633 Current-year receipts 219 168 213 543 Conditions met - transferred to revenue (219 168) (214 133) Other - (43) - - DEDEAT - Economic Stimulus Fund Balance unspent at beginning of year 34 038 6 111 Current-year receipts - 31 621 Conditions met - transferred to revenue (13 408) (3 694) 20 630 34 038 DEDEAT - Tourism Relief Fund Balance unspent at beginning of year - 6 952 44 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 22. Government grants & subsidies (continued) Conditions met - transferred to revenue - (6 952) - - SANBI Presidential Youth Employment Intervention Balance unspent at beginning of year 275 - Current-year receipts 1 340 2 680 Conditions met - transferred to revenue (951) (2 405) 664 275 South African National Biodiversity Institute Balance unspent at beginning of year - 9 Current-year receipts 2 266 192 Conditions met - transferred to revenue - (201) 2 266 - South African National Parks Balance unspent at beginning of year 2 491 2 057 Current-year receipts 264 3 321 Conditions met - transferred to revenue (2 663) (2 887) Other - returned to funder (project closure) (42) - 50 2 491 Two projects associated with the SANParks grant namely Environmental Monitors and GEF 5. GEF 5 project is completed and the remaining funds transferred back to the funder. Enviromental Monitors is still ongoing. South African Tourism (SAT) Conditions met - transferred to revenue - (1 500) Other - grant receivable - 1 500 - - CATHSSETA Balance unspent at beginning of year 88 99 Current-year receipts 218 752 Conditions met - transferred to revenue (103) (763) 203 88 National Lotteries Commission Balance unspent at beginning of year 420 26 Current-year receipts - 800 Conditions met - transferred to revenue (519) (406) Other - grant receivable 99 - - 420 Sarah Baartman District Municipality (SBDM) Current-year receipts 300 300 Conditions met - transferred to revenue (300) (300) 45 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 22. Government grants & subsidies (continued) - - National Department of Tourism Balance unspent at beginning of year 10 209 14 402 Current-year receipts 10 327 34 810 Conditions met - transferred to revenue (6 378) (37 486) Other - Surrender - (1 517) 14 158 10 209 DFFE - Environmental Protection and Infrastructure Programme Balance unspent at beginning of year 40 130 81 273 Current-year receipts 41 172 - Conditions met - transferred to revenue (26 095) (41 143) 55 207 40 130 Rhino Impact Bond Balance unspent at beginning of year 204 629 Current-year receipts - 6 Conditions met - transferred to revenue (70) (431) 134 204 Dept of Sports, Recreation, Arts and Culture (DSRAC) Current-year receipts - 1 000 Conditions met - transferred to revenue - (1 000) - - Commission on Restitution of Land Rights Balance unspent at beginning of year - 207 Conditions met - transferred to revenue - (207) - - South African National Roads Agency Limited Balance unspent at beginning of year 288 9 189 Current-year receipts 16 026 - Conditions met - transferred to revenue (11 935) (8 901) 4 379 288 African Wildlife Foundation Balance unspent at beginning of year 123 123 Conditions met - transferred to revenue (123) - - 123 Marine and Coastal management MPA Balance unspent at beginning of year - 139 Current-year receipts - 3 750 46 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 22. Government grants & subsidies (continued) Conditions met - transferred to revenue (4 185) (4 460) Other - grants receivable 4 185 571 - - BANKSETA Current-year receipts 720 - NEDBANK Green Trust Current-year receipts 1 400 - Conditions met - transferred to revenue (411) - 989 - Wildlife Conservation Bond Current-year receipts 24 320 - Conditions met - transferred to revenue (6 942) - 17 378 - Department of Transport Current-year receipts 3 500 3 000 Conditions met - transferred to revenue (3 500) (3 000) - - 23. Employee related costs Basic salary 128 081 121 782 Performance bonus 6 761 6 761 Medical aid contributions 12 770 12 066 Unemployment insurance fund 1 068 986 Skills development levy 152 148 Leave pay provision charge 1 092 1 615 Workmen's compensation - COID 1 785 1 757 Defined contribution plans 18 130 17 710 Overtime payments 4 707 4 128 Car allowance 476 487 Allowances - Relocation and Acting 339 1 798 175 361 169 238 Included in employee related costs is an amount of R13,310 million (2022: R12,951 million) for projects that are funded outside the provincial fiscus. In addition, included in medical aid contribution is an amount for former employees that enjoy benefits under the defined benefit plan. 24. Depreciation and amortisation Property, plant and equipment 29 021 20 199 Investment property 456 424 Service concession assets 1 413 690 Intangible assets 578 383 31 468 21 696 47 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 24. Depreciation and amortisation (continued) Depreciation and amortisation As per revised As per original Change in useful life useful life estimate Property, plant and equipment 29 021 (29 021) - Investment property 456 (456) - Service concession assets 1 413 (1 413) - Intangible assets 578 (578) - 31 468 (31 468) - 25. Finance costs Employee benefit obligations 1 865 2 323 Finance leases 40 7 1 905 2 330 48 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 26. General expenses Advertising and marketing 13 145 18 036 Auction expenses 1 082 560 Auditors remuneration 2 752 2 688 Bank charges 290 268 Board expenses ^ 3 413 1 814 Chemicals 529 689 Cleaning 1 396 1 693 Community projects 139 142 Compliance and law enforcement** 1 174 968 Computer expenses 26 55 Conferences and seminars 2 034 1 330 Consulting and professional fees 12 706 8 802 Consumables 1 164 1 347 Electricity 6 939 6 248 Entertainment 26 4 Fleet 5 046 3 496 Fuel and oil 459 478 Game management * 3 240 3 091 Hire expenses 1 385 1 099 Insurance 2 758 2 236 Internal audit fees 1 098 853 Lease rentals on operating lease 7 904 6 248 Levies - Buildings 138 158 Medical expenses 59 13 Postage and courier 29 55 Printing and stationery 800 772 Profit or loss on foreign exchange (29) (21) Protective clothing 281 205 Refuse 240 304 Research and development costs - 2 Royalties and license fees 4 585 4 360 Security 2 455 1 370 Staff relocation 229 424 Staff welfare 316 252 Subscriptions and membership fees 490 404 Telephone and fax 6 352 9 567 Tourism development 637 1 380 Training 2 464 2 377 Travel - local 11 218 7 231 Travel - motor car, accommodation and subsistence 2 943 1 621 Travel - overseas 844 - Uniforms 2 251 1 489 105 007 94 108 ^ Board expenses include travel of R1.4 million (2022: R226 thousand). * Game management relates to expenditure in bringing game held for sale into account, includes animal feed, veterinary and aviation services. ** Compliance and law enforcement includes expenditure related to the ECPTA biodiversity and conservation mandate (includes Fire prevention, ammunition costs, compliance law enforcement). The tables below provide details of the expenditure included in Compliance and law enforcement, and in Game management: Compliance and law enforcement Fire prevention 620 735 Ammunition 16 18 Compliance law enforcement 538 215 49 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 26. General expenses (continued) 1 174 968 Game management Rhino security 68 43 Game census 1 272 1 303 Game vet drugs 675 389 Game translocation 1 224 1 032 Animal feed 1 324 3 240 3 091 27. Repairs and maintenance Property, plant and equipment 5 070 5 087 Investment property 77 112 5 147 5 199 Repairs and maintenance only includes amounts paid to service providers. Nature Reserves' employees do repairs with their tools and equipment from time to time. 28. Auditors' remuneration Fees 2 752 2 688 Auditors' remuneration includes audit fees for projects amounting to R376 thousand in the prior year. No expenditure in the current year. 29. Debt impairment Debt impairment 736 295 30. Cash generated from operations Surplus 10 674 68 404 Adjustments for: Depreciation and amortisation 31 467 21 696 Donations (9 960) (10 661) Loss / (profit) on disposal of assets 6 837 Impairment deficit 648 717 Debt impairment 736 295 Movements in retirement benefit assets and liabilities 1 184 (217) Movements in provisions 100 (3 255) Changes in working capital: Inventories 1 174 1 872 Receivables from exchange transactions (538) (106) Receivables from non-exchange transactions (3 600) (972) Payables from exchange transactions (2 256) (7 056) Payables from non-exchange transactions 51 1 034 Unspent grants and receipts 28 507 (33 583) 58 193 39 005 50 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 31. Operating lease The ECPTA has considered the following leases as significant, where it rents office space: Ÿ Hemipac Investments (Pty) Ltd, a division of SKG Properties Group, in East London, at number 17-25 Oxford Street, Central Business District. Pursuant to a procurement process the landlord was appointed for 3 years with an option to extend for a further period of 2 years from October 2021. At the time of reporting contractual arrangements had not been finalized. The lease is R507 thousand per month including parking with an escalation of eight percent (8,00%) per annum. Ÿ SKG Africa (Pty) Ltd, in East London, at number 17-25 Oxford Street, Central Business District, for the rental of storage facilities. The lease contract is for a period of 36 months commencing on 01 March 2022 to 28 February 2025, with an option to renew for a further period of two (2) years. The rental amount is R7 thousand per month including vat with an escalation of eight percent (8,00%) per annum. Ÿ Gana and Dimpo Developers CC in Lusikisiki, in Lungani Drive, Newtown. The lease contract is for a period of twenty four (24) months commencing on 01 November 2019. The rental per month is R21 thousand with no escalation. The contract ended in November 2021. Ÿ Gana and Dimpo Developers CC in Lusikisiki, in Lungani Drive, Newtown. The lease contract is for a period of thirty six (36) months commencing on 09 February 2022 with an option to renew for a further twenty four (24) months. The rental per month is R33 thousand including parking with an escalation of eight point eight percent (8,8 %) in year two and nine point five percent (9,5%) in year three. Operating leases as the lessor: Minimum lease payments due - Not later than one year 7 421 7 475 - in second to fifth year inclusive 20 129 13 405 27 550 20 880 The ECPTA has considered the following leases as significant, where it rents out office space: Ÿ National Prosecuting Authority (NPA) at Tourism House, in Phalo Avenue in Bhisho. The contract was a thirty six (36) months lease, commencing on 01 May 2016. The rental was R82 thousand per month with a six percent (6.00 %) escalation rate on renewal of the lease. The rental amount was adjusted to R85 thousand on 01 December 2018 and the contract ended on 30 April 2019. Ÿ A new contract was entered into with The National Prosecuting Authority (NPA) at the Tourism House in Bhisho during the 2019 year. The contract was a thirty six (36) months lease, commencing on 01 May 2019. The rental amount was R93 thousand per month with a six percent (6.00 %) annual escalation rate. The contract ended 30 April 2022. A new contract for twelve (12) months, commencing on 01 May 2022 is in place. The rental amount is R105 thousand (no VAT payable) per month till 30 April 2023. Ÿ Department of Public Works at Erf 292, Unit 02, Business Village in Bhisho. The contract was a thirty six (36) months lease, commencing on 01 April 2018 with an option to renew for a further twenty four (24) months. The commencement rental was R22 thousand per month with a six percent (6.00 %) escalation rate at the end of each lease year. The rental was R25 thousand from April 2020.The contract ended on 31 March 2021. A new contract was signed for a year to March 2022. An extension of the lease for a period of twelve (12) months commencing on 01 April 2022, has been entered into. The rental amount is R28 thousand including VAT per month. The contract ends on 31 March 2023. 51 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 32. Contingencies Contingent liabilities Contingent liabilities comprising of damage claims are as follows: Damage claims Ÿ Khayalethu Geelbooi v ECPTA: This is a claim for personal injuries. The ECPTA was served with a letter of demand in which the claimant is claiming R500 thousand for damages. A summons has also been issued. The ECPTA is defending the matter through the attorneys appointed by its insurers and is accordingly not in a position to quantify its legal costs. This matter has been dormant over a year as no further steps have been taken by the Plaintiff (K Geelbooi). The ECPTA has advised the attorneys to close the file. The total legal fees paid to date amount to R70 539.39. Ÿ Andre Prinsloo v ECPTA: This matter relates to a buffalo attack which took place on the Baviaanskloof Nature Reserve on 13 June 2015. The ECPTA is being sued for damages to the amount of R3,089 million. A settlement proposal has been accepted by the Plaintiff and the damages have been quantified. A sum of R900 thousand was served to the Plaintiff's attorneys and their response is still awaited. The ECPTA is defending the matter through the attorneys appointed by its insurers and is accordingly not in a position to quantify its legal costs. An Industrial Psychologist has been appointed, as we have been unable to settle this claim. The Plaintiff is intent on pursuing a substantial claim for loss of income/earning capacity and the head of damage can only be determined once a report is received from an Industrial Psychologist. Plaintiff has passed on and the process of appointing an executor is underway. With the Plaintiff’s passing the only claims which now remain are the claim for past hospital and medical expenses with limited general damages claim, and a claim for any past loss of earnings (if same can be proven).The insurers are responsible for the litigation costs. A trial date is awaited. Ÿ Vuyisile Diko v ECPTA: The matter relates to a claim for damages alleged to have occurred when an ECPTA vehicle collided with the plaintiff's stationery vehicle. The ECPTA was served with a letter of demand in which the claimant is claiming R140 thousand for the damages. Summons has also been issued and the ECPTA is awaiting a trial date in this matter. The ECPTA insurers are handling the matter and are responsible for the litigation costs. A report has been received from the insurers in this matter advising that ECPTA's own damage has been finalised and now their third-party specialist is awaiting a trial date. The claim has been resolved during the year with payment of R138 thousand to the third party as settlement of their claim. Ÿ Anthony McCune Mortlock v ECPTA: The matter relates to a claim for bodily injury alleged to have occurred to a client at the Blue Bend Nahoon River beach in February 2018. The plaintiff is claiming an amount of R366 thousand for personal injuries. The ECPTA insurers are handling the matter. A pre-trial conference was recently convened as a precursor to an application for a trial date. The claim is being defended by virtue of the licence that was given by the erstwhile Department of Forestry to the erstwhile East London Municipality for the construction and maintenance of the wooden steps in question. The insurers are responsible for the litigation costs. The matter was set for hearing on the 11th of October 2022 and was postponed for trial without a date (sine die). Ÿ A member of the Public v ECPTA: The ECPTA received a letter demanding payment of R12 million emanating from an incident that took place in December 2022 at Dwesa Cwebe Nature Reserve. At the reporting date summons has not been received. The claimant was allegedly shot at by field rangers that were on duty and patrolling the area and as a result, he sustained serious injuries. The ECPTA has opened a criminal case against the alleged offenders. The investigation is underway, and it has been confirmed that the ECPTA Field Rangers are firearm competent. The claim has been submitted to the ECPTA's insurer. The member of the public is not named for POPIA reasons. 52 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 32. Contingencies (continued) Contingent assets Contingent assets comprising of damage claims are as follows: ECPTA v Medbury Farm: This matter relates to the recovery of animals that crossed over to the neighbouring farm. The ECPTA is demanding the return of the animals, alternatively, payment of the sum of R4 million being the reasonable market value of the animals. Judgement in favour of the ECPTA has been received from the Supreme Court of Appeal. A settlement offer was made by the defendant and the matter stands in court without a trial date. The legal costs paid amount to R2 million. The Supreme Court of Appeal awarded costs to the ECPTA. At the reporting date these had not been determined and are expected to be in line with costs paid to date of R2 million. The entity expects to recover R500 thousand after the taxing of the bills. Attempts to settle the matter were unsuccessful. A trial date is still awaited, and no legal fees have been paid since 2019. Contingencies summary: Contingent Assets: ECPTA v Medbury Farm 4 000 4 000 Contingent Liabilities: Khayalethu Geelbooi v ECPTA 500 500 Andre Prinsloo v ECPTA 3 089 3 089 Vuyisile Diko v ECPTA - 140 Anthony McCune Mortlock v ECPTA 366 366 member of the Public v ECPTA 12 000 - 15 955 4 095 53 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 33. Related parties ` Relationships Controlling entity Department of Economic Development, Environmental Affairs and Tourism as directed by the MEC as the Executive Authority. Controlled entities - under common control by DEDEAT Coega Development Corporation East London Industrial Development Zone Eastern Cape Development Corporation Eastern Cape Gambling and Betting Board Eastern Cape Liquor Board Entities with co-management agreements Dwesa-Cwebe Land Trust Mkhambathi Land Trust Strategic partnership entities Culture, Arts, Tourism, Hospitality and Sports Sector Education and Training Authority South African National Biodiversity Institute South African National Parks Commission on Restitution of Land Rights Members of management members of The Board and key management personnel are disclosed in Note 35 Related party balances Amounts included in Trade receivable (Trade Payable) regarding related parties Debt receivable (staff debtors) - note 4 400 265 Transfer payments received from related parties Department of Economic Development, Environmental Affairs and Tourism 219 168 245 164 Amounts received from related parties for tourism development programmes National Department of Tourism 10 327 - BANKSETA 720 - 11 047 - Amounts received from related parties for biodiversity conservation projects National Department of Forestry, Fisheries and the Environment 41 172 3 750 South Africa National Biodiversity Institute 2 266 192 South African National Parks (Including Environmental Monitoring Programme) 264 3 321 South Africa National Biodiversity Institute Presidential Youth Employment Integration 1 340 2 680 45 042 9 943 Amounts received from related parties for skills development programme Culture, Arts, Tourism, Hospitality and Sports Sector Education and Training Authority 219 752 54 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 33. Related parties (continued) Remuneration of management Management class: Board members 2023 Fees for Other benefits Total services as a received member of the Board Name Ms T Putzier - (Acting Chairperson of the Board effective 01 April 2021 to 30 281 66 347 November 2022) - Appointed 01 September 2017 * Dr N Mzilikazi - (Chairperson of the Board effective 01 December 2022) 155 - 155 ;(Board Member) - Appointed 01 May 2019 - November 2022 Dr AJ Baxter - (Board Member) - Appointed 01 May 2019 - 30 November 101 - 101 2022 Mr ZL Fihlani - (Board Member) - Appointed 15 August 2017 - 30 November 113 - 113 2022 Mr L Bevile - (Board Member) - Appointed 01 May 2019 107 3 110 Mr TL Lehloesa (Board Member) - Appointed 01 March 2021 - 30 November 80 - 80 2022 Ms NEP Loyilane - (Deputy Chair) 42 - 42 Appointed 01 December 2022 Dr A Muir - (Board Member) 51 - 51 Appointed 01 December 2022 Mr CJ Sparg - (Board Member) 52 - 52 Appointed 01 December 2022 Adv S Mancotywa - (Board Member) 37 - 37 Appointed 01 December 2022 1 019 69 1 088 2022 Fees for Other benefits Total services as a received member of the Board Name Ms T Putzier - (Acting Chairperson of the Board effective 01 April 2021) - 208 22 230 Appointed 01 September 2017 * Dr N Mzilikazi - (Board Member) - Appointed 01 May 2019 138 - 138 Dr A Baxter - (Board Member) - Appointed 01 May 2019 120 - 120 Mr ZL Fihlani - (Board Member) - Appointed 15 August 2017 123 - 123 Mr L Bevile - (Board Member) - Appointed 01 May 2019 87 - 87 Mr TL Lehloesa (Board Member) - Appointed 01 March 2021 90 - 90 766 22 788 * Re-appointed by the Member of the Executive Council with effect from 1 May 2019. Other benefits include stakeholder engagements and cellphone allowances. 55 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 33. Related parties (continued) Audit Committee 2023 Fees for Other benefits Total services as a received member of the Board Name Mr L Mangquku (Chairperson) - Appointed 01 May 2020 136 5 141 Mr S Dzengwa - (Member) - re appointed on 1 May 2020 - 31 March 2023 40 - 40 Mr J Emslie - (Member) - Appointed 01 May 2020 50 - 50 226 5 231 2022 Fees for Other benefits Total services as a received member of the Board Name Mr L Mangquku (Chairperson) - Appointed 01 May 2020 119 7 126 Mr S Dzengwa - (Member) - re appointed on 1 May 2020 40 - 40 Mr J Emslie - (Member) - Appointed 01 May 2020 50 - 50 209 7 216 Other benefits include stakeholder engagements and cellphone allowances. 56 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 33. Related parties (continued) Management class: Executive management 2023 Basic salary Bonuses and Post- Other benefits Total performance employment received related benefits payments Name Mr V Dayimani 2 325 304 130 42 2 801 - (Chief Executive Officer) Mr J Jackson 1 573 210 229 80 2 092 - (Chief Financial Officer) Ms E Van Den Berg-McGregor 1 198 134 173 37 1 542 - (Executive Director: Biodiversity Conservation) Ms TS Dlamini 1 392 160 - 64 1 616 - (Chief Marketing Officer) Ms M Mahlatsi 1 364 82 - 78 1 524 - (Executive Director: Destination Development) Ms Y Roboji 1 532 89 - 160 1 781 - (Executive Director: Corporate Services) Ms X Mapoma 1 107 120 164 75 1 466 - (Legal Advisor and Board Secretary) 10 491 1 099 696 536 12 822 2022 Basic salary Bonuses and Post- Other benefits Total performance employment received related benefits payments Name Mr V Dayimani 2 358 451 - 69 2 878 - (Chief Executive Officer) Mr J Jackson 1 506 329 218 81 2 134 - (Chief Financial Officer) Ms E Van Den Berg-McGregor 1 158 153 167 65 1 543 - (Executive Director: Biodiversity Conservation) - Appointed 01 April 2021 Ms N Ali 396 327 - 263 986 - (Executive Director: Corporate Services) - resigned 30 June 2021 Ms TS Dlamini 1 314 253 - 61 1 628 - (Chief Marketing Officer) Ms M Mahlatsi 580 - 84 169 833 (Executive Director: Destination Development) - Appointed 01 October 2021 Ms Y Roboji 771 - - 213 984 - (Executive Director: Corporate Services) - Appointed 01 October 2021 Ms X Mapoma 1 056 153 156 68 1 433 - (Legal Advisor and Board Secretary) 57 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 33. Related parties (continued) Mr L Oliphant 211 106 31 51 399 - (Acting Executive Director: Corporate Services) - 01 July to September 2021 Ms F Mlungu 473 141 74 140 828 - (Acting Executive Director: Destination Development) - 01 April to September 2021 9 823 1 913 730 1 180 13 646 Other benefits comprise travel allowance, reimbursements and medical benefits 34. Risk management Financial risk management The entity’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The ECPTA has a risk management framework, risk management policy, and risk management committee in place which meets on a quarterly basis and reviews the strategic and operational risk registers. The risk management committee comprises of executive and senior management and reports to the audit and risk committee which in turn reports to the Board. Payables from exchange transactions excludes employee related payables of R14 355 million (2022: R14 306 million). Classification of financial instruments. 2023 Note(s) At amortised Total cost Receivables from exchange transactions 3 782 782 Receivables from non-exchange transactions 4 7 768 7 768 Cash and cash equivalents 5 113 887 113 887 Payables from exchange transactions 13 (14 688) (14 688) 107 749 107 749 2022 Note(s) At amortised Total cost Receivables from exchange transactions 3 980 980 Receivables from non-exchange transactions 4 4 168 4 168 Cash and cash equivalents 5 101 633 101 633 Payables from exchange transactions 13 (16 943) (16 943) 89 838 89 838 58 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 34. Risk management (continued) Liquidity risk The ECPTA’s risk to liquidity is a result of the funds available to cover future commitments. The entity manages liquidity risk through an ongoing review of future commitments. Liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Contractual maturities of financial liabilities. A significant percentage of the ECPTA's liabilities consist of trade creditors. This relates to goods and services obtained during the normal course of business and is budgeted for. Quarterly cash flow forecasts and expenditure analysis reports enable the entity to ensure that adequate cash will be available to meet its obligations. Cognizance has also been made of the historical deficit of current assets over current liabilities and in the medium term this is not expected to impact the entity’s obligations. Liquidity risk is regarded as being low. The table below analyses the entity’s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The ECPTA recoginsed the following financial instruments (all balances are recognised at amortised cost and due within a year). 2023 Less than 1 Total year Payables from exchange transactions (note 13) 14 688 14 688 Social responsibility projects 73 73 14 761 14 761 2022 Less than 1 Total year Payables from exchange transactions (note 13) 16 943 16 943 Social responsibility projects 82 82 17 025 17 025 Payables from exchange transactions exclude revenue received in advance and employee payables as the ECPTA believes these are not financial instruments. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The ECPTA only deposits cash with the major banks with high quality credit standing. The risk on cash and cash equivalents is thus low. The ECPTA does not operate on a credit basis with customers and a significant portion of trade receivables relate to specific amounts receivable through agreed projects and agreements. A small portion relates to staff debts but this has been mitigated through the creation of an impairment allowance. Financial assets exposed to credit risk at year end were as follows: Neither past due nor impaired Cash and cash equivalents 113 887 101 633 Receivables from exchange and non exchange transactions 7 345 4 322 121 232 105 955 Past due and not impaired Receivables from exchange and non exchange transactions - 28 Past due and impaired Receivables from exchange and non exchange transactions 1 492 756 59 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 34. Risk management (continued) Market risk Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As the ECPTA has no significant interest bearing assets, the entity's income and operating cash flows are substantially independent of changes in market interest rates. All interest bearing assets are included under cash and cash equivalents. These are all short term as they relate mainly to the transfer payments received from DEDEAT as part of our budgeted grants to be used for operational expenditure. The sensitivity analysis below has been determined on financial instruments exposure to interest rates at reporting date, assuming the amount of the instrument outstanding is outstanding for the whole year. The analysis, as detailed in the table below was determined by management and indicate a reasonable estimate of the increase / (decrease) on surplus from an increase in interest rates by 100 basis points. There were no changes from the prior year in the methods and assumptions used in preparing the sensitivity analysis: Cash and cash equivalents 1 139 1 016 Employee benefit obligation (182) (170) 957 846 Price risk Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The nature of our business is on a cash basis for revenue received and for expenditure incurred it is all short term trades relating only to the relevant financial year. As a result the impact of market price fluctuations does not impact on the ECPTA. 60 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 34. Risk management (continued) Currency risk: Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The main foreign currency transactions which the entity is exposed to, is the accommodation revenue received from overseas customers. The amounts received are not significant so the currency risk of the entity is regarded as being low. The ECPTA has a software licencing agreement with a service provider where amounts payable are denominated in US Dollars. The contract is near termination and the currency risk of the entity in relation to the agreement is regarded as being low. Refer to note 35 . Capital risk management: The ECPTA's objectives when managing capital is to safeguard the entity's ability to continue as a going concern. The ECPTA does not enter into any high risk financial instruments and reviews its cash flows on a quarterly basis to ensure that it maintains its ability to operate as a going concern. The mandate of the ECPTA is largely driven by the constitution and by the Provincial Growth and Development Plan and we are thus assured of funding from DEDEAT for biodiversity conservation. 35. Commitments Capital expenditure - approved, funded and contracted 41 235 53 806 Goods and services - approved, funded and contracted 11 353 3 537 52 588 57 343 Goods and services commitments that relate to onerous contracts and thus included. The committed expenditure relates to outstanding expenditure orders at year-end and will be financed from available resources within a year, as follows: DEDEAT - Economic Stimulus Fund 20 299 23 845 NEDBANK Green Trust 589 - National Department of Forestry, Fisheries and the Environment 21 376 21 990 National Department of Tourism 7 398 10 046 SANRAL - N2BOP 1 844 - CATHSSETA 200 - Own revenue 230 1 016 Marine and Coastal Management 525 446 Wildlife Conservation Bond 127 - 52 588 57 343 The ECPTA entered into an agreement with Microsoft in respect of Microsoft Software licences, for an amount of R7.4 million (503 thousand USD) during the 2022 financial year for a period of 3 years. The balance of the contract at the reporting date is R3 million (168 thousand USD) and will be funded in the short term. 36. Going concern The ECPTA, as a Public Finance Management Act listed 3C entity (with the responsible MEC, as the Shareholder, being the Executive Authority), receives an annual grant from the Provincial Government and prepares its budget and Annual Performance Plans based on such grant. The ECPTA also receives, as a small proportion of this grant, cash flow from its own revenue to augment its operations. The ECPTA has also leveraged resources from the International and National sphere and thereby augmenting its operations and capital expenditure. As such, the ECPTA is dependent for its continued operation in the foreseeable future on continued Government Grant funding. Management has determined that such funding is reasonably expected to continue and therefore has prepared these Annual Financial Statements on the going concern basis. 61 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 37. Irregular expenditure Add: Irregular Expenditure - current 1 706 5 719 Irregular expenditure is presented inclusive of VAT. Details are included in Annexure E of the Annual Report. 38. Fruitless and wasteful expenditure Add: Fruitless and wasteful expenditure identified - current 98 - Add: Fruitless and wasteful expenditure identified - prior period 208 - Closing balance 306 - Fruitless and wasteful expenditure is presented inclusive of VAT Details are included in Annexure E of the Annual Report. 39. New standards and interpretations 39.1 Standards and interpretations issued, but not yet effective The entity has not applied the following standards and interpretations, which have been published and are mandatory for the entity’s accounting periods beginning on or after 01 April 2023 or later periods: Standard/ Interpretation: Effective date: Expected impact: Years beginning on or after Ÿ GRAP 25 (as revised): Employee Benefits 01 April 2023 Unlikely there will be a material impact Ÿ iGRAP 7 (as revised): Limit on defined benefit asset, 01 April 2023 Unlikely there will be a minimum funding requirements and their interaction material impact Ÿ GRAP 104 (as revised): Financial Instruments 01 April 2023 Unlikely there will be a material impact Ÿ iGRAP 21: The Effect of Past Decisions on Materiality 01 April 2023 Unlikely there will be a material impact Ÿ GRAP 1 (amended): Presentation of Financial Statements 01 April 2023 Unlikely there will be a material impact 62 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 40. Budget differences The Annual Financial Statements are prepared on an accrual basis of accounting while the budget is on a cash basis. The amounts in the Annual Financial Statements were recalculated from the accrual to cash basis. A reconciliation between the budget and the actual amounts in the statement of financial performance is presented on a comparable basis in the face of the statement of comparison of budget and actual amounts for the year ended 31 March 2023. Detailed below are explanations of material differences between the budget and actual amounts on a comparable basis. The changes between the approved and final budget are a consequence of reallocations within the approved budget parameters. Revenue from exchange transactions: The under-collection of R7,2 million is mainly from concession revenue for the Baviaanskloof World Heritage Site and the Cape Morgans conference centre whose concession agreements have not been finalised as anticipated. Other grants: The difference of R93,7 million arises from grants received for multi-year projects from prior financial years for the DFFE - Environmental Protection Infrastructure Programme and NDT-Infrastructure grants which were unspent at the 2021-22 year- end, also included is current year grants for N2 Biodiversity Offset Projects and Wildlife Conservation Bond. Refer to note 35 for commitments and note 16 for unspent grants. Grants and subsidies: Nil Compensation of employees: The difference of R815 thousand from provisions for employee leave. Goods and Services: The difference of R26,7 million arises mainly for Project funds such as DFFE - Environmental Protection Infrastructure Programme, Wildlife Conservation Bond and N2BOP grants that were not spent. Capital expenditure: The underspending of capital expenditure of R61,5 million arises from grants received for this period such as the Wildlife Conservation Bond, N2 Biodiversity Offset Project and DFFE - Environmental Protection Infrastructure Programme, which was unspent at year-end and the unspent grants from the previous year for the NDT Infrastructure and the Provincial Economic Stimulus Fund grants . Refer to note 35 for commitments and note 16 for unspent grants. 63 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 41. Segment information General information Identification of segments The ECPTA is organised and reports to management on the basis of four major functional areas: Other Services, biodiversity and heritage cluster, game management and recreation cluster and marine and coastal cluster. The segments were organised around the type of service delivered and the target market. Management uses these same segments for determining strategic objectives. Segments were aggregated for reporting purposes. Information reported about these segments is used by management as a basis for evaluating the segments’ performances and for making decisions about the allocation of resources. The disclosure of information about these segments is also considered appropriate for external reporting purposes. Types of goods and/or services by segment These reportable segments as well as the goods and/or services for each segment are set out below: Reportable segment Goods and/or services Other Services Corporate Management Services and Other Services Biodiversity and heritage cluster Biodiversity and heritage management Game management and recreation cluster Game management and recreation management Marine and coastal cluster Tourism and coastal conservation management 64 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 41. Segment information (continued) Segment surplus or deficit 2023 Other Services Biodiversity Game Marine and Total and heritage management coastal and recreation Revenue Revenue from non-exchange transactions 296 624 - 10 023 - 306 647 Revenue from exchange transactions 12 716 4 075 4 100 3 415 24 306 Total segment revenue 309 340 4 075 14 123 3 415 330 953 Entity's revenue 330 953 Expenditure Salaries and wages 84 358 39 059 22 305 29 637 175 359 Other expenses 94 977 7 873 4 181 6 412 113 443 Depreciation and amortisation 30 855 1 621 - 31 477 Total segment expenditure 210 190 46 933 27 107 36 049 320 279 Total segmental surplus/(deficit) 10 674 2022 Other Services Biodiversity Game Marine and Total and heritage management coastal and recreation Revenue Revenue from non-exchange transactions 160 576 82 884 26 807 69 151 339 418 Revenue from exchange transactions 11 882 3 906 3 907 3 712 23 407 Total segment revenue 172 458 86 790 30 714 72 863 362 825 Entity's revenue 362 825 65 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 41. Segment information (continued) Expenditure Salaries and wages 87 631 36 422 19 790 25 395 169 238 Other expenses 86 003 7 404 3 734 6 346 103 487 Depreciation and amortisation 21 006 - 690 - 21 696 Total segment expenditure 194 640 43 826 24 214 31 741 294 421 Total segmental surplus/(deficit) 68 404 The assets and liabilities which have been reported in aggregate are not directly attributable nor can be reasonably allocated to segments. Segmented amounts for these assets and liabilities are not regularly provided to management for the purpose of assessing performance and making decisions about how the future resources will be allocated to the various activities of the ECPTA. 66 Eastern Cape Parks and Tourism Agency Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 2023 2022 42. Prior-year adjustments Presented below are those items contained in the statement of financial position, statement of financial performance and cash flow statement that have been affected by prior-year adjustments: Statement of financial position 2022 Note As previously Correction of Restated reported error Receivables from non exchange transactions 3 960 208 4 168 Accumulated surplus 297 601 (208) 297 393 301 561 - 301 561 Errors Receivables from exchange and non exchange transactions: It was discovered in the current financial year that salaries totallling to R306 thousand was erroneously paid to an employee who had resigned in the 2020 financial year. Staff debts for same have been raised. This resulted in the understatement of receivables from non exchange by R306 thousand, current year personnel costs of R99 thousand and accumulated surplus by R208 thousand. There is no effect on the accounting policy or estimate due to the error. Reclassifications The following reclassifications adjustment occurred: Current liabilities of R618 thousand (2022: R577 thousand), per Statement of Financial Position - Employee benefit obligations (Note 17), previously disclosed as Payables from non-exchange transactions. Employee related payables previously disclosed as Payables from non exchange R14 355 thousand (2022: R14 304 thousand) are disclosed as payables from exchange transactions (Note 13). 43. Events after the reporting date None to date 67