South African National Parks Annual Financial Statements for the year ended 31 March 2023 South African National Parks Annual Financial Statements for the year ended 31 March 2023 South African National Parks Annual Financial Statements for the year ended 31 March 2023 General Information Country of incorporation and domicile South Africa Nature of business and principal activities In terms of the National Environmental Management: Protected Areas Act, 57 of 2003, SANParks mandate is to conserve, protect, control, and manage national parks and other pre-defined protected areas and their biological diversity (biodiversity). Registered office 643 Leyds Street Muckleneuk Pretoria South Africa 0002 Business address 643 Leyds Street Muckleneuk Pretoria South Africa 0002 Postal address PO Box 787 Pretoria 0001 Controlling entity Department of Forestry, Fisheries and the Environment (DFFE) 473 Steve Biko Road Arcadia Pretoria 0083 Bankers First National Bank 1 First Place 7th Floor Bank City Johannesburg 2000 Auditors Auditor General of South Africa (AGSA) 300 Middel Street New Muckleneuk Pretoria 0002 Secretary Ms M Mathabathe 1 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Index The reports and statements set out below comprise the Annual Financial Statements presented to the parliament: Page Statement of responsibility and confirmation of accuracy of the annual report 3 Statement of Financial Position 4 Statement of Financial Performance 5 Statement of Changes in Net Assets 6 Cash Flow Statement 7 Statement of Comparison of Budget and Actual Amounts 8 Accounting Policies 9 - 42 Notes to the Annual Financial Statements 43 - 82 2 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Statement of responsibility and confirmation of accuracy of the annual report The Board is responsible and accountable for the integrity of the Financial Statements of the organisation and the objectivity of other information presented in the Annual Report. To the best of the Boards’ knowledge and belief, the following can be confirmed:  All information and amounts disclosed in this Annual Report are consistent with the Annual Financial Statements to be audited by the AGSA. The report is complete, accurate and free of omissions,  The Annual Report has been prepared in accordance with the guidelines issued by National Treasury and Annual Financial Statements were prepared in accordance with the PFMA, and Generally Recognised Accounting Practice (GRAP),  The going concern basis has been adopted in preparing the Financial Statements. The Board, after having reviewed management's assessment of the entity ability to operate as a going concern, has a reasonable expectation that the organisation will have adequate resources to continue its operations as a going concern for the foreseeable future,  Management and employees operated within a framework requiring compliance with all applicable laws and maintenance of the highest integrity in the conduct of all aspects of the business, except where indicated otherwise in the Annual Report. The AGSA is responsible for expressing an independent opinion on the Annual Financial Statements of the entity. The Board is well versed of its responsibilities as stipulated in the PFMA. Those responsibilities include, but are not limited to the following:  establishing and maintaining effective, efficient and transparent systems of financial, risk management and internal controls;  safe-guarding of assets and the management of the revenue, expenditure and liabilities of the entity;  taking effective and appropriate steps to prevent irregular, fruitless and wasteful expenditure, losses resulting from criminal conduct, and expenditure not complying with the operational policies of the entity;  taking effective and appropriate disciplinary steps against any employee(s) of the entity who contravenes or fails to comply with a provision of the PFMA; or commits an act which undermines the financial management and internal control system of the entity; or makes or permits an irregular expenditure or a fruitless and wasteful expenditure to be incurred;  keeping full and proper records of the financial affairs of the entity; and  preparation of financial statements for each financial year, in accordance with GRAP. In the Board's opinion, the Annual Financial Statements fairly presents in all material respects, the state of affairs of the entity, its business, its financial results, its performance against predetermined objectives for the year ended 31 March 2023 and its financial position as at 31 March 2023. Ms Hapiloe Sello Ms Pam Yako Chief Executive Officer Accounting Authority Pretoria 31 July 2023 3 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Statement of Financial Position as at 31 March 2023 2023 2022 Restated* Note(s) '000 '000 Assets Current Assets Inventories 2 62,420 66,162 Receivables from exchange transactions 3 94,356 100,747 Cash and cash equivalents 4 2,004,733 1,746,186 2,161,509 1,913,095 Non-Current Assets Property, plant and equipment 5 2,200,125 2,105,151 Intangible assets 6 7,878 8,743 Heritage assets 7 868,787 813,953 Receivables from exchange transactions 3 351,388 340,580 3,428,178 3,268,427 Total Assets 5,589,687 5,181,522 Liabilities Current Liabilities Finance lease obligation 10 11,153 42,741 Payables from exchange transactions 11 308,914 318,712 Unspent conditional grants and receipts 13 792,165 481,197 Accured leave 11 76,560 73,446 Reservation deposits 15 438,241 390,473 1,627,033 1,306,569 Non-Current Liabilities Finance lease obligation 10 14,114 13,126 Employee benefit obligation 12 537,280 587,713 Provisions 14 351,388 340,580 902,782 941,419 Total Liabilities 2,529,815 2,247,988 Net Assets 3,059,872 2,933,534 * See Note 40 4 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Statement of Financial Performance 2023 2022 Restated* Note(s) '000 '000 Revenue Revenue from exchange transactions Tourism, Retail, Concession and Other 16 2,220,885 1,572,066 Sales - fauna and flora 17 655 9,693 Other operating income 18 64,237 90,044 Interest income 19 61,521 45,277 Total revenue from exchange transactions 2,347,298 1,717,080 Revenue from non-exchange transactions Transfer revenue Government grants and other funding 20 821,457 939,650 Donations 21 42,073 25,165 Total revenue from non-exchange transactions 863,530 964,815 Total revenue 3,210,828 2,681,895 Expenditure Employee related costs 22 (1,443,200) (1,411,072) Depreciation and amortisation 23 (124,940) (146,199) Finance costs 24 (5,241) (5,189) Operating lease payments 25 (54,894) (45,245) Loss on disposal of assets 26 (1,754) (714) Cost of sales 39 (367,703) (269,655) Operating expenses 27 (1,170,694) (1,050,098) Total expenditure (3,168,426) (2,928,172) Surplus (deficit) 42,402 (246,277) Actuarial (gains)/losses 12 (83,935) 7,519 Surplus (deficit) for the year 126,337 (253,796) * See Note 40 5 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Statement of Changes in Net Assets Accumulated Total net surplus assets '000 '000 Opening balance as previously reported 3,187,332 3,187,332 Changes in net assets Deficit for the year (223,116) (223,116) Prior period adjustment - Refer to Note 39 (30,682) (30,682) Total changes (253,798) (253,798) Restated* Balance at 01 April 2022 2,933,535 2,933,535 Changes in net assets Surplus for the year 126,337 126,337 Total changes 126,337 126,337 Balance at 31 March 2023 3,059,872 3,059,872 * See Note 40 6 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Cash Flow Statement 2023 2022 Restated* Note(s) '000 '000 Cash flows from operating activities Receipts Cash receipts from exchange transactions 2,292,168 1,661,068 Cash receipts from non-exchange transactions 1,146,898 706,931 Interest income 61,521 45,277 3,500,587 2,413,276 Payments Employee costs (1,409,698) (1,379,437) Suppliers (1,548,464) (1,253,036) Finance costs (2,153) (304) (2,960,315) (2,632,777) Net cash flows from operating activities 30 540,272 (219,501) Cash flows from investing activities Purchase of property, plant and equipment 5 (221,615) (162,209) Proceeds from sale of property, plant and equipment 5 980 623 Purchase of intangible assets 6 - (1,860) Proceeds from sale of intangible assets 6 1 21 Purchase of heritage assets 7 (27,403) (52,399) Net cash flows from investing activities (248,037) (215,824) Cash flows from financing activities Finance lease payments (30,600) (46,094) Finance costs (3,088) (4,885) Net cash flows from financing activities (33,688) (50,979) Net increase/(decrease) in cash and cash equivalents 258,547 (486,304) Cash and cash equivalents at the beginning of the year 1,746,186 2,232,490 Cash and cash equivalents at the end of the year 4 2,004,733 1,746,186 * See Note 40 7 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Statement of Comparison of Budget and Actual Amounts Budget on Accrual Basis Approved Adjustments Final Budget Actual Difference Reference budget amounts on between final comparable budget and basis actual '000 '000 '000 '000 '000 Statement of Financial Performance Revenue Revenue from exchange transactions Tourism, Retail, Concession and 1,932,413 (101,000) 1,831,413 2,220,885 389,472 Other Sales - fauna and flora 4,000 - 4,000 655 (3,345) Other operating income 28,493 - 28,493 64,237 35,744 Interest received 49,638 - 49,638 61,521 11,883 Total revenue from exchange 2,014,544 (101,000) 1,913,544 2,347,298 433,754 Note 41 (A) transactions Revenue from non-exchange transactions Transfer revenue Government grants and other 993,263 123,591 1,116,854 821,457 (295,397) Note 41 (B) funding Donations 28,757 - 28,757 42,073 13,316 Note 41 (C) Total revenue from non- 1,022,020 123,591 1,145,611 863,530 (282,081) exchange transactions Total revenue 3,036,564 22,591 3,059,155 3,210,828 151,673 Expenditure Employee related costs (1,342,602) (100,295) (1,442,897) (1,359,265) 83,632 Note 41 (D) Depreciation and amortisation (162,491) 5,591 (156,900) (124,940) 31,960 Note 41 (E) Finance Costs (6,484) - (6,484) (5,241) 1,243 Note 41 (F) Operating lease payments (47,567) - (47,567) (54,894) (7,327) Note 41 (G) Cost of sales (207,524) - (207,524) (367,703) (160,179) Note 41 (J) Operating expenses (1,269,645) 72,113 (1,197,532) (1,170,694) 26,838 Note 41 (H) Total expenditure (3,036,313) (22,591) (3,058,904) (3,082,737) (23,833) Operating surplus 251 - 251 128,091 127,840 Loss on disposal of assets (251) - (251) (1,754) (1,503) Note 41 (I) Surplus for the year - - - 126,337 126,337 Actual Amount on - - - 126,337 126,337 Comparable Basis as Presented in the Budget and Actual Comparative Statement 8 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1. Presentation of Annual Financial Statements The Annual Financial Statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP),including any interpretations and directives issued by the Accounting Standards Board in accordance with Section 91(1) of the Public Finance Management Act, (Act No 1 of 1999). These Annual Financial Statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention as the basis of measurement, unless specified otherwise. They are presented in South African Rand. In the absence of an issued and effective Standard of GRAP, accounting policies for material transactions, events or conditions were developed in accordance with paragraphs 8, 10 and 11 of GRAP 3 as read with Directive 5. Assets, liabilities, revenues and expenses were not offset, except where offsetting is either required or permitted by a Standard of GRAP. 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 Presentation currency These Annual Financial Statements are presented in South African Rand, which is the functional currency of the entity. 1.2 Going concern assumption These Annual Financial Statements have been prepared based on the expectation that the entity will continue to operate as a going concern for at least the next 12 months. 1.3 Significant judgements and sources of estimation uncertainty In preparing the Annual Financial Statements, management is required to make estimates and assumptions that affect the amounts represented in the Annual Financial Statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis. The effect of changes in estimates are accounted for on a prospective basis. Significant judgements include: Provisions Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in the notes. Provisions are measured at management's best estimate of the expenditure required to settle the obligation at the reporting date. Post-retirement benefits The present value of the post-retirement obligation depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) include the discount rate. Any changes in these assumptions will impact on the carrying amount of post-retirement obligations. The entity determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the entity considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. Other key assumptions for pension obligations are based on current market conditions. 9 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.3 Significant judgements and sources of estimation uncertainty (continued) Accounting for adjustments to revenue Determining whether an adjustment to revenue charged in terms of legislation or similar means is a correction of an error or a change in an accounting estimate requires the application of judgement by management. When adjustments to revenue already recognised arise from new information that becomes known to the entity, the following considerations are applied to determine whether the adjustment to revenue already recognised is a correction of an error or a change in an accounting estimate: (a) If information becomes known to the entity, and the entity could reasonably have been expected to know of the information and/or the information used was incorrect, the adjustment to revenue is likely to be a correction of an error. (b) If information becomes known to the entity, but the entity could not reasonably have been expected to know of this information when the revenue was charged, the adjustment to revenue is likely to be a change in an accounting estimate. Definition of an asset not being met for living resources or a group of living resources Key judgements made and assumptions applied to conclude that the definition of an asset is not met are disclosed in the notes. Impairment of receivables In determining whether an impairment loss should be recognised, judgement is made as to whether there were observable data indicating a measurable decrease in the estimated future cash flows from receivables. Where there is objective evidence of impairment loss, the present value of the future cash flows discounted at the original effective interest rate is determined and compared to the carrying value of receivables Heritage assets Management has used judgement in applying the initial recognition criteria of GRAP 103 to land obtained from non-exchange transactions and other heritage assets which originate from National Parks and derive their significance from their association with a National Park. The heritage value of National Parks is derived from the NEMPA (National Environmental Management Protected Areas) Act which is primarily to protect these areas; prevent exploitation or occupation inconsistent with the protection of the ecological integrity of the these areas; provide spiritual, scientific, educational, recreational and tourism opportunities which are environmentally compatible and contribute to economic development, where feasible. This land is an inalienable item (withdrawal as a National Park and protected area in terms of the NEMPA Act is only by resolution of the National Assembly and/or the Minister depending on the circumstances), therefore none of National Parks have been disposed. Also due to the size and magnitude of National Parks, The entity and the Office of the Valuer General (under the Department of Rural Development and Land Reform) is not aware of any market to buy and sell National Parks or any other valuation method or technique that is available to measure National Parks. Therefore based on these judgements made, The entity’s land acquired from non-exchange transactions could not be recognised in the Annual Financial Statements. Impairment of cash generating assets Judgements made by management in applying the criteria to designate assets as cash-generating assets or non-cash generating assets, are as follows: The designation of assets as cash and non-cash generating assets is based on how the assets are used, as required by the standards of impairment. For the majority of the assets held by the entity, the objective of using these assets is for service delivery purposes, rather than for a commercial return. 10 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.3 Significant judgements and sources of estimation uncertainty (continued) The assessment of buildings used for rental accommodation (including tented and timber structures), restaurant buildings, shop buildings, buildings that are tented and timber structures is park and demand driven. In line with the entities Responsible Tourism, there is rental accommodation that is used to generate cash flows, which are significantly higher than the cost of the asset. These are primarily park, demand and accommodation type depended. Their use is to maximise commercialisation. Some accommodation will fall under accommodation used for service delivery purposes, as it is regarded as ‘budget accommodation’, which is meant to be accessible to all. This type of accommodation is not used to generate positive cash flows, which are significantly higher than the cost of the asset. The smaller camps merely breakeven therefore the restaurants and shops are being used for service delivery. The entity assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, The entity estimates the recoverable amount of the asset. The recoverable amount of cash generating assets or a cash-generating unit is determined on the higher its fair value less costs to sell and its value in use. These calculations require the use of estimates and assumptions. When estimating the value in use of an asset, the entity estimates the future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal and the entity applies an appropriate discount rate to those future cash flows. Impairment of non-cash generating assets The entity assesses at each reporting date whether there is any indication that a non-cash-generating asset may be impaired. If any such indication exists, entity estimates the recoverable service amount of the asset. These calculations require the use of estimates and assumptions. 1.4 Inventories The entity's inventories include consumables, retail goods, fuel and military inventory Inventories are initially measured at cost except where inventories are acquired through a non-exchange transaction, then their costs are their fair value as at the date of acquisition. 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: - distribution at no charge or for a nominal charge;or: - 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. Current replacement cost is the cost the entity incurs to acquire the asset on the reporting date. The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects is assigned using specific identification of the individual costs. The cost of inventories is assigned using the first-in, first-out (FIFO) formula. The same cost formula is used for all inventories having a similar nature and use to entity. The entity recognises the unused cutlery,crockery and linen as inventory in the statement of financial position,once items are brought into use they are then expensed in the statement of financial perfomance. When inventories are sold, the carrying amounts of those inventories are recognised as an expense in the period in which the related revenue is recognised. If there is no related revenue, the expenses are recognised when the goods are distributed, or related services are rendered. The amount of any write-down of inventories to net realisable value or current replacement cost and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value or current replacement cost, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs. 11 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.5 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual interest of another entity. A concessionary loan is a loan granted to or received by entity on terms that are not market related. A financial asset is:  cash;  a residual interest of another entity; or  a contractual right to: - receive cash or another financial asset from another entity; or - exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to entity. A financial liability is any liability that is a contractual obligation to:  deliver cash or another financial asset to another entity; or  exchange financial assets or financial liabilities under conditions that are potentially unfavourable to entity. A financial asset is past due when a counterparty has failed to make a payment when contractually due. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financial instrument. Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial liabilities that have fixed or determinable payments, excluding those instruments that:  the entity designates at fair value at initial recognition; or  are held for trading. Financial instruments at cost are investments in residual interests that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured. The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, The entity shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see the Standard of GRAP on Revenue from Exchange Transactions), transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to reliably estimate the cash flows or the expected life of a financial instrument (or group of financial instruments), the entity shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments). 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. 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. 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. Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. 12 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.5 Financial instruments (continued) Other 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. 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. Derecognition is the removal of a previously recognised financial asset or financial liability from the entity's statement of financial position. Classification The entity has the following types of financial assets (classes and category) as reflected on the face of the statement of financial position or in the notes thereto: ` Class Category Cash and cash equivalents Financial asset measured at amortised cost Receivables from exchange transactions Financial asset measured at amortised cost Receivables from non-exchange transcactions Financial asset measured at amortised cost The entity has the following types of financial liabilities (classes and category) as reflected on the face of the statement of financial position or in the notes thereto: ` Class Category Trade and other payables from exchange transactions Financial liability measured at amortised cost Unspent conditional grants Financial liability measured at amortised cost Finance lease obligation Financial liability measured at amortised cost Initial recognition The entity 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. Initial measurement of financial assets and financial liabilities The entity measures a financial asset and financial liability initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. 13 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.5 Financial instruments (continued) Subsequent measurement of financial assets and financial liabilities The entity measures all financial assets and financial liabilities after initial recognition using the following categories:  Financial instruments at amortised cost. All financial assets measured at amortised cost, or cost, are subject to an impairment review. Gains and losses For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through the amortisation process. Impairment and uncollectibility of financial assets The entity assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. Financial assets measured at amortised cost: If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in surplus or deficit. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting an allowance account. The reversal does not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in surplus or deficit. 14 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.5 Financial instruments (continued) Derecognition Financial assets entity derecognises a financial asset only when:  the contractual rights to the cash flows from the financial asset expire, are settled or waived;  entity transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or  the entity, despite having retained some significant risks and rewards of ownership of the financial asset, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the entity : - derecognise the asset; and - recognise separately any rights and obligations created or retained in the transfer. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in surplus or deficit. Financial liabilities entity 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. An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as having extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is accounted for as having extinguished the original financial liability and having recognised a new financial liability. The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions (Taxes and Transfers). Presentation Interest relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit. Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit. A financial asset and a financial liability are only offset and the net amount presented in the statement of financial position when the entity currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. 1.6 Property, plant and equipment Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one period. Recognition The cost of an item of property, plant and equipment is recognised as an asset when:  it is probable that future economic benefits or service potential associated with the item will flow to the entity; and  the cost of the item can be measured reliably. Initial Measurement Property, plant and equipment is initially measured at cost. 15 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.6 Property, plant and equipment (continued) The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost. Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition. Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item's fair value was not determinable, it's deemed cost is the carrying amount of the asset(s) given up. When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories. Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management. Items such as spare parts, standby equipment and servicing equipment are recognised when they meet the definition of property, plant and equipment. Major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which meet the recognition criteria above are included as a replacement in the cost of the item of property, plant and equipment. Any remaining inspection costs from the previous inspection are derecognised. Subsequent Measurement Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. Property, plant and equipment are depreciated on the straight-line basis over their expected useful lives to their estimated residual value. The useful lives of items of property, plant and equipment have been assessed as follows: Item Depreciation method Average useful life Buildings Straight-line 5 to 50 years Aircraft Straight-line 2 to 20 years as componentised Furniture and office equipment Straight-line 5 to 25 years Vehicles,machinery and mechanical equipment Straight-line 5 to 40 years The depreciable amount of an asset is allocated on a systematic basis over its useful life. 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. The depreciation method used reflects the pattern in which the asset’s future economic benefits or service potential are expected to be consumed by the entity. The depreciation method applied to an asset is reviewed at least at each reporting date and, if there has been a significant change in the expected pattern of consumption of the future economic benefits or service potential embodied in the asset, the method is changed to reflect the changed pattern. Such a change is accounted for as a change in an accounting estimate. 16 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.6 Property, plant and equipment (continued) The entity assesses at each reporting date whether there is any indication that the entity expectations about the residual value and the useful life of an asset have changed since the preceding reporting date. If any such indication exists, the entity revises the expected useful life and/or residual value accordingly. The change is accounted for as a change in an accounting estimate. The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset. Derecognition Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset. 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. Assets which the entity holds for rentals to others and subsequently routinely sell as part of the ordinary course of activities, are transferred to inventories when the rentals end and the assets are available-for-sale. Proceeds from sales of these assets are recognised as revenue. All cash flows on these assets are included in cash flows from operating activities in the cash flow statement. The entity separately discloses expenditure to repair and maintain property, plant and equipment in the notes to the financial statements. The entity discloses relevant information relating to assets under construction or development, in the notes to the financial statements. 1.7 Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance. An asset is identifiable if it either: - 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 - 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. A binding arrangement describes an arrangement that confers similar rights and obligations on the parties to it as if it were in the form of a contract. Recognition An intangible asset is recognised when: - it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the entity; and - the cost or fair value of the asset can be measured reliably. An intangible asset arising from development (or from the development phase of an internal project) is recognised when: - it is technically feasible to complete the asset so that it will be available for use or sale. - there is an intention to complete and use or sell it. - there is an ability to use or sell it. 17 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.7 Intangible assets (continued) - it will generate probable future economic benefits or service potential. - there are available technical, financial and other resources to complete the development and to use or sell the asset. - the expenditure attributable to the asset during its development can be measured reliably. Initial Measurement An intangible asset is measured initially at cost by the entity. Where an intangible asset is acquired through a non-exchange transaction, its initial cost at the date of acquisition is measured at its fair value as at that date. Subsequent Measurement After initial recognition,an intangible asset is measured as follows: An intangible asset is carried at its cost less any accumulated amortisation and any accumulated impairment losses. Amortisation is calculated on a straight line basis, and the useful life varies between 3 and 5 years and is reviewed annually. An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful life. Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life. Impairment of Intangible Asset An impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation. The entity assesses at each reporting date whether there is any indication that the computer software may be impaired Derecognition Intangible 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 an intangible assets is included in surplus or deficit when the asset is derecognised 1.8 Heritage assets Heritage assets are assets that have a cultural, environmental, historical, natural, scientific, technological or artistic significance and are held indefinitely for the benefit of present and future generations. A class of heritage assets is a grouping of heritage assets of a similar nature or function in entity's operations, that is shown as a single item for the purpose of disclosure in the financial statements. The entity' classes of Heritage Assets include: - Conservation areas such as National Parks. - Archeological sites 18 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.8 Heritage assets (continued) - Collections - Geological sites - Graves of cultural significance - Historical buildings - Historical sites - Landscapes and natural features of cultural significance - Monuments - Palaeontology sites - Sacred sites (sites of spitritual or religious significance) Characteristics often displayed by heritage assets include the following: - Their value in cultural, environmental, educational and historical terms is unlikely to be fully reflected in monetary terms. - Ethical, legal and/or statutory obligations may impose prohibitions or severe stipulations on disposal by sale. - They are often irreplaceable. - Their value may increase over time even if their physical condition deteriorates. - They have an indefinite life and their value appreciates over time due to their cultural, environmental, educational, natural scientific, technological, artistic or historical significance. - They are protected, kept unencumbered, cared for and preserved. Recognition A heritage asset shall be recognised as an asset if, and only 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. The entity will assess the degree of certainty attached to the flow of future service potential or economic benefits: - If the entity holds an asset that might be regarded as a heritage asset but which, on initial recognition, does not meet the recognition criteria of heritage assets because of the need to analyse the proposed collection items to determine if they conform to the set collection criteria through evaluation and research. - For recognition of heritage assets, the asset needs to be controlled by the entity as a result of past events. Such events may include: Purchase, donation, bequeath, loan or transfer. - Particularly for archaeology, material is often retrieved in a fragmentary state – finding a completely articulated specimen is the exception rather than the rule. A great deal of knowledge is thus required to identify and systematise the collections. The research required to identify, analyse and classify heritage items is often a collaborative effort between local and international experts that span several months, even years. These items cannot be recognised in the financial statements, but will be recorded and controlled in the register. Relevant and useful information about them shall be disclosed in the notes to the Annual Financial Statements. The entity does not recognise heritage assets which on initial recognition, do not meet the recognition criteria of a heritage asset because they cannot be reliably measured. Relevant and useful information about them has been disclosed in the notes to the financial statements.These items are controlled in the heritage asset register. 19 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.8 Heritage assets (continued) Initial Measurement A heritage asset that qualifies for recognition as an asset shall be measured at its cost, and where it is acquired through a non-exchange transaction, at its fair value as at the date of acquisition. For collections assets, values have been assigned to the heritage assets, which are considered to be appreciating in value, and which values are to be reviewed from time to time. Wherever possible, the appraisers have adopted the discipline of ‘Open Market’ principles in determining value, however values derived are largely determined by the skill and experience applied by the appraiser at the date of valuation. Subsequent measurement After recognition as an asset, a class of heritage assets is carried at its cost less any accumulated impairment losses. Impairment The entity assess at each reporting date whether there is an indication that heritage assets may be impaired. If any such indication exists, entity estimates the recoverable amount or the recoverable service amount of the heritage asset. Transfers Transfers from heritage assets are only made when the particular asset no longer meets the definition of a heritage asset. Transfers to heritage assets are only made when the asset meets the definition of a heritage asset. The transfer will be made at the carrying value of the heritage asset. Derecognition The entity derecognises heritage assets 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 Recognition and derecognition of land Assessment of control of land Control of land is assessed by the following criteria: - legal ownership, and/or - the right to direct access to land, and to restrict or deny the access of others to land. Legal ownership Legal ownership refers to the owner being the registered title deed holder of the land. Legal ownership also arises where the land is transferred from the legal owner to another entity or party, through legislation or similar means. The right to direct access to land, and to restrict or deny the access of others to land Where the entity has the right to direct access to, and restrict or deny the access of others to land while another is the legal owner of land, substance over form determines that the land is controlled by the entity that has the right to direct access to land, and to restrict or deny the access of others to land. 20 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.8 Heritage assets (continued) All state land that is declared national parks as per the National Environmental Management: Protected Areas (NEMPA) Act (2003), the ownership of such parks resides with the Department of Public Works (DPW). The entity is assigned the Management Authority for the land (once declared as a national park) in terms of section 38 of the NEMPA. Entity as the management authority for national parks is declared to protect these areas; prevent exploitation or occupation inconsistent with the protection of the ecological integrity of the these areas; provide spiritual, scientific, educational, recreational and tourism opportunities which are environmentally compatible and contribute to economic development, where feasible. Once the national park is declared and the management is assigned to the entity, any withdrawal of national park status is done in accordance to section 21 of the NEMPA by resolution of the National Assembly. Therefore the entity as the management authority has rights or access to the service potential of land declared as national parks. Where the criteria for assessment of control land is met, the land is recognised as an asset in accordance with the applicable Standard of GRAP.National Parks are classified as Heritage Assets and therefore the entity applies principles of GRAP 103 for accounting for the land. 1.9 Impairment of cash-generating assets Cash-generating assets are assets used with the objective of generating a commercial return. Commercial return means that positive cash flows are expected to be significantly higher than the cost of the asset. Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation (amortisation). Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses thereon. A cash-generating unit is the smallest identifiable group of assets used with the objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets. Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense. Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life. Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal. Recoverable amount of an asset or a cash-generating unit is the higher its fair value less costs to sell and its value in use. Useful life is either:  the period of time over which an asset is expected to be used by the entity; or  the number of production or similar units expected to be obtained from the asset by the entity. Designation At initial recognition, the entity designates an asset as non-cash-generating, or an asset or cash-generating unit as cash- generating. The designation is made on the basis of entity's objective of using the asset. the entity designates an asset or a cash-generating unit as cash-generating when:  its objective is to use the asset or a cash-generating unit in a manner that generates a commercial return; such that  the asset or cash-generating unit will generate positive cash flows, from continuing use and its ultimate disposal, that are expected to be significantly higher than the cost of the asset. 21 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.9 Impairment of cash-generating assets (continued) Identification When the carrying amount of a cash-generating asset exceeds its recoverable amount, it is impaired. the entity assesses at each reporting date whether there is any indication that a cash-generating asset may be impaired. If any such indication exists, the entity estimates the recoverable amount of the asset. Irrespective of whether there is any indication of impairment, the entity also tests a cash-generating intangible asset with an indefinite useful life or a cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current reporting period, that intangible asset was tested for impairment before the end of the current reporting period. Value in use Value in use of a cash-generating asset is the present value of the estimated future cash flows expected to be derived from the continuing use of an asset and from its disposal at the end of its useful life. When estimating the value in use of an asset, the entity estimates the future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal and the entity applies the appropriate discount rate to those future cash flows. Basis for estimates of future cash flows In measuring value in use the entity:  base cash flow projections on reasonable and supportable assumptions that represent management's best estimate of the range of economic conditions that will exist over the remaining useful life of the asset. Greater weight is given to external evidence;  base cash flow projections on the most recent approved financial budgets/forecasts, but excludes any estimated future cash inflows or outflows expected to arise from future restructuring's or from improving or enhancing the asset's performance. Projections based on these budgets/forecasts covers a maximum period of five years, unless a longer period can be justified; and  estimate cash flow projections beyond the period covered by the most recent budgets/forecasts by extrapolating the projections based on the budgets/forecasts using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. This growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the entity operates, or for the market in which the asset is used, unless a higher rate can be justified. Composition of estimates of future cash flows Estimates of future cash flows include:  projections of cash inflows from the continuing use of the asset;  projections of cash outflows that are necessarily incurred to generate the cash inflows from continuing use of the asset (including cash outflows to prepare the asset for use) and can be directly attributed, or allocated on a reasonable and consistent basis, to the asset; and  net cash flows, if any, to be received (or paid) for the disposal of the asset at the end of its useful life. Estimates of future cash flows exclude:  cash inflows or outflows from financing activities; and  income tax receipts or payments. The estimate of net cash flows to be received (or paid) for the disposal of an asset at the end of its useful life is the amount that the entity expects to obtain from the disposal of the asset in an arm's length transaction between knowledgeable, willing parties, after deducting the estimated costs of disposal. Discount rate The discount rate is a pre-tax rate that reflects current market assessments of the time value of money, represented by the current risk-free rate of interest and the risks specific to the asset for which the future cash flow estimates have not been adjusted. 22 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.9 Impairment of cash-generating assets (continued) Recognition and measurement (individual asset) If the recoverable amount of a cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. This reduction is an impairment loss. An impairment loss is recognised immediately in surplus or deficit. Any impairment loss of a revalued cash-generating asset is treated as a revaluation decrease. When the amount estimated for an impairment loss is greater than the carrying amount of the cash-generating asset to which it relates, the entity recognises a liability only to the extent that is a requirement in the Standard of GRAP. After the recognition of an impairment loss, the depreciation (amortisation) charge for the cash-generating asset is adjusted in future periods to allocate the cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. 23 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.9 Impairment of cash-generating assets (continued) Impairment loss If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, entity determines the recoverable amount of the cash-generating unit to which the asset belongs (the asset's cash-generating unit). The carrying amount of a cash-generating unit is determined on a basis consistent with the way the recoverable amount of the cash-generating unit is determined. An impairment loss is recognised for a cash-generating unit if the recoverable amount of the unit is less than the carrying amount of the unit. The impairment is allocated to reduce the carrying amount of the cash-generating assets of the unit on a pro rata basis, based on the carrying amount of each asset in the unit. These reductions in carrying amounts are treated as impairment losses on individual assets. In allocating an impairment loss, the entity does not reduce the carrying amount of an asset below the highest of:  its fair value less costs to sell (if determinable);  its value in use (if determinable); and  zero. The amount of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other cash-generating assets of the unit. Where a non-cash-generating asset contributes to a cash-generating unit, a proportion of the carrying amount of that non- cash-generating asset is allocated to the carrying amount of the cash-generating unit prior to estimation of the recoverable amount of the cash-generating unit. Reversal of impairment loss The entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a cash-generating asset may no longer exist or may have decreased. If any such indication exists, the entity estimates the recoverable amount of that asset. An impairment loss recognised in prior periods for a cash-generating asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss for a cash-generating asset is recognised immediately in surplus or deficit. After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the cash-generating asset is adjusted in future periods to allocate the cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. A reversal of an impairment loss for a cash-generating unit is allocated to the cash-generating assets of the unit pro rata with the carrying amounts of those assets. These increases in carrying amounts are treated as reversals of impairment losses for individual assets. No part of the amount of such a reversal is allocated to a non-cash-generating asset contributing service potential to a cash-generating unit. In allocating a reversal of an impairment loss for a cash-generating unit, the carrying amount of an asset is not increased above the lower of:  its recoverable amount (if determinable); and  the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior periods. The amount of the reversal of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other assets of the unit. 24 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.9 Impairment of cash-generating assets (continued) Redesignation The redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-cash-generating asset to a cash-generating asset only occur when there is clear evidence that such a redesignation is appropriate. 1.10 Impairment of non-cash-generating assets Non-cash-generating assets are assets other than cash-generating assets. Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation (amortisation). A cash-generating unit is the smallest identifiable group of assets managed with the objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets. Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and its value in use. Useful life is either:  the period of time over which an asset is expected to be used by the entity; or  the number of production or similar units expected to be obtained from the asset by the entity. Designation At initial recognition, the entity designates an asset as non-cash-generating, or an asset or cash-generating unit as cash- generating. The designation is made on the basis of the entity's objective of using the asset. the entity designates an asset or a cash-generating unit as cash-generating when:  its objective is to use the asset or a cash-generating unit in a manner that generates a commercial return; such that  the asset or cash-generating unit will generate positive cash flows, from continuing use and its ultimate disposal, that are expected to be significantly higher than the cost of the asset. Identification When the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is impaired. the entity assesses at each reporting date whether there is any indication that a non-cash-generating asset may be impaired. If any such indication exists, the entity estimates the recoverable service amount of the asset. Irrespective of whether there is any indication of impairment, the entity also tests a non-cash-generating intangible asset with an indefinite useful life or a non-cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable service amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current reporting period, that intangible asset was tested for impairment before the end of the current reporting period. Value in use Value in use of non-cash-generating assets is the present value of the non-cash-generating assets remaining service potential. The present value of the remaining service potential of a non-cash-generating assets is determined using the following approach: Service units approach The present value of the remaining service potential of the asset is determined by reducing the current cost of the remaining service potential of the asset before impairment, to conform to the reduced number of service units expected from the asset in its impaired state. The current cost of replacing the remaining service potential of the asset before impairment is determined as the depreciated reproduction or replacement cost of the asset before impairment, whichever is lower. 25 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.10 Impairment of non-cash-generating assets (continued) Recognition and measurement If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment loss. An impairment loss is recognised immediately in surplus or deficit. When the amount estimated for an impairment loss is greater than the carrying amount of the non-cash-generating asset to which it relates, the entity recognises a liability only to the extent that is a requirement in the Standards of GRAP. After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. Reversal of an impairment loss The entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a non-cash-generating asset may no longer exist or may have decreased. If any such indication exists, the entity estimates the recoverable service amount of that asset. An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable service amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or deficit. After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. Redesignation The redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-cash-generating asset to a cash-generating asset only occur when there is clear evidence that such a redesignation is appropriate. 1.11 Leases A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.. When a lease includes both land and buildings elements, the entity assesses the classification of each element separately. 26 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.11 Leases (continued) Finance leases - lessee Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. The discount rate used in calculating the present value of the minimum lease payments is the entity's incremental borrowing rate. Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of on the remaining balance of the liability. Any contingent rents are expensed in the period in which they are incurred. Operating leases - lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability. 1.12 Employee benefits Employee benefits are all forms of consideration given by the entity in exchange for service rendered by employees. Short-term employee benefits Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within twelve months after the end of the period in which the employees render the related service. Short-term employee benefits include items such as:  wages, salaries and social security contributions;  short-term compensated absences (such as paid annual leave and paid sick leave) where the compensation for the absences is due to be settled within twelve months after the end of the reporting period in which the employees render the related employee service;  bonus, incentive and performance related payments payable within twelve months after the end of the reporting period in which the employees render the related service; and  non-monetary benefits (for example, medical care, and free or subsidised goods or services such as housing, cars and cellphones) for current employees. 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:  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  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. 27 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.12 Employee benefits (continued) Post-employment benefits Post-employment benefits are employee benefits (other than termination benefits) which are payable after the completion of employment. Post-employment benefit plans are formal or informal arrangements under which the entity provides post-employment benefits for one or more employees. Post-employment benefits: Defined contribution plans Defined contribution plans are post-employment benefit plans under which the entity pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. When an employee has rendered service to the entity during a reporting period, the entity recognises the contribution payable to a defined contribution plan in exchange for that service:  as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the reporting date, 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  as an expense, unless another Standard requires or permits the inclusion of the contribution in the cost of an asset. 28 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.12 Employee benefits (continued) Post-employment benefits: Defined benefit plans Defined benefit plans are post-employment benefit plans other than defined contribution plans. Actuarial gains and losses comprise experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred) and the effects of changes in actuarial assumptions. In measuring its defined benefit liability the entity recognises actuarial gains and losses in surplus or deficit in the reporting period in which they occur. Current service cost is the increase in the present value of the defined benefit obligation resulting from employee service in the current period. Interest cost is the increase during a period in the present value of a defined benefit obligation which arises because the benefits are one period closer to settlement. Past service cost is the change in the present value of the defined benefit obligation for employee service in prior periods, resulting in the current period from the introduction of, or changes to, post-employment benefits or other long-term employee benefits. Past service cost may be either positive (when benefits are introduced or changed so that the present value of the defined benefit obligation increases) or negative (when existing benefits are changed so that the present value of the defined benefit obligation decreases). In measuring its defined benefit liability the entity recognises past service cost as an expense in the reporting period in which the plan is amended. The present value of a defined benefit obligation is the present value, without deducting any plan assets, of expected future payments required to settle the obligation resulting from employee service in the current and prior periods. The amount recognised as a defined benefit liability is the net total of the following amounts:  the present value of the defined benefit obligation at the reporting date;  minus the fair value at the reporting date of plan assets (if any) out of which the obligations are to be settled directly;  plus any liability that may arise as a result of a minimum funding requirement The amount determined as a defined benefit liability may be negative (an asset). the entity measures the resulting asset at the lower of:  the amount determined above; and  the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. The present value of these economic benefits is determined using a discount rate which reflects the time value of money. Any adjustments arising from the limit above is recognised in surplus or deficit. The entity determines the present value of defined benefit obligations with sufficient regularity such that the amounts recognised in the Annual Financial Statements do not differ materially from the amounts that would be determined at the reporting date. The entity recognises the net total of the following amounts in surplus or deficit, except to the extent that another Standard requires or permits their inclusion in the cost of an asset:  current service cost;  interest cost;  actuarial gains and losses;  past service cost;  the effect of any curtailments or settlements; and  the effect of applying the limit on a defined benefit asset (negative defined benefit liability). The entity uses the Projected Unit Credit Method to determine the present value of its defined benefit obligations and the related current service cost and, where applicable, past service cost. The Projected Unit Credit Method (sometimes known as the accrued benefit method pro-rated on service or as the benefit/years of service method) sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. In determining the present value of its defined benefit obligations and the related current service cost and, where applicable, past service cost, the entity shall attribute benefit to periods of service under the plan’s benefit formula. However, if an employee’s service in later years will lead to a materially higher level of benefit than in earlier years, the entity shall attribute benefit on a straight-line basis from: 29 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.12 Employee benefits (continued)  the date when service by the employee first leads to benefits under the plan (whether or not the benefits are conditional on further service); until  the date when further service by the employee will lead to no material amount of further benefits under the plan, other than from further salary increases. Actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan. The results of the valuation are updated for any material transactions and other material changes in circumstances (including changes in market prices and interest rates) up to the reporting date. The entity recognises gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on a curtailment or settlement comprises:  any resulting change in the present value of the defined benefit obligation; and  any resulting change in the fair value of the plan assets. Before determining the effect of a curtailment or settlement, the entity re-measures the obligation (and the related plan assets, if any) using current actuarial assumptions (including current market interest rates and other current market prices). When it is virtually certain that another party will reimburse some or all of the expenditure required to settle a defined benefit obligation, the right to reimbursement is recognised as a separate asset. The asset is measured at fair value. In all other respects, the asset is treated in the same way as plan assets. In surplus or deficit, the expense relating to a defined benefit plan is [OR is not] presented as the net of the amount recognised for a reimbursement. Actuarial assumptions Actuarial assumptions are unbiased and mutually compatible. Financial assumptions are based on market expectations, at the reporting date, for the period over which the obligations are to be settled. The rate used to discount post-employment benefit obligations (both funded and unfunded) reflect the time value of money. The currency and term of the financial instrument selected to reflect the time value of money is consistent with the currency and estimated term of the post-employment benefit obligations. Post-employment benefit obligations are measured on a basis that reflects:  estimated future salary increases;  the benefits set out in the terms of the plan (or resulting from any constructive obligation that goes beyond those terms) at the reporting date; and  estimated future changes in the level of any state benefits that affect the benefits payable under a defined benefit plan, if, and only if, either:  those changes were enacted before the reporting date; or  past history, or other reliable evidence, indicates that those state benefits will change in some predictable manner, for example, in line with future changes in general price levels or general salary levels. Assumptions about medical costs take account of estimated future changes in the cost of medical services, resulting from both inflation and specific changes in medical costs. 30 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.12 Employee benefits (continued) Termination benefits The entity recognises termination benefits as a liability and an expense when the entity is demonstrably committed to either:  terminate the employment of an employee or group of employees before the normal retirement date; or  provide termination benefits as a result of an offer made in order to encourage voluntary redundancy. The entity is demonstrably committed to a termination when the entity has a detailed formal plan for the termination and is without realistic possibility of withdrawal. The detailed plan includes [as a minimum]:  the location, function, and approximate number of employees whose services are to be terminated;  the termination benefits for each job classification or function; and  the time at which the plan will be implemented. Implementation begins as soon as possible and the period of time to complete implementation is such that material changes to the plan are not likely. Where termination benefits fall due more than 12 months after the reporting date, they are discounted using an appropriate discount rate. The rate used to discount the benefit reflects the time value of money. The currency and term of the financial instrument selected to reflect the time value of money is consistent with the currency and estimated term of the benefit. In the case of an offer made to encourage voluntary redundancy, the measurement of termination benefits shall be based on the number of employees expected to accept the offer. 1.13 Provisions and contingencies A provision is a liability of uncertain timing or amount. Recognition Provisions are recognised when: - Entity has a present obligation as a result of a past event; - it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; and - a reliable estimate can be made of the obligation. 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. Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation. The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset. The amount recognised for the reimbursement does not exceed the amount of the provision. 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. Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as an interest expense. A provision is used only for expenditures for which the provision was originally recognised. Provisions are not recognised for future operating surplus (deficit). 31 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.13 Provisions and contingencies (continued) Contingent Assets A contingent asset is a possible asset that arises from past events, and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent Liabilities - a possible obligation that arises from past events, and whose existence will be confirmed only by the occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the entity; or - a present obligation that arises from past events but is not recognised because: - it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; or - the amount of the obligation cannot be measured with sufficient reliability Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in the notes to the Annual Financial Statements. 1.14 Service concession arrangements: Entity as grantor Identification Service concession arrangements arise from the service concession agreements that the entity has with different Public Private Partnerships (PPP). These arrangements give the operator the right to build and operate an infrastructure asset within the National Park. The operator also has to pay the entity a concession fee as agreed upon in the specific PPP agreement. These transactions give rise to assets (infrastructure and other movable assets), liabilities and revenues that are accounted for in the manner outlined below: Recognition of asset and liability 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 the entity controls or regulates what services the operator must provide with the asset, to whom it must provide them, and at what price, and if 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. This applies to an asset used in a service concession arrangement for its entire economic life (a “whole-of-life” asset). If one, or both of the recognition criteria above are not met, the grantor considers the principles in the Interpretation of the Standards of GRAP on determining whether an arrangement contains a lease (IGRAP 3), Standard of GRAP on Leases (GRAP 13), Interpretation of the Standards of GRAP on service concession arrangements where the grantor controls a significant residual interest in an asset (IGRAP 17) to account for the service concession arrangement. Entity only controls the right to receive service concession assets at the end of each of the service concession arrangements. This right to receive assets is the residual interest in the concessionaire assets at the end of the service concession arrangements. Entity is liable to compensate the concessionaire, a consideration equal to the residual value of the asset at the date of transfer. In a service concession arrangement where the grantor controls a significant residual interest in a service concession asset at the end of the service concession arrangement through ownership, beneficial entitlement or otherwise, and the arrangement does not constitute a finance or an operating lease, the grantor recognises its right to receive the residual interest (i.e. a receivable) in the service concession asset at the commencement of the arrangement. When the grantor recognises the right to receive a residual interest in the service concession asset, the grantor shall also recognise its performance obligation for granting the operator access to the service concession asset in accordance with the substance of the arrangement. The value of the performance obligation shall be the same as the receivable interest recognised at the commencement of the service concession arrangement. The residual value, as per concessionaire contracts, is defined as the value of immovable concession assets, revalued for changes in the consumer price index (calculated from inception date to termination date). The value of immovable concession asset is calculated at a depreciation rate of 5%. 32 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.14 Service concession arrangements: Entity as grantor (continued) The performance obligation shall be reduced and revenue shall be recognised based on the substance of the arrangement. Other revenues The entity accounts for revenues from a service concession arrangement, other than those relating to the grant of a right to the operator model, in accordance with the Standard of GRAP on Revenue from exchange transactions. 1.15 Revenue from exchange transactions Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners. The entity derives revenue from exchange and non-exchange transactions. An exchange transaction is one in which the entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange. Examples of exchange transactions include: The rendering of services - revenue from tourism, retail and concession fees The sale of goods and services - the sales of fauna and flora Interest - from investment income Rendering of services Where 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: - the amount of revenue can be measured reliably; - it is probable that the economic benefits or service potential associated with the transaction will flow to the entity - the stage of completion of the transaction at the reporting date can be measured reliably; and - 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. - Accommodation income is accrued on a daily basis. - Conservation levies are recognised on a daily basis and other tourist related activities are recognised upon commencement of the activity. - Wild Card sales are amortised over the validity period of the Wild Card. Sale of goods Revenue from the sale of goods is recognised when all the following conditions have been satisfied: - the entity has transferred to the purchaser the significant risks and rewards of ownership of the goods; - the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; - the amount of revenue can be measured reliably - it is probable that the economic benefits or service potential associated with the transaction will flow to the entity; and - the costs incurred or to be incurred in respect of the transaction can be measured reliably. Sales are recognised upon delivery of the products and customer acceptance. 33 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.15 Revenue from exchange transactions (continued) Interest received Revenue arising from the use by others of the entity's assets yielding interest is recognised when: - it is probable that the economic benefits or service potential associated with the transaction will flow to the entity and - the amount of revenue can be measured reliably. Interest is recognised using the effective interest rate method on a time proportion basis. Measurement of revenue from exchange transactions Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates. At the time of initial recognition it is inappropriate to assume that the collectability of amounts owing, to the entity, by individual recipients of goods or services will not occur, because SANParks has an obligation to collect all revenue. Exchange transactions The following is included in revenue from exchange transactions: - Tourism, retail, concession and other. - Concession income Income from concessions granted to operators to build, operate and transfer lodges and from rental of facilities to operators is recognised as it accrues over the period of the agreement. - Management fees Management fees for managing special projects are recognised on a monthly basis, based on the services performed. - Rent received Rent received is accrued on a daily basis in accordance with the substance of the relevant agreements. 1.16 Revenue from non - exchange transactions Revenue comprises gross inflows of economic benefits or service potential received and receivable by entity, which represents an increase in net assets, other than increases relating to contributions from owners Conditions on transferred assets are stipulations that specify that the future economic benefits or service potential embodied in the asset is required to be consumed by the recipient as specified or future economic benefits or service potential must be returned to the transferor. Control of an asset arise when the entity can use or otherwise benefit from the asset in pursuit of its objectives and can exclude or otherwise regulate the access of others to that benefit. Expenses paid through the tax system are amounts that are available to beneficiaries regardless of whether or not they pay taxes. Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, entity either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity without directly receiving approximately equal value in exchange. Restrictions on transferred assets are stipulations that limit or direct the purposes for which a transferred asset may be used, but do not specify that future economic benefits or service potential is required to be returned to the transferor if not deployed as specified. Stipulations on transferred assets are terms in laws or regulation, or a binding arrangement, imposed upon the use of a transferred asset by entities external to the reporting entity. 34 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.16 Revenue from non - exchange transactions (continued) Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes. 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 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 Revenue from a non-exchange transaction is measured at the amount of the increase in net assets recognised by the entity. The following are the major classes of revenue from non-exchange transactions, the basis on which the fair value of inflowing resources has been measured: Operational grants received: Revenue from operational grants received shall be measured at the amount of the increase in net assets which in this case will be the net proceeds received from DFFE; Land infrastructure grant: Revenue from Land Infrastructure Grant shall be measured at the amount of the increase in net assets which in this case will be the net proceeds received from the DFFE. If conditions are attached to the grant a liability will be recognised and shall be the best estimate of the amount required to settle the present obligation at the reporting date. When a liability is subsequently reduced because a condition is satisfied the amount of the reduction in the liability will be recognised as revenue; Donations received: Revenue from donations received shall be measured at the amount of the increase in net assets which in this case will be the net proceeds received from the various donors; and Special projects grant: Revenue from special projects grant shall be measured at the amount of the increase in net assets which in this case will be the net proceeds received from the DFFE and other funders. If conditions are attached to the grant a liability will be recognised and shall be the best estimate of the amount required to settle the present obligation at the reporting date. When a liability is subsequently reduced because a condition is satisfied the amount of the reduction in the liability will be recognised as revenue. Assets arising from non-exchange transactions Recognition An inflow of resources arising from non-exchange transactions, other than services in kind, that meet the definition of an asset shall be recognised as an asset when and only when: - it is probable that future economic benefits or service potential associated with the asset will flow to the entity; and - the fair value of the asset can be reliably measured. Entity recognises an asset in respect of taxes when the taxable event occurs and the asset recognition criteria is met. Measurement An asset acquired through a non-exchange transaction shall initially be measured at its fair value as at the date of acquisition. Subsequent measurement An asset acquired through a non-exchange transactions shall subsequently be measured in terms of the respective standard that the asset relates to. Liabilities arising from non-exchange transactions Recognition 35 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.16 Revenue from non - exchange transactions (continued) A present obligation arising from a non-exchange transaction that meets the definition of a liability shall be recognised as a liability when, and only when: - it is probable that an outflow of resources embodying future economic benefits or service potential will be required to settle the obligation; and - a reliable estimate can be made of the amount of the obligation. Measurement The amount recognised as a liability shall be the best estimate of the amount required to settle the present obligation at the reporting date. Subsequent Measurement The liabilities arising from a non-exchange transaction are subsequently measured in terms of the respective standard that the liability relates to. 1.17 Accounting by principals and agents Identification An agent is an entity that has been directed by another entity (a principal), through a binding arrangement, to undertake transactions with third parties on behalf of the principal and for the benefit of the principal. A principal is an entity that directs another entity (an agent), through a binding arrangement, to undertake transactions with third parties on its behalf and for its own benefit. A principal-agent arrangement results from a binding arrangement in which one entity (an agent), undertakes transactions with third parties on behalf, and for the benefit of, another entity (the principal). Identifying whether an entity is a principal or an agent When the entity is party to a principal-agent arrangement, it assesses whether it is the principal or the agent in accounting for revenue, expenses, assets and/or liabilities that result from transactions with third parties undertaken in terms of the arrangement. The assessment of whether the entity is a principal or an agent requires the entity to assess whether the transactions it undertakes with third parties are for the benefit of another entity or for its own benefit. Binding arrangement The entity assesses whether it is an agent or a principal by assessing the rights and obligations of the various parties established in the binding arrangement. Where the terms of a binding arrangement are modified, the parties to the arrangement re-assess whether they act as a principal or an agent. 36 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.17 Accounting by principals and agents (continued) Assessing which entity benefits from the transactions with third parties When the entity is party to a principal-agent arrangement, it assesses whether it is the principal or the agent in accounting for revenue, expenses, assets and/or liabilities that result from transactions with third parties undertaken in terms of the arrangement. Management assesses whether the entity is party to any principle-agent arrangements. Should the entity be party to such an arrangement, management will assess whether it is a principal or an agent in the arrangement, in accounting for revenue, expenses, assets and/or liabilities that result from transactions with third parties undertaken in terms of the arrangement. The assessment of whether entity is a principal or an agent is based on the following criterion. - It does not have the power to determine the significant terms and conditions of the transaction; - It does not have the ability to use all, or substantially all, of the resources that result from the transaction for its own benefit - It is not exposed to variability in the results of the transaction. An entity is an agent when, in relation to transactions with third parties, all three of the above criteria are met. If the above criteria is not met, then the entity is considered to be a principal in the arrangement. Recognition The entity, as a principal, recognises revenue and expenses that arise from transactions with third parties in a principal- agent arrangement in accordance with the requirements of the relevant Standards of GRAP. The entity, as an agent, recognises only that portion of the revenue and expenses it receives or incurs in executing the transactions on behalf of the principal in accordance with the requirements of the relevant Standards of GRAP. The entity recognises assets and liabilities arising from principal-agent arrangements in accordance with the requirements of the relevant Standards of GRAP. 1.18 Statutory receivables Identification Statutory receivables are receivables that arise from legislation, supporting regulations, or similar means, and require settlement by another entity in cash or another financial asset. Carrying amount is the amount at which an asset is recognised in the statement of financial position. The cost method is the method used to account for statutory receivables that requires such receivables to be measured at their transaction amount, plus any accrued interest or other charges (where applicable) and, less any accumulated impairment losses and any amounts derecognised. Nominal interest rate is the interest rate and/or basis specified in legislation, supporting regulations or similar means. The transaction amount for a statutory receivable means the amount specified in, or calculated, levied or charged in accordance with, legislation, supporting regulations, or similar means. Recognition The entity recognises statutory receivables as follows:  if the transaction is an exchange transaction, using the policy on Revenue from exchange transactions;  if the transaction is a non-exchange transaction, using the policy on Revenue from non-exchange transactions (Taxes and transfers); or  if the transaction is not within the scope of the policies listed in the above or another Standard of GRAP, the receivable is recognised when the definition of an asset is met and, when it is probable that the future economic benefits or service potential associated with the asset will flow to the entity and the transaction amount can be measured reliably. 37 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.18 Statutory receivables (continued) Initial measurement The entity initially measures statutory receivables at their transaction amount. Subsequent measurement The entity measures statutory receivables after initial recognition using the cost method. Under the cost method, the initial measurement of the receivable is changed subsequent to initial recognition to reflect any:  interest or other charges that may have accrued on the receivable (where applicable);  impairment losses; and  amounts derecognised. Impairment losses The entity assesses at each reporting date whether there is any indication that a statutory receivable, or a group of statutory receivables, may be impaired. In assessing whether there is any indication that a statutory receivable, or group of statutory receivables, may be impaired, the entity considers, as a minimum, the following indicators:  Significant financial difficulty of the debtor, which may be evidenced by an application for debt counselling, business rescue or an equivalent.  It is probable that the debtor will enter sequestration, liquidation or other financial re-organisation.  A breach of the terms of the transaction, such as default or delinquency in principal or interest payments (where levied).  Adverse changes in international, national or local economic conditions, such as a decline in growth, an increase in debt levels and unemployment, or changes in migration rates and patterns. If there is an indication that a statutory receivable, or a group of statutory receivables, may be impaired, the entity measures the impairment loss as the difference between the estimated future cash flows and the carrying amount. Where the carrying amount is higher than the estimated future cash flows, the carrying amount of the statutory receivable, or group of statutory receivables, is reduced, either directly or through the use of an allowance account. The amount of the losses is recognised in surplus or deficit. In estimating the future cash flows, the entity considers both the amount and timing of the cash flows that it will receive in future. Consequently, where the effect of the time value of money is material, the entity discounts the estimated future cash flows using a rate that reflects the current risk-free rate and, if applicable, any risks specific to the statutory receivable, or group of statutory receivables, for which the future cash flow estimates have not been adjusted. An impairment loss recognised in prior periods for a statutory receivable is revised if there has been a change in the estimates used since the last impairment loss was recognised, or to reflect the effect of discounting the estimated cash flows. Any previously recognised impairment loss is adjusted either directly or by adjusting the allowance account. The adjustment does not result in the carrying amount of the statutory receivable or group of statutory receivables exceeding what the carrying amount of the receivable(s) would have been had the impairment loss not been recognised at the date the impairment is revised. The amount of any adjustment is recognised in surplus or deficit. Derecognition The entity derecognises a statutory receivable, or a part thereof, when:  the rights to the cash flows from the receivable are settled, expire or are waived;  the entity transfers to another party substantially all of the risks and rewards of ownership of the receivable; or  the entity, despite having retained some significant risks and rewards of ownership of the receivable, has transferred control of the receivable to another party and the other party has the practical ability to sell the receivable in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the entity: - derecognise the receivable; and - recognise separately any rights and obligations created or retained in the transfer. 38 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.18 Statutory receivables (continued) The carrying amounts of any statutory receivables transferred are allocated between the rights or obligations retained and those transferred on the basis of their relative fair values at the transfer date. The entity considers whether any newly created rights and obligations are within the scope of the Standard of GRAP on Financial Instruments or another Standard of GRAP. Any difference between the consideration received and the amounts derecognised and, those amounts recognised, are recognised in surplus or deficit in the period of the transfer. 1.19 Commitments Items are classified as commitments when an entity has committed itself to future transactions that will normally result in the outflow of cash. Disclosures are required in respect of unrecognised contractual commitments. Commitments for which disclosure is necessary to achieve a fair presentation should be disclosed in a note to the financial statements, if both the following criteria are met:  Contracts should be non-cancellable or only cancellable at significant cost (for example, contracts for computer or building maintenance services); and  Contracts should relate to something other than the routine, steady, state business of the entity The commitments disclosed in the disclosure note are the aggregate amount of capital expenditure approved and contracted for at the reporting date, to the extent that the amount has not been recorded in the financial statements. 1.20 Fruitless and wasteful expenditure Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised. Fruitless and wasteful expenditure is accounted for in line with all related requirements, including, but not limited to, ruling Legislation, Regulations, Frameworks, Circulars, Instruction Notes, Practice Notes, Guidelines (as applicable). 1.21 Irregular expenditure Irregular expenditure is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including: - the PFMA; or - the State Tender Board Act, 1968 (Act No. 86 of 1968), or any regulations made in terms of the Act; or - any provincial legislation providing for procurement procedures in that provincial government. Irregular expenditure is accounted for in line with all relating requirements, including, but not limited to, ruling Legislation, Regulations, Frameworks, Circulars, Instruction Notes, Practice Notes, Guidelines (as applicable) 1.22 Segment information A segment is an activity of an entity:  that generates economic benefits or service potential (including economic benefits or service potential relating to transactions between activities of the same entity);  whose results are regularly reviewed by management to make decisions about resources to be allocated to that activity and in assessing its performance; and  for which separate financial information is available. Reportable segments are the actual segments which are reported on in the segment report. They are the segments identified above or alternatively an aggregation of two or more of those segments where the aggregation criteria are met. 39 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.22 Segment information (continued) Measurement The amount of each segment item reported is the measure reported to management for the purposes of making decisions about allocating resources to the segment and assessing its performance. Adjustments and eliminations made in preparing the entity’s financial statements and allocations of revenues and expenses are included in determining reported segment surplus or deficit only if they are included in the measure of the segment’s surplus or deficit that is used by management. Similarly, only those assets and liabilities that are included in the measures of the segment’s assets and segment’s liabilities that are used by management are reported for that segment. If amounts are allocated to reported segment surplus or deficit, assets or liabilities, those amounts are allocated on a reasonable basis. 1.23 Related parties A related party is a person or an entity with the ability to control or jointly control the other party, or exercise significant influence over the other party, or vice versa, or an entity that is subject to common control, or joint control. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Joint control is the agreed sharing of control over an activity by a binding arrangement, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the venturers). Related party transaction is a transfer of resources, services or obligations between the reporting entity and a related party, regardless of whether a price is charged. Significant influence is the power to participate in the financial and operating policy decisions of an entity, but is not control over those policies. Management are those persons responsible for planning, directing and controlling the activities of the entity, including those charged with the governance of the entity in accordance with legislation, in instances where they are required to perform such functions. Close members of the family of a person are those family members who may be expected to influence, or be influenced by that person in their dealings with the entity. The entity is exempt from disclosure requirements in relation to related party transactions if that transaction occurs within normal supplier and/or client/recipient relationships on terms and conditions no more or less favourable than those which it is reasonable to expect the entity to have adopted if dealing with that individual entity or person in the same circumstances and terms and conditions are within the normal operating parameters established by that reporting entity's legal mandate. Where the entity is exempt from the disclosures in accordance with the above, the entity discloses narrative information about the nature of the transactions and the related outstanding balances, to enable users of the entity’s financial statements to understand the effect of related party transactions on its Annual Financial Statements. 1.24 Events after reporting date Events after reporting date are those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue. Two types of events can be identified:  those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date); and  those that are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting date). The entity will adjust the amount recognised in the financial statements to reflect adjusting events after the reporting date once the event occurred. The entity will disclose the nature of the event and an estimate of its financial effect or a statement that such estimate cannot be made in respect of all material non-adjusting events, where non-disclosure could influence the economic decisions of users taken on the basis of the financial statements. 1.25 Living and non-living resources 40 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.25 Living and non-living resources (continued) Living resources are those resources that undergo biological transformation. Non-living resources are those resources, other than living resources, that occur naturally and have not been extracted. Agricultural activity is the management by the entity of the biological transformation and harvest of biological assets for: (a) sale; (b) distribution at no charge or for a nominal charge; or (c) conversion into agriculture produce or into additional biological assets for sale or distribution at no charge or for a nominal charge. A bearer plant is a living plant that: (a) is used in the production or supply of agricultural produce; (b) is expected to bear produce for more than one period; and (c) has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales. 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. Group of resources means a grouping of living or non-living resources of a similar nature or function in an entity’s operations that is shown as a single item for the purpose of disclosure in the Annual Financial Statements. Recognition Non-living resources, other than land, are not recognised as assets. Required information are disclosed in the notes to the Annual Financial Statements. A living resource is recognised 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. Where the entity is required in terms of legislation or similar means to manage a living resource, but it does not meet the definition of an asset because control of the resource cannot be demonstrated, relevant information are disclosed in the notes to the Annual Financial Statements. Where the entity holds a living resource that meets the definition of an asset, but which does not meet the recognition criteria, relevant information are disclosed in the notes to the Annual Financial Statements. Measurement at recognition A living resource that qualifies for recognition as an asset is measured at its cost. Where a living resource is acquired through a non-exchange transaction, its cost is measured at its fair value as at the date of acquisition. The cost of a living resource comprises its purchase price, including import duties and non-refundable purchase taxes, and any costs directly attributable to bringing the living resource to the location and condition necessary for it to be capable of operating in the manner intended by management. 1.26 New Standards and Interpretations Standards and interpretations issued, but not yet effective 41 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Accounting Policies 1.26 New Standards and Interpretations (continued) The following Standards of GRAP and/ or amedments thereto have been approved by the Accounting Standards Board, but will only become effective in future periods or have not been given an effective date by the Minister of Fianace. The entity has not early-adopted any of these new Standards or amendments thereto, but has referred to them for guidance in the development of accounting policies in accordance with GRAP 3 as read with Directive 5: IGRAP 21: The Effect of Past Decision on Materiality The effective date is 1 April 2023 and early adoption is encouraged. SANParks expects to adopt the amendment for the first time in 1 April 2023. The adoption of this standard is not expected to impact on the results of SANParks,but may result in assets being recognised as minor assets under operating expenditure if they below the maximum threshold set by SANParks management. GRAP 25 - Employee Benefits (and IGRAP 7) The effective date is 1 April 2023 and early adoption is permitted. SANParks expects to adopt the amendment for the first time in 1 April 2023. The adoption of this standard is not expected to impact on the results of SANParks,but may result a different presentation and disclosure of the defined benefit obligation than is currently provided in the annual financial statement. GRAP 103 - Heritage Assets The effective date of the amendment is not yet set by the Minister of Finance. SANParks expects to adopt the amendment for the first time when the Minister sets the effective date for the amendment. The adoption of this standard is not expected to impact on the results of SANParks,but may result a different presentation and disclosure of heritage assets than is currently provided in the annual financial statements GRAP 1 - Presentation of Financial Statements The effective date of the amendment is not yet set by the Minister of Finance. SANParks expects to adopt the amendment for the first time when the Minister sets the effective date for the amendment. The adoption of this standard is not expected to impact on the results of SANParks,but may result a different presentation and disclosure of the annual financial statements GRAP 104 - Financial Instruments The effective date is 1 April 2025 and early adoption of entire standard is permitted. SANParks expects to adopt the amendment for the first time in 1 April 2025. The adoption of this standard is expected to have significant impact on the presentation and disclosure of SANParks financial instruments in the annual financial statements, hence adoption is deferred to the adoption date. 1.27 Budget Information The approved budget is prepared on an accrual basis and classified according to nature of items.The approved budget covers the financial period from 1 April 2022 to 31 March 2023. 42 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 2. Inventories Consumables 20,508 17,103 Retail goods and fuel 39,336 45,084 Military inventory 2,576 3,975 62,420 66,162 Inventories recognised as an expense during the year 447,255 319,941 Inventory pledged as security There is no Inventory pledged as security. 3. Receivables from exchange transactions Trade debtors 75,430 80,150 Prepayments 26,808 24,485 Creditors with debit balances 218 - Staff debtors and other 6,472 9,991 Provision for doubtful debts (14,572) (13,879) Concession assets (non-current) 351,388 340,580 445,744 441,327 Non-current receivables 351,388 340,580 Current receivables 94,356 100,747 445,744 441,327 Credit quality of trade and other receivables The credit quality of trade and other receivables from exchange transactions are determined and monitored with reference to historical payment trends. Accordingly the credit quality of the customers included in the balance of trade and other receivables from exchange transactions is determined internally through applications of the entity's own credit policy. Trade receivables age analysis Current (0 - 30 days) 18,255 31,572 31 - 60 days 5,614 (4,886) 61 - 90 days 3,044 9,321 91 - 120 days 5,095 3,401 Over 120 days 43,422 40,742 75,430 80,150 SANParks only controls the right to receive service concession assets at the end of each of the service concession arrangements. This right to receive assets is the residual interest in the concessionaire assets at the end of the service concession arrangements. SANParks is liable to compensate the concessionaire, a consideration equal to the residual value of the asset at the date of transfer. 43 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 3. Receivables from exchange transactions (continued) Trade and other receivables past due but not impaired Trade and other receivables which are less than 3 months past due are not considered to be impaired. At 31 March 2023,R 13,753 (31 March2022:R 41,896) were past due but not impaired. The ageing of amounts past due but not impaired is as follows: 1 month past due 5,614 1,636 2 months past due 3,044 6,193 3 months past due 5,095 34,067 Trade and other receivables impaired As of 31 March 2023, trade and other receivables of R 14,572 (March 2022: R 13,879) were impaired and provided for. The amount of the provision was R 14,572 as of 31 March 2023 (March 2022: R 13,879). The ageing of these trade and other receivables is as follows: 3 to 6 months 2,351 675 Over 6 months 13,879 13,204 Reconciliation of provision for impairment of trade and other receivables Opening balance 13,879 6,963 Provision for impairment 693 10,523 Amounts written off as uncollectible - (3,607) 14,572 13,879 The COVID-19 pandemic and subsequent lockdown restrictions resulted in adverse effects on the tourism industry and thus placing certain concessionaires under financial difficulty. These concessionaires have not settled outstanding debts due. Other debtors impaired have been outstanding for over 1 year. SANParks has instituted legal action to recover outstanding amounts. 4. Cash and cash equivalents Cash and cash equivalents consist of: Cash on hand 743 274 Bank balances 1,372,648 1,153,268 Short term investments 631,342 592,644 2,004,733 1,746,186 Short term investments Notice account: First National Bank 319,755 280,105 Notice account: ABSA Bank 293,895 295,810 Notice account: Standard Bank 17,692 16,729 631,342 592,644 44 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 5. Property, plant and equipment 31 March 31 March 2023 2022 Cost / Accumulated Carrying value Cost / Accumulated Carrying value Valuation depreciation R'000 Valuation depreciation R'000 R'000 and R'000 and accumulated accumulated impairment impairment R'000 R'000 Buildings and infrastructure 2,330,108 (647,784) 1,682,324 2,153,461 (584,988) 1,568,473 Vehicles and mechanical equipment 608,617 (424,963) 183,654 560,957 (393,316) 167,641 Furniture and office equipment 302,342 (208,726) 93,616 266,241 (192,846) 73,395 Aircraft 109,665 (91,782) 17,883 106,754 (83,298) 23,456 Work in progress 222,648 - 222,648 272,186 - 272,186 Total 3,573,380 (1,373,255) 2,200,125 3,359,599 (1,254,448) 2,105,151 45 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 5. Property, plant and equipment (continued) Reconciliation of property, plant and equipment - March 2023 Opening Additions Disposals Transfers Depreciation Total R'000 balance R'000 R'000 R'000 R'000 R'000 Buildings and infrastructure 1,568,473 - (1,118) 178,094 (63,125) 1,682,324 Vehicles and mechanical equipment 167,641 49,599 (602) - (32,984) 183,654 Furniture and office equipment 73,395 40,548 (1,014) 168 (19,481) 93,616 Aircraft 23,456 2,912 - - (8,485) 17,883 Work in progress 272,186 128,556 - (178,094) - 222,648 2,105,151 221,615 (2,734) 168 (124,075) 2,200,125 Reconciliation of property, plant and equipment - March 2022 Opening Additions Disposals Transfers Depreciation Total R'000 balance R'000 R'000 R'000 R'000 Buildings and infrastructure 1,607,604 - (270) 19,594 (58,455) 1,568,473 Vehicles and mechanical equipment 210,151 13,186 (257) - (55,439) 167,641 Furniture and office equipment 76,882 18,194 (812) - (20,869) 73,395 Aircraft 31,944 - - - (8,488) 23,456 Work in progress 160,951 130,829 - (19,594) - 272,186 2,087,532 162,209 (1,339) - (143,251) 2,105,151 Pledged as security No property plant and equipment are pledged under security. Assets subject to finance lease (Net carrying amount) Motor vehicles 88,572 154,817 Furniture and Office equipment - - 88,572 154,817 46 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 5. Property, plant and equipment (continued) Property, plant and equipment in the process of being constructed or developed Cumulative expenditure recognised in the carrying value of property, plant and equipment Buildings 208,200 290,575 Expenditure incurred to repair and maintain property, plant and equipment Expenditure incurred to repair and maintain property, plant and equipment included in Statement of Financial Performance Buildings and infrastructure 97,371 111,025 Vehicles and mechanical equipment 60,694 46,929 Furniture and office equipment 109 28 General expenses 15,091 13,712 173,265 171,694 47 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 6. Intangible assets 31 March 31 March 2023 2022 Cost / Accumulated Carrying value Cost / Accumulated Carrying value Valuation amortisation R'000 Valuation amortisation R'000 R'000 and R'000 and accumulated accumulated impairment impairment R'000 R'000 Patents, trademarks and other rights 2,736 - 2,736 2,736 - 2,736 Computer software 55,636 (50,494) 5,142 55,648 (49,641) 6,007 Total 58,372 (50,494) 7,878 58,384 (49,641) 8,743 Reconciliation of intangible assets - March 2023 Opening Disposals Amortisation Total R'000 balance R'000 R'000 R'000 Patents, trademarks and other rights 2,736 - - 2,736 Computer software 6,007 (1) (864) 5,142 8,743 (1) (864) 7,878 Reconciliation of intangible assets - March 2022 Opening Additions Disposals Amortisation Total R'000 balance R'000 R'000 R'000 R'000 Patents, trademarks and other rights 2,736 - - - 2,736 Computer software, other 7,116 1,860 (21) (2,948) 6,007 9,852 1,860 (21) (2,948) 8,743 48 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 7. Heritage assets 31 March 31 March 2023 2022 Cost / Accumulated Carrying value Cost / Accumulated Carrying value Valuation impairment R'000 Valuation impairment R'000 R'000 losses R'000 R'000 losses R'000 Collections 19,854 - 19,854 19,854 - 19,854 Monuments 174,367 - 174,367 174,536 - 174,536 Conservation areas 674,566 - 674,566 619,563 - 619,563 Total 868,787 - 868,787 813,953 - 813,953 Reconciliation of heritage assets March 2023 Opening Additions Transfers Total R'000 balance R'000 R'000 R'000 Collections 19,854 - - 19,854 Monuments 174,536 - (169) 174,367 Conservation areas 619,563 55,003 - 674,566 813,953 55,003 (169) 868,787 Reconciliation of heritage assets March 2022 Opening Additions Total R'000 balance R'000 R'000 Collections 19,854 - 19,854 Monuments 174,536 - 174,536 Conservation areas 567,164 52,399 619,563 761,554 52,399 813,953 49 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 7. Heritage assets (continued) Heritage assets whose fair values cannot be reliably measured Land and Other Heritage Assets A significant number and value of SANParks Heritage assets were obtained through non exchange transactions from various state-owned organisations and these include  Land  Archaelogical site  Collections  Geological sites  Graves of cultural significance  Historical Buildings  Historical sites  Landscapes and natural features of cultural significance  Monuments  Palaentology sites  Sacred sites (sites of spiritual or religious significance) For land obtained from non-exchange transactions, SANParks attempted to establish the value thereof using guidance from GRAP 103 and Directive 7 issued by the Accounting Standards Board. The heritage value (i.e. which is the service potential of the land) of the National Parks is derived from the NEMPA (National Environmental Management Protected Areas) Act which is primarily to protect these areas; prevent exploitation or occupation inconsistent with the protection of the ecological integrity of the these areas; provide spiritual, scientific, educational, recreational and tourism opportunities which are environmentally compatible and contribute to economic development, where feasible. Due to the size and magnitude of National Parks, SANParks and the Office of the Valuer General (under the Department of Rural Development and Land Reform) is not aware of any market to buy and sell National Parks or any other valuation method or technique that is available to measure National Parks. For those reasons SANParks’ land acquired from non- exchange transactions could not be recognised in the Annual Financial Statements. As this land is an inalienable item (withdrawal as a National Park and protected area in terms of the NEMPA Act is only by resolution of the National Assembly and/or the Minister depending on the circumstances), none of National Parks have been disposed of however information pertaining to such land has been disclosed below. Heritage assets per park Size in Hectares Kruger National Park 1,905,031 Augrabies Falls National Park 54,643 Kalahari Gemsbok National Park 962,027 Mokala National Park 25,903 Namaqua National Park 189,601 Richtersveld National Park 170,373 Agulhas National Park 20,412 Bontebok National Park 3,390 Table Mountain National Park 178,358 Tankwa Karoo National Park 140,652 West Coast National Park 63,139 Addo Elephant National Park 249,801 Camdeboo National Park 18,946 Karoo National Park 83,337 Mountain Zebra National Park 19,885 Golden Gate Highlands National Park 32,811 Mapungubwe National Park 15,075 Marakele National Park 58,157 Groenkloof National Park 7 Graspan/Vaalbos National Park 4,575 Garden Route National Park 128,014 50 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 7. Heritage assets (continued) Meerkat 135,392 In addition SANParks has acquired other heritage assets which originate from National Parks, derive their significance from their association of National Parks and have the potential to yield information that enhances the cultural significance of National Parks when considering tourism experience and marketing. These are managed within the National Heritage Resources Act (NHRA). Due to the uniqueness of the heritage assets, mandate and nature of SANParks and in addition the limitations of the NHRA, neither the fair value, deemed cost or replacement cost could be determined for these heritage asset. For that reason SANParks could not recognise them in the Annual Financial Statements. None of these heritage assets have been disposed.However see below information pertaining to such heritage assets below: Other heritage assets per park Description Kruger National Park Archaeological sites, Collections, Geological sites, Graves of cultural significance, Historical buildings, Historical sites, Landscapes and natural features of cultural significance, Monuments, Palaeontology sites, Sacred sites (sites of spiritual or religious significance). Augrabies Falls National Park Archaeological sites, Historical sites, Landscapes and natural features of cultural significance. Kalahari Gemsbok National Park Archaeological sites Mokala National Park Archaeological sites, Collections, Graves of cultural significance, Historical buildings, Historical site. Namaqua National Park Archaeological sites, Geological sites, Historical building, Historical sites. Richtersveld National Park Graves of cultural significance, Historical sites. Agulhas National Park Historical buildings, Historical sites. Bontebok National Park Historical sites. Table Mountain National Park Archaeological sites, Collections, Geological sites, Historical sites, Historical buildings, Historical sites, Monuments. Tankwa Karoo National Park Archaeological sites, Historical buildings, Historical sites. West Coast National Park Graves of cultural significance, Historical buildings, Palaeontology sites. Addo Elephant National Park Archaeological site, Collections, Geological sites, Graves of cultural significances, Historical building, Historical site, Landscapes and natural features of cultural significance, Monuments, Sacred sites (sites of spiritual or religious significance). Camdeboo National Park Archaeological site, Geological site, Historical buildings, Historical site, Monument, Sacred sites (sites of spiritual or religious significance). Garden Route National Park: Archaeological sites, Collections, Graves of cultural significance, Knysna; Historical buildings, Historical sites, Landscapes and natural features of Tsitsikamma; cultural significance. Wilderness Archaeological sites, Graves of cultural significance, Historical buildings, Historical sites, Landscapes and natural features of cultural significance. Archaeological sites, Historical buildings, Monuments Karoo National Park Archaeological sites. Mountain Zebra National Park Archaeological sites, Graves of cultural significance, Historical sites. Golden Gate Highlands National Park Archaeological site, Geological site, Graves of cultural significance, Historical Buildings, Historical site, Palaeontology site. Mapungubwe National Park Archaeological sites, Collections, Historical sites. Marakele National Park Archaeological sites, Graves of cultural significance, Historical buildings. Expenditure incurred to repair and maintain heritage assets 51 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 8. Non-living resources Entity as custodian SANParks exists in terms of the National Environmental Management: Protected Areas Act (NEM:PAA), 57 of 2003, with the mandate to conserve, protect, control and manage national parks and other defined protected areas and their biological diversity (biodiversity). SANParks executes its mandate in accordance with a management plan as required by section 41 of the NEM: PAA which aims to ensure the protection, conservation and management of the national parks in a manner which is consistent with the objectives of the Act and for the purposes listed in section 17 of the Act. Section 17 of the NEM: PAA provides a list of purposes for the declaration of areas as protected areas, which includes the protection of biological diversity (Section 17(a) (c)), the preservation of ecological integrity (Section 17(b)), and the sustainable use of natural and biological resources (17(h)). Nature and types of non-living resources for which the entity is responsible Water Within national parks, water is found in its natural state in the form of boreholes. SANParks is permitted through the National Water Act, 1998 (Act No 36 of 1998) to abstract water from rivers flowing through national parks for use within park operations. Land SANParks is assigned as the Management Authority of state land that is declared a national park in terms of the NEM: PAA. 9. Living resources Entity as custodian SANParks exists in terms of the National Environmental Management: Protected Areas Act (NEM:PAA), 57 of 2003, with the mandate to conserve, protect, control and manage national parks and other defined protected areas and their biological diversity (biodiversity). SANParks executes its mandate in accordance with a management plan as required by section 41 of the NEM: PAA which aims to ensure the protection, conservation and management of the national parks in a manner which is consistent with the objectives of the Act and for the purposes listed in section 17 of the Act. Section 17 of the NEM: PAA provides a list of purposes for the declaration of areas as protected areas, which includes the protection of biological diversity (Section 17(a) (c)), the preservation of ecological integrity (Section 17(b)), and the sustainable use of natural and biological resources (17(h)).. Restrictions on use or capacity to sell The following information relates to living resources which is subject to restrictions on use or capacity to sell: Animals in the Kruger National Park The Kruger National Park falls within the region identified as a high risk area for the disease TB. As a result there is a restriction placed which prevents the trading and donation of animals within this region. 52 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 9. Living resources (continued) Living resources not recognised SANParks did not recognise the following living resources, due to the definition of an asset not being met: Flora and Fauna The nature and type are as follows: Fauna The following types of fauna is found in national parks: - Mammals - Reptiles - Birds - Fish - Invertebrates - Amphibians - Scorpions - Spiders - Butterflies - Insects Flora The following types of fauna is found in national parks: - Terrestial Vegetation - Acquatic Vegetation - Semi Acquatic Vegetation Key judgements and assumptions applied In terms of the NEM:PAA SANParks’ mandate is to conserve, protect manage national parks and other defined protected areas and their biological diversity (biodiversity).SANParks acts as custodian to conserve the resources entrusted to it and thus to manage and conserve the environment as a whole. Therefore SANParks does not manage the physical condition of each individual animal or plant within a national park. Animals in national parks are left to roam freely and the plants are left in their natural environment or habitat. SANParks only restricts the movement of wild animals by fencing off national parks generally for disease control purposes and limit the exposure of neighbouring landowners and communities to the risks associated with keeping wild animals in a national park. In the bigger parks, fences are very permeable as there are rivers and drainage lines going through the parks and therefore making it impossible to fence certain sections of the park. Therefore animals are able to move in and out through unfenced areas. Furthermore though national parks have fences, animal migration occurs frequently and animals do from time to time jump over, or burrow under fences. Access control is therefore not high and as such SANParks does not have control of the individual animals and plants within the parks. 53 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 9. Living resources (continued) SANParks is allowed in terms of the NEM: PAA to make use of the resources under its custodianship subject to the conditions that the ecological integrity of the ecological systems of the park is not significantly disrupted and that the survival of any species is not negatively affected. Although legally SANParks is allowed by the NEM: PAA to sell animals, in reality this is applicable to those animals where there is a market for buyers of such animals and also where the costs of disposal are much lower than the market value of the animals. SANParks’ ability to sell animals is also dependent on the ability to count them and given the wide variety of the type of animals found in national parks, counting animals is only considered for larger animals. The counts performed by SANParks are not on an annual basis, on certain species SANParks can get an indication of the population every 5 years. Various methods are used to determine estimates of animal abundances in national parks. These methods include: registration studies, block counts, total counts, fixed width sample transects, spoor indexing, photographic mark-recapture, call-up surveys or even guestimate usually from ranger experience. SANParks’ main objective for counting animals is about the trend in animal populations and not necessarily to keep record of exact quantities of animals at any point in time. SANParks cannot guarantee the accuracy and precision of the counting process due to the various methods used and biases involved in the counting process. Furthermore a count of animals is done on a specific day and given the fact that animals roam freely within a park and SANParks cannot restrict their movement, the numbers counted on a specific day will certainly change within day or week especially in the bigger parks. SANParks ability to move or sell animals is based ultimately on ecological needs within parks due to too many animals under certain environmental conditions In respect of animals sold and thus in terms of paragraph 20 of GRAP 110 SANParks has control, where the the presumption on acquisition date is that the acquisition date is the date that animals meet the definition of an asset, SANParks is not able to determine a reliable fair value of the animals. This is due to the variability in prices of animals depending on where an animals is located, the same specie of animal will sell at different prices depending on an animals location. Therefore due to the considerable varying ranges in prices SANParks cannot determine a reliable fair value and thus the recognition criteria is not met. Furthermore due to the restriction placed on animals in the Kruger National Park, SANParks cannot determine a fair value of animals in the Kruger National Park. 54 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 10. Finance lease obligation Minimum lease payments due - within one year 13,104 45,036 - in second to fifth year inclusive 16,558 13,912 29,662 58,948 less: future finance charges (4,395) (3,081) Present value of minimum lease payments 25,267 55,867 Present value of minimum lease payments due - within one year 11,153 42,741 - in second to fifth year inclusive 14,114 13,126 25,267 55,867 Non-current liabilities 14,114 13,126 Current liabilities 11,153 42,741 25,267 55,867 It is SANParks policy to lease certain motor vehicles and equipment under finance leases. The average lease term was 3-5 years and the average effective borrowing rate was 8% (March 2022: 6%). 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. 11. Payables from exchange transactions Trade payables 69,009 69,802 Payments received in advanced 108,595 134,526 VAT payable 30,139 21,064 Accrued expenses 84,055 75,154 Deposits received 1,612 1,028 Other payables 15,504 17,138 308,914 318,712 Trade Payables Age Analysis Current (0-30 days) 62,283 74,625 5 5,946 (5,409) 61 - 90 days 43 5 91 - 120 days (35) - 120 days and more 772 580 69,009 69,801 Accured Leave Leave liability 76,560 73,446 55 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 12. Employee benefit obligation The amounts recognised in the statement of financial position are as follows: Carrying value Present value of the defined benefit obligation-wholly unfunded 587,713 548,559 Interest cost 58,719 55,280 Current service cost 6,816 6,942 Actual employer benefit payment (32,033) (30,587) Actuarial (gain)/loss (83,935) 7,519 537,280 587,713 Changes in the present value of the defined benefit obligation are as follows: Opening balance 66,381 27,227 Benefits paid (32,033) (30,587) Net expense recognised in the statement of financial performance (18,400) 69,741 15,948 66,381 Net expense recognised in the statement of financial performance Current service cost 6,816 6,942 Interest cost 58,719 55,280 Actuarial (gains) losses (83,935) 7,519 (18,400) 69,741 Key assumptions used Assumptions used at the reporting date: Discount rates used 11.10 % 10.26 % Health care cost inflation rate 7.19 % 7.07 % The basis on which the discount rate has been determined is as follow: GRAP 25 stipulates that the choice of this rate should be derived from government bond yields consistent with the estimated term of the post-employment liabilities. However, where there is no deep market in government bonds with a sufficiently long maturity to match the estimated term of all the benefit payments, current market rates of the appropriate term should be used to discount shorter term payments, and the discount rate for longer maturities should be estimated by extrapolating current market rates along the yield curve. Consequently, a discount rate of 11.10% per annum has been used. The corresponding index-linked yield at this term is 3.65%. These rates do not reflect any adjustment for taxation. These rates were deduced from the interest rate data obtained from the Johannesburg Stock Exchange after the market close on 31 March 2023. Assumption Value Average retirement age 63* Continuation of membership at retirement 100% if subsidy is 100%. 90% if subsidy is 60% Proportion of in-service non-members joining a scheme by retirement and continuing with the 100% if subsidy is 100%. subsidy thereafter 90% if subsidy is 60% Proportion with a spouse dependent at retirement 50% Mortality during employment SA 85-90 ultimate table adjusted for female lives 56 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 12. Employee benefit obligation (continued) Mortality post-employment PA(90) ultimate table, adjusted down by one year of age, and a 1% annual compound mortality improvement from 2010. *The average age of retirement was 62 years in the 21/22 Financial year Sensitivity analysis Assumed healthcare cost trends rates have a significant effect on the amounts recognised in surplus or deficit. A one percentage point change in assumed healthcare cost trends rates would have the following effects: ` One One percentage percentage point increase point decrease Effect on the aggregate of the service cost and interest cost 73,661 58,659 Effect on defined benefit obligation 593,937 488,064 Amounts for the current and previous four year are as follows: ` March 2023 March 2022 March 2021 March 2020 March 2019 '000 '000 '000 '000 '000 Defined benefit obligation 537,280 587,713 548,559 492,373 513,617 Experience adjustments on plan liabilities (28,210) 6,308 (32,510) 46,332 (3,226) 57 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 13. Unspent conditional grants and receipts Unspent conditional grants comprises of: Unspent conditional grants and receipts Infrastructure grant 220,970 238,130 Special projects and Expanded Public Works Programme 505,606 174,716 Land grant 65,589 68,351 792,165 481,197 Movement during the year Infrastructure Grant Department of Forestry, Fisheries and the Environment (DFFE) 211,832 189,728 National Department of Tourism (NDT) 9,138 48,402 220,970 238,130 - Infrastructure Grant - Department of Forestry, Fisheries and the Environment (DFFE) Opening balance beginning of the year 189,729 299,840 Prior year error - (1,377) Funds received during the year 108,610 - Transfers - (421) Interest received during the year 10,235 5,208 Funds utilised during the year (96,742) (113,522) 211,832 189,728 - Infrastructure Grant - National Department of Tourism (NDT) Opening balance beginning of the year 48,402 46,976 Transfers - 421 Interest received or paid back during the year (11,301) 1,021 Funds utilised during the year (27,962) (16) 9,139 48,402 Special Projects and Expanded Public Works Programme (EPWP) Special Projects 453,680 167,981 Expanded Public Works Programme (EPWP) 51,926 6,734 505,606 174,715 - Special Projects Opening balance beginning of the year 167,981 281,959 Opening balance adjustment 358 (2,584) Prior year error - 7,283 Transfer to income received advance - (56,522) Funds received during the year 701,952 312,736 Interest received during the year 6,135 13,726 Funds utilised during the year (422,746) (388,617) 453,680 167,981 - Expanded Public Works Programme (EPWP) Opening balance beginning of the year 6,735 11,635 Opening balance adjustment (66) - Prior year error & transfer from income received in advance 10,000 - Funds received during the year 148,687 66,241 Interest received during the year 1,773 276 58 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 13. Unspent conditional grants and receipts (continued) Funds utilised during the year (115,203) (71,418) 51,926 6,734 Land Grant Opening balance beginning of the year 68,351 98,670 Funds received during the year 21,381 20,618 Interest received during the year 3,264 1,462 Funds utilised during the year (27,407) (52,399) 65,589 68,351 14. Provisions Reconciliation of provisions - March 2023 Opening Remeasureme Total Balance nts Concessionaires provision 340,580 10,808 351,388 Reconciliation of provisions - March 2022 Opening Remeasureme Prior Period Total Balance nts Error Concessionaires provision 287,580 54,150 (1,150) 340,580 The lodge concessions entail allowing private operators to build and operate tourism facilities within the National Parks, for contracted defined periods, usually over a 20 year concession contract. Investors take over and upgrade specified existing lodge facilities, or build new ones. The contractual mechanism is a concession contract, which enables the private operator to use a defined area of land, plus any building that may already exist on that land, over a specific time period in return for payment of concession fees. Against these rights of occupation and commercial use of facilities, there is a set of obligations on the part of the concessionaire regarding financial terms, environmental management, social objectives, empowerment and other factors. Infringement of these requirements carries specified penalties, underpinned by performance bonds, and finally termination of the contract. The assets will revert to SANParks at a consideration equal to the residual value of the asset at the date of transfer. The provision arose as a result of the liability payable at the termination date of the concessionaire contract. Refer to note 3 for the concession asset. 15. Reservation deposits Opening balance 390,473 392,628 Movement during the year* 47,768 (2,155) Closing balance 438,241 390,473 * The presentation of the disclosure note above has been amended to reflect the net movement in reservation deposit. 59 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 16. Tourism, retail, concession and other Retail Sales Retail sales 355,974 255,089 355,974 255,089 Tourism income Accommodation 850,401 751,140 Drive fees 56,498 30,192 Trail fees 36,594 30,255 Other tourism related activities 50,657 39,667 994,150 851,254 Concession income Facilities rental 48,296 23,863 Concession fees received 102,382 37,867 150,678 61,730 Conservation income Wild card income 120,889 77,778 Conservation fees 516,986 204,853 Entrance fees 14,267 10,556 652,142 293,187 Other income Rent received 15,856 16,204 Services rendered 52,085 94,602 67,941 128,220 2,220,885 1,572,066 17. Sales - fauna and flora Sales - fauna and flora 655 9,693 The sale of fauna and flora is used for biodiversity and to improve representative conservation estate. 18. Other operating income Sales - non-retail 1,293 5,297 Fines 777 1,048 Course fees 1,512 1,056 Commission received 11,565 8,856 Water and electricity 17,533 16,820 Rebates received 560 - Location fee for filming right 3,753 3,208 Other income 26,362 53,759 Exchange rate difference income 882 - 64,237 90,044 19. Interest income Interest revenue Interest 61,521 45,277 60 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 20. Government grants and other funding Operating grants Roads 15,700 15,140 Conservation 355,604 483,494 Land grant 27,407 52,399 Special projects income 422,746 388,617 821,457 939,650 21. Donations Donations 42,073 25,165 22. Employee related costs Salaries and wages 1,105,060 1,067,341 Social contributions 171,082 160,001 Other salary related costs 101,523 121,508 Post-retirement benefits 65,535 62,222 1,443,200 1,411,072 Included in employee related costs are related parties transactions pertaining to key management personnel remuneration as detailed in note 32. SANParks Pension Fund Contributions by the employer and the employees are allocated to the SANParks Pension Fund. The fund is a defined contribution plan which is controlled by the Pension Funds Act, 1956 and administered by a financial institution. During the year SANParks contributed an amount of R51, 696 million for 2 385 employees to the retirement fund (2022: R46, 403 million for 2 421 employees) SACCAWU National Provident Fund The fund is a defined contribution plan, which is controlled by the Pension Funds Act, 1956 and administered by a financial institution. Retirement benefits are based on the accumulated credits as contributed by both employer and employee. During the year SANParks contributed an amount of R36,935 million for 2 216 employees (2022: R31,309 million for 2 258 employees) 23. Depreciation and amortisation Property, plant and equipment 124,075 143,251 Intangible assets 865 2,948 124,940 146,199 24. Finance costs Finance leases 3,088 4,885 Interest on current account 2,153 304 5,241 5,189 61 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 25. Lease rentals on operating lease Motor vehicles Contractual amounts 39,580 30,030 Lease rentals on operating lease - Other Contractual amounts 15,314 15,215 54,894 45,245 26. Loss on disposal of assets Loss on disposal of assets (1,754) (714) 27. Operating expenses Assessment rates and municipal charges 86,086 81,763 Auditors remuneration (Note 28) 11,687 6,744 Bank charges 30,578 19,259 Consulting and professional fees 38,447 47,766 Consumables 79,552 50,286 License fees 77,820 24,743 Insurance 40,037 54,037 EPWP and other project expenditure 220,369 239,307 Information and communication technology expenses 82,184 54,316 Motor vehicle expenses 49,562 35,495 Fuel and oil 120,196 61,206 Promotions 8,676 15,309 Repairs and maintenance 123,702 136,200 Staff welfare 51,256 36,427 Telephone and fax 42,383 49,837 Other operating expenses 70,731 67,669 Impairment of financial assets 693 10,519 Special projects expenses 31,609 51,281 Game capture expenses 5,126 7,934 1,170,694 1,050,098 EPWP and other project expenditure. The Expanded Public Works Programme (EPWP) is implemented through Biodiversity Social Projects (BSP) and the expenditure includes rehabilitation and other related costs. The costs include among others, alien invasive vegetation clearing, land rehabilitation, cleaning of beaches and infrastructure maintenance. 28. Auditors' remuneration Internal audit fees 4,400 897 External audit fees 7,287 5,847 11,687 6,744 62 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 29. Irregular and Fruitless Expenditure Irregular Expenditure 202,357 393,707 Fruitless and wasteful expenditure - 10 Total 202,357 393,717 Disciplinary steps taken as a result of irregular and fruitless and wasteful expenditure Cases finalised and disciplinary process completed (10) - 2,230 Transactions referred for external investigation (8) 12,586 12,697 Matters referred for discussion by the loss control committee - 18,160 Matters referred for consequence management (21) - 360,630 12,586 393,717 Irregular Expenditure In the current year irregular expenditure, there is currently an amount of R25 million (13%) of alleged irregular expenditure under assessment which relates to budget over expenditure on Retail Cost of Sales. Retail Cost of Sales cannot be predicted with utmost accuracy due to the nature of SANParks operations. 70% (R128 million) of the identified irregular expenditure relates to the non-compliance with the preferential procurement regulations on local content. The remaining 17% relates to the utilisation of expired contracts and non-compliance with supply chain management prescripts 91% (R356 million) of prior year irregular expenditure relates to an alleged irregular expenditure under assessment which relates to budget over expenditure on Operating leases and Operating expenses. SANParks revenue had decreased due to the pandemic (Covid-19) and was sufficient to cover running costs of the organisation. SANParks has a contract with Total Energies (Pty) (Ltd) for the supply and delivery of fuel. The contract was varied and there were breakdowns in controls when finalizing the addendum to the contract. This contract is currently under assessment and the assessment will be finalised in the 2023-24 financial year. The estimated figure under assessment is R263 million. PPP Management contracts are currently under assessment to determine if reimbursed amounts will amount to irregular expenditure. The assessment will be finalised in the 2023-24 financial year. Fruitless and Wasteful Expenditure There was no fruitless and wasteful expenditure detected during the 2022/23 financial year. 63 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023 2022 '000 '000 30. Cash generated from (used in) operations Surplus (deficit) 126,337 (253,796) Adjustments for: Depreciation and amortisation 124,940 146,199 Loss on sale of assets 1,754 714 Finance costs 3,088 4,885 Movements in retirement benefit liabilities (50,433) 39,154 Movements in concession provisions 13,922 55,102 Movement in leave provision - 40,573 Donation received (27,600) - Changes in working capital: Inventories 3,742 (16,210) Receivables from exchange transactions (4,417) (65,837) Payables from exchange transactions (9,797) 89,754 Unspent conditional grants and receipts 310,968 (257,884) Reservation deposits 47,768 (2,155) 540,272 (219,501) 31. Risk management Financial risk management SANParks’ 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. SANParks’ overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on SANParks’ financial performance. Risk management is carried out under policies approved by the Accounting Authority. The Accounting Authority provide written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, and investment of excess liquidity. Liquidity risk Liquidity risk is the risk of SANParks not having sufficient funds to meet its financial obligations as they fall due. SANParks manages liquidity risk through proper management of working capital, monitoring variances of actual expenditure against budgeted amounts, ongoing review of future commitments and credit facilities. Cash flow forecasts are prepared and adequate utilised borrowing facilities are monitored. The table below analyses SANParks financial liabilities into relevant maturity groupings based on the remaining period from 31 March 2023 to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. March 2023 Within 1 year Later than 1 R'000 year and not later than 5 years R'000 Finance Lease Obligation 11,153 14,114 Trade and Other Payables 69,008 - Reservation Deposits 438,241 - Unspent Conditional Grants 771,183 - Post Retirement Health Benefit Obligation - 537,280 1,289,585 551,394 64 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 31. Risk management (continued) Credit risk Credit risk is the risk of financial loss to SANParks where counterparties to financial instruments fail to meet their contractual obligations. Credit risk arises mainly from cash deposits, cash and cash equivalents, and trade debtors. Trade debtors are amounts owing by various types of customers. Credit risk from trade debtors is limited as sales to retail customers are settled in cash or using major credit cards. No credit is allowed unless back by an agreement whereby risk control assesses the credit worthiness of the customer, taking into account its financial position, past experience and other factors. Where necessary, SANParks obtains appropriate deposits from debtors to mitigate risk. SANParks accounts for an impairment that represents its estimate of incurred losses in respect of trade debtors. Trade debtors are presented net of the allowance for impairment. SANParks limits its exposure to credit risk on cash and cash equivalents by investing with only reputable financial institutions that have a sound credit rating and within specific guidelines set in SANParks investment policy and cash management procedures. Therefore SANParks does not consider there to be any significant exposure to credit risk. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at year was as follows: ` Financial instrument March 2023 March 2022 Cash and cash equivalents 2,004,733 1,746,186 Receivables from exchange transactions 92,698 100,747 Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of market factors such as interest rates and foreign exchange rates. SANParks’ exposure to market risk is limited to interest rate risk. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will be negatively affected by the adverse changes in interest rates. SANParks’ interest rate risk arises from finance leases and investments at variable interest rates. Interest rate risk on investments is monitored by key management personnel through ensuring that investments are made in accordance with SANParks’ investment policy. Investments are diversified amongst financial institutions selected according to their registered investment grading. The investment portfolio is structured so that securities mature to meet cash requirements for ongoing operations and special projects, and also so that SANParks investments can achieve a rate of return on the surplus funds invested that will outperform the rate of return of such funds at current account rates. Operating funds are invested primarily in short-term securities or similar investment pools. Interest rate risk on finance leases at variable rates is monitored by key management personnel through cash flow forecasts. Cash flow forecasts are assessed and monitored to ensure that reasonable and appropriate assumptions have been taken into consideration to minimise interest rate risk on future cash flows. 65 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 32. Related parties ` Relationships Members Names of key management are listed in the Management Class: Board Members below Controlling entity Department of Forestry, Fisheries and the Environment (DFFE) Members of key management Names of key management are listed in the Management Class : Executive Management below. SANParks is not required to disclose the value of transactions with other public sector entities as the transactions were concluded within normal operating procedures and in terms that are not more or no less favourable than the terms it would use to conclude transactions with any another entity or person. The grants paid by Department of Forestry, Fisheries and the Environment to SANParks is manner in which government funds organs of state, and such transfers and allocations are within normal operating procedures therefore part of the normal supplier and client relationships. Related party balances Unspent Conditional Grants Department of Forestry, Fisheries and the Environment 211,831 189,728 The unspent conditional grant represents grants received by SANParks which have been accounted for as a liability in terms of GRAP 23 as the conditions pertaining to the grant have not yet been met. Key management information Class Description Number Non-executive board members Accounting Authority 13 66 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 32. Related parties (continued) Remuneration of management Management class: Board members 2023 Fees for Subsistence Total services as a and Travel committee Allowance member Board members for the period 31 March 2023 Ms P Yako(Chairperson) 275,680 17,639 293,319 Ms N Mayathula-Khoza 180,506 20,988 201,494 Ms Z Ramasia 227,967 19,416 247,383 Ms Y Friedmann 224,142 28,191 252,333 Ms H Mushiane 147,018 13,856 160,874 Chief L Matsila 199,277 74,467 273,744 Mr B Ngobeni 157,941 11,287 169,228 Mr E Neluvhalani 145,796 15,535 161,331 Mr L Mogakane 156,570 21,804 178,374 Mr J Mashele 164,399 15,985 180,384 Ms B Koyana 203,702 17,416 221,118 Mr T Kgokolo 13,694 1,042 14,736 Adv M Ndaba 21,252 1,814 23,066 2,117,944 259,440 2,377,384 2022 Fees for Subsistence Total services as a and Travel committee Allowance member Board members for the period 31 March 2022 Ms J Yawitch (Chairperson) 70,000 9,000 79,000 Mr T Motsepe 72,000 - 72,000 Dr T Abrahamse 49,000 4,000 53,000 Adv T Mphahlane 88,000 7,000 95,000 Ms S Molokoane 82,000 1,000 83,000 Dr U Govender - - - Prof E Mokotong 72,000 - 72,000 67 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 32. Related parties (continued) Mr F Docrat 89,000 8,000 97,000 Mr Z Fihlani 50,000 4,000 54,000 Ms P Yako 118,000 8,000 126,000 Ms N Mayathula-Khoza 89,000 10,000 99,000 Ms Z Ramasia 80,000 7,000 87,000 Ms Y Friedmann 106,000 9,000 115,000 Ms H Mushiane 102,000 22,000 124,000 Chief L Matsila 108,000 29,000 137,000 Mr B Ngobeni 101,000 11,000 112,000 Mr E Neluvhalani 89,000 7,000 96,000 Mr L Mogakane 191,000 21,000 212,000 Mr J Mashele 141,000 13,000 154,000 Ms B Koyana 159,000 15,000 174,000 1,856,000 185,000 2,041,000 Management class: Executive Management March 2023 Basic salary Subsistence Total and travel allowance Name Mr F Mketeni - Resigned CEO - 01 June 2022 454,021 7,926 461,947 Mr D Dlamini - Resigned CFO - 31 Dec 2022 1,739,868 48,693 1,788,561 Mr G Coleman - Resigned ME KNP - 14 Oct 2022 1,318,716 23,037 1,341,753 Ms L McCourt - COO 2,356,190 38,724 2,394,914 Mr L Mokoena - ME Parks 2,131,678 80,313 2,211,991 Ms H Sello - ME Tourism 2,211,533 39,852 2,251,385 Dr L Dziba - ME Conservation Services 2,376,322 70,048 2,446,370 Ms Pillay R - Acting CFO - 03 Jan 2023 684,428 9,124 693,552 Mr D Govender - Acting ME KNP (Nov to Dec 22) 815,764 9,726 825,490 Mr Mthimkhulu OME - Appointed ME KNP - 03 Jan 2023 474,461 9,896 484,357 14,562,981 337,339 14,900,320 March 2022 68 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 32. Related parties (continued) Basic salary Subsistence Total and travel allowance Name Mr F Mketeni - CEO 2,648,000 38,000 2,686,000 Mr D Dlamini -CFO 2,193,000 42,000 2,235,000 Mr G Coleman - ME KNP 2,335,000 47,000 2,382,000 Ms L McCourt - COO 2,244,000 30,000 2,274,000 Mr L Mokoena - ME Parks 2,067,000 60,000 2,127,000 Ms H Sello - ME Tourism 2,105,000 33,000 2,138,000 Dr L Dziba - ME Conservation Services 2,263,000 64,000 2,327,000 15,855,000 314,000 16,169,000 69 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 33. Commitments Authorised capital expenditure Already contracted for but not provided for  Property, plant and equipment 202,163 191,457 Not yet contracted for and authorised by members  Property, plant and equipment 35,041 - Total capital commitments Already contracted for but not provided for 202,163 191,457 Not yet contracted for and authorised by members 35,041 - 237,204 191,457 Operating leases - as lessee (expense) Operating lease payments represent rentals payable by the SANParks for certain of its office properties. Leases are negotiated for an average term of seven years and rentals are fixed for an average of three years. No contingent rent is payable. Rental expenses relating to operating leases Minimum lease payments due within one year 710 20,631 Minimum lease payments due within two to five years 261 3,054 971 23,685 70 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 34. Contingencies Contingent Liabilities Ehlanzeni District Municipality Matter Claim for outstanding property rates over those parts of Kruger National Park falling within the Ehlanzeni District area of jurisdiction. SANParks raised a special plea that Ehlanzeni cannot institute a court action without first having invoked the Intergovernmental Relations Framework Act designed to minimise legal dispute between government agencies. Since then, the matter has been dormant and has never been actively pursued at court. Estimated liability R0 (March 2022: R100m) Swellendam Municipality v/s SANParks (Bontebok National Park) Nine simple summons were served on SANParks on 26 June 2019 by the Swellendam Municipality for outstanding property rates in respect of various properties in Bontebok National Park. SANParks is uncertain on expected outcome of the case and timing of outflows. Estimated liability R553 100.56 (March 2022: R553 100.56) Madyayimile In July 2020 Madyayimile issued Summons out of the Mbombela High Court whereby they instituted various claims in terms of the Joint Building Contracts Committee (JBCC) agreement amounting to R11 million. The prospects of this matter are remote, since the court has already made judgement on this matter. Estimated liability R0 (March 2022: R11m) Genex Power Services (Pty) Ltd v/s SANParks Genex Power Services (Pty) Ltd served summons on SANParks in May 2016 claiming payment of R670 346.90 from SANParks allegedly due for construction work to the Nyalaland trail camp in KNP after flood damage. The prospects of this matter are remote. Estimated liability R0 (March 2022: R670 346.90) Moropa Projects CC v/s SANParks Summons were served on SANParks on 17 March 2021, in terms of which Moropa Projects has applied to the Tshwane Magistrate Court for an order for payment by SANParks in the amount of R100 050.00 (one hundred thousand and fifty rand) (debt amount) in respect of tools and factory equipment allegedly supplied and delivered to SANParks by Moropa Projects following an order placed by SANParks on 15 October 2019. The prospects of this matter are remote. Estimated liability R0 (March 2022: R100 050.00) Blue Crane Route Municipality Combined summons were served to SANParks by the Blue Crane Route Municipality (BCRM) for Addo Elephant National Park for outstanding property rates in respect of various properties in the Park. The amount claimed is R4 198 191.09 plus legal costs that LSD is not in a position to estimate. Estimated liability R4 198 191.09 (March 2022: R4 198 191.09). Urgent court application - Thwala and Mkefe Notice of Motion was served on SANParks on 17 September 2021, in terms of which relief was sought on an urgent basis to, inter alia, interdict and restrain the Board of SANParks and any other person acting under their instruction from proceeding with the present disciplinary hearing against two employees. The second part of the application deals with records that they require from SANParks in terms of the High Court Rules and this part of the application is not brought on an urgent basis. SANParks is uncertain of the expected outcome of the case and timing of any outflows. 71 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 34. Contingencies (continued) LSD is not in a position to estimate the potential liability. Kempton Park Caravans (PTY) LTS vs SANParks SANParks was served with summons instituted for the alleged unpaid invoices amounting to of R463 624.74 in the Pretoria Regional Court as per case No: 2138/2022, on the 8 September 2022. It is alleged that on or about June 2017, Kempton Park Caravan (Pty) Ltd enter into an oral agreement with SANParks for the supply. Amount claimed as outstanding is R225 569.35 (March 2022: R0). Accumulated Surplus In terms of section 53(3) of the PFMA, SANParks as a public 3A entity may not accumulate a surplus without prior written approval of National Treasury being obtained. In order to give guidance to public entities and to operationalise this section of the PFMA, National Treasury had issued Instruction note no. 12 of 2020/21 on 02 September 2020, that indicates that a public entity must declare all surpluses to the relevant treasury from 01 August to 30 September of each year, after the financial year end. SANParks will submit a draft declaration and request to retain all of its surpluses to National Treasury during August 2023 once the annual financial statements have been audited and approved. The estimated calculated contingent liability as per Annexure A of instruction note no.12 is R505m. CCMA Cases There are various cases lodged with the CCMA for alleged unfair labour practices. SANParks is uncertain of the expected outcome and timing of outflows if any, however the possible claims amount to R1 329 434. Estimated liability R1 329 434.00 (March 2022: R1 311 623.72) Labour court cases. Cases lodged to the labour court for alleged unfair labour practices. SANParks is uncertain of the expected outcome of the case and timing outflows.The possible liability amounts to R570,200.20 in total should the case lodged be ruled in favour of applicants. Estimated liability R570 200.20 (March 2022: R821 777.00) 72 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 34. Contingencies (continued) Contingent assets Madyayimile Madyayimile instituted various claims in terms of a JBCC agreement entered into between the parties amounting to R11 million. The matter was referred to arbitration and the parties agreed to settle. Parties agreed that Madyayimile pays SANParks R360 000 however Madyayimile has defaulted causing SANParks to bring an application to make the arbitration award an order of court. 35. Events after the reporting date There are no material facts or circumstances that have arisen after the reporting date. 36. Going concern For the 2022/23 financial year SANParks' self-generated revenue increased by 37%. Tourism industry is gradually moving back to its normal state post COVID-19 and SANParks generated a significant increase across the various tourism revenue streams. SANParks also expects a higher increase in revenue from international markets In future years as more tourists visits our shores. SANParks continues to monitor expenditure and implementing cost curtailment measures to mitigate financial risk. 37. Public Private Partnership Programme - PPP Fee Income Lodge Concession PPP Fees The lodge concessions entail allowing private operators to build and operate tourism facilities within the National Parks, on the basis of a defined period usually over a 20 year concession contract. Investors take over and upgrade specified existing lodge facilities, or build new ones. The contractual mechanism is a concession contract, which enables the private operator to use a defined area of land, plus any building that may already exist on that land, over a specific time period in return for payment of concession fees. Against these rights of occupation and commercial use of facilities, there is a set of obligations on the part of the concessionaire regarding financial terms, environmental management, social objectives, empowerment and other factors. Infringement of these requirements carries specified penalties, underpinned by performance bonds, and finally termination of the contract, with the assets reverting to SANParks. The annual concession fee payable by the concessionaire to SANParks for any given concession year shall be the higher of a minimum rental as determined by the agreement for the concession year or a calculated annual concession fee based on the bid percentage of gross revenue for the concession year. At the end of the concession period the concessionaires shall hand over the concession area, the camp, all concession assets and its rights or interest in the developments to SANParks free of charges, liens, claims or encumbrances of any kind whatsoever and free of any liabilities in good condition, fair wear and tear excepted. The concessionaire shall not, other than as provided for in respect of the residual value, be entitled to payment of any compensation in connection therewith. Performance bonds were provided to SANParks by the concessionaires that are operative from the effective dates. The concessionaires will maintain valid performance bonds from the effective dates until 90 business days after the expiry or earlier termination of the concession contracts. The amounts to be guaranteed by the performance bonds shall be equal to R250 000 at effective date and increased every 3 years by CPI per Concession Area. The calculated annual concession fee is based on the bid percentage of actual gross revenue for that concession year. The specific obligations per concession are detailed in the schedule below: 73 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 37. Public Private Partnership Programme - PPP Fee Income (continued) National Park - Concession area Concession holder Commissioning date Termination date Addo - Gorah Elephant Camp Hunter Hotels (Pty) Ltd 1 January 2001 30 September 2032 Kruger - Mutlumuvi Rhino Walking Safaris (Pty) Ltd 1 October 2003 30 June 2024 Kruger Mpanamana Shishangeni Lodge (Pty) Ltd 1 January 2002 31 October 2025 Kruger - Jakkalsbessie Jakkalsbessie Lodge (Pty) Ltd 1 December 2002 30 September 2023 Kruger - Jock of the Bushveld Mitomeni River Lodge (Pty) Ltd 1 July 2001 31 March 2024 Kruger - Lwakahle Lukimbi Safari Lodge (Pty) Ltd 1 November 2001 30 June 2023 Kruger - Mluwati Imbali Safari Lodge (Pty) Ltd 1 January 2002 31 March 2024 Kruger - Nwanetsi Singita Lebombo (Pty) Ltd 1 March 2002 30 Septmber 2033 Table Mountain - Roundhouse Roundhouse (Pty) Ltd 01 October 2010 30 April 2031 Table Mountain - Koeel Bay Koeel Bay Hospitality (Pty) Ltd 1 February 2007 31 July 2028 West Coast - Houseboats Kraalbaai Houseboats (Pty) Ltd 1 September 2018 31 December 2039 Namaqua - Luxury Beach Camp Mobile Chief Luxury Mobile Tented Camp 01 September 2018 22 August 2024 Tents Kruger - Shalati Train Skukuza Thebe Tourism 1 December 2020 31 December 2045 Public Private Partnership Programme: Retail and Restaurant Facility Rental Income The concession contracts for retail and restaurant operations entail allowing private operators to operate SANParks' existing facilities on the basis of a medium-term operating agreement. Investors manage and upgrade existing retail and restaurant facilities (it should be noted that as part of the most recent tender process SANParks undertook refurbishments to some facilities which included upgrading to electricity, refrigeration, roofs, floors and tiling). The agreements enable the operators to use a defined area over a pre-determined term in return for payment of concession fees. Funding for the refurbishment of ageing infrastructure is for the Concessionaires account. Against the right of occupation and commercial use of facilities, there are set obligations on the part of the concessionaire regarding financial terms, environmental management, social objectives, empowerment and other factors. Infringement of these requirements carries specified penalties, including termination of the contract with the assets reverting to SANParks. The monthly rental payable for the facilities by the private operator to SANParks for any given month shall be the higher of the fixed monthly rental as defined by the agreements, escalating on an annual basis; or the rental based on actual gross revenue realised, expressed as a percentage of gross revenue. The private operators have provided SANParks with Performance Bonds equivalent to 3 months fixed rental in the form of Performance Guarantees that secure the operators performance under the Operating Agreement on the basis set out in the Facilities Rental Agreement. The following schedule summarises the potential income receivable from the various operators for the various sites: 74 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 37. Public Private Partnership Programme - PPP Fee Income (continued) Retail and Restaurant Commissioning date Termination date The Park Shop (South ) - Tourvest 1 February 2013, 30 September 2023 Cattle Baron Restaurant - Tourvest 1 April 2014 30 November 2024 IT Safaris 01 September 2021 30 September 2029 Town Talk Trading Enterprises t/a Big Tree Curio Shop 1 December 2019 31 September 2025 Jobojali cc T/a Salt and Pepper Restaurant 1 December 2013 31 July 2024 The Park Shop (North) - Tourvest 1 February 2013 30 September 2023 Royal Ibhubesi Safari Company - Bush Braai 1 March 2018 31 December 2026 Tindlovu Bush Café 1 May 2016 31 January 2032 Select Events and Venues CC 1 December 2013 31 July 2024 Renvir (Pty) Ltd - Mugg and Bean Lower Sabie 1 March 2014 31 October 2024 Eysbos (Pty) Ltd - Wimpy Pretoriuskop 1 March 2014 30 November 2024 Cattle Baron Restaurant - Tourvest 1 October 2014 31 May 2025 Tourvest Holdings (Pty) Ltd 1 October 2016 31 May 2032 Boulders Penguin Sanctuary 1 December 2019 30 September 2032 Cattle Baron Restaurant - Tourvest 1 August 2014 31 March 2025 Kruger Park Bush Braais 1 November 2022 31 January 2031 Kruger North Restaurant Group (Pty) Ltd 1 November 2021 31 November 2031 Cattle Baron Restaurant - Tourvest 1 December 2021 31 December 2031 Kruger North Restaurant Group (Pty) Ltd 01 November 2021 31 November 2031 Tourvest Holdings (Pty) Ltd 1 August 2019 15 Years + development period The Park Shop (South) - Tourvest 1 December 2019 1 September 2032 Activities Contracting Commissioning Termination Party Date Date Kruger National Park Skukuza Airport 01 June 2014 28 February 2025 Management Co AM Spa 22 May 2017 31 January 2028 Garden Route National Park Segway Tours 01 December 2014 01 February 2024 Knysna gorge 01 September 01 August 2029 Zip Lines 2020 Wilderness Boat 01 April 2027 01 March 2032 cruise Table Mountain National Park Table Mountain 01 November 1926 01 November 2025 Aerial Company Cape Town 01 September 30 September 2027 Abseiling - 2022 Game Trackers Cape Point 01 May 1995 31 March 2023 Concession - Thebe Tourism Addo Elephant National Park Addo Wellness 01 April 2020 30 September 2027 and Spa Riverbend 01 June 2004 30 September 2079 Country Lodge Garden Route National Park Untouched 01 January 2015 01 May 2022 Adventures 75 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 37. Public Private Partnership Programme - PPP Fee Income (continued) Contractual Parks Contracting Commissioning Termination Party Date Date Addo Elephant National Park Riverbend 01 June 2004 31 May 2079 Country Lodge Marakele Marakele 02 November 01 December 2030 (Pty) Ltd 2000 Kgalagadi National Park Ixhaus Lodge 01 May 2007 30 April 2026 38. Segment information General information Identification of segments SANParks’ activities are very broad, and are undertaken in a wide range of different geographical areas with different socioeconomic characteristics. To enable efficient and effective delivery on the strategy of SANParks, the Executive Management structure subdivided SANParks into three categories namely; Kruger, Parks and Corporate. In establishing the segments to report on, management organised the financial information according to the three existing Executive Management structures. Each of the three categories was identified to meet the definition of segments as it was noted that each; - generates economic benefits or service potential; - whose results are regularly reviewed by management to make decisions about resources to be allocated to that activity and in assessing its performance; and - for which separate financial information is available. Management opted to combine Parks operations into a single segment as the Parks have similar economic characteristics and share a majority of the aggregation criteria stipulated below; - the nature of the goods and/or services delivered is more or less similar; - the type or class of customer or consumer to which goods and services are delivered are similar; - the methods used to distribute the goods or provide the services is almost identical; or - the nature of the regulatory environment that applies to the segment (NEMPAA). The segments were structured such that the totals of revenues, reported segment surplus or deficit, segment assets, segment liabilities and other material segment items corresponds to figures recognised in the Annual Financial Statements. Therefore, a reconciliation of the segment figures to the Annual Financial Statements is not necessary. 76 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 38. Segment information (continued) Segment surplus or deficit, assets and liabilities March 2023 Corporate R' Kruger R' 000 Parks R' 000 Total 000 Revenue Retail activities 374,785 24,349 15,579 414,713 Tourism 13,204 673,889 283,344 970,437 Conservation fees 93,333 198,955 331,898 624,186 Interest income 61,464 7 50 61,521 Concession fees - 85,234 65,445 150,679 Other operating income/Other Income 84,611 29,017 18,134 131,762 Revenue from non-exchange transactions 850,672 1,639 5,219 857,530 Total segment revenue 1,478,069 1,013,090 719,669 3,210,828 Entity's revenue 3,210,828 Expenditure Employee Related Costs 389,196 556,561 413,513 1,359,270 Depreciation and Amortisation 18,611 50,316 56,013 124,940 Operating Leases 2,242 34,954 17,240 54,436 Finance costs 3,075 807 1,359 5,241 Loss on Disposal of assets 181 308 1,265 1,754 Operating Expenses 1,099,322 195,330 244,198 1,538,850 Total segment expenditure 1,512,627 838,276 733,588 3,084,491 Total segmental surplus/(deficit) 126,337 77 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 38. Segment information (continued) March 2022 Corporate R' Kruger R' 000 Parks R' 000 Total 000 Revenue Retail activities - 178,074 77,015 255,089 Tourism 35,595 286,359 259,645 581,599 Conservation fees 58,812 164,155 190,719 413,686 Interest income 45,277 - - 45,277 Concession fees 92 34,767 26,871 61,730 Other income 44,771 31,123 14,150 90,044 Revenue from non-exchange transactions 955,073 3,093 6,648 964,814 Total segment revenue 1,139,620 697,571 575,048 2,412,239 Entity's revenue 2,412,239 Expenditure Employee Related Costs 482,415 511,118 425,058 1,418,591 Depreciation and Amortisation 23,117 68,611 54,471 146,199 Operating Leases 2,653 28,112 14,480 45,245 Operating Expenses 445,499 343,796 260,803 1,050,098 Loss on disposal of assets (66) 384 396 714 Finance Costs 1,519 2,096 1,574 5,189 Total segment expenditure 955,137 954,117 756,782 2,666,036 Total segmental surplus/(deficit) (253,797) 39. Cost of sales Sale of goods Retail cost of sales 316,034 218,808 Wild card 27,557 21,595 Accomodation 24,112 29,252 367,703 269,655 78 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 40. Prior-year adjustments Unspent conditional grants and receipts and Property, plant and equipment It was noted that transfer revenue - Donations was incorrectly accounted for which resulted in over and understatement of revenue and in return it resulted in an increase/decrease in unspent conditional grants and receipts and property, plant and equipment. Donations. (a) During the 2021/22 financial period an Agreement between SANParks and Norwegian was incorrectly interpreted and resulted in the funds received being fully recognised as transfer revenue from non-exchange transactions, The above resulted in overstatement of donation revenue and unspent conditional grants and receipts in the prior year financial period. The total error was R7,283,155.42 The incorrectly interpreted Agreement contains conditions that meet the definition of "conditions" in terms of GRAP 23 and the funds received should have been recognised as a liability, and only accounted for as revenue as and when the stipulated conditions are met. SANParks management took a decision to correct the prior year misstatement and recognise a liability in the current year to the value of the unspent conditional grant. (b) For financial year 2021/22 it was noted that an omission was made on the recognition of the Iconic Structure donated by the Department of Tourism. The error resulted in both understatement of donations (R4,629,970), depreciation (R462,997) and property, plant and equipment (R4,166,973). (c) During the year it was noted that DEFF infrastructure funded projects incurred expenditure to the value of R1,375,666.76, however, this amount was erroneously not accounted for in unspent conditional grants and government grants revenue. The error resulted in understatement of government grants and other funding revenue and overstatement of unspent conditional grants and receipts Property, Plant and Equipment. (a) During 2021/22 financial period completed, available and ready for use assets were not capitalised, they were however incorrectly accounted for in work in progress. The error resulted in understatement of depreciation and overstatement of property, plant and equipment. The total error was R254,904.19 (b) It was noted that an item of operating expenditure was incorrectly recognised as work in progress in the 2021/22 financial period, The error resulted in overstatement of property, plant and equipment and understatement of operating expenditure. The total error amounted to R11,333,173.97 Receivables from exchange transactions and provision (Concession Provision). On review of concessionaire' audited signed annual financial statements, it was noted that their cost price of property, plant and equipment was revalued, and this resulted in the adjustment of SANParks prior year concession provision and asset. The total error was R1,149,658.55 Leave Provision. The leave provision was incorrectly accounted for in prior year due to incorrect calculation of leave balances for employees. The recalculated balances were understated and as a result the provision for leave was understated. SANParks procured a new HCM system that calculate leave balance appropriately, hence the adjustment to the provision. The total error resulted in understatement of leave provision and understatement of employee cost (R32,400,651.97) Payables from exchange transactions. (a) On review of expenditure population incurred in the financial year 2022/23, it was noted that expenditure with invoices dated March 2022 were accounted for in the incorrect financial period. The error resulted in an understatement of payables from exchange transaction (R8,585,376.77), operating leases (R41,22.09) and operating expenditure (R8,544,154.68). The error was subsequently corrected and comparative amounts have been retrospectively adjusted. 79 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 40. Prior-year adjustments (continued) (b) Donation income was incorrectly recognised in income received in advance, this resulted in overstatement of payables from exchange transaction (R22,968,340.77) and both understatement of donations (R20,382,404.33) and understatement of tourism, retail and concession (R2,585,936.44). Government Grants and Other Funding On review of special project grant note, it was noted that the amount disclosed as revenue utilised was overstated. The error resulted in understatement of employee related costs (R1,735,212.64), operating expenditure (R603,626.38) and property, plant and equipment (R244,146.60). Further government grants and other funding was understated (R2,582,985.62). As a result, management restated the presentation of the note and account for the amounts appropriately. The correction of the prior period errors results in adjustments as follows 80 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 40. Prior-year adjustments (continued) Statement of financial position March 2022 Note As previously Correction of Restated R' reported R' 000 error R' 000 000 Increase in unspent conditional grants and receipts (475,290) (5,907) (481,197) Decrease in PPE 2,111,909 (6,758) 2,105,151 Decrease in receivables from exchange transactions and 341,730 (1,150) 340,580 provisions Increase in leave provision (41,045) (32,401) (73,446) Decrease in concession provision (341,730) 1,150 (340,580) decrease in payables from exchange transactions (333,097) 14,384 (318,713) Effect on accumulated surplus 1,262,477 (30,682) 1,231,795 Statement of financial performance March 2022 Note As previously Correction of Restated R' reported R' 000 error R' 000 000 Increase in donations 7,436 17,729 25,165 Increase in depreciation (145,481) (719) (146,200) Increase in government grants and other funding 935,691 3,958 939,649 Increase in employee cost (1,384,456) (34,135) (1,418,591) Increase in operating expenditure (1,299,693) (20,060) (1,319,753) Increase in operating lease payments (45,204) (41) (45,345) Increase in tourism, retail, concession 1,569,480 2,586 1,572,066 Effect on surplus or deficit (362,227) (30,682) (393,009) 41. Comparative figures Statement of financial performance Certain comparative figures have been reclassified. During the year management assessed the nature of consulting and other professional fees expenditure, and noted that EPWP operating expenditure incurred in the 2021/22 financial period was incorrectly classified. As a result, management reclassified EPWP expenditure under consulting expenditure category to lead to a more appropriate disclosure. During the year management noted that deposits made for leased buildings was accounted for under cash and cash equivalents and the amount is refundable to SANParks at the end of the lease agreement. As a result, management decided to correct the error and appropriately account for receivables from exchange transactions. Management noted that cost of sales for retail, wild card and tourism was previously accounted for under operating expense as their nature is expenses. During the year management decide to reclassify actuarial gains/losses to a separate line item on the face of the annual financial statements. The actuarial gains/losses were previously recognised under employee related costs. 81 South African National Parks Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements Figures in Rand thousand 41. Comparative figures (continued) Statement of Financial Performance Total as Reclassificati Restated previously on R'000 Total R'000 reported R'000 Consulting and professional fees (287,073) 239,307 (47,766) EPWP and other project expenditure - (239,307) (239,307) Cash and cash equivalents 1,749,154 (2,968) 1,746,186 Receivables from exchange transactions 97,779 2,968 100,747 Cost of sales - (269,655) (269,655) Operating expenses (1,319,753) 269,655 (1,050,098) Actuarial gains/losses - (7,519) (7,519) Employee related costs (1,418,591) 7,519 (1,411,072) (1,178,484) - (1,178,484) 42. Budget differences Material differences between budget and actual amounts (A) Revenue from exchange transactions is more than budget as a result of tourism related revenue doing better than expected. There were more visitors through SANParks gates than anticipated. (B) Government grants and other funding is less than budget mainly because of an additional infrastructure grant of R235 million that was allocated to SANParks and not yet spent in full due to late receipt thereof. The additional grant could therefore not be spent timeously due to incomplete projects. (C) Donations reflect a positive variance due to newly signed agreements which have yielded financial inflow. (D) Employee related costs savings is mainly attributed to the employee benefit obligation actuarial gain of R83 million. (E) Depreciation is below budget attributed to the non-capitalisation of new assets which were anticipated to be acquired by year-end. The depreciation budget takes into consideration the depreciation arising from anticipated asset purchases for the current financial year. (F) Finance costs reflect a saving of R1, 243m which is attributed to a lower capital finance lease balance. (G) Operating lease payments have exceeded the budget due to a lower budget allocated to operating leases. (H) Operating costs saving is as a result of maintenance projects which have not yet been completed. (I) Loss on disposal of assets is more than projected as a result of assets that had to be retired due to impairment as a result of unforeseen circumstances. (J) At the time of budgeting a conservative approach was followed since the tourism market was still recovering. In addition the cost of fuel significantly increased after the budget was prepared. 82