Laying the Foundation

Annual Report 2001/2002

Construction Industry Development Board

CONTENTS Page

Construction Industry Development and Delivery

Industry Development - A Challenge for All

Chief Executive’s Report

Laying the Foundation - From the Act to a Business Plan

The Organisation - CIDB at a Glance

CIDB - Members of the Board

Report of the Auditor-General

Financial Statements - For the 4-month period ended 31 March 2002

CIDB Act - Summary Objectives and Functions

A transformed and competitive construction industry that:

! delivers quality infrastructure

! promotes economic growth

! provides sustainable opportunity for all participants

To provide the strategic leadership necessary to promote:

! sustainable industry growth and participation of the emerging sector

! improved performance and best practice

! uniform and ethical procurement and delivery management

! a transformed and enabling delivery environment

! value to clients and society

RP number 229/2002ISBN number 0-621-33541-XCopyright © CIDB

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VISION

MANDATE

“The construction industry is a national asset in the ongoing South African effort towards delivery and transformation. In fact, infrastructure delivery and construction industry development should be inseparable - they are two sides of the same coin.

Led by the Chairperson, Brian Bruce, and the Deputy Chair, Pepi Silinga, the CIDB’s purpose is to ensure that the construction industry develops to its full potential...

Of course the ability of the CIDB to make an impact will depend on the commitment and action of all of us.”

Deputy President and Minister of Housing expressing the Government’s commitment at the announcement of the Board by the Minister of Public Works, 24 April 2001:

“The CIDB Act equips the CIDB with statutory functions and instruments to drive implementation and to promote the outcomes that we want...

The CIDB should provide a focal point for leadership inconstruction industry development.

! It should foster industry stability and sustainable growth to promote South Africa's economic and social objectives.

! The CIDB should work towards unlocking bottlenecks, promoting best practice and enhancing our capacity to deliver quality infrastructure to our people.

! It must promote transformation and the inclusive participation of all role-players in the mainstream construction economy...

The CIDB Act empowers us to fulfil these objectives through the various instruments such as the Register of Contractors and the Register of Projects. It empowers the Board to enlist the broader expertise of industry through the establishment of a Stakeholder Forum...

Our launch of the CIDB is more than just a celebration of accomplishment. It is a commitment by all of us to the challenges ahead.”

Deputy President Jacob Zuma at the launch of the CIDB.

“An inter-ministerial committee of the key infrastructure departments has guided the construction industry development process at a strategic level within government. This committee consists of the Department of Housing, Transport, Water Affairs and Forestry, Provincial and Local Government... ably coordinated by the Department of Public Works. Our commitment to improved infrastructure and overall delivery remains unchanged. Our policy to develop the construction industry is central to the commitment and is also unwavering... Construction industry development is about promoting best practice, quality and value for money and fair return on investment...”

Minister of Housing Sankie Mthembi-Mahanyele.

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CONSTRUCTION INDUSTRY DEVELOPMENT AND DELIVERY

Minister of Public Works Stella Sigcau, at a meeting with Industry Leaders (13 May 2002).

Chairperson's Statement

Government has recognised our construction industry as a

national asset and has established the Construction Industry

Development Board (CIDB) to facilitate its transformation to

meet the needs of socio-economic delivery into the future.

We in the CIDB recognise the national asset of our

construction industry because it is. We are committed to the

development of our construction industry as an integral

element of the South African landscape. We have placed

ourselves in the future to look back over society, as we

believe it should unfold. We do not define this future vision in

terms of construction alone, as we see the world in its

totality. The construction industry does not exist in isolation.

It is but one complex element within an even more complex

and chaotic system.

The future of our construction industry is the future of South

Africa, the SADC community and perhaps even Africa. I

believe that significant investment in the built environment is

one of the primary drivers of socio-economic development.

We also support the New Partnership for Africa's Deve-

lopment (NEPAD), as an important driver of systemic

change in our macro socio-economic environment. Industry

development goes hand-in-hand with broad socio-economic

growth. There can be no development without investment.

And this investment requires more than the allocation of

funds. More than anything else, industry development

depends on the investment of industry leadership - the

investment of commitment.

The CIDB has completed its first year. The process may

seem slow, but the foundation has been well set. The great

challenge ahead is to secure the personal commitment of

industry leadership, a commitment as personal as that made

by the Board and Chief Executive. Industry participants at

the Stakeholder Forum are challenged on how they will

personally advance the strategic principles embodied within

construction industry development.

Brian Bruce

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INDUSTRY DEVELOPMENT A Chal lenge for Al l

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It is a privilege to submit this inaugural Annual Report of the

Construction Industry Development Board (CIDB) to the Minister

of Public Works, Ms Stella Sigcau, whose commitment to the

goals of industry development has been inspirational to the

Board and to me personally.

The year 2001 marked the foundation of the CIDB with the

appointment of the Board in April, the appointment of the CEO in

December and finalisation of a summary business plan to gear

the organisation for the challenges set out in the CIDB Act.

Basic financial management systems and a procurement policy

were put in place, a recruitment programme based on the

business plan was initiated and responsibilities were formally

delegated. We commenced the process to establish an audit

committee and are proud to have achieved an unqualified report

by the Auditor-General. The CEO's performance agreement

reflects the Board's commitment to sound governance and its

strategic leadership in the development of the construction

industry.

The Board's focus is detailed in the 2002/03 business plan,

where strategic priorities are identified and projects initiated to

develop a momentum for sustainable growth, improved delivery,

performance and transformation, all of which will ultimately

translate into enhanced value to clients and society.

These goals can only be realised in partnership between all

stakeholders and consequently a key priority for the Board is the

establishment and convening of a Stakeholder Forum as

required by the Act. The positive and broadly based response to

our call for nominations signals the high expectation of all role-

players. We see the Forum as a network and a resource in

identifying and promoting client and supply-side best practice

within the objectives of construction industry development.

During this first year, we initiated plans for the Registers of

Contractors and Projects and for improving public sector delivery

capacity. To assist industry performance improvement we have

prioritised the development of a best practice guideline for

emerging contractors entitled “Construction Contracts - Know

your Rights, Responsibilities and Risks” and will call upon public

sector agencies to assist in its distribution. We are also working

towards reliable “Construction Industry Indicators” that will

enable policy-makers, clients and industry participants to

benchmark performance.

Fundamental to the implementation of our mandate is the rapid

development of capacity, which will include our drawing on

specialist capacity within the industry, and the establishment of a

network of associates throughout the country.

Following the establishment and gearing up of the CIDB orga-

nisation, we face a number of challenges that will involve close

co-operation with the Minister and the Department of Public

Works. These include the development of targets for growth and

investment, infrastructure delivery best practice, industry perfor-

mance improvement, the development of capacity, empower-

ment and transformation. Delivery against our mandate will

commence in the year ahead.

Finally, the CIDB wishes to express its gratitude to the many

public and private sector stakeholders who have generously

advised and supported it in this period of establishment.

CHIEF EXECUTIVE’S REPORT

In this regard, we extend particularly thanks to the Minister and

Department of Public Works, the National Treasury and the

Office of the Auditor-General. On a personal note, I would like

to thank the CIDB Chairperson and Board members for their

high level of commitment and willingness to shoulder opera-

tional as well as strategic responsibilities during this early

development stage of our organisation.

Spencer Hodgson

Appointment of the CIDB Board

Approval by Ministers of Public Works and

Finance of the Remuneration System for

top management, enabling recruitment

CEO appointed

CIDB is listed as a Schedule 3A public

entity enabling transfer of funds from the

Department of Public Works

First transfer of funds by DPW based on a

Summary Business Plan for 2001

Approval by Ministers of Public Works and

Finance of the Remuneration System for

the envisaged CIDB staff establishment,

enabling the staff recruitment plan

Development of the 2002/03 Business

Plan for Submission to the Minister of

Public Works

Preparations to establish and convene the

Stakeholder Forum

April 2001

August 2001

December 2001

December 2001

December 2001

January 2002

March 2002

March 2002

Establishment of the CIDB - Statutory Building Blocks

LAYING THE FOUNDATION - From the Act to a Business Plan

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Historical Background

The development of the CIDB business plan (2002/2003) marks

a pivotal milestone in the process to take forward the vision of

construction industry development in South Africa. It crystallizes

significant effort by the CIDB to translate the spirit and intent of

the legislation into concrete action.

Emanating from the White Paper Creating an Enabling

Environment for Reconstruction, Growth and Development in

the Construction Industry, the CIDB Act sets an agenda for

public and private sector partnership to promote industry growth

and transformation. It instructs the Board and its organisation to

champion the principle objectives of industry development and

to implement its statutory functions to achieve these objectives.

The construction industry plays an indispensable role in the

South African economy. It provides the built environment that is

fundamental to the country's development and its activities

affect the lives of all South Africans. A large and growing

percentage of infrastructure development is taking place within

disadvantaged communities.

The construction industry's value added contribution to GDP

has declined from its peak of over 5,7% in the 1970's to 2,7% in

1997 and rising to its current level of 2,9% in 2001. Investment

tends to be volatile and public sector spend on infrastructure is

below allocated budgets, an indication that delivery and

procurement management must be improved.

The recent Industry Status Report commissioned by the

Department of Public Works indicates that industry capacity and

skills have declined to the extent that an economic upswing in

line with our targeted growth rates, would tax the ability of our

industry to meet the corresponding demand for construction

goods and services. There is evidence to suggest that the

professional sector is rapidly losing capacity to international

markets and other industries.

Fierce competition for available work, and the award of tenders

on the principle of lowest price rather than best value, further

compromise the performance of industry, affecting quality,

productivity, safety, health and the environment.

In combination, these and other factors undermine industry

stability, sustainable enterprise growth and effective

participation of the emerging sector, sustainable employment

and skill formation.

Delivery is the imperative for change

The need for accelerated delivery presents industry and

government with both challenges and opportunities. All industry

role players as well as public and private sector clients and

investors are key stakeholders in the imperative for improved

performance and delivery.

The prospect of significantly increased investment into the built

environment is very real, stimulated by Government's debt

repayment policy and the resulting availability of greater levels

of public and private sector finance. Government's commitment

in this respect is underpinned by increased allocations from the

fiscus. The objectives of social and economic development

require an effective strategy for improved construction delivery

and the sustainable growth, development and transformation of

the construction industry.

Mandate and Strategic Development Objectives

The Construction Industry Development Board (CIDB) is a Schedule 3a public entity established to provide leadership to stakeholders and to stimulate sustainable growth, reform and improvement of the construction sector for effective delivery and the industry's enhanced role in the country's economy. In terms of the Public Finance Management Act it is the Accounting Authority, which is responsible to the Minister of Public Works as the Executive Authority.

The Board comprises private and public sector individuals appointed by the Minister of Public Works based on their in-dividual knowledge and expertise. It is supported by a knowledge-based organisation that is committed to the development objectives defined in the CIDB Act (Act No. 38 of 2000). The CIDB's mandate is to:

! Provide strategic leadership to construction industry stakeholders, developing effective partnerships for growth, reform and improvement of the construction sector;

! Promote sustainable growth of the construction industry and the sustainable participation of the emerging sector in the industry;

! Determine, establish and promote improved performance and best practice of public and private sector clients, contractors and other participants in the construction delivery process;

! Promote uniform application of policy throughout all spheres of government and promote uniform and ethical standards, construction procurement reform, and improved procurement and delivery management, including a code of conduct; and

! Develop systematic methods for monitoring and regulating the performance of the industry and its stakeholders, including the registration of projects and contractors.

The Board and Stakeholders

The CIDB promotes partnerships with stakeholders and organisations to realise the integral objectives of industry development, namely growth, improved performance, delivery and transformation.

Board members are non-executive and fulfil their function by guiding the executive, championing specific issues, focus groups and communication with stakeholders.

The Board has established the Stakeholder Forum to inform the CIDB on matters that affect the development of the industry. This forum is convened on an annual basis. The Stakeholder Forum comprises individuals who represent stakeholders in the construction industry and who have experience, expertise or skills to enable it to advise the Board. The Stakeholder Forum provides an opportunity for stakeholders to inform the Board of issues that affect the industry, to provide feedback to stakeholders and to promote the contribution of their organisations and sectors. The first Stakeholder Forum will be held in June 2002.

Beyond the forum, the Board promotes communication between

role-players in the industry. Focus groups will be established to tap the experience and capacity of industry and stakeholders

and to refine development outputs. Board members and staff interact with stakeholders, including all spheres of government,

to promote the principles of construction industry development.

The CIDB website supports information sharing, best practice

and a network of knowledge.

Work in progress

In the early phase of its development, the CIDB has confronted

a two-fold task. It has had to establish a firm organisational

foundation, executive capacity and resources, as well as sound

governance principles and procedures. It has also invested in

hard planning to translate the agenda of the legislation into a

strategy for action. This has been accomplished through a

rigorous business planning exercise, reinforced by interaction

with a wide range of public and private sector stakeholders.

The CEO took up office in December 2001 and a Chief

Financial Officer in March 2002, with further recruitment in

progress. A Board Remuneration Committee monitors the

organisational structure and remuneration system, approved by

the Ministers of Public Works and Finance. Procurement

policies and procedures as well as an Audit Committee

comprising three external members and two Board members

further support good governance. The CIDB is committed to an

unqualified report by the Auditor-General.

Work is in progress on all aspects of the CIDB business plan

and some areas of focus are highlighted below.

! Growth and Investment

The Board has identified investment and effective spending of

public sector construction budgets as a critical foundation for

sustainable growth and development of the industry.

Minister Sigcau has reinforced this key objective when she

addressed industry leaders on 13 May 2002:

“The failure of many public sector agencies to spend their

infrastructure budgets means a lost opportunity for South Africa,

for our industry and for transformation. That is why our

Department will champion improved public sector spending. We

are committed to being a best-practice client to the industry.

Effective spending “means development - it means work for the

industry - it means empowerment!”

To create a better understanding and awareness of its

significance to South African society, the CIDB is undertaking a

review of the “socio-economic benefits of construction

investment”. A focus group of leading economists and industry

leaders is guiding the development of the study.

! Procurement and Delivery Management

Underspending is a symptom of public sector bottlenecks,

inadequate planning, procurement and delivery management

capacity. To address this issue the CIDB has developed a

preliminary proposal and is working towards a strategy for the

roll out of government procurement policy in the construction

sector and related best practices, including a toolkit “Delivery

Management System” and a capacity-building programme.

Public sector “Centres of Excellence” will be called on to adopt

best practice and to champion the roll out.

The procurement of construction goods and services is complex

and requires a high level of skill. We have inherited an

outmoded procurement system that is inadequate to address

our vision for change.

It has delivered increasing levels of adversity and antagonism in

the relationships of those responsible for capital projects, from

investors and clients through to the professions, contractors and

the workforce. Budget and schedule overruns, disputes and

litigation, failures and liquidations, low margins and financial

loss are common features of the construction industry today.

The CIDB is promoting fundamental procurement reform that

supports best value as opposed to lowest price. Such reform is

an essential foundation for improved delivery, performance and

the sustainable growth of the industry, including both the

emerging and established sectors. ! Best Practice - and development of the

Emerging Sector

The first CIDB Best Practice Guide has been developed for

publication to assist emerging contractors to understand

construction contracts. “Know Your Rights, Responsibilities and

Risks - The 3Rs Basic Guide for SMEs” is a response by the

CIDB to some of the problems raised by emerging contractors

during workshops in the nine provinces in March 2002.

Access to contract opportunities has been widely promoted by

most public sector agencies, but the sustainability of small

contractors is jeopardised by a number of issues that were

raised in the workshops. National, provincial and local authority

clients will be called upon to support the distribution of the guide

with tender documents.

! Monitoring and Evaluation of Industry

Improvement

The CIDB is taking forward important work initiated by the

Department of Public Works including the Construction Industry

Status Report, and the development of Construction Industry

Indicators.

Collaboration with stakeholders on these initiatives must create

a focus on improvement and must unlock the potential of all

stakeholders to review their role and take concrete action for

positive change.

! The Registers of Contractors and Projects

CIDB legislation tasks us to establish a national register of

contractors, which categorises contractors in a manner that

facilitates public sector procurement and promotes contractor

development. The national register of projects will provide

information on the nature, value and distribution of projects and

will provide the basis for a best-practice project assessment

scheme.

The two registers are aimed at promoting the best practice of

clients and contractors. The process to develop the system

specification and to develop the software for the registers has

already started. The registers will be tested in co-operation with

public sector clients, before being put into operation by the end

of 2003.

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The Board is supported by a professional and knowledge-based organisation, structured to drive the strategic objectives of sustainable growth, improved industry performance, client delivery management and fundamental transformation of the industry and the delivery environment.

PROGRAMMES MANDATED FUNCTIONS -to establish & promote

WORK IN PROGRESS

PROGRAMME 1

Business, Economic and Market Development

Economic research and analysis;

Public sector construction spending;

Public/private partnerships;Regional co-operation and export opportunities

* Socio-economic benefits of

Infrastructure - Report

* Construction Industry Status Report* Construction Industry improvement indicators

PROGRAMME 2

Industry Development

Best practice standards, methods, processes;

Benchmarking, development and innovation;

Research and a body/network of knowledge

* Body/Network of Knowledge library

and website as industry resource

* “Know your rights & responsibilities”

contract guidelines for SMEs and a

supportive best practice network

* HIV/AIDS awareness* Develop research agenda

PROGRAMME 3

Procurement and Delivery Management

Effective procurement methods & systems;

Review of the regulatory environment;

Capacity of the public sector for procurement and delivery management;Code of conduct

* Develop Client Forum

* Best practice procurement roll out

* Procurement reform & best value

* Strategy for improved public sector delivery and capacity * Develop a code of conduct for all participants in the delivery process

* Pilot Register of Contractors to

support public sector procurement

and best practice of contractors * Pilot Register of Projects to foster best practice of public and private sector clients

Register of Contractors,

Register of Projects and

other registers of suppliers

PROGRAMME 4

Registers and Information Technology

Work and Focus

Groups

OBJECTIVES

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THE ORGANISATION - CIDB at a Glance

Stakeholder Forum

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CIDB - Members of the Board

Brian Bruce, Chairperson Brian Bruce is Group Chief Executive of Murray and Roberts. He was Chairperson of the Inter-Ministerial Task Team that established the framework for construction industry development in South Africa.

Mahlape Sello Mahlape is a legal consultant at Gaba & Associates. As a member of the Task Team, she has deployed her legal expertise to promote alternative dispute resolution in the construction industry and contributed significantly to the CIDB legislation. She serves on the CIDB’s Remune-ration Committee.

Cannon NoyanaCannon Noyana is Chief Executive Officer of Noyana's Management Consultancy. As a member of the Task Team, Cannon led the industry Focus Group on Construction Procurement, which developed re-commendations to enhance procurement. He serves on the CBE, PWD BEE Committees, and Agrément Board.

Lietsiso MohapeloaLietsiso Mohapeloa is the Chief Executive of High Pitched Investments (Pty) Ltd and is active as a property developer and contractor. He has held office in the Black Construction Council and the Construction Industry Confederation, and contributed to the Task Team’s Procurement Focus Group.

Pepi Silinga, Deputy Chairperson Pepi Silinga is the Chief Executive of Coega Development Corporation. As Deputy Chairperson of the Task Team, Pepi has demonstrated perception and a deep understanding of the challenges facing the industry and South African society.

Khanyi MlamboKhanyi Mlambo has an architectural background and is the Director of Group Sponsorships at Standard Bank. As Chairperson of South African Women in Construction, she is an avid campaigner for the development of women and disadvantaged communities.

Giovanna FensterGiovanna Fenster has a BA, LL.B degree from Wits, an LL.M (cum laude) from RAU and a second LL.M from Wits. She has a certificate in Construction Law and a Higher Diploma in Arbitration. Giovanna is director of PG Legal, and vice-chairperson of the Association of Arbitrators.

Rodney MilfordDr Rodney Milford is the Director of CSIR Building and Construction Technology (Boutek). He was part of the drafting team of the construction industry White Paper and a member of the Inter-ministerial Task Team.

Carl GrimCarl Grim is the Chief Executive of Aveng, is the Chairperson of Grinaker-LTA, Trident Steel Holdings and is on the board of the National Business Initiative. He serves on the CIDB's Remuneration and Audit Committees.

Sam AmodSam Amod is the managing principal of Development Engineering Consultants. He made a substantial contribution to the Task Team Secretariat. Since 1995 Sam has continuously contributed to construction industry development policy.

James Henrey (Jim)Jim is the principal member of Henrey Rix Projects. He is a past president of the Institute of Building, and a founder member of the Association of Construction Project Managers. He is Chairperson of the SA Property Owners Building Development Committee.

Sivi GoundenDr Sivi Gounden is an engineer and the Director-General of the Department of Public Enterprises. At the Department of Public Works he was instrumental in developing affirmative procurement and public/ private partnership. He serves on the CIDB’s Remu-neration Committee.

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REPORT OF THE AUDITOR-GENERAL

A U D I T O R - G E N E R A L

to Par l iament

1. AUDIT ASSIGNMENT

The financial statements as set out on pages 9 to 12, for the period 1 December 2001 to 31 March 2002 have been audited in terms of section 188 of the Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996) read with sections 3 and 5 of the Auditor-General Act 1995 (Act No. 12 of 1995). These financial statements, the maintenance of effective control measures and compliance with relevant laws and regulations are the responsibility of the Chief Executive Officer. My responsibility is to express an opinion on these financial statements, based on the audit.

2. NATURE AND SCOPE

The audit was conducted in accordance with Statements of South African Auditing Standards. Those standards require that I plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement.

An audit includes:

• examining on a test basis, evidence supporting the amounts and disclosures in the financial statements,

• assessing the accounting principles used and significant estimates made by management, and

• evaluating the overall financial statement presentation.

Furthermore an audit includes an examination, on a test basis, of evidence supporting compliance in all material respects with the relevant laws and regulations which came to my attention and are applicable to the financial statements.

I believe that the audit provides a reasonable basis for my opinion.

3. AUDIT OPINION

In my opinion, the financial statements fairly present in all material respects the financial position of the Construction Industry Development Board (CIDB) at 31 March 2002 and the results of its operations and cash flows for the period 1 December 2001 to 31 March 2002 in accordance with generally accepted accounting practice and in the manner required by the Public Finance Management Act, 1999 (Act No. 1 of 1999).

4. APPRECIATION

The assistance rendered by the staff of the CIDB during the audit is sincerely appreciated.

H van Zylfor AUDITOR-GENERAL

Pretoria25 October 2002

on the financial statements of the Construction Industry Development Board for the period 1 December 2001 to 31 March 2002

1 307 995

1 307 995

1 200 924

560 746 640 178

2 508 919

2 437 230

2 437 230

71 689

54 169 17 520

2 508 919

5 075 372 100 204

5 175 576

2 437 230

2 437 230

2 437 230

2

3

9

45

6

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ANNUAL FINANCIAL STATEMENTS for the 4-month period ended 31 March 2002

The Financial Statements were presented to the newly appointed Audit Committee and have been approved by the Board.

Notes

Notes

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R

R

2002

2002

2002Accumulated

Surplus

ASSETS

Non-current assets

Property, plant and equipment

Current assets

Accounts receivableCash and cash equivalents

TOTAL ASSETS

EQUITY AND LIABILITIES

Capital and Reserves

Accumulated surplus

Current liabilities

Accounts payableProvisions

TOTAL EQUITY AND LIABILITIES

Operating Income

Transfers from Department of Public WorksOther income

Total Income

Operating Costs

OPERATING SURPLUS FOR THE PERIOD

Surplus for the period

Balance at 31 March 2002

BALANCE SHEET AS AT 31 MARCH 2002

INCOME STATEMENT FOR THE 4-MONTH PERIOD ENDED 31 MARCH 2002

STATEMENT OF CHANGES IN EQUITY FOR THE 4-MONTH PERIOD ENDED 31 MARCH 2002

9

(2 738 346)

8

9

Notes R2002

CASH FLOW STATEMENT FOR THE 4-MONTH PERIOD ENDED 31 MARCH 2002

CASH FLOWS FROM OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES

Cash generated by operations

Interest received

Property, plant and equipment - acquired

Increase in cash and cash equivalents

Cash and cash equivalents at beginning of the period

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD

1. ACCOUNTING POLICIES

The financial statements are prepared on a historical cost basis and incorporate the following principal

accounting policies.

These financial statements comply with generally accepted accounting practice.

1.1. Property, plant and equipment

Assets costing less than R2 000 are written off in the year of acquisition.

Property, plant and equipment are stated at historical cost less depreciation. Depreciation is calculated on

a straight-line basis at rates considered appropriate to reduce the cost of the assets over their estimated

useful lives. No depreciation has been provided for the current year due to the fact that the majority of the

assets were purchased during March 2002.

The depreciation rates are as follows:

Computer equipment 33,33% Office equipment 20%

1.2. Cash and cash equivalents

This figure includes monies held in call accounts as well as cash in the bank and cash on hand.

1.3. Revenue

Revenue comprises of funds transferred from Department of Public Works.

1.4. Expenditure

All amounts are recorded exclusive of value-added tax (VAT) as the entity is in the process of applying for

VAT registration.

NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE 4-MONTH PERIOD ENDED 31 MARCH 2002

1 948 173

1 847 969

100 204

640 178

-

640 178

10

(1 307 995)

(1 307 995)

2. PROPERTY, PLANT AND EQUIPMENT

Movements for the year

Additions

Balance at end of the period

Made up as follows:

Cost Accumulated depreciation

Net Book Value

3. ACCOUNTS RECEIVABLE

Accrued income Prepayments VAT refunds receivable

Note that if SARS does not refund VAT retrospectively, R379 366 will be recoverable for March 2002.

4. ACCOUNTS PAYABLE

Trade payables

5. PROVISIONS

Provision for leave

6. OTHER INCOME Interest received

7. OPERATING SURPLUS FOR THE PERIOD

Operating surplus is stated after taking into account the following items of expenditure:

Auditors' remuneration - Fees for audit

Board expenses

Employee costs CEO Other personnel Professional services

Rentals paid in respect of : Premises Telephone and other

Other operating expenses

8. RECONCILIATION OF SURPLUS TO CASH GENERATED BY OPERATIONS

Operating surplus

Less: Other income

Operating surplus before working capital changes

Working capital changes

Increase in accounts receivable Increase in accounts payable

Cash generated from operations

1 177 750 130 245 1 307 995 1 177 750 130 245 1 307 995

1 177 750 130 245 1 307 995 - - -

1 177 750 130 245 1 307 995

21 971 50 000 488 775 560 746

54 169

17 520

100 204

25 000

131 368

230 325 191 912 38 413

1 977 209

14 500 24 100

335 844

2 437 230

2 337 026

71 689

1 847 969

.

RRR

Computer Office Total Equipment Equipment

2002

11

NOTES (CONTINUED)

(100 204)

(489 057)

(560 746)

54 799 2 200 583 179 640 178

3 739 089

465 576 3 273 513

R2002

9. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand and balances with bank including investments in call accounts.

Cash and cash equivalents included in the cash flow statement comprise the following balance sheet amounts:

Bank Cash on hand Investments

A Standard Bank call account is ceded to the value of R359 400 in favour of letters of credit still in progress to cover contractual commitments.

10. COMMITMENTS

Amounts approved and contracted - outstanding contractual obligations at year end.

Capital commitments Current commitments

11. INCOME TAX EXEMPTION

The CIDB is exempt from Income Tax in terms of section 10 (1) (a) of the Income Tax Act ,1962.

12. COMPARATIVE FIGURES

No comparative figures have been included as this is the entity's first period of operation.

25 000 1 320 131 368 18 519 50 000

593 3 057 5 884

618 8 603

122 003 1 977 209

15 752 38 600

2 744 230 325

6 452 100 299

2 738 346

R

2002

OPERATING COSTS

Audit fees - externalBank chargesBoard member expensesComputer expensesConferences and seminarsGiftsInsuranceIT service providerLeviesOffice suppliesPrinting, stationery and postageProfessional servicesPublications, books and subscriptionsRent paidRepairs, maintenance and cleaningSalariesTelephoneTravelling and entertainment

SCHEDULE TO THE ANNUAL FINANCIAL STATEMENTS FOR THE 4-MONTH PERIOD ENDED 31 MARCH 2002

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NOTES (CONTINUED)

The overarching objective of the CIDB is to promote the contribution of the construction industry in meeting national construction demand and in advancing national, social and economic development objectives, industry performance,

efficiency and competitiveness and improved value to clients.

Provide strategic leadership Promote and implement policies, programmes and projects that support industry development.

Initiate policy refinement and development in co-operation with government and advise the Minister on policy and programmes that impact on industry development.

Facilitate communication between construction industry stakeholders, all spheres of government, and statutory bodies.

Establish a construction industry stakeholder forum and provide information to stakeholders on industry performance, best practice and matters affecting the industry.

Promote sustainable growth

Monitor programmes and publish quarterly and annual reports

Participation of the emerging sector

Regional co-operation

Monitor economic activity in the construction industry and the measure according to which public sector spending is scheduled.

Monitor programmes aimed at construction industry development including:

support of emerging enterprises sector; work process transformation; employment; job creation

and improved Iabour relations; human resource development; innovation and best practice

processes; simplification of regulatory procedures; procurement reform; standardisation and

uniformity in procurement documentation; practices and procedures; best practice and value for

money; regional co-operation, and international competitiveness.

Publish quarterly and annual status reports.

Promote emerging enterprise participation in the industry.

Delivery and procurement management

Advance the uniform application of policy and

Promote uniform and ethical standards

Advance the uniform application of policy in all spheres of government for improved procurement, delivery management and human resource development.

Identify delivery constraints and develop and promote appropriate training for public sector officials.

Develop the capacity of the public sector for procurement and delivery management.

Publish and promote a code of conduct for all construction-related procurement and all participants in the procurement process.

Initiate, promote and implement national programmes and projects aimed at uniformity of procurement documents and procedures.

Determine best practice priorities; develop, publish and promote best practice standards and guidelines.

Develop performance improvement targets and indicators and evaluate progress.

Develop a knowledge centre, provide access to knowledge and promote research, development and innovation through a national research agenda.

Core Functions outlined in the Legislation

Establish a statutory register of contractors and contractor recognition scheme to support public sector procurement and promote the best practice of contractors.

Establish and maintain a statutory register of projects and best-practice project assessment scheme to promote the best practice of clients.

Registers of Contractors and Projects to promote improvement

Performance improvement and best practice

Promote research and development

Communication and

Stakeholders

Promote regional co-operation and export opportunities.

Policy refinement and advice

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CIDB ACT - Summary Object ives and Funct ions

Tel: +27(0)12 343-7136Fax: +27(0)12 343-7153