report perfect locations...ias international accounting standards ibfc independent black filmmakers...

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BIG IDEAS. PERFECT LOCATIONS.

2017/18

ANNUAL REPORT

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“The highlight for 2018 will be the formerPresident Nelson Mandela and Albertina Sisulu Centenary celebrations.”

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PART A: GENERAL INFORMATION

General information...................................................................................................................................................................6List of abbreviations/ acronyms..............................................................................................................................................7Foreword by the MEC..............................................................................................................................................................8Foreword by the Chairperson................................................................................................................................................9Chief Executive Officer’s overview................................................................................................................................10-11Statement of responsibility and confirmation of accuracy for the Annual Report.............................................12Strategic overview..............................................................................................................................................................13-14Organisational structure.........................................................................................................................................................15

PART B: PERFORMANCE INFORMATION

Auditor-General’s report: Predetermined objectives.................................................................................................18Situational analysis....................................................................................................................................................................20Performance information by programme..................................................................................................................24-34Revenue collection..................................................................................................................................................................35

PART C: GOVERNANCE

Introduction................................................................................................................................................................................38Composition of the Board.............................................................................................................................................39-40Board Committees............................................................................................................................................................42-43Risk management...............................................................................................................................................................44-46Internal Control.........................................................................................................................................................................46Internal Audit and Audit Committee.................................................................................................................................46Compliance with laws and regulations..............................................................................................................................47Fraud and corruption..............................................................................................................................................................47Minimising conflict of interest...............................................................................................................................................47Code of Conduct.....................................................................................................................................................................48Health, safety and environmental issues..........................................................................................................................48Company secretary.................................................................................................................................................................48Social responsibility.................................................................................................................................................................48

PART D: HUMAN RESOURCE MANAGEMENT

Introduction................................................................................................................................................................................52Human resource oversight statistics...........................................................................................................................53-55

PART E: FINANCIAL INFORMATION

Statement of Responsibility...................................................................................................................................................58Report of the Directors..................................................................................................................................................59-60Report of the Auditor General.....................................................................................................................................61-63Corporate Government Report..................................................................................................................................64-68Audit and Risk Committee....................................................................................................................................................69Statement of Financial Position............................................................................................................................................70Statement of Comprehensive Income...............................................................................................................................71Statement of Changes in Equity...........................................................................................................................................72Cash Flow Statement..............................................................................................................................................................73Notes to the Annual Financial Statements................................................................................................................74-97Unaudited Supplementary Schedule .........................................................................................................................98-99

TABLE OF CONTENTS

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The GFC continues to enjoy clean audits.

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PART AGENERAL INFORMATION

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General information

Registered name Gauteng Film Commission (GFC)

Registration number 2001/01303/08

VAT registration number 4060209766

NPC registration number 930018843

Country of incorporation and domicile South Africa

Physical address 56 Main Street

Johannesburg

2108Postal address PO Box 61601

Marshalltown

2107Telephone number(s) +27 11 833 0409

E-mail address [email protected]

Website www.gautengfilm.org.za

Auditor Auditor-General of South Africa

Bankers Absa Bank Limited

Company/Board Secretary Anthea Mokoena

Directors Simangele Sekgobela (Acting CEO)

Keith Khoza (Acting Chairperson)

Sello Maake Ka Ncube

Thembi Mtshali Jones

Elliot Maluleke PA (SA) & AGA (SA)

Joy Ngoma

David Bensusan

Sammy Mafu

Andile Mbeki

PR Number 168/2017

ISBN 978-0-621-45532-1

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List of abbreviations

AGSA Auditor-General of South Africa

APP Annual Performance Plan

CEO Chief Executive Officer

CPA Commercial Producers Association

CFO Chief Financial Officer

COO Chief Operations Officer

DFA Documentary Filmmakers’ Association

DSACR Gauteng Department of Sport, Art, Culture and Recreation

GCIA Gauteng Creative Industry Agency

GDP Gross Domestic Product

GFC Gauteng Film Commission

GRAP Generally Recognised Accounting Practice

HR Human Resources

IAS International Accounting Standards

IBFC Independent Black Filmmakers Collective

ICT Information and Communication Technology

IFRS International Financial Reporting Standards

King (IV) King Report on Corporate Governance

MEC Member of the Executive Council

MTEF Medium Term Expenditure Framework

MTSF Medium Term Strategic Framework

NPC Non-profit Company

PDI Previously Disadvantaged Individual

PFMA Public Finance Management Act, Act No. 1 of 1999

SARS South African Revenue Service

SCM Supply Chain Management

SWIFT Sisters Working in Film and TV

TOR Terms of Reference

VAT Valued-added Tax

ZAR South African Rand

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FAITH MAZIBUKOMEC

FOREWORD BY THE MEC

The Gauteng Film Commission (GFC) continued to focus on delivering high impact integrated programmes, showcasing locally production creative works of various programmes. The mandate of the Commission informs the programmes that are delivered with the emphasis on cultivation of strategic partnerships. These partnerships are categorised as follows; broadcasting and distribution, and development.

The Commission provided financial support to seventeen (17) local productions which resulted in 968 jobs being created in the year under review. Existing Inter-Governmental Framework processes were utilised to expand access of budding film makers to the industry.

Hence the Commission worked closely with Municipalities to identify sites for film shoots.

Collaborating with Municipalities ensured that permit fees for film shoots were paid to local municipal authorities across the Gauteng City Region, which in turn attracted more productions and curbed illegal shoots. This resulted in GFC facilitating a total of 209 film permits with an estimated combined production cost of R370 million.

Targeted strategic interventions resulted in expanded access for shorter and smaller productions. These productions were funded with the aim to ensure that local stories as experienced by communities in their daily lives were captured as succinct productions.

Provision of funding to these shorter productions also ensured that a wider number of budding film makers were reached. The department continues to see the role of GFC as that of a facilitator in the broader creative industries.

Competing priorities within government impacted negatively on increased funding allocation to the Commission. However, strategic focus areas such as establishment of broadcasting partners, and promotion of access to the industry itself ensured that set targets were made.

The GFC is working tirelessly to convince the local and international industry to consider Gauteng Province as a preferred destination for film shoots and productions. The rich history of the province and easily accessible landscape are some of the competitive advantages that the Commission hopes to leverage in the future.

Streamlining operations and adherence to regulations, contributed to the GFC maintaining a clean audit in the year under review.

...............................................Faith MazibukoMECMember of the Executive Council (MEC): Sport, Art, Culture and Recreation Date: 31 July 2018

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KEITH KHOZADEPUTY CHAIRPERSON

FOREWORD BY THE CHAIRPERSON

Overview of the GFC’s strategy and performance

The GFC has been integral in shaping the film landscape within Gauteng with a developmental focus. The Commission achieved the majority of its strategic objectives through its programmes in nurturing emerging filmmakers and providing opportunities for skills development across the Gauteng City Region. This resulted in the establishment of the production and research facility within the GFC office as they translate their concepts into tangible and proudly South African productions. These productions ignite and reflect our diverse multicultural society which impacts on the wellbeing and economy of the Province. We are proud to have supported more productions than anticipated, due to the focus on Emerging Filmmakers.

The year ahead

The Board will focus on achieving the targets set out at the beginning of the current term of Administration, through the 5-year strategic plan. Management will implement the Enhanced Strategy once it has been approved. This entails the redefinition of GFC’s role, to ensure that it actively assumes a centre stage within the film value chain in Gauteng. The strategy will allow for the entity to enhance its service delivery and will focus on leveraging strategic partnerships to ensure that the industry is adequately supported.

Through integrated programmes and strategic partnerships, some of the projects will assist in delivering film services via a Post-production and Research facility, which will be rolled in other areas

such as at the Kagiso Monument in West Rand, and at the Women’s Monument in Tshwane.

GFC welcomes the newly appointed Board. The Board will drive the strategy to fulfil its mandate up to the end of this current Administration in 2019. This will ensure leadership stability, good governance and organisational renewal to make sure that GFC continues to enjoy clean audits under its guidance.

Acknowledgements

The Board of Directors and I would like to thank the MEC, Ms Faith Mazibuko for the department’s support in delivering our mandate as an organisation. I would also like to thank my fellow Board members for their input and guidance. The performance and dedication of the GFC staff is appreciated.

................................................Keith KhozaDeputy ChairpersonDate: 31 July 2018

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SIMANGELE SEKGOBELA(Acting) CEO

CHIEF EXECUTIVE OFFICER’S OVERVIEW

GENERAL FINANCIAL REVIEW

The GFC continued to support the industry through numerous initiatives and in establishing strategic partnerships that will augment the financial support provided during 2017/18. The GFC received its allocation through the Department of Sport, Art, Culture and Recreation (DSACR).

The budget allocation for 2017/18 was R29,0 million (2016/17 was R28,3 million), increasing the revenue by 5% from the previous financial year.

Total assets decreased by R68, 241 from R 1, 288, 920 (2016/17 R1, 357, 161), mainly due to a decrease in property, plant and equipment resulting from the depreciation during the current financial year under review.

SPENDING TRENDS

The limited budget allocated to the GFC necessitates significant spending cuts to deliver on all strategic outcome-oriented goals.

CAPACITY CONSTRAINTS AND CHALLENGES

There was stability at management level during the year under review. Most critical vacant positions were filled. The position of a Project Manager was not filled with a view of restructuring the Industry Support and Development Unit (ISD) which is to be aligned to the Enhanced Strategy. The strategy aims to enhance training initiatives and audience development. The successful performance is attributed to stability at the leadership level.

NEW AND DISCONTINUED ACTIVITIES

The new project introduced was the Post-production and Research facility, targeting marginalised emerging filmmakers that was piloted at the GFC offices with rollout expected to be implemented in other regional facilities. No programmes were discontinued.

ECONOMIC VIABILITY

In the current year under review, the GFC commissioned Strategy Development Consultants, to enhance the draft Turnaround Strategy of the organisation. The aim is to reposition the Commission to ensure that it attains maximum impact in the industry in spite of its limited resources. According to an industry analysis by the consultants, from a global perspective, there is no evidence that suggests that there are any other film commissions around the globe that generate revenue.

For a film commission to be able to generate revenue to help ensure economic sustainability, it has to provide a product or service that is of commercial value and for which industry role players are willing and able to pay a fee. If no such product or service exists, an investment has to be made first, so that it addresses industry-wide demands from a commercial point of view.

At the moment, the services that film commissions around the world render, do not necessarily imply that commissions have the ability to generate revenue in the absence of a product or service that can be sold to industry players. Research further shows that revenue generation in the film value chain is only possible at the distribution stage. This is the late stage that is preceded by pre-production, production and post-production stages. As such, this factor further reduces the chances

REPORT OF THE ACCOUNTING OFFICER

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of a catalytic entity such as a film commission to be able to generate profit.

The GFC intends to use the information provided by the consultants to raise funds through alternative sources such as grants and corporate social investment programmes of interested corporations. The Commission will also seek to cut costs by exploring co-funding partnerships with relevant training institutions. These strategic interventions will enable the GFC to not rely on the government as its only source of funding, as has been the case since its inception. Raising funds from alternative sources will furthermore enable the GFC to expand its capacity to support more filmmakers, while establishing economic sustainability.

SUPPLY CHAIN MANAGEMENT

The GFC Supply Chain Management (SCM) was reviewed and streamlined to assist the entity to fulfil its procurement obligations of preferential consideration given to historically disadvantaged individuals. The policy sets its targets consistent with the provisions of the Public Financial Management Act (PFMA) and its Regulations.

AUDIT REPORT MATTERS

In relation to the 2017/18 Internal Audit annual plan, the following audits were approved namely: Performance Audits; Follow-up on AG findings, Supply Chain Management (SCM) and Research and Governance.All action plans related to matters which were raised by the Auditor General in the 2016/17 financial year, external audit were resolved.

OUTLOOK

In the year ahead, the GFC will focus on the development and support of emerging filmmakers. GFC has seen the need to focus more on developmental programmes for the Film and Television industry as part of its mandate and the Enhanced Strategy. GFC’s strategic objectives are aligned to The National Development Plan (NDP), the Provincial 10 Pillar Programme and the DSACR mandate of driving social cohesion programmes for Gauteng. GFC will continue to work closely with the Department in delivering high impact integrated programmes, showcasing locally produced creative works through commemorative celebrations in honour of our heroes and heroines. The highlight for 2018 will be the former President Nelson Mandela and Albertina Sisulu Centenary celebrations.

The GFC is currently finalising the draft Enhanced Strategy. The purpose of this Enhanced Strategy is to redefine the role of the GFC to ensure that it actively assumes a centre stage in the film value chain in Gauteng. As a result, GFC has prioritised for the establishment of two additional film post production and research facilities within the identified Gauteng Regions during the 2018/19 financial year. This will target and enable young, previously disadvantaged filmmakers to access cutting edge facilities to complete their projects under

the guidance and mentorship of the GFC. The facilities will be established in Diepsloot and within the Women’s Living Monument in Tshwane.

Part of the Enhanced Strategy is to leverage strategic partnerships due to the expanding mandate for regionalisation, however, the GFC has limited resources to offer to the industry. The GFC will continue to collaborate with and formalise programme partnerships with sister agencies such as the National Film and Video Foundation (NFVF), the Gauteng Growth and Development Agency (GGDA), the Gauteng Tourism Agency (GTA), and the National Student Financial Aid Scheme (NSFAS), to name a few. Strategic partnerships for co-production, broadcast platforms, content distribution and skills development will be enhanced to deliver on set objectives in collaboration with industry players and studios.

A number of significant new partnerships were established in 2017/18, in particular with the South African Broadcasting Corporation (SABC) for broadcast; GGDA for infrastructure (local production facilities) and outbound missions; and NFVF for film related matters regarding production and markets. Public awareness will be elevated in townships through various campaigns that promote access to the GFC services and job opportunities within the industry. In the remaining period of this current administration, the GFC will finalise the implementation of the Enhanced Strategy as a critical success factor to deliver on its mandate. It will cultivate, facilitate and enhance an environment that allows the audio-visual industry to play a meaningful role in the socio-economic development of Gauteng.

TAX EXEMPTION

The GFC applied for Tax Exemption from the South African Revenue Service (SARS) which has been granted during the financial year under review.

ACKNOWLEDGEMENTS

I would like to acknowledge the contribution of the Board of Directors for their stewardship, the GFC management and staff for their commitment to achieve the targets and to deliver on the mandate. The overall excellent performance bears testimony to our collective team work.

Simangele Sekgobela(Acting) CEO Date: 31 July 2018

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To the best of our knowledge and belief, we confirm the following:

• All information and amounts disclosed in the An-nual Report is consistent with the Annual Finan-cial Statements audited by the Auditor-General

• The Annual Report is complete, accurate and is free from any omissions

• The Annual Report were prepared in accor-dance with the Annual Report Guide for Sched-ule 3A and 3C Public Entities as issued by Na-tional Treasury

• The Annual Financial Statements (Part E) were prepared in accordance with the Companies Act of South Africa, Act No. 71 of 2008 and all stan-dards applicable to the GFC

• The Accounting Authority is responsible for the preparation of the Annual Financial Statements and for the judgments made therein

• The Accounting Authority is responsible for es-tablishing and implementing a system of internal control which is designed to provide reasonable assurance as to the integrity and reliability of the performance information, human resources (HR) information and Annual Financial Statements

• The Auditor-General of South Africa (AGSA) is engaged to express an independent opinion on the Annual Financial Statements

In my opinion, the Annual Report fairly reflects the operations, the performance information, HR information and the financial affairs of the GFC for the financial year that ended 31 March 2018.

Yours faithfully

...........................................Simangele Sekgobela (Acting) CEO Date: 31 July 2018

............................................Keith Khoza Deputy Chairperson of the Board Date: 31 July 2018

Statement of responsibility and confirmation of accuracy for the Annual Report

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Vision

Making Gauteng an innovative, world-class hub for the film and television industry.

Mission

To cultivate, facilitate and enhance an environment that allows the audio-visual industry to play a meaningful role in the socio-economic development of Gauteng.

Values

In working towards the achievement of the mandate and vision set out above, the GFC subscribes to the following internal values:

- Leadership - Efficiency, accountability and transparency- Progressive and innovative - Passion, excellence and commitment - People development and empowerment

STRATEGIC GOALS OF THE GFC

The strategic goals of the GFC were developed as a response to the mandate of (DSACR), objectives of the (NDP), the revised mandate of the Provincial

Government, as well as the key macro and micro environment challenges and strategic issues that the Agency should address. Further, given the need to ensure synergy and seamless integration, these high level strategic objectives are aligned to both the DSACR and the 14 provincial Medium Term Strategic Framework (MTSF) Outcomes.

The overarching aim of the GFC is to cultivate, facilitate and enhance an environment that allows the Creative Industries to play a meaningful role in the socio-economic development of Gauteng.

THE GFC RESPONSE TO THE OUT-COMES-BASED APPROACH

As the creative industries form a lever for promotion of social cohesion and nation building, the GFCcontributes to the provincial outcome 14: “To promote social cohesion and nation building”. TheGFC also equally considers its critical and clearly targeted role in support of Outcome 4: “Decent work and inclusive economic growth”. The Annual Report 2017/18 was aligned to the NDP and linked to the Gauteng Provincial Government’s (GPG’s) 10 Pillar Programme.

Strategic Overview

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GFC CONTRIBUTION TO THE GAUTENG PROVINCIAL GOVERNMENT’S 10 PILLAR PROGRAMMEPlease note that out of the ten GPG Programme Pillars, the GFC only contributes to the six that are listed below:

10 GPG Pillars GFC Contribution in 2017/18

1. Radical economic transformation

Provided training opportunities for 963 individuals through 14 training initiative partnerships.

To drive the development of local content, 17 productions were supported.

2. Decisive spatial transformation

Established the piloting of the in-house post-production and research hub that will be rolled out in different regions in the remaining years of this Administration.

Promoted GFC initiatives and industry opportunities to relevant communities in 16 townships across various regions.

3. Accelerated social transformationDeveloped 14 618 audiences for appreciation of local content through various initiatives across Gauteng City Region.

5. Modernisation of the public service

Facilitated issuing of 209 filming permits in conjunction with Local Municipalities.

Continued to develop online Locations and film services database. This is to be accessed by National and International stakeholders to promote Gauteng as a film destination.

6. Modernisation of the economy Supported four alternative distribution platforms.

10. Taking the lead in Africa’s new industrial revolution

Participated and supported local filmmakers at National and International film markets. The aim is to export local content and provide access to markets.

Legislative and other mandates

The GFC is mandated to develop and promote the audio-visual industries in Gauteng and to facilitate all film-related projects within the DSACR.

Despite being registered as a non-profit company (NPC) in terms of the Companies Act, Act No. 71 of 2008, the GFC is mandated to comply with the PFMA, National Treasury Regulations and any other government regulations applicable to a public entity.

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ORGANISATIONAL STRUCTURE

“Targeted strategic interventions resulted in expanded access for shorter and smaller productions.”

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PART BPERFORMANCE INFORMATION

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Auditor – General’s Report: Predetermined Objectives

The AGSA currently performs the necessary audit procedures on the GFC’s performance information to provide reasonable assurance in the form of an audit conclusion. The audit conclusion on the performance against predetermined objectives is included in the Report to Management, with material findings being reported under the Predetermined Objectives heading in the Report on Other Legal and Regulatory Requirements section of the Auditor’s Report.

Refer to page 61-63 of the Auditors Report, published under Part E: Financial Information.

Situational Analysis

To analyse the environment within which the GFC operates, a PESTEL analysis was used in order to unpack the effect that the environment has on the production and distribution of Film and TV content, as well as to highlight industry trends and dynamics.

Political

As an agency of Provincial government, the GFC tends to benefit from continuity and stability of the political administration. The political mandate has been intensely directed at providing services at local level through integrated programmes that will bolster nation building and social cohesion.

Economic

Recent research shows that macro-economic factors have a direct impact on the disposable income of the population and, subsequently, their ability to spend on entertainment. Furthermore, lack of private investment in the industry and slow economic growth limit the funding that is made available to catalyst organisations such as the GFC, compelling government to look at non-traditional and less major industries as sources of economic growth and employment creation. Considering the imperatives of national government, the Film and Television industry enjoys less priority than Health, Education, Social Development, Housing, and Human Settlements. The Creative industry nevertheless presents an opportunity for continued growth and global recognition, and remains a notable contributor to the GDP of the country, with Gauteng accounting for the majority of film operations. According to a study commissioned by the National Film Video Foundation (NFVF) and conducted by Urban Econ, 2017, the current growth drivers in the Film and

Television industry are provincially located film offices and commissions, technology, affordability (due to an increase in access platforms such as box office, cell phones, internet, etc.) and committed filmmakers. Current inhibitors of growth include lack of support infrastructure, lack of skills development in pre-development phase and lack of entrepreneurial skills of filmmakers.

Social

The creative industry plays a significant role in raising awareness of the different philosophies, presenting common beliefs, values and ideas, as well as sharing information. From a cultural perspective, the industry contributes to the culture of our economy, thus, providing a sense of identity and sharing the history and diversity of a country. Films also serve as a record of the most significant developments in a country, enlightening future generations and preserving traditions (Urban Econ, 2017). The production and the circulation of locally produced content is greatly supported by the booming audiences which are glued to local TV channels such as Mzansi Magic channels, Soweto TV, eKasi oriented stories, and others. Access to cinemas nonetheless remains a problem for most South Africans residing in townships, who have to rely on public transport to get to and from cinemas, which is not safe during late hours. Another major negative factor is the fact that the local cinema is still dominated by imported content, especially from the United States of America (USA). Piracy also still remains a thorn in the side of the industry, as it inhibits profitability and traceable return on investments.

Technological

The improvement in cellular telephone technology through smart phones continues to provide filmmakers and users with a cheaper option to capture moments, create films and share them on social media. The availability of the internet through Wi-Fi at areas where data is available for free or at a low cost such as public libraries, has also provided an alternative distribution platform. However, the internet can not be relied on as a widespread and accessible distribution platform, as the cost of data still remains a huge inhibiting factor for the majority of audiences. Lack of supporting infrastructure in the province, protection of creative ideas and Piracy remains the biggest threats to the industry. Piracy now takes place in one of two ways: either through hard copy piracy, or through file sharing, both which are enabled by technology development

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and other economic problems. South African Film distributors and cinemas are enormously affected by the circulation of illegal pirated products while involvement with pirated movies remains lucrative in most parts of Gauteng, consequently harming the film industry.

Environmental

In view of the global imperatives to preserve the natural environment and its resources for future generations, the GFC encourages green filmmaking through the use of environmentally sensitive production materials and techniques. As such, production companies are encouraged to:

• Avoid the use of Styrofoam and other non-biodegradable products and use caterers that do the same.

• Purchase locally produced products that not only boost the local economy but also re-duces additional energy use associated with transportation.

• Recycle when possible: paper, cans, glass, cardboard, plastics, and batteries, etc.

• Provide recycling bins in production offices and on set.

• Recycle sets or donate all unused or unwant-ed items to local charities, schools, animal wel-fare organisations, etc.

Legal

Broadcasters offer exciting prospects to content producers, but producers still experience challenges with the commissioning and funding of the rights to programming and to retain the Intellectual Property (IP) of their productions. Considering this, there is a critical requirement for new laws and policies to ensure that the rights of broadcasters and filmmakers are equally protected, and that content producers are fairly rewarded for their work

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Service Delivery Environment

Strategic Partnerships

In the year under review, GFC sought to establish eight strategic partnerships to have more impact in delivering its programmes. These partnerships can be mainly categorised as follows:

• Broadcast and distribution

o Fox Network Group partnership for co-production and commissioning of content;

o Blackskrin partnership for profiling content supported by GFC;

o Mzansi Magic partnership for commissioning and licensing of content; and

o Zkhiphani partnership to assist with content streaming and the promotion of content on social media platforms.

• Developmental

o National Film & Video Foundation partner-ship to enhance our support to the industry;

o Publication Board for classification of con-tent and distribution licensing;

o City Varsity for skills development and train-ing; and

o Sepamla Fashion Consulting in partner-ship with WSV Wealth, to offer a 1-year Wardrobe and Styling Training pro-gramme in Johannesburg, for candidates from across the Province.

Productions supported

In the year under review, GFC funded a total of 17 Production companies who in turn created employment for 968 people, 90% of whom are young people. The growing appetite from Emerging filmmakers to create low budget films inspired GFC to introduce a slate to service them. The majority of these films are in the process of acquiring licence deals from broadcasters with the assistance of the GFC.

Figure 1: Temporary jobs created in 2017/18

Highlights of Projects supported:

In the light of GFC’s adoption of Township Economy initiatives, our funding was dedicated to nurturing Emerging filmmakers. We are proud to announce that 85% of productions were produced by Young Black emerging filmmakers. Long form feature films that were supported are Zachariah by Favor Media; Droplets by Grey Street Media; Lovely Day by Spyland Jova; I want to be a Dr too by Tymphanic Vision; Lost and Found by Sonrise and Thesha by La Musement.

As we strive to increase support for feature films releasing through Cinemas, the following productions were funded in this current financial year; Comatose by 1 Take Media; Mayfair (On the Way to Paradise) by Real Eyes Media and She is King by Zulu Musical Film. Some of the documentaries funded were produced by prolific Female Filmmakers namely Children of the Revolution by Nayanaya Pictures and When Babies Don’t Come (Womb Man) by Bolobathaba Media.

A ground-breaking mentorship project that we partnered with, is a 48-hour film project which benefited seven (7) Emerging filmmakers from seven (7) townships across Gauteng. TThe 48-hour film project was an initiative that required teams from around the Province to make 7-minute short films, within a 48 hour time span. It encourages and teaches upcoming filmmakers to strategise, be creative, write scripts, find locations and actors, and deliver the final product, all within 48 hours.

AnnualTartget

Achievement

440 968

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Distribution

GFC provided financial and distribution support which entailed contribution towards theatrical release and marketing of the respective films. The following productions were implemented with the aim of supporting the distribution of locally produced content:

• She is King – a feature film that was released in cinemas and that has done a World Pre-miere in Cannes in May 2017;

• Greatest Thing – a feature film that was provided with distribution support and will be realised through Ster Kinekor cinemas;

• The Revenge Reloaded by Anaconda Pro-ductions, an informative awareness movie for the community, especially youth and teenagers; and

• Zkhiphani Web distribution, an online magazine aimed at attracting South Afri-can youth. It covers current affairs that are of interest to the youth as well as enter-tainment, with two platforms, namely the Youth Channel and an active website.

Productions for Broadcast

GFC supported a total of ten (10) productions for broadcast. This includes five (5) Women’s Month PSA produced by five (5) production companies, which were flighted on the Trace TV platform; as well as the Little America and Human Rights campaign project licensed by Trace TV. A license agreement with BET was also facilitated for Hip Hop Effect. More productions for broadcast were furthermore concluded, with feature films Ifa and 4/5 that were licensed by Mzansi Magic.

Film Permits

Gauteng has a vibrant, growing film industry that is increasingly competitive internationally. Local and international filmmakers are taking advantage of the province’s diverse, unique locations – as well as low production costs and favourable exchange rate, which make it up to 40% cheaper to make a movie here than in other countries. A total of 209 film permits were facilitated as a result of dire need for productions to access locations. No additional expense was incurred by the entity. An average financial expenditure as a result of facilitated productions is estimated at over R30 Million in this financial year.

Figure 2: Achieved film permits for 2017/18

Skills Development Skills development is one of our key development targets to drive and support the GPG transformation agenda. A total of 14 training initiatives were supported and 963 individuals were developed, including Film Students who received on-the-job training at the Arnold Classic Africa Games, the Talent Campus during the Durban Iinternational Film Festival and at DISCOP Africa. We also partnered with other organisations as follows:

• Standard Bank Joy of Jazz or the Geleza Kle-va initiative which focused on music scoring in the film & TV industry;

• City Varsity where young people were trained in various disciplines in Motion pic-ture, and

• Obuwa Management Company for a Copy-right workshop.

Figure 3: Number of individuals trained in the film industry

AnnualTartget

Achievement

165 209

AnnualTartget

Achievement

414 963

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Audience Development

An essential part of developing awareness about film screening activities is to consistently expose all stakeholder groups to films, through the use of attractive publicity material. Seventeen (17) audience development initiatives were hosted and attended by 14 617 individuals. The introduction of the School Holiday Film Programme also enabled GFC to reach 50 townships between December 2017 and January 2018.

Post production and Research hub

To enhance access for emerging Filmmakers, GFC established and piloted an inhouse post production and research hub. The facility was operational in the fourth quarter of 2018 and was accessed by five (5) production companies and three (3) individuals, which is an underachievement of the annual target. Going forward, the facility will be promoted more actively, and two regional facilities have already been earmarked for establishment in 2018/19.

Productions supported – Marketing

GFC supported 12 productions with marketing material for promotion of local content through the different platforms during 2017/18. The following films were supported during the year in review:

• The Whale Caller

• AAA Entertainment

• The Hangman

• Sibusiso Handprint

• Willow Street

• Story teller pod, an animation script writing initiative

• She is King

• Vaya

• Parole Camp

• Zulu Wedding

• Cape Town International Animation Festival (CTIAF) 2018

• Baby Mamas

Export Missions

GFC was involved in the Durban International Film Festival as part of export markets. The festival was held from 13 – 23 July 2017 in Durban, Kwa-Zulu Natal. GFC participation included support of Gauteng based filmmakers for Talents Durban; Exhibition and Branding at the Filmmart and Talents; as well as hosting a Stakeholder engagement session with industry and government representatives. GFC supported the DIFF awards in the following categories:

• SA best short film – Hangman; and

• Africa’s best short film – All of Us.

Film Awards

During 2017/18, GFC financially supported three (3) film awards, namely;

• SA Best Short Film- The Hangman; and Afri-ca’s Best Short film - All of us during Durban International Film Festival,

• Wits Student Film Awards and

• Premier’s Awards: Women Excellence (Film and TV category).

Awareness Campaigns

GFC initiated 16 Township public awareness campaigns on issues that are prohibiting young unemployed youth from breaking into the Film and Television industry. The campaigns were conducted in the form of information sharing workshops about GFC and opportunities that are available in the Film and Television industry. In 2017/218, GFC managed to reach several townships across the five Gauteng Regions namely: Alexandra, Diepsloot, Mamelodi, Nellmapius, Palm Springs, Orange Farm, Thokoza, Sharpeville, Kliptown, Palm Springs; Ratanda, Ivory Park, Rockville, Sharpeville, Tsakane and Eldorado Park.

Industry Associations

• In the year under review, GFC supported numerous Industry Associations as follows:

• The activities of the Documentary Film As-sociation (DFA) in the West Rand;

• Sisters Working in Film and TV (SWIFT) for a workshop at DISCOP;

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• The Commercial Producers Association (CPA) regarding locations and JOC issues; and

• The Independent Black Filmmakers Collec-tive (IBFC) through a stakeholder engage-ment session at the Rapid Lion Film Festival.

Branding Partnerships

In an effort to promote GFC, the following branding partnerships were executed in 2017/18:

• Arnold Classic Games Africa at Sandton Convention Centre from 5 – 7 May 2017;

• Youth Expo at Nasrec from 8 – 18 June 2017;

• Durban International Film Festival from 13 – 23 July 2017;

• DISCOP Africa at the Sandton Convention Centre, Johannesburg from 25 – 27 Octo-ber 2017; and

• Branded at the Mnet Magic In Motion Expo 2018 on 28 February 2018.

Organisational Environment

The GFC committed to transform into a listed public entity, but after extensive engagement with National Treasury and DSACR, it was concluded that it is to the advantage of the Commission to retain its current status, due to the benefits it attains as a Non-Profit Company (NPC).

The stability at leadership level has already had a tremendous impact on the GFC’s performance. Most of the targets were either achieved, or exceeded. This is reported in full in the Performance information by programme section of the Annual Report.

Key policy development and legislative changes

There were no new policies developed during the reporting period, and there were no changes in legislation that impacted on the operations of the GFC.

Strategic outcome- oriented goals

• To establish the GFC as a Public entity.

• To transform and modernise the audio-vi-sual landscape that will contribute to social cohesion and enterprise development.

• To enhance knowledge management and innovation.

• To enhance our corporate services to pro-mote good governance in line with TMR service delivery

• To enhance knowledge management and innovation.

• To enhance our corporate services to pro-mote good governance in line with TMR service delivery

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Performance against strategic objectives

Strategic objective

Actual Achievement 2016/2017

Planned Target

2017/2018

Actual Achievement

2017/2018

Deviation from planned target to Actual Achievement for 2017/2018

Comment on

deviations

Supporting audio-visual industries initiatives with an emphasis on the whole value chain

12 productions supported and funded by the GFC

14 17 Over achieved by +3

Overachievement due to the Emerging Filmmakers Slate project will ensure that smaller productions access funding.

Supporting initiatives aimed at required skills development and mentorship programmes in the industry, focusing on the previously marginalised

422 Temporary jobs created

440 968 Over achieved by +528 jobs

The over-achievement in the previous quarters is due to job opportunities realised from productions supported

22 627 audiences reached through exhibition of local content

16 685 14 618 Underachievement by (2067) audiences

Underachievement due to a lower than expected number of individuals who attended the Youth Month Expo in Quarter 1.

417 individuals trained and developed in the film industry towards “employability” and participation within the sector

414 963 Over achieved by +549

Overachievement due to opportunity to partner with Mzansi Magic and facilitate the training workshop. No additional costs were incurred

PROGRAMME 1: INDUSTRY SUPPORT AND DEVELOPMENT

The aim of the Industry Support and Development unit is to develop and support the audio-visual industry in Gauteng by creating an enabling environment.

The film value chain includes:

• Pre-production (conceptualisation, research, and script development);

• Production (principal photography);

• Post-production (visual and sound editing); and

• Distribution.

Strategic objectives:

• Supporting audio-visual industries initiatives with an emphasis on the whole value chain.

• Supporting initiatives aimed at required skills development and mentorship pro-grammes in the industry, focusing on the previously marginalised.

Performance Information by Programme

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Key performance indicators, planned targets, and actual achievements

Performance Indicator


Planned Target

2017/2018

Actual Achievement

2017/2018

Annual Target Assessment 2017/18


Comment on deviations

Number of strategic partnerships established

3 8 8 Target achieved None None

Number of productions supported

12 14 17 Target achieved 3 Overachievement due to the Emerging Filmmakers Slate project which ensured that smaller productions had access to funding.

Number of projects implemented to support the distribution of local filmed content


Number of productions for broadcast platforms supported


Number of film permits for productions facilitated

170 165 209 Target achieved 44 Overachievement was as a result of more productions utilising this service within local authorities. No extra costs were incurred

Number of temporary jobs directly created in the sector

422 440 968 Target achieved 528 The over-achievement in the previous quarters is due to job opportunities realised from productions supported

Number of audience development initiatives implemented

11 16 17 Target achieved 1 The over-achievement was due to initiatives implemented in Quarter 2

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Planned Target

2017/2018

Actual Achievement

2017/2018




Number of audiences (individuals) reached through exhibition of local content

22 627 16 685 14 618 Target not achieved

(2067) Underachievement due to a lower than expected number of individuals who attended the Youth Month Expo in Quarter 1.

Number of training initiatives implemented in the film industry


Number of individuals trained in the film industry

417 414 963 Target achieved 549 Overachievement due to opportunity to partner with Mzansi Magic and facilitate the training workshop. No additional costs were incurred

Number of productions accessing post-production inhouse facilities (hubs)

N/A 9 5 Target not achieved

(4) Annual target was not met due to late implementation of the facility.

The facility was launched in Q4

Number of individuals accessing research hub

N/A 18 3 Target not achieved

(15) Annual target was not met due to late implementation of the facility.

The facility was launched in Q4

The programme’s key performance indicators contribute to the achievement of all of the GFC’s strategic goals. Despite the budgetary constraints experienced by the GFC, the programme delivered on all its performance targets, and even exceeded on some.

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Strategy to overcome areas of underperformance

During the 2017/18 financial year, challenges were experienced in audiences reached and in accessing post production and research facilities. Going forward, exhibitions will be promoted more actively and greater awareness around the post production and research facility services will be created.

Changes to planned targets

The targets set out above are in line with those stipulated in the final GFC Annual Performance Plan (APP) 2017/18, as approved by the Executive Authority and thus, there are no changes to the planned targets.

Linking performance with budgets

Programme 1: Industry Support and Development

2017/18 2016/17Budget Actual

expenditure(Over)/under expenditure

Budget Actual expenditure

(Over)/under expenditure

R’000 R’000 R’000 R’000 R’000 R’000

Distribution 282 700 308 000 (25 300) 200 000 154 309 45 691

Production support 2 100 000 1 985 849 114 151 1 305

500 1 305 250 250

Audience development 975 000 1 539 759 (564 759) 599 000 598 128 872

Post production and Research Hub

- - - 32 239 31 500 739

Production for Broadcast 500 000 100 000 400 000 394 500 381 500 13 000

Skills Development 870 000 802 584 67 416 1 070 000 1 078 735 (8 735)

Total 4 727 700 4 736 192 (8 492) 3 601 239 3 549 422 51 817

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PROGRAMME 2: MARKETING AND COMMUNICATION

The aim of the Marketing and Communication unit is to deliver integrated marketing and communication interventions to both internal and external stakeholders of the organisation.

Strategic objectives:

• To position Gauteng as an audio-visual content hub and enhance the GFC brand locally and inter-nationally.

• To promote Gauteng as a film destination of choice.

• To build strategic collaborations with key industry stakeholders.


Strategic objective


Planned Target

2017/2018

Actual Achievement

2017/2018



To position Gauteng as an audio-visual content hub and enhance the GFC brand locally and internationally

12 film productions supported at Festivals and Markets with marketing material

12 12 None None

To promote Gauteng as a film destination of choice

One export market supported

1 1 None None

To build strategic collaborations with key industry stakeholders

3 film award events supported

3 3 None None

Key performance indicators, planned targets, and actual achievements



Planned Target

2017/2018

Actual Achievement

2017/2018




Number of film productions supported

12 12 12 Target achieved None Not Applicable

Annual Report produced


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Planned Target

2017/2018

Actual Achievement

2017/2018




Number of newsletters produced


Number of export markets involved in


Number of routes covered through Public Awareness Campaigns


Number of regions reached through public awareness campaigns

6 5 3 Target not achieved

(2) A workshop in Winterveldt could not take place due to unrest. In future, closer coordination with local Municipalities will take place to determine when unrests occur, so that alternative events can be supported instead. The event was rescheduled to 5 May 2018.

Number of film awards supported


Number of industry association supported


Number of branding partnerships to promote GFC


The programme’s key performance indicators contribute to the achievement of all of the GFC’s strategic goals. Despite the budgetary constraints experienced by the Gauteng Film Commission, the programme delivered on all its performance targets.

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During the 2017/18 financial year, the GFC experienced challenges in reaching all the identified areas through public awareness campaigns. Going forward, better coordination with Municipalities as well as better promotion of the campaigns will be undertaken.


The targets set out above are in line with those stipulated in the final GFC APP 2017/18, as approved by the Executive Authority and thus, there are no changes to the planned targets.


Programme 2: Marketing and Communication

2017/18 2016/17


(Over)/under expenditure


(Over)/under

expenditure

R R R R R R

Annual Report 95 258 94 511 747 200 000 222 904 (22 904)Export mission support 80 000 74 409 5 591 90 000 96 058 (6 058)Industry Communications

55 000 45 000 10 000 50 000 40 434 9 566

Advertising Placement 100 000 95 152 4 848 153 000 160 041 (7 041)Location database updating

919 - 919 15 000 2 450 12 550

Branding partnership 50 000 28 090 21 910 40 000 31 477 8 523Media engagements 4 542 - 4 542 4 780 - 4 780Message on hold 4 542 7 285 (2 743) 7 000 6 646 354Marketing support film funded by GFC

360 000 335 316 24 684 340 000 336 500 3 500

Film Awards 60 000 55 000 5 000 50 000 50 000 -Website maintenance 273 500 222 905 50 595 200 000 199 760 240Marketing collateral 90 000 62 473 27 527 100 000 73 452 26 548

Public Awareness Campaigns: Municipalities & Townships

160 000 139 079 20 921 80 000 77 526 2 474

Total 1 333 761 1 152 220 168 031 1 329 780 1 297 248 32 532

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PROGRAMME 3 – ADMINISTRATION AND SUPPORT SERVICES

The aim of the Administration and Support Services Programme is to provide strategic support to the entity through research, financial management, legal services, human capital and information technology. The programme has five sub-programmes:

• Office of the CEO (Strategic Planning and Reporting; Research, Monitoring and Evaluation)

• Financial Management Services

• Human Capital Management Services

• Legal and Governance services

• Information and Communication Technology Services

Strategic objectives

To develop and implement performance excellence systems and processes that will ensure that the GFC adheres to good corporate governance

Strategic objectives Key Performance Indicator

Actual achievement 2016/17

Planned target

2017/18

Performance Results

Reason for variation

To conduct comprehensive industry research for the purpose of informing GFC and sector strategies by effectively becoming a central repository of credible industry information.

Number of research reports

The research strategy was implemented and 6 research reports compiled

Research strategy implemented

The Research business plan (strategy) was developed, implemented and approved.

2 Research reports were concluded.

Reports and analysis not sufficiently done

Effective monitoring and evaluation system developed, approved and implemented



Verification of data was implemented.

2 M&E Quarterly reports concluded

Reports and analysis not sufficiently done

Develop and maintain effective business planning and performance reporting processes

Number of programme performance reports and five-year strategic plans reviewed

Programme performance reports consolidated, approved and submitted

Once per MTEF period

The five-year strategic plan was finalised and approved by the Board and submitted to the Department on time

N/A

Annual performance plan revised and approved (2016/17 up to 2018/19)


July (first draft), November (second draft), February (final approved submission)

All APP drafts were finalised, approved by the Board of Directors and submitted to the Department on time

N/A

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Planned target

2017/18

Performance Results


Number of performance reports compiled, approved and submitted (2017/18)


16 reports compiled, approved and submitted (4 quarterly reports and 12 POA reports)

16 Reports were finalised and were submitted to the DSACR

N/A

Sound financial management, effective financial administration, internal control systems and procedures aligned to prescribed financial regulations and guidelines.

Ensure effective financial systems and reporting procedures to manage and administer financial transactions.

100% compliance with budget management framework and reporting requirements

Settlement of all contractual obligations within the prescribed period.

Payment of all invoices within thirty days.

N/A

Risk Management, Fraud Management and Audit Management plans implemented

100% Risk Management, Fraud Management and Audit Management services provided

Annual audit plan and implementations of policies.

Approved Annual audit plan and continuous improvement implementations of policies and procedures. Monitoring progress in relation to Internal and External audits conducted.

N/A

Effective Asset Management internal control systems implemented

Interim and annual physical verification of assets.

Interim and annual physical verification of assets.

Interim and annual physical asset verification was conducted

N/A

To develop and maintain an environment in which reliable information is seamlessly available to staff and stakeholders in a sustainable and cost effective manner supported by sound ICT governance processes.

ICT Strategy reviewed and implemented



ICT Strategy was reviewed and implemented.

N/A

Human Resources Strategy developed, approved and implemented.


HR Plan reviewed, approved and implemented


Human Resource Plan was reviewed, approved and implemented.

N/A

Provision of 100% legal services to the agency

Effective legal services provided to the agency.

Effective legal services provided to the organisation

100% compliant legal services

Provided and complied with all required legal services.

N/A

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Planned target

2017/18

Performance Results


Effective and efficient Secretariat services provided to the Board

Effective and efficient support services provided to the Board

Effective and efficient Secretariat services provided to the Board

Effective and efficient Secretariat services were provided to the Board

N/A

Effective and efficient Secretariat services to the Board provided

Effective and efficient support services provided to the Board

Effective and efficient Secretariat services to the Board provided

Effective and efficient Secretariat services to the Board were provided

N/A


The programme’s key performance indicators contribute to the achievement of all of the GFC’s strategic goals. Despite the limited budget, the Commission delivered on most of its performance targets.


During 2017/18, the GFC finalised its Enhanced Strategy that will realign the organisation and address any areas of underperformance.


The targets set out above are in line with those stipulated in the final GFC APP 2017/18, as approved by the Executive Authority.


Programme 3: Administration and Support Services

2017/18 2016/17


(Over)/under

expenditure


(Over)/under

expenditure

R R R R R RManagement of GFC 22 094 733 23 345 423 (1 250 690) 21 811 981 21 923 565 (111 585)

Administration services 134 884 121 361 13 523 133 583 143 058 (9 476)

Building, office maintenance and operations

1 726 104 2 144 431 (418 327) 1 692 928 1 709 220 (16 292)

Development and maintenance of IT services

633 948 580 673 53 275 748 750 758 003 (9 253)

Human resource cost 265 472 241 954 23 518 272 400 281 597 (9 197)

Printing and stationery 61 960 69 813 (7 853) 84 000 85 593 (1 593)

Professional services 820 677 721 259 99 418 752 072 751 551 521

Auxiliary services 384 900 299 764 85 136 409 500 403 463 6 037

Employee cost 18 036 788 19 137 697 (1 100 909) 17 688 748 17 756 877 (68 129)

Finance cost 30 000 28 471 1 529 30 000 34 203 (4 203)

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Programme 3: Administration and Support Services

2017/18 2016/17


(Over)/under

expenditure


(Over)/under

expenditure

R R R R R RLegal and governance 367 150 383 518 (16 368) 415 000 388 021 26 979

Audit Committee fees 80 000 55 000 25 000 66 000 66 000 -

Bid Committee 8 000 9 500 (1 500) 8 000 8 000 -

Directors’ remuneration 112 000 166 000 (54 000) 177 000 179 000 (2 000)Legal fees 50 000 - 50 000 4 000 - 4 000

Remuneration fees 40 000 36 500 3 500 60 000 60 000 -

Training and Development - Board

20 000 43 910 (23 910) 40 000 22 430 17 570

Refreshment and meetings 57 150 72 608 (15 458) 60 000 52 591 7 409

Advocacy and strategy 103 575 247 377 (143 802) 1 269 000 1 254 704 14 296

Research 52 450 - 52 450 132 000 132 261 (261)

Strategic Planning 51 125 247 377 (196 252) 125 000 113 002 11 998

Special Projects - - - 1 000 000 1 000 000 -

CEO corporate entertainment

- - - 12 000 9 441 2 559

Total 22 565 458 23 973 318 (1 407 860) 23 665 981 24 120 946 (454 965)

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Revenue collection Sources of revenue 2017/18 2016/17

Estimate Actual amount

collected

(Over)/under collection

Estimate Actual amount

collected

(Over)/under

collection

R’000 R’000 R’000 R’000 R’000 R’000

Government grant 29 016 29 016 - 28 397 28 397 -Interest received 200 259 (59) 200 266 (66)Total 29 216 29 275 (59) 28 597 28 663 (66)

It should be noted that during the current financial year under review, GFC incurred a loss amounting to R882,109. This is largely due to non-cash items, i.e. provision, depreciation, and loss of assets resulting from asset write offs.

Capital investment

The GFC does not have any capital investment projects.

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“The Board will drive the strategy to fulfill its mandate up to the end of this current Administration in 2019.”

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PART CGOVERNANCE

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Introduction

Corporate governance embodies processes and systems by which public entities are directed, controlled and held to account. In addition to legislative requirements based on a public entity’s enabling legislation and the Companies Act, corporate governance with regard to public entities is applied through the precepts of the Public Finance Management Act (PFMA) and run in tandem with the principles contained in the King Code of Governance Principles, the King Report on Governance (King III) and the Protocol on Corporate Governance in the Public Sector, as adopted by Cabinet in 2002.

The GFC is committed to sound governance practices and to conducting its affairs with integrity, and holds itself accountable to its stakeholders and clients. The Board continually reviews its corporate governance structures and practices to align it with national best practice. The CEO and the Board are responsible for corporate governance.

Executive Authority

The MEC of the Gauteng Department of Sport, Arts, Culture and Recreation (DSACR) is the Executive Authority of the GFC. During the period under review, no issues were raised by the MEC with regards to the GFC’s reporting and operations.

The Board reports back to the DSACR through quarterly and annual reports, as well as regular meetings with the MEC. All required quarterly and financial reports were submitted within the set timeframes.

The Board

Introduction

The Board of Directors serves as the GFC’s Accounting Authority and ensures that it operates in the best interests of the DSACR, and in line with all relevant legislation and corporate governance principles.

The CEO is in charge of the day-to-day management of the GFC’s operations and assists the Board in providing strategic and policy direction to the entity. The directors are entitled to seek independent professional advice concerning

the affairs of the GFC, and have access to any information that they may require in discharging their duties.

The responsibilities of the Board include:

• Retaining full and effective control over the GFC

• Approving the corporate strategy, business plans and budgets, and closely monitoring management’s implementation thereof

• Ensuring that the GFC complies with all relevant laws, regulations and codes of best practice

• Ensuring that effective risk management processes are in place

The term of two board members came to an end during the current financial year under review. The third board member’s contract was subsequently extended.

Board Charter

The objectives of the GFC Board Charter are to:

• Enable the Board of Directors to provide strategic guidance to the GFC and to ef-fectively oversee management

• Clarify the respective roles and respon-sibilities of directors and management to facilitate accountability

• Ensure a balance of authority so that no single individual has unfettered powers

• Ensure compliance with South Africa’s laws and regulations

• Ensure that management adheres to the mandate given to them by government, as well as adhering to the approved bud-get

During the period under review, the GFC Board continued to adhere to the Board Charter.

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Composition of the Board

Mr Keith KhozaDeputy ChairpersonDate appointed: 1 September 2015Qualifications: Master of Public Administration, Postgraduate Diploma in Administrative StudiesArea of expertise: Public administrationBoard directorships: NoneOther committees/task teams: Audit CommitteeNo. of meetings attended: 4 of 8

Mr S Maake Ka NcubeNon-executiveDate appointed: 25 November 2014Qualifications: MA ScreenwritingArea of expertise: Film and televisionBoard directorships: NoneOther committees/task teams: Remuneration CommitteeNo. of meetings attended: 3 of 8

Ms Simangele SekgobelaExecutiveDate appointed: 1 September 2015Qualifications: Executive Leadership, Corporate Governance, MSc (Economics), BCom, BCom (Hons),Senior Secondary Teachers’ CertificateArea of expertise: Corporate governance, finance, and HRBoard directorships: TCTA, INTEK, SASI, Magalies Water, DED Mpumalanga, Ehlanzeni Economic AdvisoryOther committees/task teams: Remuneration CommitteeNo. of meetings attended: 7 of 8

Mr Sammy MafuNon-executiveDate appointed: 1 September 2015Qualifications: Chartered Marketer, BAArea of expertise: ICT/TelecomsBoard directorships: NoneOther committees/task teams: Bid CommitteeNo. of meetings attended: 7 of 8

Ms T Mtshali-JonesNon-executiveDate appointed: 25 November 2014Qualifications: FilmArea of expertise: Film and televisionBoard directorships: NoneOther committees/task teams: Remuneration CommitteeNo. of meetings attended: 2 of 8

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Mr A MbekiExecutiveDate appointed: 1 September 2014Qualifications: National Diploma in Education, BEd, Masters in Education, Masters in Business Admin, Certificates in ICT, Leadership, and African StudiesArea of expertise: Film and televisionBoard directorships: NoneOther committees/task teams: NoneNo. of meetings attended: 0 of 8

Mr E MalulekeExecutiveDate appointed: 26 January 2009Qualifications: BCom, Completed SAICA articles, South African Institute Professional Qualification (SAIPA), and Associate General Accountant South Africa (AGASA)Area of expertise: Finance and auditingBoard directorships: NoneOther committees/task teams: NoneNo. of meetings attended: 6 of 8

Ms J NgomaExecutiveDate appointed: 31 July 2017Qualifications: BA in Mass Commiunication, Minor: Africana StudiesArea of expertise: Digital Marketing, Content Development, Scriptwriting/ Creative Writing, Digital Media (Website Development, Google Analytics, Social Media/ Community Management, and SEO’s) Campaign DevelopmentBoard directorships: NoneOther committees/task teams: NoneNo. of meetings attended: 5 of 5Mr D BensusanExecutiveDate appointed: 31 July 2017Qualifications: Bachelor of Arts in Film Production, Bachelor of Arts (Honours), Masters in Education & LLBArea of expertise: Philosophy of EducationBoard directorships: NoneOther committees/task teams: NoneNo. of meetings attended: 5 of 5

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Board Committees

To assist in discharging its responsibilities, the Board established the following committees: Audit Committee, Remuneration Committee, Specification and Evaluation Committee, the Bid Adjudication Committee and the Risk Management Committee as reflected on the Board Charter.

CommitteeNo. of

meetings held

No. of members Name of members

Audit Committee 5 4 Mr. J van der Walt (CA) SA – ChairpersonMr. K Khoza – Deputy ChairpersonMs. E MakauMr. P Mothudi – (CA) SA

Remuneration Committee 3 5 Mr. S Maake Ka Ncube – ChairpersonMs. T Mtshali-JonesMr. P KomaneMr. M MojapeloMs. S Sekgobela

Bid Adjudication Committee 2 3 Mr. S Mafu – ChairpersonMr. E Maluleke – (PA) SA & AGA (SA)Ms. A Mokoena

Specification and Evaluation Committee - 6 Ms. A MokoenaMs. L MohoaladiMr. I MokgaphaneMr. M MogobaMr. D MthembuMs. S Mbatha

Risk Management Committee 5 10 Ms. S Sekgobela Mr. A MbekiMr. E MalulekeMs. A MokoenaMs. L MohoaladiMs. S MbathaMr. I MokgaphaneMr. M MogobaMr. S NdayiMr. D Mthembu

Management Committee 11 9 Mr. A MbekiMr. E MalulekeMs. A MokoenaMs. L MohoaladiMs. S MbathaMr. I MokgaphaneMr. M MogobaMr. S NdayiMr. D Mthembu

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CommitteeNo. of

meetings held

No. of members Name of members

Board Members 7 9 Mr. A Mbeki Mr. S Mafu Mr. D Bensusan Mr. K Khoza Mrs. S Sekgobela Ms. T Mtshali-Jones Ms. J Ngoma Mr. E MalulekeMr. S Maake Ka Ncube

Audit & Risk Committee

The role and responsibilities of the Audit Committee are discussed on pages 69.

Remuneration Committee

The Remuneration Committee is accountable for monitoring and overseeing the remuneration of all GFC employees, giving due regard to the competitiveness within the relevant market, as well as the financial wellbeing of the organisation.

Bid Committee

The Bid Committee is involved in all open tenders of the GFC and is responsible for approving recommendations from the Specification and Evaluation Committee. It reports directly to the Board of Directors.

Specification and Evaluation Committee

The Specification and Evaluation Committee is accountable for monitoring and overseeing the implementation of the procurement policy, procedures and code of conduct and monitoring adherence thereto and making recommendations to the Bid Committee.

Risk Management Committee

The Risk Management Committee, which comprises GFC senior managers, is responsible for managing the overall risk of the organisation, both financial and non-financial.

Management Committee

The Management Committee (Manco) comprises GFC executive managers and deals with issues pertaining to the day-to-day management of the operation and is accountable for formulating the GFC’s strategy and implementing it once approved by the Board.

Remuneration of Board members

All non-executive directors are remunerated for their services on the Board. The MEC determines the fees payable to Board members, provided that such members do not work for the state or state-owned agencies as required by National Treasury. The Chairperson of the Board receives no additional fee for services rendered on the Board.

Name Remuneration Other allowance Other reimbursements Total

Mr. J Van Der Walt 11,000 - - 11,000Mr. S Mafu 52,000 - - 52,000Mr. P Mothudi 11,000 - - 11,000Ms. J Ngoma 27,500 - - 27,500Mr. S Maake Ka Ncube 20,500 - - 20,500Ms. T Mtshali Jones 13,500 - 13,500Mr. D Bensusan 27,500 - - 27,500Mr. P Komane 11,000 - - 11,000Mr. M Mojapelo 11,000 - - 11,000Total 185,000 - - 185,000

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Risk management

In line with the Companies Act, Act No 71 of 2008, the Board is responsible for the management of risks pertaining to the business of the GFC. The Board has delegated this authority to the CEO.

While the line manager of each division within the GFC has the primary responsibility for identifying and managing risks inherent to the operations of his/her division, the Audit Committee develops and reviews risks management strategies, policies and procedures to ensure that they are appropriate.

Manco reports administratively to the CEO and submits annual reports to the Audit Committee, providing assurance on the management of significant risks or exposure. The Internal Audit function, which is outsourced, independently audits the adequacy and effectiveness of the GFC’s risk, control and governance processes.

The GFC manages its risk through its risk register. Manco and the Board take the necessary actions to mitigate each risk listed in the risk register. The identified risks can be grouped as strategic, liquidity, operational, reputation, reporting and compliance.

The risk register for 2017/18 is set out below.

Risk register

Results statement Associated risk Risk level Mitigating actions

Industry Support and Development:

To support, develop and contribute to the growth of Gauteng’s film industry

Inadequate processes and capacity

High A criteria and process document is in place to manage this risk

Marketing:

To market the GFC’s services and promote Gauteng as a film location and production hub

Lack of awareness by business and the community regarding the importance of film, leading to a lack of industry support and support of the GFC’s service offering

Medium Ongoing awareness campaigns are being rolled out

Strategic Planning:

To ensure that the GFC and its departments have formulated and maintained adequate strategic plans

Failure to achieve its mandate

High The GFC finalised its business planning for the 2015/16 financial year in time for implementation

Corporate Governance:

To develop and maintain effective corporate governance systems

Non-compliance with legal provisions and policies

High Relevant committees have been established to deal with risks and compliance

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Risk management policy and strategy

The GFC’s risk approach is to identify as many of its business risks as possible, and then to formulate appropriate policies and controls in order to manage these risks. The Risk Management Policy and Risk Register are managed by the Board and management.

These documents provide the governance framework for managing the GFC’s risks and set out the controls, procedures and processes necessary to manage, reduce and/or eliminate the identified risks. Since risk management is an ongoing process, the Risk Management Policy and Risk Charter are reviewed and updated annually.

Risk assessments

Strategic risk

Strategic risk relates to failure of the GFC to deliver on its mandate.

Liquidity risk

Liquidity risk relates to funds available to cover future commitments, and is managed through careful selection of financial instruments and cash flow forecasting.

Compliance risk

Compliance risk relates to negative impact originating from the GFC’s non-compliance with all applicable legislation and regulations. Compliance risk is managed through creating awareness of the regulatory requirements and monitoring compliance with legislative requirements.

The Risk Management Committee assists the Board of Directors in complying with all applicable statutory and regulatory requirements.

Operational risk

Operational risk relates to a direct or indirect loss resulting from inadequate or failed internal processes, people and systems.

This risk category is managed through a system of internal controls, which is based on approved policies and procedures for initiation, verification and reconciliation of transactions, and adequate segregation of incompatible duties. The operational risk category includes the following risk areas:

• Fraud

• Financial management

• Legal risk

• HR risk

• IT risk

• Business continuity

• Taxation

The Audit Committee and Board approved finance policies which include the Fraud and Corruption Policy and avoidance of wasteful and fruitless expenditure. No incidents of fraud or irregular activities were reported during the financial year under review.

Reputation risk

Reputation risk relates to the damage of the GFC’s image, which may impair its ability to retain and generate more business.

GFC’s reputational risk is managed through its ongoing evaluation and management of the significant risk types highlighted above. The Senior Manager: Marketing and Communication is in charge of the corporate communication portfolio.

Risk Management Committee

The Risk Management Committee advises the Board and management on the mitigation of identified operational and financial risks facing the GFC.

In 2017/18, the committee met on two occasions. The matters discussed included:

• Approved annual performance plan for the 2015/16 financial year under review

• Updating and finalising the risk register

• Internal Audit Reports

• Final Management and Audit Report

• Action plan for both internal and external audits

• Policies and Procedures Progress Report

Role of the Audit & Risk Committee in manag-ing risk

The Audit Committee reviews the Risk Management Policy annually before presenting it to the Board for approval. It also monitors compliance with the approved policy during the course of the year.

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Progress in risk management

During the year under review, the GFC kept its risk exposure at a medium to low level, and successfully managed the risks contained in its risk register, as outlined in the table above.

Internal control

The Audit Committee assists the Board in discharging its duty to ensure that the GFC maintains adequate accounting records, internal controls and systems designed to provide reasonable assurance on the integrity and reliability of financial information, and to safeguard its assets.

The effectiveness of these internal control systems is monitored through management reviews, formalised reporting and internal audits.

During the period under review, the following initiatives were undertaken to ensure improved internal control:

• Annual review of policies and procedures

• Implementation of action plans for both internal and external audit findings

• Compliance to policies and procedures

Internal audit and Audit & Risk Committee

Key activities and objectives of the internal audit

The internal audit function, under the direction of the Audit Committee, is outsourced to an independent service provider and operates in terms of the Internal Audit Charter, which was reviewed and approved by the Audit Committee and endorsed by the Board during the financial year.

It reports functionally to the Audit Committee and administratively to the CEO, and its staff has full and unrestricted access to the Chairperson of the Audit Committee. The Audit Committee conducts its own review of the effectiveness of the internal audit function.

All operations, business activities and support functions are subject to internal review. The Internal Audit Plan is based on key risk areas identified and audits are planned and executed to provide management with independent assurance on the adequacy and effectiveness of the internal control systems.

Internal audits during the year

The following internal audits were conducted:

• Performance audit

• Supply Chain Management

• Legal and Governance

• Follow up on Auditor-General matters

Key activities and objectives of the Audit & Risk Committee

The Audit Charter sets out the role and responsibilities of the Audit Committee, including:

• Reviewing the Risk Management Policy for Board approval and monitoring compliance therewith

• Reviewing financial policies, internal control structures, financial controls and accounting systems

• Reviewing the quarterly financial and progress reports before Board submission

• Reviewing the quality of the Annual Financial Statements and its compliance with accounting policies

• Liaising with the external auditors on issues, including the effectiveness of the annual audit coordination between the external and internal auditors and recommending the audit fee

• Reviewing the reports of the internal and external auditors to ensure that prompt action is taken to rectify deficiencies in controls and procedures

• Reviewing reports on abnormal events affecting the GFC, including reports on defaults in respect of grants, fraud and theft

• Compiling the minutes of its meetings and circulating these to all

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Board members

• Monitoring compliance with all statutory requirements

• Requesting surprise audits as and when deemed fit

The committee has the authority to approve audit plans and audit fees, and to review the adequacy of insurance cover and make recommendations thereon before submission to the Board for approval.

Attendance of Audit and Risk Committee meetings

The Audit Committee held 5 meetings during the period under review, as outlined in the table below.

Name Qualifications Internal/ external

If internal, position

Date appointed

Date resigned

No. of meetings attended

Mr J van der Walt

(CA) SA Chairperson - 24 May 2007 - 5

Mr K Khoza

Master of Public Administration, Postgraduate Diploma in Administrative Studies

Deputy Chairperson

- 01 Nov 2012 - -

Ms E Makau BCom Accounting, MBA External - 24 May 2007 - 2

Mr P Mothudi (CA) SA External - 24 Nov 2009 - 5

Compliance with laws and regulations

The Board and management are confident that all policies and procedures comply with the applicable laws and regulations which govern the GFC’s operations. In this regard, the GFC submitted its business plan, as required in terms of Section 52 of the PFMA, as well as quarterly reports regarding finance, performance and conformance with applicable laws, regulations and other government prescripts to the DSACR.

Fraud and corruption

Progress on Fraud Prevention Plan implementation

All GFC governing structures are focused on fraud prevention to protect its revenue, expenditure, assets and reputation from any attempts by any person to gain financial or other benefits in an unlawful, dishonest or unethical manner. The CEO and Board Chairperson are responsible for the implementation and maintenance of the Fraud Prevention Plan, while the Audit Committee plays an oversight role.

All instances of fraud or corruption are reported to the Audit Committee quarterly. Fraud-related risks are reviewed regularly, and the necessary internal controls and audit measures are in place to identify and manage these risks. Any direct or indirect losses incurred due to fraud are monitored through

effective information and communication processes, and the GFC reacts swiftly if a crime is uncovered.

No instances of fraud or irregular activities have been reported during the year under review.

Mechanisms in place to report fraud and corruption

The GFC continues to embrace any contribution employees and members of the community make in the reporting of fraud and corruption. Its Fraud Prevention Plan puts the necessary whistle-blowing mechanisms in place to report any cases of fraud or corruption.

Minimising conflict of interest

The GFC believes that it has effective measures in place to minimise conflict of interest. All Board members complete a General Declaration of Interest prior to each meeting. Should a conflict occur, the conflicting party is recused from any meetings or decisions relating thereto. Management is encouraged to disclose any gifts they may have received in the GFC’s Gift Registry, which is kept in the CEO’s office.

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Code of Conduct

The GFC Code of Conduct is based on the fundamental principles of fairness, transparency, integrity, reliability, responsibility and honesty. It commits both management and staff to high standards of conduct in their dealings with clients and stakeholders.

No incidents of unethical conduct that required further investigation or action were reported during the year under review.

Health, safety and environmental issues

The GFC closely monitors health, safety and environmental issues which may impact on its operations. No incidents were reported in the year under review.

The Company Secretary must, in accordance with the Companies Act, certify that the GFC has lodged all returns required of a public company and that these returns are true, correct and up to date. Other responsibilities include ensuring that all letterheads, notices, official stationery and publications display the correct entity name, registration number, registered office and names of the directors and company secretary. Copies of the GFC’s Annual Financial Statements, as well as quarterly performance reports were sent to the Executive Authority.

Company Secretary

The Company Secretary is responsible for ensuring compliance with the GFC’s Memorandum and Articles of Association, and effecting any changes to meet the needs of the GFC. She may also assume the responsibility of public officer of the GFC under the Income Tax Act, No 28 of 1997, and other taxation legislation.

Social responsibility

No social responsibility projects were undertaken during the year under review.

Internal Audit and Risk Committee

1. Audit Committee responsibility

The Audit and Risk Committee reports that it has discharged all of its responsibilities set out in terms of applicable requirements of the Companies Act as well as in its adopted Terms of Reference.

In the conduct of its duties, the Audit and Risk Committee reviewed the following:

• The effectiveness of the internal control systems.

• The effectiveness of the internal audit.

• The risk area of the operations to be covered in the scope of internal and external audits.

• The adequacy, reliability and accuracy of finan-cial information provided to management and other users of such information.

• Any Accounting and Auditing concerns identified as a result of internal and external audits.

• Compliance with legal and regulatory provisions.

• The activities of the Internal Audit function, including its Annual Audit Plan, coordination with the External Auditors and the responses of management to specific recommendations.

• Internal audit assessment and Compliance.

2. Internal Controls

The management of the Gauteng Film Commission continues to strive towards sustainable improvement in its internal control.

Nothing has come to the attention of the Audit and Risk Committee to indicate that a material breakdown in the functioning of the internal controls, procedures and systems has occurred during the year under review.

In the opinion of the Audit and Risk Committee, the internal controls and procedures of the GFC are considered to be appropriate in all material respects in relation to:

• Achieving the business objectives of the GFC;

• Ensuring that the GFC assets are adequately safeguarded; and

• Ensuring that transactions undertaken are recorded in the GFC’s records.

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3. Evaluation of financial statements

The Committee evaluated the Annual Financial Statements of the GFC for the year that ended 31 March 2018 and, based on the information provided to the Audit and Risk Committee, considers that it complies, in all material respects, with the requirements of the applicable Companies Act.

_________________

Keith Khoza Deputy Chairperson Date: 31 July 2018

Directors

The following persons served as directors of the GFC during the financial year:

Name Status Appointment DateResignation date

Ms. J Ngoma Non-executive 01 August 2017 -

Mr. D Bensusan Non-executive 01 August 2017 -

Mr. K Khoza Non-executive 01 September 2015 -

Mr. S Maake Ka Ncube Non-executive 25 November 2014 -

Ms. T Mtshali-Jones Non-executive 25 November 2014 -

Ms. S Sekgobela(Acting CEO) Executive 01 September 2015 -

Mr. S Mafu Non-executive 01 September 2015 -

Mr. A Mbeki Executive 15 September 2014 -

Mr. E Maluleke – (PA) SA & AGA (SA) Executive 01 March 2009 -

Non-executive directors do not have a service contract with the organisation, only the executive directors

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“The GFC sets its targets consistent with the provisions of the Public Financial Management Act (PFMA) and itsRegulations.”

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PART DHUMAN RESOURCE MANAGEMENT

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Introduction

Overview of HR matters

The objective of the HR Unit is to develop and maintain effective HR management processes, which in turn will ensure that the GFC is adequately staffed and that those staff members, are trained and capacitated in an environment conducive to harmonious working relations. This will contribute to ensuring that the GFC is positioned and resourced to deliver on its mandate and strategic objectives.

Employees and directors are expected to conduct themselves in an ethical manner and within the laws of this or any other country in which they, or the GFC, may operate.

Priorities for the year

During the period under review, the HR Unit focused on the following activities, as per the Annual HR Plan:

• Leave Management System and procedures• Implementing the Employment Equity (EE) Plan• Implementing the Performance Management

System• Implementing the Employee Wellness Plan• Complying with labour legislation• Dispute management• Conducting a needs analysis of HR policies to be

developed or reviewed• Conducting a skills need analysis and developing

a Workplace Skills Development Plan.• Implementing CSI programme

Workforce planning framework

The Workplace Skills Development Plan was reviewed and updated during the reporting period. In line with this plan, the HR Unit developed training schedules and individual development plans for each staff member.

Employee performance management framework

After conducting a needs assessment, the HR Unit implemented the Performance Management System. Performance is monitored through a balanced scorecard, and all employees signed their performance agreements for the year. These agreements are aligned with the business and/or department outputs, as well as employees’ individual job outputs as outlined in their job profile. Quarterly performance reviews were conducted and submitted to the CEO. Management ensures that performance outputs focus on tangible deliverables for each

employee, to guarantee that the small team remains dynamic and streamlined to deliver on the business objectives.

Employee wellness programme

The GFC has a holistic Employee Wellness Plan in place. This is aimed at achieving a balance between work and personal life. An employee wellness event was held with a great turnover.

Achievements and challenges

The HR Unit faced the following challenges:

• Adherence to Performance Management System• Retention and Succession Strategy to be clarified• Employee wellbeing• Structured leave system by means of an

automated ESS System• High vacancy rate

Most of these challenges were, however, addressed during the reporting period.

The unit reviewed and approved the HR plan for 2017/18. It also compiled a policy registry, and reviewed various HR-related policies. The revised policies are pending Board approval.

The automated Leave Management System was implemented.

The GFC is committed to transformation in the workplace and embarked on a process of promoting equal opportunity and fair treatment in employment in the workplace. The HR Unit therefore implemented its EE Plan and partially achieved the EE targets set for the year. Efforts are being made to employ people with disabilities. Due to the pending Enhanced Strategy for GFC, most vacant positions could not be filled as per the Acting Chief Executive Officer Ms. S Sekgobela’s directive.

The GFC complied with all labour relations legislation.

Plans for the future

In order to fulfil its mandate of ensuring a fully capacitated GFC, the HR Unit will ensure that a change management session is conducted once the Enhanced Strategy is completed. It will also review all existing HR policies as well as the annual HR Plan.

Workforce planning will remain a key function and the HR Unit will ensure that individual development plans are in place for each employee, which is in line with the strategic goals of the GFC.

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HR oversight statistics

Personnel cost by programme

Programme Total expenditure

Personnel expenditure

Personnel expenditure

as a % of total expenditure

No. of employees

Average personnel cost per employee

(R’000) (R’000) (R’000) (R’000)

CEO’s Office 244 4,319 24% 5 864

Finance 22 837 2 288 13% 2 1 144

Human Resources 242 1 880 11% 4 470

Information Technology 581 1 648 9% 2 824

ISD 4 736 2 695 15% 4 708

Marketing 1 159 3 255 19% 3 1 085

Legal 383 1 497 9% 2 749

Total 30 182 17 582 100% 22 5 844

Personnel cost by salary band

Level Personnel expenditure

% of personnel expenditure to total personnel

cost

No. of employees

Average personnel cost per employee

(R’000) (R’000) (R’000)

Top management 4 339 24% 3 1 446

Senior management 3 783 22% 3 1 261

Professional qualified 5 835 33% 7 834

Skilled 3 168 18% 7 453

Semi-skilled 457 3% 2 229

Unskilled - - - -

Total 17 582 100% 22 4 226

Performance rewards

No incentives were paid to GFC employees during the period under review.

Training costsProgramme Personnel

expenditureTraining

expenditureTraining

expenditure as a % of personnel cost

No. of employees

trained

Average training cost per

employee

R’000 (R’000)

Study assistance and training

17 719 210 0.84% 8 26

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Employment and vacancies

Programme 2016/17 No. of

employees

2017/18 Approved posts

2017/18 No. of employees

2017/18 Vacancies

% of vacancies

CEO’s Office 4 4 4 - -

Finance 2 3 2 1 4.3%

Human Resources 4 4 4 - -

Information Technology 2 2 2 - -

ISD 4 5 4 1 4.3%

Marketing 3 3 3 - -

Legal 2 2 2 - -

Total 21 23 21 2 8.6%

Salary band 2016/17 No. of

employees

2017/18 Approved posts

2017/18 No. of

employees

2017/18 Vacancies

% of vacancies

Top management 2 2 2 - -

Senior management 4 3 3 - -

Professional qualified 7 8 7 1 4.3%

Skilled 6 8 7 1 4.3%

Semi-skilled 1 1 1 - -

Unskilled 1 1 1 - -

Total 21 23 21 2 8.6%

Employment changes

Salary band Employment at beginning of period

Appointments Terminations Employment at end of the period

Top management - - - -

Senior management - - - -

Professional qualified 1 - 1 1

Skilled - - - -

Semi-skilled - - - -

Unskilled - - - -

Total 1 1 1 1

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Reasons for staff leaving

Reason Number % of total no. of staff leaving

Death - -

Resignation 2 8.6%

Dismissal - -

Retirement - -

Ill health - -

Expiry of contract - -

Other - -

Total 2 8,6%

Labour relations: misconduct and disciplinary action

There was one suspension in the period under review, which is still under investigation.

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Streamlining operations and adherence to regulationscontributed to the Gauteng Film Commissionmaintaining a clean audit in the year under review.

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PART EFINANCIAL INFORMATION

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GAUTENG FILM COMMISSION (NPC) (REGISTRATION NUMBER 2001/013031/08)

STATEMENT OF RESPONSIBILITY _________________________________________________________________________________________________________________

For the year that ended 31 March 2018

The Companies Act requires the directors to ensure that GFC keeps full and proper records of its financial affairs. The Annual Financial Statements fairly present the state of the affairs of GFC, its financial results, and its financial position for the year ended. The Annual Financial Statements are the responsibility of the directors.

The Annual Financial Statements of GFC were prepared in terms of International Financial Reporting Standards (IFRS), including any interpretations of such statements. The Annual Financial Statements were prepared in the manner required by the South African Companies Act.

These Annual Financial Statement are based on the appropriate accounting policies, supported by reasonable and prudent judgements and estimates; and are prepared on the going concern basis and prepared on an accrual basis. The directors have every reason to believe that the GFC will be a going concern in the year ahead.

To discharge the above responsibilities, the Board of Directors set standards to ensure that sound systems of internal control are implemented by management.

The controls are designed to provide cost-effective assurance that assets are safeguarded, and that liabilities and working capital are efficiently managed. Policies, procedures, structures and approval frameworks provide direction, accountability and division of responsibilities.

The controls throughout GFC focus on those critical risk areas identified by operational risk management and confirmed by executive management. Management, Audit and Risk Committee and Internal Audit closely monitor the controls and ensure action is taken to correct deficiencies as they are identified.

The Directors are of the opinion, based on the information and explanations given by Management, Audit and Risk Committee, that the material internal accounting controls are adequate to ensure that the financial records may be relied upon for preparing the Annual Financial Statements, and that accountability for assets and liabilities is maintained.

Nothing has come to the attention of the Directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review.

In the opinion of the Directors, based on the information available to date, the Annual Financial Statements (including cash flow information) fairly present the financial position of GFC for the year that ended 31 March 2018, and the results of its operations for the year ended.

The Annual Financial Statements of GFC for the year that ended 31 March 2018, set out on pages 58 to 99, is to be reviewed by the Audit and Risk Committee on 28 May 2018 and subsequently submitted to the Board of Directors for approval.

…………………………. ………………………….

Simangele Sekgobela Keith KhozaActing Chief Executive Officer Deputy Chairperson

Date: 31 July 2018

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REPORT OF THE DIRECTORS _________________________________________________________________________________________________________________


Director’s report

The Directors are pleased to submit their report, together with the GFC’s Annual Financial Statements for the year that ended 31 March 2018. The Annual Financial Statements were prepared on the basis of accounting policies applicable to a going concern. This basis presumes GFC will continue as a going concern entity in the foreseeable future and there is nothing brought to the attention of the Board of Directors that will impact on the going concern of the entity.

Services rendered by the entity

The GFC is a Non-Profit Company (NPC) incorporated in terms of the Companies Act. The main business of the GFC is the development and promotion of audio-visual industries in GPC. GFC’s core business is to deliver professional film commission services, as well as to support, facilitate and enhance the contribution of the film industry to the economic growth of the Gauteng Province. The business and activities of the Gauteng Film Commission for the year ended are reviewed by the Chief Executive Officer.

Registration as a public entity

It should be noted that GFC’s legal standing is a Non-Profit Company (NPC) and it is audited in terms of the Companies Act. The GFC will continue to operate and this is evidenced by the further Medium Term Expenditure Framework (MTEF) allocation by Provincial Treasury.

Business result summary

Mar 2018 Mar 2017Restated

R R

Total revenueNet loss for the yearTotal assets

29,016,000 (882,109)

1,338,106

28,397,000 (96,980)1,399,350

Accumulated Loss (657,355) 224,754

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REPORT OF THE DIRECTORS _________________________________________________________________________________________________________________


Directors

The following persons served as Directors of the Company during the financial year:

Directors Name StatusAppointment

DateResignation

Date

Ms J Ngoma Non-Executive 31 July 2017 -

Mr D Bensusan Non-Executive 31 July 2017 -

Mr K Khoza-Deputy Chairperson Non-Executive 01 September 2015 -

Mr S Maake Ka Ncube Non-Executive 25 November 2014 -

Ms T Mtshali-Jones Non-Executive 25 November 2014 -

Mr S Mafu Non-Executive 01 September 2015

Ms S Sekgobela-Acting CEO Executive 01 September 2015 -

Mr A Mbeki-CEO Executive 15 September 2014 -

Mr E Maluleke-PA(SA) & AGA (SA) Executive 01 March 2009 -

Non-executive directors do not have service contracts with the GFC. The Chief Executive Officer has a five-year fixed term employment performance contract. Mr Andile Mbeki was appointed as the Chief Executive Officer on15 September 2014. It should be noted that he was put on special leave on 23 February 2017 pending an investigation. Ms Simangele Sekgobela, a board member, was appointed as Acting Chief Executive Officer on 27 February 2017, for a period of six months. The acting appointment has since been extended to allow the Board of Directors to conclude all outstanding matters in relation to Mr Andile Mbeki. During the current financial year under review, Mr D Bensusan and Ms J Ngoma were appointed as Directors of the Board on 31 July 2017, following resignations from Ms Y Kwinana and Mr L Ramatshila-Mugeri.

Registered address Postal address

56 Main Street

Anglo Vaal House

6th Floor

Marshalltown

Johannesburg

2107

P O Box 61601

Marshalltown

2107

Internal Audit

Nexia SAB&T has been appointed as GFC’s internal auditors for a period of three years.

External Audit

The Auditor-General of South Africa (AGSA) has been appointed as GFC’s external auditor, in terms of section 188 of the Constitution of the Republic of

South Africa, 1996.

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Report of the auditor-general to Gauteng Provincial Legislature on Gauteng Film Commission

Report on the audit of the financial statements

Opinion

1. I audited the financial statements of the Gauteng Film Commission set out on pages 58 to 99, which comprise the statement of financial position as at 31 July 2018, the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, as well as the notes to the financial statements, including a summary of significant accounting policies.

2. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Gauteng Film Commission as at 31 July 2018, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Companies Act of South Africa, 2008 (Act No. 71 of 2008) (Companies Act).

Basis for opinion

3. I conducted my audit in accordance with the International Standards on Auditing (ISA). My responsibilities under these standards are further described in the Auditor-General’s responsibilities for the audit of the financial statements section of this auditor’s report.

4. I am independent of the entity in accordance with the International Ethics Standards Board for Accountants’ Code of ethics for professional accountants (IESBA code) and the ethical requirements that are relevant to my audit in South Africa. I fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA code.

5. I believe that the audit evidence I obtained is sufficient and appropriate to provide a basis for my opinion.

Emphasis of matter

6. I draw attention to the matter below. My opinion is not modified in respect of this matter.

Restatement of corresponding figures

7. As disclosed in note 9 to the financial statements, the corresponding figures for 31 March 2017 were restated as a result of an error in the financial statements of the entity at, and for the year that ended, 31 March 2018.

Responsibilities of accounting authority for the financial statements

8. The board of directors, which constitutes the accounting authority, is responsible for the preparation and fair presentation of the financial statements in accordance with and the requirements of the Companies Act, and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

9. In preparing the financial statements, the accounting authority is responsible for assessing the Gauteng Film Commission’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting, unless the accounting authority either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so.

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Auditor-General’s responsibilities for the audit of the financial statements

10. My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the ISA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

11. A further description of my responsibilities for the audit of the financial statements is included in the annexure to this auditor’s report.

Report on the audit of the annual performance report

12. The entity is not required to prepare a report on its performance against predetermined objectives, as it does not fall within the ambit of the PFMA and such, reporting is also not required in terms of the entity’s specific legislation.

Report on the audit of compliance with legislation

Introduction and scope

13. In accordance with the PAA and the general notice issued in terms thereof, I have a responsibility to report material findings on the compliance of the entity with specific matters in key legislation. I performed procedures to identify findings, but not to gather evidence to express assurance.

14. I did not raise material findings on compliance with the specific matters in key legislation set out in the general notice issued in terms of the PAA.

Other information

15. The accounting authority is responsible for the other information. The other information comprises the information included in the annual report, which includes the directors’ report, the audit committee’s report and the company secretary’s certificate as required by the Companies Act. The other information does not include the financial statements and the auditor’s report presented in the annual performance report that have been specifically reported in this auditor’s report.

16. My opinion on the financial statements findings on the and compliance with legislation do not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon.

17. In connection with my audit, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

18. If, based on the work I performed, I conclude that there is a material misstatement in this other information, I am required to report that fact. I have nothing to report in this regard.

Internal control deficiencies

19. I considered internal control relevant to my audit of the financial statements and compliance with applicable legislation; however, my objective was not to express any form of assurance on it. I did not identify any significant deficiencies in internal control.

Johannesburg 31 July 2018

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Annexure – Auditor-General’s responsibility for the audit

1. As part of an audit in accordance with the ISA, I exercise professional judgement and maintain professional scepticism throughout my audit of the financial statements, and the procedures performed on reported performance information selected and on the entity’s compliance with respect to the selected subject matters.

Financial statements

2. In addition to my responsibility for the audit of the financial statements as described in this auditor’s report, I also:

• Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of directors, which constitutes the accounting authority

• Conclude on the appropriateness of the board of directors, which constitutes the accounting authority’s use of the going concern basis of accounting in the preparation of the financial statements. I also conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the GFC’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements about the material uncertainty or, if such disclosures are inadequate, to modify the opinion on the financial statements. My conclusions are based on the information available to me at the date of this auditor’s report. However, future events or conditions may cause an entity to cease continuing as a going concern

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. I am responsible for the direction, supervision and performance of the group audit. I remain solely responsible for my audit opinion

Communication with those charged with governance

3. I communicate with the accounting authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

4. I also confirm to the accounting authority that I complied with relevant ethical requirements regarding independence, and communicate all relationships and other matters that may reasonably be thought to have a bearing on my independence and, where applicable, related safeguards.

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GAUTENG FILM COMMISSION (NPC) (REGISTRATION NUMBER 930 018 483)

CORPORATE GOVERNANCE REPORT _________________________________________________________________________________________________________________


Subsequent events

The Board of Directors are not aware of any matter or circumstances arising for the year ending, of the current financial year under review.

Governance principles

The Board reaffirmed the GFC’s commitment to sound governance practices and, in particular, to the Companies Act, as well as the principles underpinning the King IV Report on Corporate Governance published in 2002 which focuses on integrated reporting on social, health, ethical and environmental issues on reporting. In this regard, the Board is constantly reviewing its corporate governance structures and practices to align it with national best practice. TheGFC is committed to conducting its affairs with integrity and holds itself responsible and accountable towards its stakeholders and clients.

Code of ethics

The GFC is managed ethically and in line with the Code, which is based on the fundamental principles of fairness, transparency, integrity, reliability, responsibility and honesty.

The Code commits GFC management and staff to high standards of conduct in their dealings with its clients and stakeholders. No incidents of unethical conduct that required further investigation or action was reported during the year under review.

Values

The GFC promotes sound values and is committed to the Batho Pele principles.

The Gauteng Film Commission governance structures:

Accountability to the Funder

The GFC is accountable to the DSACR, under the leadership of the MEC, Ms F Mazibuko.

Accountability to the MEC of the Gauteng Department of Sport, Arts, Culture and Recreation

The MEC, in her capacity as representative of the DSACR, holds the Board accountable for managing and controlling the operations of the GFC in compliance with its mandate.

The Annual Performance Plan (APP), Memorandum of Agreement (MoA) and a Budget for the GFC’s were submitted to the DSACR. These documents were subsequently approved by the Board of Directors, the Head of the Department (HOD) and the MEC.

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The business plan sets out the strategic objectives and performance criteria of the GFC. Management is accountable for achieving these objectives within the risk parameters. The Board reports to DSACR by way of Quarterly and Annual reports as well as regular meetings between the MEC, HOD and the Board of Directors.

Tax Exemption.

The GFC tax exemption application was granted by The South African Revenue Service (SARS), in terms of section 30(3) of the Income Tax Act No 58 of 1962. The tax exemption granted is in terms of section 10(1) cN of the Act.

The Board is responsible for:

• Approving the corporate strategy, business plans, budgets and monitoring management closely in implementing it;

• Ensuring that the GFC complies with all relevant laws and regulations and Codes of Best Practice; and ensuring Risk Management processes are in place.

The Directors are entitled to seek independent professional advice concerning the affairs of the GFC and to have access to any information they may require in discharging their duties.

Chief Executive Officer (CEO)

The Chief Executive Officer is charged with the day-to-day management of the GFC operations and assists the Board of Directors in providing Strategic and Policy direction to the GFC. In terms of the operations of the GFC, Industry Support Development and Marketing & Communications are regarded as the core function of the organisation in line with the mandate of the organisation. The core function is assisted by the support function, i.e. Finance, Human Resources, Legal and Governance, Information Communication Technology (ICT), Research and Stakeholder Relations. All these managers report directly to the CEO.

Board Committees

To assist it in discharging its responsibilities, the Board established the following committees: Audit and Risk Committee, Remuneration Committee, Specification and Evaluation Committee, Bid Adjudication Committee and Management Committee, as reflected in the Board charter.

Audit and Risk Committee

The Audit and Risk Committee oversees Financial Reporting, Internal Control, Risk Management, funding plans and Strategies, Compliance, Corporate Governance and Policies. It is supported by the Management Committee in fulfilling its duties with regard to financial Risk Management. Its responsibilities pertaining to risk management include, but are not limited to:

• Reviewing the GFC’s Risk Management policy and strategy;

• Assisting the Board in evaluating the adequacy and effectiveness of the risk management process;

• Reviewing significant risk exposures of the GFC and making recommendations to the Board of Directors on appropriate mitigation strategies; and

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The committee is accountable for monitoring and overseeing the remuneration of all GFC’s employees; giving due regard to the competitiveness within the relevant market as well as the financial wellbeing of the organisation.

Bid Adjudication Committee

This committee is involved in all open tenders of the GFC. The committee is responsible for approving recommendations from the Specification and Evaluation Committee and reports directly to the Board of Directors.

Specification and Evaluation Committee

This committee is accountable for monitoring and overseeing the implementation of the procurement policy, procedures, code of conduct and monitoring adherence whilst also making recommendations to the Bid Adjudication Committee.

Board Committees’ composition and record of attendance

Category Name of director AppointmentDate

ResignationDate

Number of Meetings

Total

Held Attended

Mr. A Mbeki - Executive 15 September 2014 - 8 -

Mr. S Maake Ka Ncube - Non-Executive

25 November 2014 - 8 3

Ms. T Mtshali Jones - Non-Executive 25 November 2014 - 8 2

Ms. S Sekgobela - Executive 01 September 2015 - 8 7

Mr. S Mafu - Non-Executive 01 September 2015 - 8 7

Mr. E Maluleke PA (SA) & AGA (SA) - Executive

01 March 2009 - 8 6

Mr. Keith Khoza - Deputy Chairperson 01 September 2015 - 8 4

Ms. J Ngoma - Non-Executive 31 July 2017 - 5 5

Mr. D Bensusan - Non-Executive 31 July 2017 - 5 5

Audit and Risk Committee

Mr. J van der Walt CA (SA) - Chairperson

24 May 2007 - 5 5

Mr. K Khoza 01 November 2012 - 5 -

Ms. E Makau 24 May 2007 - 5 2

Mr. P Mothudi CA (SA) 24 November 2009 - 5 5

Bid Committee Mr. S Mafu - (Chairperson) 01 December 2015 - 2 2

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Category Name of director AppointmentDate

ResignationDate

Number of Meetings

Total

Held Attended

Ms. A Mokoena 23 February 2016 - 2 -

Ms. T Moncho 03 March 2017 - 1 1

Mr. E Maluleke-PA (SA) & AGA (SA) 01 March 2009 - 2 2


Mr. S Maake Ka Ncube - Chairperson 17 June 2015 - 3 1

Mr. M Mojapelo-CA (SA) 17 June 2015 - 3 3

Mr. P Komane 17 June 2015 - 3 3

Ms. T Mtshali-Jones 17 June 2015 - 3 1

Ms. S Sekgobela 23 February 2016 - 3 2

* This relates to members who has since resigned, as board members during the previous year.

Integrated risk management

In line with the Companies Act, the Board of Directors is responsible for the management of the risks pertaining to the business of the GFC. The board delegated this authority to the Chief Executive Officer.

Whilst the line manager of each division within the GFC has the primary responsibility for identifying and managing risks inherent to the operations of his/her division, the Audit and Risk Committee develops and reviews risks management strategies, policies and procedures to ensure that they are appropriate for the GFC.

The Management Committee (MANCO) reports to the Chief Executive Officer and submits Quarterly and Annual reports to the Audit and Risk Committee, providing assurance on the management of significant risks or exposure. The internal audit function independently audits the adequacy and effectiveness of the GFC’s risk, internal control and governance processes and this function is outsourced.

Strategic risks

Strategic risks can be defined as the uncertainties and untapped opportunities embedded in our strategic intent and how well they are executed. As such, they are key matters for the board and impinge on the whole business, rather than just on an isolated unit.

Liquidity risks.

The liquidity risk is the risk that GFC may be unable to meet short term financial demands. This usually occurs due to the inability to convert a security or hard assets to cash without a loss of capital and/or income in the process.

Compliance risks

Compliance risk relates to negative impact originating from non-compliance with all applicable legislation and regulations.

The Audit and Risk Committee assist the Board of Directors in complying with all applicable statutory and regulatory requirements.

The compliance risk is managed through creating awareness of the regulatory requirements, and monitoring compliance with legislative requirements

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Operational risks.

Operational risk is the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems.

This risk category is managed through a system of internal controls, which is based on approved policies and procedures for initiation, verification and reconciliation of transactions, and adequate segregation of incompatible duties. The operational risk category includes the following risk areas: Fraud, Financial management, Legal Risk, Human Resources risk, Information Technology Risk, Business Continuity and Taxation.

The Audit and Risk Committee and Board of Directors approved finance policies which include antifraud and corruption policies and provide for the elimination of wasteful and fruitless expenditure. No incidents of fraud or irregular activities were reported during the financial year under review.

Reputational risk

Reputational risk is the risk of damage to the GFC image, which may impair its ability to retain and generate more business.

The GFC manages its reputational risk through its ongoing evaluation and management of the significant risk types highlighted above. The Public Relations and Communications Manager is in charge of the Corporate Communications portfolio.

Internal controls.

The Audit and Risk Committee assists the Board in discharging its duties to ensure that the GFC maintains adequate accounting records, internal controls and systems designed to provide reasonable assurance on the integrity and reliability of financial information and to safeguard its assets.

The effectiveness of these internal control systems is monitored through management reviews, formalised reporting and internal audits. The Internal Audit function, under the direction of the Audit and Risk Committee, is outsourced to an independent service provider. It operates in terms of an Internal Audit Charter, which was reviewed and approved by the Audit and Risk Committee and approved by the Board of Directors during the financial year under review.

The Internal Audit function reports functionally to the Audit and Risk Committee and administratively to the Chief Executive Officer and its staff have full and unrestricted access to the Chairperson of the Audit and Risk Committee.

The Audit and Risk Committee conducts its own review of the effectiveness of the Internal Audit function.

All operations, business activities and support functions are subject to internal review. The Internal Audit plan is based on key risk areas identified from risk assessments and the audits are planned and executed to provide management with independent assurance on the adequacy and effectiveness of the internal control systems

……………………………………

Anthea Mokoena Company Secretary and Legal ManagerDate: 31 July 2018

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REPORT OF THE AUDIT AND RISK COMMITTEE _________________________________________________________________________________________________________________


1. Audit and Risk Committee responsibility

The Audit and Risk Committee reports that it discharged all of its responsibilities set out in terms of applicable requirements of the Companies Act as well as in its adopted Terms of Reference.

In the conduct of its duties, the Audit and Risk Committee reviewed the following:

• The effectiveness of the internal control systems.

• The effectiveness of the internal audit.

• The risk area of the operations to be covered in the scope of internal and external audits.

• The adequacy, reliability and accuracy of financial information provided to management and other users of such information.

• Any Accounting and Auditing concerns identified as a result of internal and external audits.

• Compliance with legal and regulatory provisions.

• The activities of the Internal Audit function, including its Annual Audit Plan, coordination with the External Auditors and the responses of management to specific recommendations.

• Internal audit assessment and Compliance.

2. Internal Controls

The management of the GFC continues to strive towards sustainable improvement in its internal control.

Nothing has come to the attention of the Audit and Risk Committee to indicate that a material breakdown in the functioning of the internal controls, procedures and systems has occurred during the year under review.

In the opinion of the Audit and Risk Committee, the internal controls and procedures of the GFC are considered to be appropriate in all material respects in relation to:

• Achieving the business objectives of the GFC;

• Ensuring that the GFC’s assets are adequately safeguarded; and

• Ensuring that transactions undertaken are recorded in the GFC’s records.

3. Evaluation of financial statements

The Committee evaluated the Annual Financial Statements of the GFC’s for the year that ended 31 March 2018 and, based on the information provided to the Audit and Risk Committee, considers that they comply, in all material respects, with the requirements of the applicable Companies Act.

………………………………….……….……….

Johan Van Der Walt CA (SA) ChairpersonDate: 31 July 2018

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STATEMENT OF FINANCIAL POSITION (SOFP) _________________________________________________________________________________________________________________

As at 31 March 2018

Notes Mar 2018 Mar 2017Restated

R R

ASSETSNon-current Assets 670,883 764,315

Property, plant and equipmentIntangible assets

23

646,08624,797

713,85350,462

Current Assets 667,223 635,035

Trade and other receivablesCash and cash equivalents

45

567,71499,509

529,091105,944

TOTAL ASSETS 1,338,106 1,399,350

Accumulated deficit (657,355) 224,754

Non-current liabilities

Long-term finance borrowingsCurrent liabilities

8 122,1171,873,344

171,0741,003,522

Trade and other payablesCurrent portion of long term borrowings

78

1,824,38748,957

961,19342,329

TOTAL EQUITY AND LIABILITIES 1,338,106 1,399,350

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STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (SOCI)_________________________________________________________________________________________________________________



R R

Government grant 11 29,016,000 28,397,000

Other income 12 25,011 116,716

DepreciationAmortisation of intangible assets

23

(275,513)(30,932)

(491,878)(35,744)

Operating expenses 23 (29,847,850) (28,315,411)

Operating loss (1,113,284) (329,317)

Interest received 15 259,646 266,540

Finance costs 16 (28,471) (34,203)

Loss for the year (882,109) (96,980)

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STATEMENT OF CHANGES IN EQUITY (SOCE) _________________________________________________________________________________________________________________


Notes Mar 2018

R

Accumulated Deficit:

Restated balance 31 March 2016 256,327

Prior year error 9 65,407

Loss for the year (96,980)

Restated balance as at 31 March 2017 224,754

Loss for the year (882,109)

Balance at 31 March 2018 (657,355)

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STATEMENT OF CASH FLOW _________________________________________________________________________________________________________________



R R

Receipts from Customers 28,977,373 28,385,559

Cash paid to suppliers and employees (28,952,045) (28,888,149)

Cash utilised from operations 18 25,328 (502,590)

Interest receivedFinance cost

1516

259,646(28,471)

266,540(34,203)

Net cash inflow from operations 256,503 (270,253)

Net cash outflows from investing activities (220,604) (292,769)

Purchase of property, plant and equipment (215,337) (376,898)

Proceeds 2 - 101,731

Purchase of intangibles 3 (5,267) (17,602)

Cash flow from financing activities

Finance lease payments 6,623 (34,334)

Repayment of other financial liabilities (48,957) 144,686

Net cash flow from financing activities (42,334) 110,352

Net decrease in cash and cash equivalents for the year ended (6,435) (452,670)

Cash and cash equivalents at beginning of the year 105,944 558,614

Cash and cash equivalents at the end of the year 5 99,509 105,944

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NOTES TO THE FINANCIAL STATEMENTS _________________________________________________________________________________________________________________


1. Presentation of Annual Financial Statements

The Annual Financial Statements were prepared in accordance with International Financial Reporting Standards (IFRS), as well as the applicable requirements of the Companies Act. The Annual Financial Statements were furthermore prepared on a historical basis, except for the measurement of certain financial instruments at fair value, and the principal accounting policies set out below were incorporated. They are presented in South African Rand.

An entity classifying expenses by function shall disclose additional information on the nature of expenses including depreciation and armotisation and employee benefits expenses.

The choice between the function of expenses method and nature of expenses method depends on historical and industry factors and the nature of the entity. Both methods provide an indication of those costs that may vary directly and indirectly.

1.1 Significant judgements and sources of estimation of uncertainty

In preparing the Annual Financial Statements, Management is required to make estimates and assumptions that affect the amounts represented in related disclosures. Use of available information and the application of judgement are inherent in the formation of estimates. Actual results in the future could differ from those estimates which may be material to the Annual Financial Statements.

Impairment testing and taxation must be applied and the residual value and useful lives of Property, Plant and Equipment must be considered. An entity shall disclose information about the assumptions it makes about the future, and other major sources of estimation uncertainty at the end of the reporting year, that have a significant risk that may result in material adjustments to the carrying amounts of assets and liabilities within the next financial year. In respect of those assets and liabilities, the notes shall include details of:

• Their nature;• Their carrying amount as at the end of the reporting year;• Estimated useful lives and residual values of assets; and• Effective interest on finance lease; including significant judgements.

Trade Receivables, Loans and Receivables.

The company assesses its trade receivables for impairment at the end of each reporting year. In determining whether an impairment loss should be recorded in a profit or loss, the company makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from financial assets.

Provisions

Provisions were raised and Management determined estimates based on the information available. Additional disclosures of these estimates of provision as disclosed as per.

The cost of an item of property, plant and equipment is recognised as assets when:

• It is probable that the future economic benefits associated with the item will flow to the company; and

• The cost of the item can be measured reliably.

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1.2 Property, Plant and Equipment.

Property, Plant and Equipment are initially measured at cost.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and cost 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.

Property, Plant and Equipment are carried at cost less accumulated depreciation and any impairment losses; and reassessment of assets is performed on an annual basis.

Property, Plant and Equipment are depreciated on a straight-line basis over their expected useful lives to their estimated residual values.

The useful lives of items of Property, Plant and Equipment were assessed as follows:

Item Average useful life

Computer Hardware 3 years

Capitalised Lease Assets 5 years

Office Furniture 5 years

Leasehold Improvement 5 years

Office Equipment 5 years

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting year. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

The depreciation charge for each year is recognised in the profit or loss, unless it is included in the carrying amount of another asset.

The gain or loss arising from the derecognition of an item of Property, Plant and Equipment is included in profit or loss when the item is derecognised. This gain or loss is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

1.3 Intangible assets.

An intangible asset is recognised when:

• It is probable that the future economic benefits associated with the item will flow to the company; and

• The cost of the item can be measured reliably.

Intangible assets are initially recognised at cost.

Expenditure on research (or on the research phase of an internal project) is recognised as expenses when it is incurred.

Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.

An intangible asset is regarded as having indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the year over which the asset is expected to generate net cash inflow.

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1.3 Intangible assets (cont).

Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the assets may be impaired. For all other intangible assets, amortisation is provided on a straight-line basis over their useful lives.

The amortisation method of intangible assets is reviewed every yearend.

An entity shall disclose in the summary of significant accounting policies:

(a) The measurement basis used in preparing the financial statements, and(b) The other Accounting Policies used that are relevant to an understanding of the financial statements.Reassessing the useful life of an intangible asset with a finite useful life after it was classified as infinite, is an indicator that the asset may be impaired. As a result, the asset is tested for impairment and the remaining carrying amount is amortised over its useful life.

Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.

Amortisation is provided to write down the intangible assets, on a straight-line basis, to their residual values as follows:

Item Useful lifeComputer Software 3 years

1.4 Financial instruments

Classification

The company classifies financial assets and financial liabilities into the following categories:

• Loans and receivables; and• Financial Liabilities measured at amortised cost.

Classification depends on the purpose for which the financial instruments were obtained/incurred and takes place at initial recognition. Classification is re-assessed on an annual basis, except for derivatives and financial assets designated as at fair value through profit or loss, which shall not be classified out of the fair value through profit or loss category.

Initial recognition and measurement

Financial instruments are initially measured at fair value and any purchases of financial assets are accounted for at trade date.

Financial instruments are recognised initially when the company becomes a party to the contractual provision of the instruments.

The company classifies financial instruments, or their component parts, on initial recognition as financial assets, a financial liability or equity instruments in accordance with the substance of the contractual arrangements.

Subsequent measurements

Financial instruments at fair value through profit or loss are subsequently measured at fair value, with gains and losses arising from changes in fair value being included in profit or loss for the year ended.

Loans and receivables are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.

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1.4 Financial instrument (cont).

When a financial asset or financial liability is recognised initially, the entity shall measure its fair value, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.

Derecognition

Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the institute has transferred substantially all risks and rewards of ownership.

Trade and other receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the assets are impaired. SSignificant financial difficulties of the debtor, probability that the debtor or financial organisation will enter bankruptcy, and the default or delinquency in payments (more than thirty days overdue), are considered indicators that the trade and other receivables are impaired. The allowances recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate and computed at initial recognition.

The carrying amount of the assets is reduced through the use of an allowance account, and the amount of the loss is recognised in profit or loss with operating expenses. When trade receivables are uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off against operating expenses, are indicated in profit or loss.

Trade and other receivables are classified as current assets.

Trade and other payables

Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value.

1.5 Finance lease.

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.

Finance leases

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 machinery, 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.

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1.5 Finance lease (cont).

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each year during the lease term so as to produce a constant year rate on the remaining balance of the liability.

Operating lease

Operating lease payments are recognised as expenses on a straight-line basis over the lease term. The differences between the amounts recognised as an expense and the contractual payments are recognised as operating lease assets. This liability is not discounted.

1.6 Impairment of assets.

The company assesses assets at the end of the reporting year whether there is any indication that any of the assets may be impaired. If any such indication exists, the company estimates the recoverable amount of the assets.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortization is recognized immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.

An entity assesses at each reporting date whether there is any indication that an impairment loss recognized in prior years for assets other than goodwill may no longer exist or may be decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortization other than goodwill is recognized immediately in profit or loss. Any reversal impairment loss of a revalued asset is treated as a revaluation increase.

1.7 Defined contribution plans.

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the company’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.

1.8 Provisions and contingencies

Provisions are recognised when:

• The company has a present obligation as a result of past event;

• It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

• A reliable estimate can be made of the obligation.




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1.8 Provisions and contingencies (cont).

The amount of provision is the present value of the expenditure expected to be required to settle the obligation.

Where some or all the expenditure required settling a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount of the provision.

Provisions are not recognised for future operating losses.

If an entity has a contract that is onerous, the present obligation under contract shall be recognised and measured as a provision, contingent assets and contingent liabilities are recognised

1.9 Government grants.

Government grants are recognised when there is reasonable assurance that:

• The company will comply with the conditions attaching to them; and

• The grant will be received.

Government grants are recognised as an income over the years necessary to match them with the related cost that they are intended to compensate.

Government grants are income related and are presented as a credit in a profit and loss.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related cost, is recognised as income for the year ended in which it becomes receivable.

In cases where the grant is more than expenses, the surplus is recognised as deferred income, in our statement of financial position.

Grant related income is:

The repayment of a grant related to income is applied first against any un-amortised deferred credit set up in respect of the grant. In the event that the repayment exceeds any such deferred credit, or where no deferred credit exists, the repayment is recognised immediately as expenses.

The repayment of a grant related to an asset is recorded by increasing the carrying amount of the asset or reducing the deferred income balance by the amount repayable.

The cumulative additional depreciation that would have been recognised to date as expenses in the absence of the grant, is recognised immediately as an expense.

1.10 Revenue.

Interest is recognised as income in profit or loss, using the effective interest rate method.

1.11 Related parties.

The entity operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the national/provincial/local spheres of government are considered to be related parties.




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1.12 Presentation currency.

The Annual Financial Statements are presented in South African Rands, which is the functional and presentation currency of the Board and amounts have been rounded to the nearest thousand.

1.13 Disclosure relating to prior year errors.

The following disclosure is necessary in relation to prior year errors:

• The nature of the prior year error for each prior year presented,

• To the extent practicable, the amount of the correction, for each financial statement line affected;

• The total amount of the correction at the beginning of the earliest prior year presented; and

• If retrospective restatement is impracticable, an explanation and description of how the error has been resolved.

1.14 Financial Instruments.

Categories of financial assets and financial instruments liabilities

The carrying amounts of each of the following categories shall be disclosed either on the face of the Statement of Financial Position or in the notes:

a) Financial assets at fair value through profit or loss, showing separately

(i) those designated as such upon initial recognition and

(ii) those classified as held for trading in accordance with IAS 39

b) Held to maturity investment.

c) Loans and receivables.

d) Available for sale financial assets.

e) Financial liabilities at fair value through profit or loss, showing separately

(i) those designated as such upon initial recognition and

(ii) those classified as held for trading in accordance with IAS 39.

f ) Financial liabilities measured at armotised cost.

Other credit risk disclosures

• Nature and carrying of collateral obtained

• When assets are not readily convertible to cash

• There are no policies for disposing such assets or for using them in operations

Credit risk

The GFC discloses by class of financial instruments, the amount that represents its maximum exposure to credit risk at the end of the reporting year without taking into account any collateral held or other credit enhancements.

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ACCOUNTING POLICY _________________________________________________________________________________________________________________


1.15 Financial reporting standards and interpretations issued but not yet effective.

The GFC did not apply any of the following new or amended Standards and Interpretations that were issued by IASB, and which are effective from the financial year beginning 1 April 2017.

Standard or interpretation

Detail

Amendments to existing standards:

Amendments to IAS 40 titled Transfers of Investment Property (issued in December 2016) - The amendments, applicable to annual periods beginning on or after 1 January 2018 (earlier application permitted), clarify that transfers to, or from, investment property (including assets under construction and development) should be made when, and only when, there is evidence that a change in use of a property has occurred. The amendments are not expected to have a material effect on the GFC financial statements.

Amendments to IAS 28 (Annual Improvements to IFRS Standards 2014–2016 Cycle, issued in December 2016) – The amendments, applicable to annual periods beginning on or after 1 January 2018 (earlier application permitted), clarify that the election to measure at fair value through profit or loss of an investment in an associate or a joint venture that is held by an entity that is a venture capital organisation, mutual fund, unit trust or other qualifying entity, is available for each investment in an associate or joint venture on an investment. The amendments are not expected to have an effect on the GFC’s financial statements.

Amendments to IFRS 10 and IAS 28 titled Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (issued in September 2014) – The amendments address a current conflict between the two Standards and clarify that a gain or loss should be recognised fully when the transaction involves a business, and partially if it involves assets that do not constitute a business. The effective date of the amendments, initially set for annual periods beginning on or after 1 January 2016, was deferred indefinitely in December 2015 but earlier application is still permitted. This is not expected to have an effect on the Commission’s financial statements.

New Interpretations

IFRIC 22 Foreign Currency Transactions and Advance Consideration (issued in December 2016) - The Interpretation, applicable to annual periods beginning on or after 1 January 2018 (earlier application permitted), provides guidance clarifying that the exchange rate to use in transactions that involve advance consideration paid or received in a foreign currency is the one at the date of initial recognition of the non-monetary prepayment asset or deferred income liability. The Interpretation is not expected to have a material effect on the GFC’s financial statements.

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1.15 Financial reporting standards and interpretations issued but not yet effective (continued).


Detail

IFRIC 23 Uncertainty over Income Tax Treatments (issued in June 2017) – The Interpretation, applicable to annual periods beginning on or after 1 January 2019 (earlier application permitted), provides guidance on how to reflect the effects of uncertainty in accounting for income taxes under IAS 12, in particular (i) whether uncertain tax treatments should be considered separately, (ii) assumptions for taxation authorities’ examinations, (iii) determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits, and tax rates, and (iv) effect of changes in facts and circumstances. The Interpretation is not expected to have a material effect on the GaFC’s financial statements.

IFRS 9 New Standards

IFRS 9 Financial Instruments (issued in July 2014) – The Standard will replace IAS 39 (and all the previous versions of IFRS 9) effective for annual periods beginning on or after 1 January 2018 (earlier application permitted). It contains requirements for the classification and measurement of financial assets and financial liabilities, impairment, hedge accounting, recognition and derecognition.

IFRS 9 requires all recognised financial assets to be subsequently measured at amortised cost or fair value (through profit or loss or through other comprehensive income), depending on their classification by reference to the business model within which they are held and their contractual cash flow characteristics.

For financial liabilities, the most significant effect of IFRS 9 relates to cases where the fair value option is taken: the amount of change in fair value of a financial liability designated as at fair value through profit or loss that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income (rather than in profit or loss), unless this creates an accounting mismatch.

For the impairment of financial assets, IFRS 9 introduces an “expected credit loss (ECL)” model based on the concept of providing for expected losses at inception of a contract; recognition of a credit loss should no longer wait for there to be objective evidence of impairment.

For hedge accounting, IFRS 9 introduces a substantial overhaul allowing financial statements to better reflect how risk management activities are undertaken when hedging financial and non-financial risk exposures. The recognition and derecognition provisions are carried over almost unchanged from IAS 39. The Directors anticipate that IFRS 9 will be adopted in the GFC’s financial statements when it becomes mandatory. The Directors have performed a preliminary assessment of the impact of IFRS 9 on the GFC’s financial statements, based on an analysis of the GFC’s financial assets and financial liabilities as at 31 December 2017.

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1.15 Financial reporting standards and interpretations issued but not yet effective (continued).


Detail

IFRS 9Concerning impairment, the Directors expect to apply the simplified approach to recognise lifetime ECL for the Commission’s trade receivables. Although the Directors are currently assessing the extent of this impact, they anticipate that the application of the ECL model of IFRS 9 will result in earlier recognition of credit losses. However, it is not practicable to provide a reasonable estimate of that effect until the detailed review that is in progress has been completed. In particular, the implementation of the new ECL model proves to be challenging and might involve significant modifications to the GFC’s credit management systems.

As the new hedge accounting requirements will align more closely with the GFC’s risk management policies, a preliminary assessment of the current hedging relationships indicate that they will qualify as continuing hedging relationships upon application of IFRS 9. The Directors do not anticipate that the application of the IFRS 9 hedge accounting requirements will have a material impact on the GFC’s financial statements.

IAS 39 (Notes 2(H) and 25) on the basis of the facts and circumstances that exist at that date. Apart from equity investments classified currently as available-for-sale and measured at fair value through other comprehensive income that should be measured at fair value through profit or loss under IFRS 9, all the other GFC’s financial assets and financial liabilities should continue to be measured on the same bases as currently under IAS 39.

IFRS 15IFRS 15 Revenue from Contracts with Customers (issued in May 2014 and amended for effective date and clarifications in September 2015 and April 2016 respectively) - The Standard, effective for annual periods beginning on or after 1 January 2018 (earlier application permitted), replaces IAS 11, IAS 18 and their Interpretations. It establishes a single and comprehensive framework for revenue recognition to apply consistently across transactions, industries and capital markets, with a core principle (based on a five-step model to be applied to all contracts with customers), enhanced disclosures, and new or improved guidance (e.g. the point at which revenue is recognised, accounting for variable consideration, costs of fulfilling and obtaining a contract, etc.). The Directors anticipate that IFRS 15 will be adopted in the GFC’s financial statements when it becomes mandatory, and they intend to use the full retrospective method of transition to the new Standard.

Based on the current accounting treatment of the GFC’s major sources of revenue (Note 2(B)) the Directors do not anticipate that the application of IFRS 15 will have a significant impact on the financial position and/or financial performance of the Commission, apart from providing more extensive disclosures on the GFC’s revenue transactions. However, as the Directors are still in the process of assessing the full impact of the application of IFRS 15 on the GFC’s financial statements, it is not practicable to provide a reasonable financial estimate of the effect until the Directors complete the detailed review.

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Detail

IFRS 16 IFRS 16 Leases (issued in January 2016) - The Standard, effective for annual periods beginning on or after 1 January 2019 (earlier application permitted only if IFRS 15 also applied), replaces IAS 17 and its Interpretations. The biggest change introduced is that almost all leases will be brought onto lessees’ balance sheets under a single model (except leases of less than 12 months and leases of low-value assets), eliminating the distinction between operating and finance leases. Lessor accounting, however, remains largely unchanged and the distinction between operating and finance leases is retained.

Directors anticipate that IFRS 16 will be adopted in the GFC’s financial statements when it becomes mandatory, with the following effects:

For the GFC’s, non-cancellable operating lease commitments of CU1.89 million as at 31 December 2017 (Note 35), a preliminary assessment indicates that these arrangements will continue to meet the definition of a lease under IFRS 16. Thus, the Commission will have to recognise a right-of-use asset and a corresponding liability in respect of all these leases - unless they qualify for low value or short-term leases upon the application of IFRS 16 – which might have a significant impact on the amounts recognised in the GFC’s financial statements. However, it is not practicable to provide a reasonable estimate of that effect until the Directors complete their review.

For finance leases where the GFC is a lessee, as the GFC has already recognised an asset and a related finance lease liability for the lease arrangement, the Directors do not anticipate that the application of IFRS 16 will have a significant impact on the amounts recognised in the GFC’s financial statements.

IFRS 17 IFRS 17 Insurance Contracts (issued in May 2017) - The Standard that replaces IFRS 4, effective for annual periods beginning on or after 1 January 2021 (earlier application permitted only if IFRS 9 and IFRS 15 also applied), requires insurance liabilities to be measured at a current fulfilment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of consistent, principle-based accounting for insurance contracts, giving a basis for users of financial statements to assess the effect that insurance contracts have on the entity’s financial position, financial performance and cash flows. It also requires similar principles to be applied to reinsurance contracts held and investment contracts with discretionary participation features issued. As the GFC has neither issued insurance contracts, nor held reinsurance contracts, the Standard is not expected to have an effect on its financial statements.




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2. Property, plant and equipment.

March2018

Computer Hardware

Office Furniture

Office Equipment

Capitalised leased asset

Leasehold improvements

Total

Summary R R R R R R

Carrying amount at beginning

346,017 70,726 41,757 250.606 4,751 713,857

Cost at 1 April 2017 1,056,931 629,647 112,143 558,800 234,009 2,591,530

Accumulated Depreciation (710,914) (558,921) (70,386) (308,194) (229,258) (1,877,673)

Additions 145,699 16,152 49,082 - 4,404 215,337

Depreciation (201,238) - (5,594) (65,287) (3,395) (275,514)

Write off- Cost (31,236) - - - - (31,236)

Write off – Accumulated Depreciation

23,642 - - - - 23,642

Carrying amount 282,884 86,878 85,245 185,319 5,760 646,086

Gross carrying amount 1,171,394 645,799 161,225 558,800 238,413 2,775,631

Accumulated Depreciation (888,510) (558,921) (75,980) (373,481) (232,653) (2,129,545

The GFC does not have any assets which have been pledged as security and there was no restrictions on any title of Property Plant and Equipment (PPE) during the current financial year under review. The finance lease is classified as long term borrowing which is disclosed under (note 8).

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2. Property, plant and equipment (cont).

March2017Restated

Computer Hardware

Office Furniture

Office Equipment

Capitalised leased asset

Leasehold improvements

Total

Summary R R R R R R

Carrying amount at beginning

562,963 105,102 34,737 130,367 50,701 883,870

Cost at 1 April 2016 947,001 624,797 92,927 343,800 234,009 2,242,534


Asset reversals 40,705 - - - - 40,705

Additions 101,530 4,850 20,518 215,000 - 341,898

Depreciation (298,445) (39,226 (13,497) (94,760) (45,950) (491,878)

Write off- Cost (32,305) - (1,302) - - (33,607)

Write off – Accumulated Depreciation

(28,432) - 1,301 - - (27,131)

Carrying amount 346,017 70,726 41,757 250,606 4,751 713,857

Gross carrying amount

1,056,931 629,647 112,143 558,800 234,009 2,591,530


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3. Intangible assets.

Computer software.

March 2018 March 2017Restated

R RSummary Carrying amount at beginning of the year 50,462 68,604

Cost 123,292 105,690Accumulated Amortisation (72,830) (37,086)Additions 5,267 17,602Amortisation (30,932) (35,744)Carrying amount at End of the year 24,797 50,462

Gross carrying amount 128,559 123,292Accumulated amortisation (103,762) (72,830)

There were no restrictions on titles of intangible assets and intangible pledges as security during the financial year under review.

4. Trade and other receivables.


R RSouth African Revenue Service - Value Added Tax 114,063 103,229Prepaid expenses 207,189 171,222Sundry debtors 14,322 22,500Rental deposit 229,878 229,878Staff social fees 1,895 1,895Credit Card 367 367

567,714 529,091

The carrying value of trade and other receivables approximates the fair value. The rental deposit was as the result of relocating GFC’s to 56 Main Street and as a result of the contractual obligation to the landlord.

Trade and other receivables due but not impaired.

Trade and other receivables which are less than one month past due are not considered to be impaired. GFC does not have any trade debtors.

Trade and other receivables impaired.

During the current year under review there were no impairments on trade and other trade receivables.

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5. Cash and cash equivalents.

Cash and cash equivalents consist of cash on hand and bank balances. Cash and cash equivalents included in the cash flow statement comprise the following balance sheet amounts:


R RCash at bank - Current 64,786 70,026 - Call 34,278 33,599Cash on hand 445 2,319

99,509 105,944The carrying value of cash and cash equivalents approximates the fair value.

6. Financial assets by category.

The accounting policies for financial instruments have been applied to the line items below:Loans and receivables.


R RTrade and other receivables 567,714 529,091Cash and cash equivalents 99,509 105,944

667,223 635,035

7. Trade and other payables.

The carrying value of trade and other payables approximates the fair value. Trade and other payables were discounted, due to the fact that GFC pays its suppliers within thirty days.


R R

Accruals – MedicalSundry AccrualOperating lease accrual (Note 1)Sundry accrual – South African Revenue Service

27,762 1,441,175

-355,450

25,576911,10624,511

-

1,824,387 961,193Note 1.

Operating lease accrual has been disclosed under trade as payables during the current financial year under review, during the previous year the amount was

disclosed separately.

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8. Long term borrowings.

The finance lease is secured by capitalised lease assets (note 2). The GFC leased two photo copy machines from Panasonic. The contract was signed in April 2016 and the agreement provides for five annual payments of R70, 800. The agreement does not provide for contingent rental payments. There was no escalation on this contract with Panasonic during the year under review.

Reconciliation between the total minimum lease payments and their present value.

March 2018 Up to 1 year 2-5 years TotalsMinimum lease payments 70,800 141,600 212,400Finance cost (21,843) (19,483) (41,326)Present value 48,957 122,117 171,074

March 2017 RestatedMinimum lease payments 70,800 212,400 283,200Finance cost (28,471) (41,326) (69,797)

42,329 171,074 213,403

Finance lease obligations


R R

Current liability 48,957 42,329

Non-current liability 122,117 171,074

171,074 213,403

9. Prior year error

9.1 Leave provision

The prior year error is as a result of an incorrect classification of leave provision during the previous financial year, which has been classified and accounted as provision. It should however be noted that in terms of IAS 19, leave should be accounted as accrual. The amount does not meet the criteria in relation to IAS 37 which stipulates that a provision should be recognised only if there is uncertainty in relation to timing and amounts. It further stipulates that there are three recognition criteria which must be met for a provision to be raised.

The correction should be accounted as follows in the 2016/17 financial year:

Debit CreditR R

Decrease in provision 546,016Increase in accruals: trade and other payables 546,016

In line with our policy, leave accrual is a company obligation that is payable when any employee decides to resign from the organisation. Because the timing for the total amount is uncertain, the accrual was raised at yearend.

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9.2 Finance lease

The error is as a result of understatement of finance lease liability and the overstatement of Property, Plant and Equipment (PPE) during the previous year, when the assets were recognised at initial recognition. The correction should be accounted as follows in the 2016/17 financial year:

Debit CreditR R

Vat Control 35,000Cost Capitalised leased assets 35,000Vat Control 35,000Finance Liability 35,000Accumulated Depreciation: Capitalised Lease Asset 7,000 Depreciation 7,000

9.3 Operating lease accrual

The prior year error is as a result of an incorrect straight-line measurement for operation lease accrual in relation to rental, since the beginning of the current lease. The correction should be accounted as follows in the 2016/17 financial year:

Debit CreditR R

Operating Lease 65,504Retained Earnings 65,504

10. Financial liability by categoryThe accounting policies for financial instruments have been applied to the items below:

Financial liabilities at amortised cost:


R RTrade and other payables 1,347,518 415,178Long term borrowings 171,074 213,403

1,518,592 628,581Note 1It should be noted that leave accrual is not included under Trade and Other Payables as per employee benefit standard (IAS 19).

11. Government grants

The GFC receives a government grant from the DSARC to fulfil its mandate in line with the approved business plan. The grant is not conditional and does not have any other contingencies attached to it. It should however be noted that the special project grant from the DSACR is conditional and that the conditions of IAS 20.39(C) in this regard has been met. During the current financial year under review, there was a conditional grant for funding of the School Holiday Programme.


R RGovernment grant - Main allocation 28,766,000 27,397,000 - Conditional 250,000 1,000,000

29,016,000 28,397,000




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12. Other income

Other income arises as the result of insurance settlements for assets lost during the financial year under review:


R R

Proceeds from insurance claims 25,011 116,716

13. Operating expenses

The operating profit is stated after taking the following items into account:


R R

Depreciation 275,513 491,878

Computer hardware 2 201,238 298,445Leasehold improvements 2 3,395 45,950

Office equipment 2 5,594 13,497

Office Furniture 2 - 39,226

Capitalised lease assets 2 65,287 94,760

Provident fund 2,031,722 1,931,374Repairs and maintenance 1,535 3,246Amortisation of intangibles 3 30,932 35,744

Employee costs 17,105,975 15,881,432Asset written offs 7,594 20,033

Professional fees 721,259 751,551

Payroll Services 77,800 153,300External auditors 389,454 380,796

Internal auditors 254,005 217,455

Operating lease charges 123,104 1,260,046

Equipment - 24,511

Property 123,104 1,235,535

Directors Emoluments 4,230,810 3,500,357

Executive directors 14.1 4,045,810 3,321,357

Non-Executive directors 14.2 185,000 179,000




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14. Executive, Non-Executive and Key Management Emoluments.

14.1 Executive and non-executive emoluments

Salary Leave Pay 13th Cheque/ Bonus

MedicalAid

Provident Fund

Total

March 2018 R R R R R R

Mr. E Maluleke 1,221,413 - 124,538 110,108 163,075 1,619,134

Mr. A Mbeki 1,291,869 - - - 225,449 1,517,318

Ms. Sekgobela 909,358 - - - - 909,358

3,422,640 - 124,538 110,108 388,524 4,045,810

March 2017Restated

Mr. E Maluleke 1,174,003 - 107,698 90,194 153,471 1,525,366

Mr. A Mbeki 1,434,947 - - - 211,204 1,646,151

Ms. Sekgobela 149,840 - - - - 149,840

2,758,790 - 107,698 90,194 364,675 3,321,357 14.2 Non-executive director’s emoluments


R R

Mr. L Ramatshila Mugeri - 4,000

Mr. S Mafu 52,000 40,000

Ms. S Sekgobela - 48,000

Ms. Y Kwinana - 16,000

Mr. S Maake Ka Ncube 20,500 36,000

Ms. T Mtshali-Jones 13,500 16,000

Mr. J Van der Walt 11,000 5,500

Mr. P Mothudi 11,000 5,500

Mr. P Komane 11,000 4,000

Mr. M Mojapelo 11,000 4,000

Ms. J Ngoma 27,500 -

Mr. D Bensusan 27,500 -

185,000 179,000 Board fees include all other Board members who are also serving on other committees. i.e. Remuneration Committee (REMCO), Audit & Risk and Bid Committees. There was Board Training and Strategic Planning which was attended by Board Committees during the current financial year under review.




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14.3 Key Management Emoluments


R R

Salaries 5,614,124 5,670,467

13th Cheque 573,044 437,731

Medical aid 171,145 201,842

Leave pay-out 56,828 -

Provident fund 666,610 628,405

7,081,751 6,938,445

The GFC 2018 Key Management Emoluments include the following management units: Industry Support and Development, Marketing and Communications, Legal and Governance, Information Communication Technology (ICT), Stakeholder Relation, Human Resources and Research.

15. Interest income


R R

Interest received 259,646 266,540

16. Finance cost


R R

Long term borrowings 28,471 34,203

17. Taxation

GFC is incorporated as a Non-Profit Company (NPC) which has as its main objective to facilitate and promote film production in Gauteng Province. GFC is exempted from taxation in terms of section 10(1) cN of the Income Tax Act.

The GFC has been granted tax exemption during the current financial year under review. The tax exemption has been granted in terms of the requirements of the Public Benefit Organisation (PBO) set out in terms of Section 30(3) of the Income Tax Act No 58 of 1962 (the Act).




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18. Reconciliation of net profit before taxation to cash generated from operations


R R

Net loss for the year (882,109) (96,980)

Adjusted for items separately disclosed on face of the cash flow statement (231,175) (232,337)

Interest received 15 (259,646) (266,540)

Finance cost 16 28,471 34,203

Adjusted for items not involving the flow of cash and cash equivalents 314,040 (771,656)

Depreciation 275,513 491,878Amortisation of intangibles 30,932 35,744Movement in provisions - (632,544)Movement in operating lease straight lining - (370,634)Asset write offs 7,595 20,033Deferred revenue - (316,133)

Adjusted for changes in working capital 824,572 598,383

Increase in accounts receivable (38,624) (11,441)Increase in accounts payable 863,196 609,824

Cash utilised from operations 25,328 (502,590)

19. Related party transactions.

During the current financial year under review the Gauteng Film Commission had the following related party transaction with the Department of Sport, Art, Culture and Recreation (DSACR) and Key Management Emoluments:


R R

Government grant- Main allocation 28,766,000 27,397,000

- Conditional 250,000 1,000,000

Key Management Emoluments (refer to Note 14.1 & 14.3) 11,127,561 10,259,802

The relationship is due to the fact that GFC is mandated and wholly funded by the Department. The transactions are at arm’s length, and there was a contribution from the Department for the School Holiday Programme which was rolled out in December.




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20. Commitments

Project commitments relate to outstanding payments from Industry Support Developments (ISD), due to delayed invoices which were not yet submitted at yearend.

Project Funding Commitments


R R

LIBM Enterprise (PTY) Ltd - 55,000Sonrise Entertainment 75,000 -I Takemedia 65,000 -Grey Communications (Pty) Ltd 44,500 -Favour Media (Pty) Ltd 50,000 -Spyland Jova Film and Events Company 60,000 -Kasi Distribution (Pty) Ltd 25,000 -Sepamla Fashion Consulting 48,000 -Wendy Modelling and Talent Agency - 52,500Noble Pictures 50,000 10,000 Lelentle Trading and Projects CC 60,000 -Big Media Publishers Pty 230,264 -Purebrown Designs 99,247 -

807,011 117,500

21. Operating lease commitment


R R

Not later than one year - 24,511

Later than one year but not later than Five years - -

Later than five years - - Operating lease commitments represent rental payables for GFC premises which expire on 31 May 2017 and include rentals paid for office equipment. The operating lease is accounted for, using the straight-line method.




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22. Risk management

Capital risk management

The company’s objectives when managing capital are to safeguard the company’s ability to continue as a going concern in order to provide benefits for stakeholders to maintain an optimal capital structure.

The capital structure of the company consists of debt, which includes the cash and cash equivalents disclosures in (note 5).

Financial risk management

The company’s activities expose it to a variety of financial risks: interest risk and liquidity risk.

The company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the company’s financial performance.

Credit risk

Credit risk relates to the financial assets and simply speaking, it is the risk that we will suffer a financial loss.

Credit risk consists mainly of cash deposits, cash equivalents and trade receivables. The company only deposits cash with major banks with high quality credit standing and limits exposure to any one counter party.

Liquidity risk

The company’s risk to liquidity is as a result of the funds available to cover future commitments. The company manages liquidity risk through an ongoing review of future commitments and credit facilities.

The table below analyses the company’s financial liabilities and net-settled derivative financial liabilities into relevant maturity groupings, based on the remaining year at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within twelve months equal their carrying balances as the impact of discounting is not significant

Less than 1 year Between 2and 5 years

R R

March 2018

Trade and other payables 1,824,387 -Long term borrowings 48,957 122,117

March 2017Restated

Trade and other payables 961,193 -Long term borrowings 42,329 171,074




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Market risk.

The risk that fair value or future cash flows of financial instruments will fluctuate because of changes in prices.

Market risk comprises the following:

Interest rate risk

Interest rate risk arises on interest-bearing financial instruments recognised in the statement of financial position.

The company’s interest rate risk arises from short term investments. These investments are issued at variable rates which exposes the company to cash flow interest rate risk.

Based on the simulation basis and assuming other variables remain constant in the sensitivity calculations, the impact on the post-tax profit of a 1% shift either way would be a maximum of an increase and decrease of R143,039 and R160,821 respectively.

Currency rate risk

Arises on financial instruments that are denominated in foreign currency.

Other price risk

Other price risk arises from financial instruments because of changes in commodity price or equity price.




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R R

Bank Charges 27,257 18,469Research - 132,262Insurance 94,103 124,589CEO Corporate Entertainment - 15,413Distribution Support 308,000 154,309 Strategic Planning 244,377 113,002Employee Costs 19,137,697 17,812,807 Office Equipment Maintenance 1,535 3,247Office Rental 1,596,812 1,235,535Staff Parking 294,513 241,403Water & Electricity Charge 251,570 229,036Organisational Development Cost 21,708 -Staff Development Cost 37,142 108,242Study Assistance Cost 172,767 93,611Special Projects - 1,000,000Employee Wellness 4,064 28,718Skills Development 802,584 1,078,735Development and Maintenance of IT 580,673 603,972Production Support 1,985,849 1,305,250Audit Committee fees 55,000 66,000Directors Remuneration 166,000 179,000 Remuneration Committee 36,500 60,000 Refreshment and Meetings 72,608 52,591Auxiliary Services 299,764 403,464Annual Report 94,511 222,904Audience Development 1,539,759 598,128Film Content and Export Platform 74,409 96,058Hosting and Maintenance of Website 222,905 199,760Community Social Initiatives 6,273 28,936Courier and Cartage Cost 21,303 43,025Printing - General 5,192 9,005Location Database Updating - 2,450Asset Write Offs 7,595 20,033

Continue to next page


UNAUDITED SUPPLEMENTARY SCHEDULE _________________________________________________________________________________________________________________


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R R

Stationery 43,317 33,563Professional Fees 721,259 751,552Advertising Placements 95,152 160,041Branding Partnership 28,090 31,477Training and Development - Board 43,910 22,430Production for Broadcast 100,000 381,500Labour Relations - 22,090Film Awards 55,000 50,000Bid Committee 9,500 8,000Post Production and Research Hub - 31,500Industry Communication 45,000 40,435Marketing Collateral 62,473 73,452Marketing Support Films Funding by GFC 335,316 336,500Message on Hold 7,285 6,646Public Awareness - Municipalities 139,079 6,800Public Awareness – Townships - 70,726Officer Security - 7,850

29,847,850 28,315,411


UNAUDITED SUPPLEMENTARY SCHEDULE _________________________________________________________________________________________________________________


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Annual Report2017/18

Company Address

Gauteng Film Commission56 Main StreetJohannesburg, 2108South Africa

Online

Email: info@gautengf ilm.org.zaWebsite: www.gautengf ilm.org.za

Phone

+27 11 833 0409

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