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Electricity Distribution Industry Holdings Proprietary Limited

Annual Report 2008 / 2009

CORPORATE PROFILE

BACKGROUND

Electricity Distribution Industry Holdings (Pty) Ltd was established in 2003

to lead the restructuring of the electricity distribution industry in South Africa.

This restructuring mandate is guided by the Energy White Paper of 1998,

the Blueprint on EDI Reform of 2001 as well as related Cabinet Decisions.

In terms of the Cabinet Decision of 25 October 2006, the restructuring

process must culminate in the creation of six wall-to-wall Regional Electricity

Distributors (REDs) as public entities regulated by the National Energy

Regulator of South Africa (NERSA).

VISION

A consolidated and sustainable Electricity Distribution for the benefit of the

economy and the people of South Africa.

MISSION

To create and oversee six (6) wall-to-wall REDs as viable and efficient public

entities.

STRATEGIC PILLARS

• IndustryLeadership

• REDCreation

• REDOversight

• Advocacy

VALUES

• Excellence

• Resultsoriented

• Commitment

• Passion

• Transparency

• LearningOrganisation

• Professionalism

EDI RESTRUCTURING OBJECTIVES

The Electricity Distribution Industry Holdings (Pty) Ltd is guided by the

national objectives of restructuring as encapsulated in the Energy White

Paper of 1998 and the Blueprint on Electricity Distribution Industry Reform

of 2001. These are:

• toprovidelowcostelectricitytoallcustomersegments,withequitable

tariffs for each customer segment;

• to provide a reliable and high quality supply and service to all

customers, in support of Government’s social development and

economic goals;

• tomeetthecountry’selectrificationtargetsinthemostcost-effective

manner; and so ensure that electrification is contributing to social

and economic development;

• tomeetthelegitimateemployment,economicandsocialinterestsof

all employees in the sector, and to ensure their safety; and

• to operate in a financially sound and efficientmanner in order to

provide a reliable and sustainable future for both consumers and

employees.


3Annual Report 2008 / 2009

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SUBMISSION OF THE ANNUAL REPORT TO THE EXECUTIVE AUTHORITY

STATEMENT OF RESPONSIBILITY

The Public Finance Management Act, 1999 (Act No. 1 of

1999),asamended,requiresthattheaccountingauthority

ensure that the company keeps full and proper records of

its financial affairs.

The annual financial statements are the responsibility of the

accounting authority, i.e the Board of Directors of EDI Hold-

ings. The Auditor-General is responsible for independently

auditing and reporting on the financial statements. The of-

fice of the Auditor-General has audited the entity’s financial

statements and the Auditor-General’s report appears on

pages 35 to 37.

The annual financial statements fairly present the state of

affairs of EDI Holdings, its financial results, its performance

against predetermined objectives and its financial position

at the end of the year in terms of Generally Accepted Ac-

counting Practice (GAAP), including any interpretations of

such statements issued by the Accounting Practices Board,

with the Prescribed Standards of Generally Recognised Ac-

counting Practice (GRAP) issued by the Accounting Stand-

ardsBoardreplacingtheequivalentGAAPstatement,and

the Companies Act, 1973 (Act No. 61 of 1973).

These annual financial statements are based on appropri-

ate accounting policies, supported by reasonable and pru-

dent judgements and estimates.

The Board of Directors has reviewed the company’s budg-

ets and cash flow for the year ended 31 March 2009. On

the basis of this review, and in view of the current financial

position, the Board of Directors has every reason to believe

that EDI Holdings will be a going concern in the year ahead,

and has continued to adopt the going concern basis in pre-

paring the financial statements.

The Board of Directors sets standards to enable manage-

ment to meet the above responsibilities by implementing

systems of Internal Control and Risk Management that are

designed to provide reasonable, but not absolute, assur-

ance against material misstatements and losses. The com-

pany maintains internal financial controls to provide assur-

ance regarding:

1. The safeguarding of assets against unauthorised use or

disposal;

2. The maintenance of proper accounting records and the

reliability of financial information used within the busi-

ness or for publication.

These controls contain self-monitoring mechanisms, and

actions are taken to correct deficiencies as they are identi-

fied. Even an effective system of Internal Control, no matter

how well designed, has inherent limitations, including the

possibility of circumvention or the overriding of controls.

EDI Holdings’ system of Internal Control aims to provide rea-

sonable assurance with respect to the reliability of financial

information and, in particular, the presentation of financial

statements. Furthermore, because of changes in objective

conditions, the effectiveness of internal financial controls

may vary over time. The Board of Directors has reviewed

the company’s systems of Internal Control and Risk Man-

agement for the period 1 April 2008 to 31 March 2009.

In the opinion of the Board of Directors, the company’s

systems of Internal Control and Risk Management were ef-

fective for the period under review, and based on the in-

formation available to date, the annual financial statements

fairly present the financial position of EDI Holdings as at 31

March 2009 and the results of its operations and cash flow

information for the year.

The annual financial statements for the year ended 31 March

2009, set out on pages 31 to 77, were submitted for audit-

ing on 31 May 2009 and approved by the Board of Directors

in terms of section 51(1) (f) of the Public Finance Manage-

ment Act, 1999 (Act No. 1 of 1999), as amended, and section

298 (1) of the Companies Act, 1973 (Act No. 61 of 1973), as

amended on 28 July 2007, and are signed on its behalf by:

_____________________

P Nzimande (Ms.)

Chief Executive Officer

_____________________

DM Nkosi (Mr.)

Chairman

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INTRODUCTION

Good corporate governance is at the heart of EDI

Holdings’ business operations.

EDI Holdings subscribes to the highest level of corporate

governance and is fully committed to the principles of

good corporate governance, as set out in the King Report

on Corporate Governance for South Africa 2002 (the King

II). As a public entity, EDI Holdings also complies with the

Public Finance Management Act 1 of 1999, as amended

(the PFMA).

The company upholds the principles of fairness,

discipline, independence, accountability, transparency

and social responsibility. The Board of EDI Holdings and

the employees are committed to these principles, which

underpin the company’s Code of Ethics.

In addition to the King II and the PFMA, the company also

takescognisanceofcorporategovernancerequirements

advocated in the Protocol on Corporate Governance in

the Public Sector 2002.

CORPORATE PLAN

Each year EDI Holdings reviews its Corporate Plan which

is submitted to the Department of Minerals and Energy

for approval. The Plan, inter alia, contains EDI Holdings’

strategic objectives and indicators against which the

company’s performance is measured by the Minister of

Minerals and Energy as the executive authority.

Reports on organisational performance are submitted

quarterlybythecompanytotheDepartmentofMinerals

and Energy. These reports are used by EDI Holdings to

demonstrateonaquarterlybasisitsperformanceagainst

the strategic objectives as set out in the Corporate Plan.

Duringtheyearunderreview,allquarterlyreportsdueto

the Department of Minerals and Energy were submitted.

BOARD OF DIRECTORS

The Board has the responsibility to lead and control

EDI Holdings towards achieving its strategic objectives,

amongst other things.

The Board comprises 13 non-executive directors and

three executive directors, being the Chief Executive

Officer, Chief Financial Officer and the Chief Operations

Officer. The non-executive directors are appointed for a

three year term which expires at different times in order

to ensure continuity. This is in line with the practice of

rotating directors at regular intervals.

During the year under review, the following changes

occurred to the Board of Directors:

The following directors’ term of office expired and they

vacated their positions:

• Ms.DollyMokgatle(Chairman)witheffectfrom30

November 2008.

The following directors were appointed to the Board:

• Mr.DumaMosesNkosiwasappointedChairman

with effect from 1 December 2008;

• Mr.ThabangAudatwasappointedadirectorwith

effect from 1 January 2009.

The appointments of the following directors were renewed

for a further three year term:

• Mr. AshleyAlly (Independent)with effect from1

April 2009;

• Dr.ZaverehRustomjee(Independent)witheffect

from 1 April 2009;

• Mr.RonField(IMATU)witheffectfrom1September

2008;

• Mr.KevinMorgan(EIUG)witheffectfrom1January

2009.

The following directors had their terms of office renewed

for a further 12 months:

• Mr.LanceJoel(SALGA)witheffectfrom1

February 2009;

• Mr.SandileMaphumulo(SALGA)witheffectfrom

1 December 2009;

• Mr.OupaKomane(COSATU)witheffectfrom1

April 2009.

CORPORATE GOVERNANCE REPORT Electricity Distribution Industry Holdings Proprietary Limited


6



Board meetings are scheduled annually in advance.

Special meetings are convened as and when necessary

to deal with specific matters.

The names of the directors, as well as members of the

various Board Committees can be found on page 32 to

33 of the report.

Board Charter

The Board has a charter which is reviewed annually.

According to its charter, the Board’s responsibilities

include the following:

• Approval of the strategic plan, policies and

organisational structure

• Identifyingappropriateperformanceindices

• Ensuring compliance with relevant legislation,

regulationsandsupervisoryrequirements

• MonitoringtheimplementationofBoardplansand

strategies

• Overseeingenterprisewideriskmanagement

• Appointment of the chief executive officer and

other directors

• Developmentofasuccessionplan

• Approvalof internalandexternalcommunication

protocols and monitoring relations with

shareholders and other stakeholders.

During the year under review, the Board complied with

the charter.

Board Effectiveness

In terms of article 5.1.7.1 of the Protocol on Corporate

Governance in the Public Sector read with the King II

Report on Corporate Governance, the performance of

the Board and all its Committees must be assessed on

an annual basis.

There are processes in place to ensure that the Board

and all its structures operate effectively and efficiently.

Every financial year the performance of the Board and

individual directors is evaluated by an independent body.

In the year under review, the evaluation was undertaken

by the Institute of Directors.

The areas that were assessed included the following:

• Visiblecorporategovernance

• Boardmeetings

• Rolesandresponsibilitiesofdirectors

• CommitteesoftheBoard

• SkillsneededatBoardlevel

• Accountabilityoftheboardforrisk

• RelationshipoftheBoardwithmanagement

• Stakeholderrelations

• Communicationbetweenmeetings

• Effectiveness of the Board and individual

directors

Meetings And Related Matters

The Board meets regularly and retains full and effective

control over the company. It monitors management in

implementing Board plans and strategies. The Board

agenda is designed to focus on strategy and performance

monitoring, governance and related matters. The directors

have unrestricted access to all information, records and

documents of the company to enable them to discharge

their responsibilities and to enable them to take informed

decisions. Information regarding the attendance at

meetings can be found on page 41 to 45.

BOARD COMMITTEES

In order to assist the Board and its directors in discharging

their duties and responsibilities, specific responsibilities

have been allocated to the Board Committees listed below

which have specific Terms and References. The Terms

and References deal with or address issues such as the

Committee’s composition, duties and responsibilities and

their scope of authority.

Membership of the various Committees is outlined on

page 32 to 33 of the annual report. Executive directors

and members of the executive management team are

always invited to attend relevant meetings of the various

Committees.

A list of the Board committee follows:

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Audit and Risk Management Committee

The Committee meets at least four times a year and is

primarily responsible for assisting the Board in carrying out

its duties relating to accounting policies and procedures,

Internal Controls, financial reporting, Internal Audit, Risk

Management and the functions of External Auditors.

During the period under review, the Committee performed

all its duties and responsibilities in terms of its Terms of

Reference. The Chief Financial Officer, representatives of

the External Auditors, Internal Auditors, Risk Management

Team and members of the Finance Division attend every

meeting of the Committee by invitation.

The External and Internal Auditors have unrestricted access

to the Chairman of the Committee, as well as the Chairman

of the Board and every non-executive director on the

Board. The Chairman of the Committee meets separately

and in-committee with the External Audit team, the Internal

Audit team, the Risk Management team and the Executive

Management prior to or after every Committee meeting to

discuss various matters of concern, if any. The Committee

isalsomandatedtomonitortheestablishmentofadequate

financial and business systems and processes in respect

of the proposed Regional Electricity Distributors.

Finance and Procurement Committee

The main areas of responsibility of this Committee include

the monitoring of the financial position of the organisation

andmaintainingeffective,equitable, transparentandfair

procurement systems in order to safeguard the integrity

of the procurement function of the company and ensure

value for money. This Committee performed all its duties in

terms of its terms of reference.

Human Capital and Remuneration Committee

The Human Capital and Remuneration Committee

has developed terms of reference which are reviewed

annually. Its main duties include formulation, development

and implementation of remuneration and human capital

strategies, policies, plans and programmes for the

organisation.

In addition, the Committee is responsible for assisting the

Board in dealing with human capital matters relating to

the restructuring of the Electricity Distribution Industry.

This Committee has terms of reference. All its duties

as set out in the terms were performed during the year

under review.

Communication and Advocacy Committee

This Committee’s function is to drive the communications

and stakeholder management strategy and to facilitate

decisionmakingprocesseswhererequiredtoensurethat

EDI Holdings is well positioned as the industry leader and

advocate of the EDI restructuring process.

This Committee has its terms of reference. All its duties


under review.

Programme Management Board Committee

The primary responsibility of this Committee is to assist

the Board in programme management for the RED

creation process. The Committee also looks at operational

strategic issues such as the Wires and Retail strategy as

well as making input into national debates on technical

aspects of the Electricity Distribution Industry.



under review.

Policy and Strategy Committee

This Committee advises and makes recommendations to

the Board on matters concerning EDI restructuring policy

and strategy. It also assists the Board in overseeing the

development of a legal and institutional framework for the

Regional Electricity Distributors (REDs).



under review.

8



BOARD REMUNERATION

The remuneration of the Board members is determined

by the Minister of Minerals and Energy and gets reviewed

annually by the Minister. The Board members are paid

for attending Board or Committee meetings. The details

of the Board members’ remuneration for the year under

review are stated in Note 21 to the Annual Financial

Statements on page 68 to 69.

INDEPENDENCE OF THE BOARD

The independence of the Board is achieved and maintained

through a number of measures, including the following:

• Boardmembersbeingremuneratedforattending

meetings only.

• SeparationofthepositionsoftheChiefExecutive

Officer and that of the Chairman.

• All Board Committees being chaired by non-

executive directors.

• TheBoardhavingaccesstoindependentexternal

advice at the cost of the company.

COMPLIANCE

PUBLICFINANCEMANAGEMENTACT1OF 1999, AS AMENDED (PFMA)

The PFMA is one of the laws that EDI Holdings has to

comply with. The company has systems in place to ensure

that it complies with this law. Its policies and procedures

are responsive to the requirementsof thePFMAand its

Regulations. The company reports to the Department of

Minerals and Energy on compliance with the PFMA and its

Regulationsonaquarterlybasis.

KING II

EDIHoldingssubstantiallycomplieswiththerequirements

of the King II Report. Its corporate governance framework

and structures are in line with the King II. Annual reviews

are done to ensure compliance.

OTHER LEGISLATION

Systems have been put in place to monitor compliance

with all other applicable laws. The company’s policies and

procedures are also regularly reviewed in order to ensure

they are responsive to legal requirements. In order to

ensure that the company remains abreast of developments

in the legal environment, systems have been put in place

to continuously scan the legal environment and to get

regular updates.

INTERNALAUDIT

The Internal Audit function exists, inter alia, to examine

and evaluate the adequacy and effectiveness of the

financial, operational, compliance and IT controls to

reducebusinessrisktoanadequatelevelinthemostcost-

effective manner. The Internal Audit function is currently

outsourced. It reports to the Board through the Audit and

Risk Management Committee which approves its Internal

Audit Plan and monitors the function’s performance against

the plan.

The Function has an Internal Audit Charter which is

developed in accordance with the Institute of Internal

Auditors Guidelines. All its duties as set out in the Plan

were performed during the year under review.

RISK MANAGEMENT

The Risk Management Function is currently outsourced.

However, the Board recognises risk management as one

of its responsibilities and has recommended the creation

of a Risk Manager position to the organisational structure.

The Audit and Risk Management Committee of the

Board assists the Board in managing or overseeing risk

management.

The evaluation of risk processes is undertaken annually.

Through this process, all strategic and operational risks

facing the company are identified and measures put in

place to manage them.

CODE OF ETHICS

The company has a Code of Ethics with which all employees

and Board members have to comply. The Company’s Code

of Ethics is underpinned by the company values.

9



COMPANY SECRETARY

The company secretary plays a significant role in the

following:

• Induction of new directors

• Tabling to the Board relevant information on

regulatory and legislative changes

• Providing guidance to directors individually and

collectively on their duties and responsibilities to

the company

• Providingguidanceandadvice to theBoard on

matters of ethics and good governance

• Providingthecommunicationlinkwiththeshareholder.

The directors have unrestricted access to the advice

and services of the Company Secretary and those of the

Secretariat department.

The Company Secretary, amongst other duties, also

facilitates and ensures compliance with the PFMA,

Companies Act and other relevant legislation, and reports

to the Board on these issues.

STAKEHOLDER MANAGEMENT

EDI Holdings believes it is in the company’s best interest

to maintain active and open communication with its

stakeholders regarding the EDI restructuring process.

The Company recognises its ongoing responsibility

to disclose all relevant information to stakeholders.

This recognition is coupled with the equal treatment

of all stakeholders. Various methods of interaction,

include, among others, interaction via stakeholder fora,

publications and media. All reports to stakeholders

present a comprehensive and objective assessment

of the company so that all relevant stakeholders with

legitimate interests in the company’s affairs, operations

and conduct, are apprised of a complete, fair and

responsible account of its performance and impact.

HUMAN RESOURCE MANAGEMENT

SOCIAL RESPONSIBILITY

Part of the key objectives of EDI Holdings is to be a

good corporate citizen by amongst others, making

a contribution to the country’s efforts to uplift poor

communities as well address the educational needs of

children from disadvantaged families through corporate

social investment programmes. Such interventions are

coordinated and facilitated through the Office of the Chief

Executive Officer. One such initiative was undertaken in

the financial year 2008/9 through a donation of school

uniforms, educational and sports materials, working in

partnership with the Dinokeng Tsa Taemane Municipality

as well as other social partners.

HEALTH,SAFETYANDSECURITY

The directors acknowledge their responsibility to

all employees and the public for compliance with

occupational safety and environmental health standards.

Management are charged with ensuring that the

requirementsoftheOccupationalHealthandSafetyAct

(OHSA) are complied with. The industry, within which the

company is part, exerts a relatively low direct impact on

the environment.

WELLNESS PROGRAMME

As a responsible corporate citizen, the company has

committed to help prevent and combat diseases in the

workplace, through promotion of good health, education,

prevention and comprehensive wellbeing of staff.

The wellness programme, which incorporates a wide

spectrum of health issues, such as financial health, legal

savvy, as well as managing other symptomatic diseases

has been developed and rolled out in the organisation.

The company has adopted a policy on HIV/AIDS and

has launched bi-annual HIV/AIDS initiatives through

workshops, education and testing initiatives for all

employees.

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INTRODUCTION

The 2008/09 reporting period, unlike all the preceding

ones since the establishment of EDI Holdings some

fiveyearsago,willgodowninhistoryasaveryunique

period. This uniqueness was as a result of complex

developments on the organisational, social, political as

well as economic fronts.

At the organisational level, we found ourselves in

the unfamiliar position where my incumbency of the

ChairmanshipoftheBoardbeganintheverylastquarter

of the reporting period, with the term of the previous

Chairman and my predecessor having ended at the end of

2008. This literally meant that as the incumbent Chairman,

I now carry the responsibility of giving the Chairman’s

report from the points of view of two Chairmen.

On the social front, the call for accelerated and improved

service delivery from communities across the country

was increasing in its tempo in a manner perhaps

unprecedented before.

On the political front, several significant developments

also occurred towards the end of last year and in the last

quarterofthereportingperiod.Theeffectoftheseonthe

national political landscape was fundamental. The detail

in this regard is contained in the section dealing with the

restructuring environment.

On the economic front, the world was indeed speedily

moving towards a global recession that undoubtedly

has had a profound negative impact on every country’s

economy; including our country’s.

Notwithstanding all these developments, we have

continued on our sustained path to provide industry

thought leadership in the electricity distribution industry

and to implement our overall strategy and plans with the

same resolve and dedication displayed over the years.

All this is aimed at the attainment of the objective of

restructuring and consolidating the electricity distribution

industry as mandated by Government.

THE RESTRUCTURING ENVIRONMENT

As stated in the section above, the restructuring

environment continued to be influenced by complex

developments at organisational, social, political and

economic levels, as well as the stakeholder environment

in general.

Despite these complexities, as the Board we continued

to provide strategic leadership and guidance to the

organisationinourquesttopreparefortheestablishment

of the six viable wall-to-wall Regional Electricity

Distributors (REDs). The smooth transition from the

CHAIRMAN’S REPORT

Mr. D M Nkosi Chairman of the Board

11



erstwhile Chairman of the Board, Ms. Dolly Mokgatle,

ensured that we kept our eyes on the ball at all material

times; and that our focus on providing leadership and

strategic direction to the organisation remained intact.

As community expectations of accelerated and improved

service delivery increased, so also did our pace and

sense of urgency to get all stakeholders ready for the

consolidation of the EDI and establishment of the six wall-

to-wall REDs.

At the same time, we also had to grapple with rapid

changes that were taking place in the political landscape

during the 2008/09 reporting period. These were

characterised by several changes in the entire country’s

administration, including the Presidency and the resultant

formation of a transitional team at executive level; as well

as the national and provincial election campaigns in the

lastquarterof2008.Needlesstosay,thisperiodbrought

with it some uncertainty, but I am proud to pronounce

that we provided the best leadership possible in the

circumstances, under the able leadership of the Ministry

and the Department of Minerals and Energy, to which we

report.

Regarding the management of financial resources under

our charge, we ensured that we maintained cost effective

and efficient management of the limited resources at our

disposal so as to ensure that we could continue to fulfil

our mandate during the trying times that lay ahead.

On the legislative front, more ground was covered with

the leadership and guidance of our parent Ministry and

Departmentinourquesttobringaboutalegislativeand

policy regime necessary to create the desired enabling

environment. In this regard, the following developments

are worth noting:

• The 17th Constitutional Amendment Bill, which

is central in ensuring movement of the current

EDI restructuring environment, was finalised

and submitted to Cabinet for consideration and

approval.

• The RED Establishment Bill is currently in the

process of being drafted by the Department of

Minerals and Energy.

OUR PERFORMANCE

To give effect to the overall mandate of EDI Holdings and

the business plan for the period under review, the Board

continued to provide strategic leadership in line with the

four pillars of our organisational strategy, viz Industry

Leadership, RED Creation, Oversight and Advocacy.

In relation to the industry leadership pillar, we provided

the requisite leadership and support; thus enabling

the organisation to contribute meaningfully to policy

and legislative matters such as the 17th Constitutional

Amendment Bill, RED Establishment Bill and Asset

Transfer Regulations.

Equally so, our active participation and leadership in

broader electricity supply industry issues such as the

national interventions regarding the electricity shortages

and the distribution infrastructure challenges culminated

in theestablishmentofaProgrammeManagementUnit

that coordinates National Electricity Response Team

(NERT) initiatives, as well as the development of a Rescue

Plan to address the ailing EDI infrastructure.

Under the Board’s guidance and leadership, RED

readiness activities were intensified; thus resulting

in a greater number of municipalities committing to

participation in the RED creation process as well as

having many of them commencing with ring fencing and

MSA Section 78 processes.

The conclusion of the preliminary future industry design

was also a key highlight of the period under review.

This design covers the key aspects of the restructuring

process as they relate to retail, human resources, asset

management and tariff structures for the REDs.

We further covered significant ground in relation to the

oversight pillar. On this front, we managed to finalise the

oversight strategy, which also entails the development of

an EDI industry scorecard for measuring and tracking the

implementation of the restructuring process.

12



Guided by the refined communication and stakeholder

management strategy, we intensified our stakeholder

engagements on all fronts to ensure continued buy-in

into the restructuring process as well as ensuring that

stakeholders are kept abreast of developments in the

restructuring process. Our efforts aimed at promoting the

EDI Holdings brand as well as profiling the restructuring

process were also intensified during the year under

review.

A detailed account of the organisational performance

during the period under review is elucidated in detail in

the report of the Chief Executive Officer, as well as in the

Organisational Performance Scorecard section of this

Annual Report.

OUR FUTURE

In the year ahead, we will continue our mission of

establishing the Regional Electricity Distributors as

mandated by Government with renewed vigour. We will

do so cognisant of the fact that, in spite of the challenges

that we may face, the conclusion of our mission is not only

critical for improved and accelerated service delivery

and most importantly sustainable social and economic

development for the country, but that the finish line looms

on the horizon.

In anticipation of a favourable environment to be ushered

in by the expected enactment of the 17th Constitutional

Amendment Bill and RED Establishment Bill as well as

approval of the Strategic Implementation Plan (SIP) by the

Department and Cabinet, we are gearing ourselves for the

final push in the journey that began almost five years ago.

We will also seek to increase the tempo in respect of

our leadership in addressing distribution infrastructure

investment backlog through the EDI Infrastructure Rescue

Plan. We will also enhance our participation in the National

Electricity Response Team, thus entrenching our reputation

as a formidable player and leader in the broader electricity

supply industry as well as the energy sector at large.

Furthermore, our readiness preparations as well as

stakeholder engagements will be intensified as we seek

to ensure that all stakeholders sing from the same sheet in

as far as matters relating to the EDI restructuring process

are concerned.

The implementation of the organisational strategy will

continue with improved pace and Deal negotiations with

asset owners, signatories and influencers in the EDI

restructuring process will be commenced with as soon as

practically possible.

Our track record in the last five years of our existence gives

me the assurance that the unshakeable conviction that has

become the trademark of our team remains firmly rooted. I

have no doubt whatsoever that every member of our team

and our critical stakeholders will put their shoulders to the

wheel as we take the final steps on our journey.

I am confident that we are all up to the challenge!

ACKNOWLEDGEMENTS

On behalf of the Board, executives and staff of EDI

Holdings, I wish to extend our sincerest gratitude and

heartfelt appreciation to the Honourable Minister of

Minerals and Energy, Ms B P Sonjica, for her continued

support, leadership and unwavering championship of the

cause of EDI restructuring.

We are also indebted to the Cabinet, Inter Ministerial

Committee as well as the Parliamentary Portfolio Committee

for Minerals and Energy for their steadfastness in providing

political direction and support.

Our sincerest and special thanks also go to the Director-

General of the Department of Minerals and Energy,

Advocate Sandile Nogxina for his special, sterling and

consistent leadership together with the entire Department.

We would also like to express our profound appreciation

as well to the other National and Provincial Government

Departments on whom we continued to rely for support

and guidance.

We extend also our sincerest thanks to Organised Labour, all

the Premiers, Executive Mayors, Councillors and Municipal

Mayors as well as critical stakeholders such as the South

African Local Government Association (SALGA), Eskom,

and Organised Business for their continued support and

participation in the EDI restructuring process.

13



I further wish to extend my sincerest thanks to my

colleagues on the Board of EDI Holdings, whose

collective wisdom, strategic guidance, commitment and

determination was pivotal in ensuring that the restructuring

process remained firmly on track.

To my predecessor, Ms. Dolly Mokgatle, I remain grateful

for the solid legacy she has left, upon which we continue

to walk the last miles of our journey with confidence and

assurance. To her I say, a million thanks, daughter of the

soil!

My task would not be complete without expressing my

heartfelt appreciation and gratitude to the vital cog that

keeps the wheel of EDI restructuring on its momentum,

the Chief Executive Officer of EDI Holdings, Ms. Phindile

Nzimande and her entire team. Undoubtedly, your

commitment, energy and tenacity have been, and remain

the pillar on which the EDI restructuring process rests.

Many thanks.

_______________

Duma Nkosi (Mr)

Chairman

14



CHIEF EXECUTIVE OFFICER’S REPORTINTRODUCTION

The 2008/09 reporting period was one during which

we directed our energies and efforts on meeting the

goals we set for ourselves for this particular period, as

encapsulated in our organisational plans and highlighted

in the report of the preceding year. Amongst these were

the implementation of the Strategic Implementation Plan

(SIP) and related activities, ensuring that the requisite

enabling legislative and policy environment is realised,

ensuring the advancement of municipal readiness to

join the REDs as well as enhancing our advocacy work

and our involvement in multi- stakeholder efforts to find

solutions to the national energy challenge that the country

experienced,particularly inthefirstquarterof the2008

calendar year.

It is now common cause that certain developments that

occurred in the political arena during the period under

review had an enormous influence on many a front, with

the broader electricity industry not being an exception to

the rule. In spite of these challenges, we at EDI Holdings

continued with the task at hand in a manner characterised

by discipline, tenacity and remarkable focus.

Over and above this, we were given the additional task

of leading efforts to find lasting solutions to the ailing

electricity distribution infrastructure by both the Presidency

and the 2008 EDI Maintenance Summit. This was a

tremendous boost to our image and a confirmation of the

country’s confidence in our ability to provide leadership in

the electricity distribution industry. The development of a

visionary plan, named the Approach to Distribution Asset

Management (ADAM), is our comprehensive response to

this call by the nation.

Thus the 2008/09 reporting was, for all intents and

purposes, another remarkable one in the history of our

existence and has confirmed that, as an organisation, we

continue to grow from strength to strength.

RESTRUCTURING LEGISLATIVE ENVIRONMENT

The period under review confirmed that an enabling policy

and legislative environment remains a critical necessity

for the fulfilment of the restructuring mandate.

To this end, EDI Holdings intensified its assistance to the

Department of Minerals and Energy, the EDI Restructuring

Task Team (EDIRTT) and the Inter Ministerial Committee

in working towards the finalisation of the outstanding

pieces of legislation necessary for creating an enabling

legislative and policy environment.

The following achievements on the legislative front are

therefore worthy of mention:

• The17thConstitutionalAmendmentBill,whichis

Ms. P Nzimande Chief Executive Officer

15



central in ensuring the participation of all current

distributors as contemplated in the Energy White

Paper and the Blueprint on EDI Restructuring of

1998 and 2001, respectively.

• The RED Establishment Bill, which will give

implementation effect to the proposed constitutional

amendment in as far as EDI restructuring is

concerned, was tabled before Cabinet in April

2008, but was referred back for further work and

consultation with impacted stakeholders.

PERFORMANCE OVERVIEW

Financial Management

During the year ended 31 March 2009, we continued to

strive for prudent management of our finances.

We have an approved restructuring budget of R1,2 billion,

which is funded through the Eskom Multi Year Price

Determination (MYPD) of 2006. To date we have received

R365 million (2007/08 R272 million) of which R223 million

(2007/08 R33 million) has already been spent.

Total income received for the year amounts to R233

million, which consists of conditional grants of R10 million

(2007/08 R Nil million) received from DME in respect of the

National Energy Response Team (NERT), and R69 million

for the Corporate Operating budget allocated through the

National Treasury Medium Term Expenditure Framework

(MTEF). An amount of R154 million was recognised from

the Eskom MYPD funding to cover restructuring related

expenditure. Other income consists of R28 million in

respect of interest received on surplus funds invested

with the Corporation for Public Deposits (CPD).

Operating results for the year reflects a surplus amount

of R2.1 million. This amount, together with the cumulative

surplus of R14 million as at 31 March 2008, will be utilised

for future expenditure in line with the company’s three

year budget cycle.

Business strategy

We continued with the implementation of our business

strategy, which is premised on and guided by the four

strategic pillars, namely Industry Leadership, RED

Creation, Oversight and Advocacy. The strategy is further

complemented by our mandate, vision, mission and

values. We are pleased to report key progress towards

RED establishment under each pillar as follows:

Industry leadership

We provided input towards the finalisation of the

17th Constitutional Amendment Bill through the EDI

Restructuring Task Team. As at 31 March 2009, this

matter was concluded and awaiting Cabinet approval.

We further provided inputs on the RED Establishment Bill

and the Asset Transfer Regulations, which have since

been promulgated.

We continued to serve on the National Electricity

Response Team (NERT) and its sub-structures, continuing

in our assigned role as convener and chairman of the Co-

Generation Task Team as well as host of the Programme

ManagementUnitofNERT.

On the charge of the Presidency and in accordance with

the resolutions of the 2008 EDI Maintenance Summit, we

led the process of finding solutions to the ailing electricity

distribution infrastructure and duly completed a business

case and plan called the Approach to Distribution Asset

Management (ADAM). This business plan proposes a

comprehensive set of interventions aimed at addressing

the inadequate investment in infrastructure by current

distributors.

RED Creation

We have progressed with the development of the Strategic

Implementation Plan which contains the National Goals;

the Deal; Transition Path as well as Impact Assessment.

Key progress in this regard includes the following:

• TheNationaldistribution industry scorecardand

associated metrics have been developed.

• We have finalised the Deal project, aimed at

16



quantifying various policy options relating to

asset valuation, compensation, shareholding,

governance and impact analysis.

• We further developed a draft business case for

the establishment of REDs as public entities.

• We developed the transition path highlighting,

amongst others, the need for industry consolidation

and stabilisation.

• A draft Impact Assessment study is under

development and due to be completed early in

the new financial year

In advancing readiness preparations to join the REDs:

• Weestablishedallprojectgovernancestructures

as well as consultation fora to ensure broader

participation by all municipalities.

• We secured the signing of Accession to

Cooperative Agreements by 143 out of 187

electricity distributing municipalities.

• We approved funding for ringfencing and

Municipal Systems Act Section 78 processes for

103 municipalities, 56 of which have commenced

with ringfencing their electricity distribution

businesses.

We also concluded preliminary future industry design

through interalia:

• Developing a Business Processes and Systems

as well as the future Wires and Retail blueprints

for the REDs.

• Adopting, together with organised labour, the

transfer and placement and migration agreements

in the Transitional Labour Relations Structure

(TLRS).

• Completionofcommercially-basedguidelinesfor

Asset Management Planning for the REDs.

• Completionofcurrentstateassessmentof tariffs

and tariff structures as well as developed a tariff

model.

• CompletionofafundingstrategyfortheREDs.

Oversight

We have developed an EDI industry scorecard and

associated metrics which will be used to measure and

track the implementation of the restructuring agenda

and, most importantly; the realisation of the restructuring

objectives as articulated in both the Energy White Paper

(1998) and the Restructuring Blueprint (2001). The

Transition Path component of the SIP also provides for

industry oversight through distinct phases.

Advocacy

During the period under review, we continued to proactively

and continuously advocate for the EDI restructuring

process and promoting the EDI Holdings brand. Our

activities in this regard were based on the communication

and stakeholder management strategy and the refined

strategic approach, as adopted by the Board. Some of the

key highlights for the year ended 31 March 2009 are:

• The 2008 EDI Maintenance Summit, which we

hosted jointly with the National Energy Regulator

of South Africa (NERSA) and the Department of

Minerals and Energy

• The 2008 Amalgamated Municipal Electricity

Undertakings(AMEU)Convention

• The2008NEDLACSummit

• The 2009 Institute for Local Government

Management (ILGM) Conference

• SALGA Provincial and National Members

Assemblies

• Engagement with Organised Labour through the

Transitional Labour Relations Structure

• InternationalSeminaronEDIRestructuring

• EMBARoundtableDiscussionon theappropriate

business model for the EDI

We utilised these platforms to promote EDI restructuring

through presentations and exhibitions, providing feedback

on progress with the restructuring process as well as

solicited stakeholder views and concerns on the process.

17



We also succeeded in our efforts to ensure visibility in the

media by proactively and timely disseminating appropriate

and accurate information on EDI reform. We have also

leveraged the various engagement structures such as

Regional Engagement Forums, District Workshops as

well as the introduction of the new Board Chairman to the

marketinthelastquarteroftheperiodunderreview.

OUR PEOPLE

We intensified our investment of time and resources

towards the development of our employees, driven in this

by our belief in the maxim: Our people are our greatest

assets. To this end, we maintained the implementation of

our institutionalised performance management system.

Through this we accordingly rewarded performance

excellence and put employees on training and development

programmes to ensure not only the closing of identified

skills gaps in terms of their Personal Development Plans,

but toalsoensure theacquisitionofnewknowledgeand

skills that will enhance their ability to deliver in their various

capacities. We also remained consistent in our compliance

with all employment laws and the attainment of employment

equitytargets.

LOOKING AHEAD

Having laid a solid foundation from which we can

successfully give effect to the Strategic Implementation Plan

(SIP), we are now gearing ourselves to enter into meaningful

deal negotiations with current asset owners, signatories and

influencers in a bid to ensure amicable agreement amongst

critical stakeholders. This deal negotiation process will

be further complemented and supported by intensive

stakeholder engagement and consultation.

In anticipation of a favourable outcome in relation to

the proposed 17th Constitutional Amendment and RED

Establishment Bills, we are also readying ourselves to

take advantage of the impending favourable legislative

environment to fast-track the process of creating the

Regional Electricity Distributors (REDs) as mandated.

We will however not rest on our laurels on account of this

favourable environment, rather we will intensify our RED

readiness preparations by ensuring amongst others, the

signing of Accession to Cooperative Agreements by the

remaining municipalities, the completion of ringfencing and

MSA Section 78 processes as well as the formal signing

and effecting of the agreements reached in the Transitional

Labour Relations Structure.

Furthermore, we will also continue to provide assistance

and participate in all National Electricity Response Plan

initiatives as has become the norm as well as continue to

champion the implementation of the Approach to Distribution

Asset Management plan through, amongst others, working

with the Department of Minerals and Energy and National

Treasury to design appropriate funding mechanism for

this initiative that is aimed at resolving the ailing EDI

infrastructure challenges.

ACKNOWLEDGEMENTS

I wish to acknowledge and thank the Honourable Minister

of Minerals and Energy, Ms. Buyelwa Sonjica for her

continued and unwavering support and leadership.

We remain eternally grateful and indebted to her for her

activism and for leading the cause of EDI restructuring

from the front.

To the Director General of Minerals and Energy, Advocate

Sandile Nogxina and the staff in the Department,

sincerest thanks and appreciation are due to you for your

undiminished inspiration, guidance and leadership.

I also acknowledge the support of other Government

departments, National and Provincial Governments and

their structures, Premiers, Executive Mayors as well as

SALGA, Eskom and various other stakeholders. Your

support and continued participation continue to strengthen

and enrich the EDI restructuring process.

I salute the current Chairman, Mr. Duma Nkosi and my

other colleagues on the Board of EDI Holdings, whose

wisdom, support, guidance and advice have been and

remain invaluable in providing strategic direction and

focus on the EDI restructuring journey.

I also wish to single out the former Chairman of the Board,

Ms. Dolly Mokgatle, who, during her tenure, provided

inspirational and visionary leadership to the organisation

and the industry. Her priceless contribution, acumen and

18



insight will remain ever-critical in our quest to fulfil the

mandate of restructuring and consolidating the electricity

distribution industry.

I pay special tribute to all my colleagues at EDI Holdings

at all the levels in the organisation. I am truly humbled

by your support, commitment and dedication to both the

organisation and the cause of EDI restructuring and I

am immensely proud to be a member and captain of a

wonderful team of winners.

I once again confirm my confidence in the ability of

the EDI Holdings team and our various stakeholders

in successfully meeting our mandate and eventually

establishing viable and efficient REDs to ensure affordable,

accessible, reliable and sustainable electricity for all.

Thank you once more!

_____________________

Phindile Nzimande (Ms)

Chief Executive Officer

19



EDI HOLDINGS ORGANISATIONAL STRUCTURE

Executive:

**

20



Mr. D Nkosi Chairman

Dr.ZZRRustomjee

Mr. AB AllyFinance and Procurement

Committee (Chairman)

Mr. OJ KomaneHuman Capital and

Remuneration Committee (Chairman)

Mr. RS MaphumuloProgramme Management


Mr. RJ Field Mr. KJ MorganMr. L JoelCommunication and

Advocacy Committee (Chairman)

Mr. EC Kieswetter Mr. MM

Ntsokolo

Mr. JRD Modise Audit and Risk Management


Mr. X George

Dr. WJ de Beer Chief Operating Officer

Mr. TA Audat


BOARD OF DIRECTORS

21



Mr. J MosheshAct Chief Financial

Officer

EXECUTIVE MANAGEMENT


Dr. WJ de BeerChief Operating Officer

Mr. M MusiExecutive: Communication

and Stakeholder Management

Mr. S T NkeseExecutive: Human Capital and Corporate Services

Mr. S DlaminiCompany Secratary



22



Management LevelsEmployees Job Levels Gender Classificatioon

Number % Operational Support Total Male Female Total

Executive Management 5 5% 5 0 5 3 2 5

Senior Management 16 17% 14 2 16 14 2 16

Management 16 17% 14 2 16 8 8 16

Specialist Skills 35 37% 0 35 35 7 28 35

Discretionery Skills 18 19% 0 18 18 8 10 18

Basic Skills 4 4% 0 4 4 0 4 4

Grand Total 94 100% 33 61 94 40 54 94

% Total Employees 100% 35% 65% 100% 43% 57% 100%

STAFF ESTABLISHMENT REPORT

Employees by management level Employees by job level Employees by gender category

Operational Support

40

0

30

10

20

100

0

80

20

40

60

Male Female

50

0

40

10

20

30

60

Executive Management

Senior Management

Management

Specialist Skills

Discretionary Skills

Basic Skills

Grand Total

Management levels Management levels Management levels

Num

ber

of e

mp

loye

es

Num

ber

of e

mp

loye

es

Num

ber

of e

mp

loye

es

23



Management LevelsAFRICAN ASIAN COLOURED WHITE

Male Female Total Male Female Total Male Female Total Male Female Total

Executive Management 2 1 3 0 1 1 0 0 0 1 0 1

Senior Management 8 1 9 1 0 1 1 0 1 4 1 5

Management 8 4 12 0 2 2 0 1 1 0 1 1

Specialist Skills 6 19 25 0 1 1 0 5 5 1 3 4

Discretionery Skills 8 9 17 0 0 0 0 1 1 0 0 0

Basic Skills 0 4 4 0 0 0 0 0 0 0 0 0

Grand Total 32 38 70 1 4 5 1 7 8 6 5 11

% Total Employees 46% 54% 100% 20% 80% 100% 13% 88% 100% 55% 45% 100%

Male employees by racial composition Female employees by racial composition

25

0

20

5

10

15

30

35

40

25

0

20

5

10

15

30

35

Executive Management

Senior Management

Management

Specialist Skills

Discretionary Skills

Basic Skills

Grand Total

African Asian Coloured White African Asian Coloured White

Total employees by racial composition

0

40

20

80

African Asian Coloured White

60

Management levels Management levels Management levels

Num

ber

of e

mp

loye

es

Num

ber

of e

mp

loye

es

Num

ber

of e

mp

loye

es

24



EMPLOYMENT EQUITY PLAN

EDI Holdings exceeded its employment equity targets

in some categories, whilst it was unable to achieve its

targets in others. The details are as follows:

Black employees (i.e. African, Asian and Coloured)

• Target:66%

• Actual:75%

Female employees

• Target:69%

• Actual:57%

Disabled employees

• Target:10%

• Actual:0%

A plan will be developed to address areas where targets

were not achieved.

The employment targets were based on the full staff

complement of 106. As at 31 March 2009, the staff

compliment stood at 93.

The proposed targets took into account EDI Holdings’

strategic objectives and shall be achieved, inter alia, by:

• Proactivelyseekingemploymentequitycandidates

toestablishgender,racialanddisabilityequityat

all occupation levels; and

• Giving purposeful consideration to employment

equity candidates, who are suitably qualified,

basedonexperience,priorlearning,qualification

and potential.

A policy on representivity of employees with disabilities is

in place. EDI Holdings is working with other governmental

structures to improve the representivity of people with

disabilities.

BASIS OF REMUNERATION

All EDI Holdings posts have been evaluated according to

the TASK grading system. This system has been utilised to

grade all job profiles and benchmark salary structures.

HUMAN CAPITAL COSTS

EDI Holdings was established as a project management

company with a limited lifespan and the focus has therefore

been on employing people with high level skills within

specialist fields. EDI Holdings utilises talent management

to ensure that the Company is operationally efficient and

effective. This ensures the Company’s current and future

success. All talented individuals within the organisation

are identified and appropriate plans put in place to

ensure the continuation of their critical deliverables. It

is the policy of EDI Holdings to remunerate employees

on a “total-cost-to-company” basis. The company

also provides such benefits as medical aid, death and

disability benefit as well as pension.

Total personnel costs for the financial year were:

R63 137 000

Overtime paid for the year was:

R356 000

Incentives paid for the year were:

Prior year: R2 293 000 (under-provision)

Current year: R6 707 000 (provision)

Total: R9 000 000

The total number of days sick leave taken were:

344 days

Health and Safety

No injury, illness or death resulting from official duty or

work–related environment occurred during this financial

period.

25



ORGANISATIONAL SCORECARD: APRIL 2008 – MARCH 2009

The Organisational Scorecard is premised on the Balanced Scorecard perspectives and the following Strategic Pillars:

Industry Leadership : Provide thought leadership and strategic advice for the Electricity Distribution Industry

RED Creation : Ensure the creation of the 6 wall-to-wall REDS in alignment with the establishment strategy

Oversight : Ensure that EDI Holdings plays an oversight role to ensure the success of the REDs

Advocacy : Ensuring that EDI Holdings is the catalyst & the champion of the EDI Restructuring process through proactive and continuous advocacy

PERFORMANCE REPORT

Balanced score-card perspective

Strategic PillarKey Performance

Area (KPA)Measurement (KPI) Target/Target Date Outcomes

Financial15%

Management of EDI Restructuring Finances

Effective management of Op-erational and Restructuring budgets in line with business plan

•Quarterly

•+10%budgetvariance

•Actual-11%favourablebudgetvarianceonCorporateBudget,and15.7% budget variance on Restructuring Budget

•Unqualifiedauditedfinancialstatements

EDI Holdings operated in full compliance with its governance framework and recognised good governance

All internal audit and risks identified, mitigated and actioned in terms of the Enterprise Risk Management Framework

•Ongoing•Unqualified

audit report with respect to internal audit and risk management

•ARiskandIssueManagementMethodologyhasbeenDevelopedand is monitored and evaluated through the Audit & Risk Commit-tee on an ongoing basis

•EDIHoldingsiscurrentlyworkingtowardstheimplementationofaRiskManagementSystem(CURA).

Compliance with corporate governance

•100%compliance •Certificateofcompliancefrominternalaswellasexternalauditors/shareholder (DME)

•Fullycompliantwithallthecorporateandstatutoryrequirements.•AdherencetoKingIIandPFMA,Treasuryregulations,Company’s

Act and Good international best practice



26






Customer70%

Creation25%

Facilitate the crea-tion of an enabling environment for Restructuring

Outstanding restructuring policies and legislation put in place

•Approvalforestablishment of 6 Public Entities REDs, through evaluation of the Business Case

•EnactmentofEDIR Bill

•PromulgationofAsset Transfer Framework

•AdraftBusinessCasehasbeenfinalisedandwillberefinedinlinewith the outcomes of the Deal negotiations prior to submission to National Treasury.

•Atransactionhasbeenstructuredtofacilitatethetransferofdistri-bution business from current asset owners to the REDs.

•TheTransactionandBusinessCasewillproviderequisiteinputintothe RED Establishment Bill and Regulations.

•Providedinputtowardsthefinalisationofthe17th Constitutional Amendment Bill

•InputprovidedintotheAssetTransferFrameworkandtheMinisterof Finance has since promulgated the Asset Transfer Framework in the Government Gazette.

Ensure the creation of the 6 wall to wall REDS

6 REDs established to Day One stage as per Roadmap

•1REDs(2008)

•5REDs(2009)

•ProgressedthedevelopmentoftheStrategicImplementationPlanand developed a Transition Path detailing, amongst others, the need for industry consolidation and stabilising prior to carving out independent REDs

•143outof187municipalitieshavesignedtheAccessiontoCoop-erative Agreements.

•ApprovedfundingforringfencingandMSAs78for103municipali-ties, 56 of which have commenced ringfencing their electricity distribution business.

•Eskomisfullyring-fencedalongthe6wall-to-wallgeographicboundaries.

27






Ensure the incor-poration of munici-palities into their respective REDS

Municipal incorporation strat-egy per RED developed and implemented

•100%compliancewith municipal incorporation strategy as per roadmap

•Municipalincorporationstrategydeveloped

Industry Leadership

20%

Develop REDs operational and functional models

RED business model devel-oped and implemented

•Implementationasper Roadmap

•Thefollowingoperationalandfunctionalmodelsweredeveloped:•WiresBlueprint•RetailBlueprint•BP&SBlueprint•HumanCapitalDesign•FinanceFunctionDesign

Develop RED business im-provement strategies

•AsperRoadmap •Areasofbusinessimprovementshavebeenidentifiedandquanti-fied in the transaction model.

•Adetailedprojecttovalidatethefeasibilityofthesesynergyareasis underway.

•ArescueplanfortheailingEDIInfrastructurehasbeendevelopedand approved by the board.

28






HC framework model is developed and ready for implementation for all REDs

•InlinewithREDestablishment Roadmap

•TheHumanCapitalEstablishmentStrategyhasbeendevelopedand approved. This includes:

•ApeopleVision.•AppropriateOrganisationalMacroStructure•Skillsretentionanddevelopmentstrategy.•RecruitmentandselectionofLeadership.•Theanticipatedhumanresourcessystemsandprocesses.

•Changemanagementinterventionstosupporttheringfencingprocess have commenced.

•FullmenuofHRpoliciesandprocedureshavebeendeveloped.•High-levelHarmonisationofconditionsofservicehavebeen

developed.

Oversight10%

Establish a frame-work to provide strategic advice to the EDI

Industry Balanced Score-card developed to provide restructuring leadership and industry oversight

•Developedin-dustry Balanced Scorecard

•AspartoftheStrategicImplementationPlandevelopedandap-proved by the board, National Goals with associated metrics have been developed to guide the industry towards achievement of restructuring objectives.

Develop an Over-sight strategy

Oversight strategy a chapter of the EDI Implementation Strategy

•DevelopedOver-sight strategy

•TheStrategicImplementationPlan,inparticulartheproposedTransition Path, has been approved by the board and will provide for industry oversight through consolidation and incubation prior to carving out independent REDs.

Advocacy15%

Ensure proactive and continuous advo-cacy

Effective change manage-ment and labour relations

•Ongoing •Arefinedcommunicationandstakeholderstrategywasdevelopedand approved by the Board.

•Thetransfer,placementandmigrationagreementshavebeenadopted by the Transitional Labour Relations Structure.

•NoindustrialactionrecordedasaresultofEDIRprocessesasatdate of reporting.

Effective communication with all stakeholders and public/consumers

•ImplementBoardapproved commu-nication strategy

•Keystakeholdersincludingpolicymakers,currentassetowners,the media and public were kept informed continuously and partici-pated in the EDI restructuring process.

•TheEDIHoldingsbrandwasalsoactivelypromoted.

29






Internal systems 10%

Build EDI Restruc-turing Repository

Knowledge management policy and strategy devel-oped and implemented

•Implementationongoing

•Aknowledgemanagementpolicyandstrategywasdevelopedandimplemented during the year under review.

Align EDI Holdings business model and corporate culture

Effective generic consulting strategy developed and im-plemented for EDI Holdings

•Implementationongoing

•ArevisedorganisationdesignforEDIHoldingswasdevelopedandapproved by the Board.

•AperformanceExcellenceProgrammewasdesignedandrolled out to create a common culture and to improve employee engagement.

Build project man-agement capability

Adherence to project man-agement methodology

•Allprojectstracked as per project plans

•Adherencetoprojectmanagementmethodologycontinuouslyenforced by the Programme Management Office and validated through regular compliance audits

•49Staffmembersattendedprojectmanagementtraining.

Learning and growth 5%

Align EDI Holdings into a best practice employer of choice

Interventions to bridge industry knowledge gaps amongst EDI Holdings staff implemented

•Ongoing •13ThinkTankSessionsconductedinthe2008/2009financialyearto facilitate organisation alignment and input to strategies and operations across the business

•Employeesaffordedpracticalexposuretowardschosenfieldsofstudy and general growth path

Talent management interven-tions implemented to ensure retention of critical staff in line with Retention Strategy

•100%ofplan •TalentandretentionstrategiesdevelopedandapprovedbyHumanCapital & REMCO

•90%ofstaffidentifiedforretentionretained

Achievement of EDI Holdings EmploymentEquitytargets

•100%achieve-ment of plan

•EETargetsarecurrentlymetandexceededinthefollowingcategories:-

•Blackmale•WhiteMale•RecruitmentprocessconductedinalignmentwithEDIHoldings’EmploymentEquityPlan.

30






Achievement of EDI Holdings training and development plans

•100%achieve-ment of plan

•TheEDIHoldingsWorkplaceSkillsPlanwassubmittedtoServicesSETA in June 2008 and full compliance established by the audit in March 2009.

•TheTrainingandDevelopmentDepartmentconductedthefollow-ing external training during the financial year:

•21staff-IntermediateNegotiationSkills•1staff–AdvancedNegotiationSkills•49staff–ProjectManagement•2staff–Voicetraining•2staff–PublicRelations•20staff–EventsManagement•19staff–ReportWritingSkills

31





PART FOUR

ANNUAL FINANCIAL STATEMENTS

INDEX PAGE

Directors and Administration 32 – 33

Approval and Statement of Responsibility 34

Report of the Auditor-General 35 – 37

Report of the Audit and Risk Management Committee 38 - 40

Report of the Directors 41 - 47

Statement of financial position 48

Statement of financial performance 49

Statement of changes in net assets 50

Cash flow statement 51

Notes to the annual financial statements 52 - 77

ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2009


32 Annual Report 2008 / 2009

Country of incorporation: South Africa

Nature of business: Restructuring of electricity distribution in

South Africa

Directors: Mr D Nkosi (Chairman)

(appointed 1 December 2008)

Ms DD Mokgatle

(term expired 30 November 2008)

DrZZRRustomjee

Mr AB Ally

Mr OJ Komane

Mr RS Maphumulo

Mr RJ Field

Mr KJ Morgan

Mr K Moholola

(resigned 30 April 2008)

Mr L Joel

Mr EC Kieswetter

Mr MM Ntsokolo

Dr AMB Mokaba

(resigned 19 February 2009)

Mr JRD Modise

Mr X George

Ms P Nzimande

Dr WJ de Beer

Mr TK Mokoto

(resigned 30 May 2008)

Mr TA Audat

(appointed 1 January 2009)

Policy and Strategy Committee: MR D M Nkosi (Chairman)

(appointed 1 December 2008)

MS DD Mokgatle

(term expired 30 November 2008)

Mr AB Ally

DrZZRRustomjee

Mr KJ Morgan

Mr RS Maphumulo

Mr X George

Mr EC Kieswetter

Mr OJ Komane

Mr JRD Modise

Mr MM Ntsokolo

Audit and Risk Management Committee: Mr JRD Modise (Chairman)

DrZZRRustomjee

Mr KJ Morgan

MrZSithole

Finance and Procurement Committee: Mr AB Ally (Chairman)

Mr L Joel

Mr K Moholola

(resigned 30 April 2008)

Dr AMB Mokaba


Mr TA Audat

(appointed 1 January 2009)



Human Capital and Remuneration Committee: Mr OJ Komane (Chairman)

Mr RJ Field

Ms DD Mokgatle

Mr X George

Programme Management Board Committee: Mr RS Maphumulo (Chairman)

Mr K Moholola

Mr EC Kieswetter

Mr MM Ntsokolo

Communication and Advocacy Committee: Mr L Joel

(Chairman as from 1 November 2008)

Mr RS Maphumulo

Mr AB Ally

Mr RJ Field

(Chairman until 30 October 2008)

Dr AMB Mokaba


Governing Legislation Public Finance Management Act, Act no.1 of 1999

(as amended by Act 29 of 1999), and the

Companies Act, Act no 61 of 1973. (Scheduled

3A Public Entity)

Date of incorporation 11 March 2003

Business address Presidia Building255 Paul Kruger Street,

Pretoria,

0002

Postal address Private bag X166,

Pretoria,

001

Bankers First National Bank

Corporate Services

Bank City, Johannesburg

Auditors AUDITOR-GENERALOFSOUTHAFRICA

Company registration 2003 / 005572/07

Registered office Presidia Building

255 Paul Kruger Street,

Pretoria,

0002



The Board of Directors is responsible, through

management,forensuringthemaintenanceofadequate

accounting records and the preparation and integrity

of the financial statements and related information. The

auditors are responsible for independently auditing and

reporting on the fair presentation of financial statements in

conformity with International Standards on Auditing. The

financial statements have been prepared in accordance

with the South African Statements of Generally Accepted

Accounting Practice (GAAP) including any interpretations

of such statements issued by the Accounting Practices

Board, as well as in accordance with the Effective

Standards of Generally Recognised Accounting Practice

(GRAP) issued by the Accounting Standards Board

replacingtheequivalentGAAPstatement.

The Board of Directors is also responsible, through

management, for ensuring the company’s system of

internal financial control. This is designed to provide

reasonable, but not absolute, assurance as to the reliability

ofthefinancialstatements,andtoadequatelysafeguard,

verify and maintain accountability of assets, and to

prevent and detect misstatement and loss. 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.

The annual financial statements have been prepared

on a going concern basis, since the directors have

everyreasontobelievethatthecompanyhasadequate

resources in place to continue in operation for the

foreseeable future.

The financial statements for the year ended 31 March

2009 and which appear on pages 31 to 77 have been

approved by the Board of Directors and are signed on its

behalf by:

__________________ _________________

Mr. D Nkosi Mr. J Modise

Board Chairman Director

APPROVAL AND STATEMENT OF RESPONSIBILITY



REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE FINANCIAL STATEMENTS AND PERFORMANCE INFORMATION OF EDI

HOLDINGS (PROPRIETARY) LIMITED FOR THE YEAR ENDED 31 MARCH 2009

REPORT ON THE FINANCIAL STATEMENTSIntroduction

1. I have audited the accompanying financial statements

of EDI Holdings (Proprietary) Limited which comprise

the statement of financial position as at 31 March

2009, the statement of financial performance, the

statement of changes in net assets and the cash

flow statement for the year then ended, a summary of

significant accounting policies and other explanatory

notes, and the accounting authority’s report, as set

out on pages 48 to 77.

The accounting authority’s responsibility for the financial statements

2. The accounting authority is responsible for the

preparation and fair presentation of these financial

statements in accordance with the basis of accounting

determined by the National Treasury, as set out in

accountingpolicynote1andinthemannerrequired

by the Public Finance Management Act, 1999 (Act No.

1 of 1999) (PFMA) and the Companies Act of South

Africa 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.

The Auditor-General’s responsibility

3. Asrequiredbysection188oftheConstitutionofthe

Republic of South Africa, 1996 read with section 4 of

the Public Audit Act, 2004 (Act No. 25 of 2004) (PAA),

my responsibility is to express an opinion on these

financial statements based on my audit.

4. I conducted my audit in accordance with the

International Standards on Auditing read with General

Notice 616 of 2008, issued in Government Gazette

No.31057of15May2008.Thosestandardsrequire

thatIcomplywithethicalrequirementsandplanand

perform the audit to obtain reasonable assurance

about whether the financial statements are free from

material misstatement.

5. An audit involves performing procedures to obtain

audit evidence about the amounts and disclosures

in the financial statements. The procedures selected

depend on the auditor’s judgement, including the

assessment of the risks of material misstatement of the

financial statements, whether due to fraud or error. In

making those risk assessments, the auditor considers

internal control relevant to the entity’s preparation and

fair presentation of the financial statements 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. An audit also includes evaluating the

appropriateness of accounting policies used and

the reasonableness of accounting estimates made

by management, as well as evaluating the overall

presentation of the financial statements.

6. I believe that the audit evidence I have obtained is

sufficient and appropriate to provide a basis for my

audit opinion.

Opinion

7. In my opinion the financial statements present fairly,

in all material respects, the financial position of EDI

Holdings (Proprietary) Limited as at 31 March 2009

and its financial performance and cash flows for the

year then ended, in accordance with the basis of

accounting determined by the National Treasury, as

set out in accounting policy note 1 and in the manner

required by the PFMA and the Companies Act of

South Africa.

Basis of accounting

8. Without qualifying my opinion, I draw attention to

note 1 to the financial statements, which describes

the basis of accounting. The company’s policy

is to prepare financial statements on the basis of

accounting determined by the National Treasury.





Other matters

Withoutqualifyingmyopinion,Idrawattentiontothefollowingmattersthatrelatetomy

responsibilities in the audit of the financial statements:

Governance framework

9 The governance principles that impact the auditor’s opinion on the financial statements

are related to the responsibilities and practices exercised by the accounting authority

and executive management and are reflected in the key governance responsibilities

addressed below:

Matters of governance

10. The PFMA tasks the accounting authority with a number of responsibilities concerning

financial and risk management and internal control. Fundamental to achieving this is

the implementation of certain key governance responsibilities, which I have assessed

as follows:

No. Matter Y NClear trail of supporting documentation that is easily available and provided in a timely manner1. No significant difficulties were experienced during the audit

concerningdelaysortheavailabilityofrequestedinformation.

Qualityoffinancialstatementsandrelatedmanagementinformation2. The financial statements were not subject to any material

amendments resulting from the audit.

3. The annual report was submitted for consideration prior to the tabling of the auditor’s report.

Timeliness of financial statements and management information4. The annual financial statements were submitted for auditing as

per the legislated deadlines as set out in section 55 of the PFMA.

No. Matter Y NAvailability of key officials during audit 5. Key officials were available throughout the audit process.

Development and compliance with risk management, effective internal control and governance practices6. Audit committee

•Theentityhadanauditcommitteeinoperationthroughoutthefinancial year.

•Theaudit committeeoperates in accordancewith approved,written terms of reference.

•Theauditcommitteesubstantiallyfulfilleditsresponsibilitiesforthe year, as set out in section 77 of the PFMA and Treasury Regulation 27.1.8.

7. Internal audit•Theentityhadaninternalauditfunctioninoperationthroughout

the financial year.

•The internal audit functionoperates in termsof anapprovedinternal audit plan.

•Theinternalauditfunctionsubstantiallyfulfilleditsresponsibilitiesfor the year, as set out in Treasury Regulation 27.2.

8. There are no significant deficiencies in the design and implementation of internal control in respect of financial and risk management.

9. There are no significant deficiencies in the design and implementation of internal control in respect of compliance with applicable laws and regulations.

10. The information systems were appropriate to facilitate the preparation of the financial statements.

11. A risk assessment was conducted on a regular basis and a risk management strategy, which includes a fraud prevention plan, is documented and used as set out in Treasury Regulation 27.2.

12. Powers and duties have been assigned, as set out in section 56 of the PFMA.

13. The prior year audit findings have been substantially addressed.

REPORTOFTHEAUDITOR-GENERALTOPARLIAMENTONTHEFINANCIALSTATEMENTSANDPERFORMANCE

INFORMATION OF EDI HOLDINGS PROPRIETARY LIMITED FOR THE YEAR ENDED 31 MARCH 2009



No. Matter Y N14. The information systems were appropriate to facilitate the

preparation of a performance report that is accurate and complete.

15. Adequatecontrolprocessesandproceduresaredesignedand implemented to ensure the accuracy and completeness of reported performance information.

16. A strategic plan was prepared and approved for the financial year under review for purposes of monitoring the performance in relation to the budget and delivery by EDI Holdings (Proprietary) Limited against its mandate, predetermined objectives, outputs, indicators and targets as set out in Treasury Regulation 29.1.

17. There is a functioning performance management system and performance bonuses are only paid after proper assessment and approval by those charged with governance.

11. Significant adjustments were effected to the financial statements largely due to a

lack of effective financial oversight by management and a proper understanding

of the necessary information to affect a proper audit process. The overall control

environment of the entity has been satisfactory which had contributed to a large

extentintheissuingofanunqualifiedauditopinion.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

Report on performance information

12. I have reviewed the performance information as set out on pages 25 to 30.

The accounting authority’s responsibility for the performance information

13.Theaccountingauthorityhasadditionalresponsibilitiesasrequiredbysection55(2)

(a) of the PFMA to ensure that the annual report and audited financial statements

fairly present the performance against predetermined objectives of the public entity.

The Auditor-General’s responsibility

14. I conducted my engagement in accordance with section 13 of the PAA read with General

Notice 616 of 2008, issued in Government Gazette No. 31057 of 15 May 2008

15. In terms of the foregoing my engagement included performing procedures of an audit

nature to obtain sufficient appropriate evidence about the performance information

and related systems, processes and procedures. The procedures selected depend

on the auditor’s judgement.

16. I believe that the evidence I have obtained is sufficient and appropriate to report that

no significant findings have been identified as a result of my review.

APPRECIATION17. The assistance rendered by the staff of EDI Holdings (Proprietary) Limited during the

audit is sincerely appreciated.

Pretoria

31 July 2009

REPORTOFTHEAUDITOR-GENERALTOPARLIAMENTONTHEFINANCIALSTATEMENTSANDPERFORMANCE

INFORMATION OF EDI HOLDINGS PROPRIETARY LIMITED FOR THE YEAR ENDED 31 MARCH 2009



REPORT OF THE AUDIT AND RISK MANAGEMENT COMMITTEE

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2009

RESPONSIBILITIES

The Board of Directors has the general responsibility to

ensure that the company has and maintains effective,

efficient and transparent systems of risk management and

internalcontrol.Theresponsibilitytoensuretheadequacy

and effectiveness of these systems is delegated to the

Audit and Risk Management Committee. The Audit and

Risk Management Committee is an advisory committee

of the Board, operating as overseer with an independent

and objective stance.

INTERNAL AUDITING

The Internal Audit has conducted its affairs in compliance

with the revised and approved charter and has discharged

its responsibilities as contained therein.

During the year under review, the outsourced Internal

Audit Activity performed a number of internal audits and

ad-hoc assignments as per the operational plan approved

by the Audit and Risk Committee, including:

• CommunicationandStakeholderManagement;

• HighLevelreviewoftheAnnualFinancialStatements

• ComplianceandGovernanceReview;

• ReviewofPerformanceInformation

• RiskEvaluationandManagement

• Security;

• InformationTechnologyGeneralControlsReview;

• HumanCapitalManagement;

• BudgetaryControls;

• ContractManagement;

• AssetManagement;

• FinancialManagement;

• ProjectManagement;

• SupplyChainManagement;

• RevenuesandReceivables;and

• CashManagement.

Based on the results of the audit work done during the

year under review, there were some areas where the

internalcontrolsystemswereidentifiedasrequiringsome

corrective action. Towards the end of the financial year,

internal audit also performed follow-up audits on previous

internal and external audit findings raised during the year

and found that most of the control deficiencies that were

identified had been addressed.

Internal Audit has reported on a monthly basis to the

Executive Committee Meeting and thereafter to the Audit

and Risk Management Committee Meeting, in terms of

audits finalised and status of corrective action taken by

management.

Internal Audit will continue to focus on providing

reasonable assurance in line with the mandate from the

Public Finance Management Act, Treasury Regulations

and King II and III Reports.

• Riskmanagement

• Internalcontrols

• Governance

• BusinessProcesses

• EthicalEnvironment

Evaluate and develop recommendations for the

enhancement or improvement of the processes through

which:

a) objectives and values are established and

communicated;

b) the accomplishment of objectives is monitored;

c) accountability is ensured, and

d) corporate values are preserved.

The Internal Audit has been independent throughout the

year under review.

The Audit and Risk Management Committee convened

5 times during the year under review. In addition to the

members, persons attending the meeting by invitation

include representatives of Internal Audit, the Chief

Financial Officer and representatives of the Auditor-

General. Where necessary the Committee met separately

with internal and external auditors.



RISK MANAGEMENT

The Board is accountable for the process of Risk

Management, the system of Internal Control and for

establishing appropriate risk and control policies and

communicating these throughout the company. It has

delegated these responsibilities to the Audit and Risk

Management Committee.

The facilitation for the implementation of the strategic

risk management process is outsourced at present and

ensures that strategic risks are assessed and evaluated

on an ongoing basis and assigned to relevant risk owners

who ensure that mitigating strategies are put into place

as prescribed in the documented Risk Management

Framework. Mitigating processes include specific steps

to be taken should a risk occur. This does not reduce

the responsibility of the EDI Holdings Board of Directors

and executive management at EDI Holdings regarding

the management of risks facing the organisation and the

EDI restructuring process.

Functional and operational risks are not facilitated by

the outsourced service provider, but are managed

internally through a process aligned with the strategic

risk management process.

A Risk Management report, including details regarding

reportable strategic risks is presented to the Audit and

Risk Management Committee on a bi-monthly basis.

The key reportable strategic risks in turn are reported to

the Board of Directors in such a manner that interaction

takes place between the Audit and Risk Management

Committee and the Board of Directors.

Strategic risks and mitigating actions are formally identified

during risk assessment meetings and confirmed at

monthly risk management team meetings, to ensure that

strategic risks are properly managed. The most recent

review of strategic risks by Executive Management was

conducted on the 23 March 2009. The main purpose of

the strategic risk assessment workshop was to revise

existing risks, identify new risks, and assess, through

a structured and facilitated process, the strategic risks

which may prevent EDI Holdings and the EDI Industry

from achieving its stated strategic priorities / objectives

The risk management process is structured to ensure that

consideration is given to both, risks under control of EDI

Holdings and those not within the ambit of EDI Holdings

business operation. This is done to ensure that EDI

Holdings attains its objectives. These include, amongst

others,risksrelatingtotheadequacyofthecurrentEDI

Holdings RED establishment timelines, possible non-

realisation of EDI restructuring benefits, loss of key staff

at EDI Holdings, possible negative impact of the EDI

restructuring on the balance of the Electricity Supply

Industry and the negative impact that 2009 elections may

have on RED establishment timelines.

EDI Holdings (Pty) Ltd’s (EDI Holdings) commitment to

compliance with good corporate governance practices has

led to the adoption of enterprise risk management principles

that ensure good risk management across the entity.

The Enterprise Risk Management (ERM) process at EDI

Holdings has been established to:

• Proactivelyidentifyandmanagerisksthatmayprevent

EDI Holdings from achieving its objectives; and

• Comply with the Public Finance Management Act

(PFMA), the related Treasury Regulations, the King

II Code on Corporate Practices and Conduct (King

II Code) and other good governance practices that

prescribe a proactive Risk Management process

requiringtransparency,accountabilityandthesound

management of the revenue, expenditure, assets and

liabilities.

The ERM policy and procedures manual are reviewed

and updated annually by the ERM team. The policy

and procedures manual consists of the following

documentation:

• EDIHoldingsERMPolicy

• EDIHoldingsERMFramework

• EDI Holdings ERM Handbook – Guidebook on

framework principles

On a monthly basis, risks are reviewed at operational

level, especially regarding the risks associated with

REPORTOFTHEAUDITANDRISKMANAGEMENTCOMMITTEE




the restructuring process at a project level. In addition,

strategic risks are reviewed monthly as a standing item

on the Executive Committee’s agenda. When operational

risks and emerging issues warrant it, these items are

elevatedtothequarterlyAuditandRiskCommitteeand

Board of Directors’ meetings. The management of risk is

included in the performance contract and appraisal of

each manager.

In addition, should any risk that can be turned into

a business opportunity be identified during the risk

management process, these are investigated and dealt

with appropriately.

INTERNAL CONTROL SYSTEM

In establishing the internal control system consideration

was given to controls that would ensure risks are identified

and mitigated against and that the company’s objectives

are achieved.

Key Performance Indicators, through a Balanced

Scorecard methodology, are utilised to enhance the

attainment of the Company’s objectives.

The members of the Audit and Risk Management

Committee concur with the Directors’ assessment of the

internal control processes as described in the financial

statementsandthenotesthereto,includingthequalityof

theyearendmanagementandmonthlyquarterlyreports.

The Audit and Risk Committee is satisfied with the content

andqualityof themonthlyreportspreparedandissued

by the CFO.

FINANCIAL STATEMENTS

The Audit and Risk Management Committee has:

Reviewed and discussed with the external auditors and

the Acting Chief Financial Officer the audited annual

financial statements to be included in the annual report;

Reviewed external auditors management letter and

management response.

The Audit and Risk Committee concurs and accepts

the conclusions of the external auditors on the annual

financial statements and is of the opinion that the audited

financial statements be accepted.”

External auditors have been independent throughout the

year under review.

LEGAL AND REGULATORY COMPLIANCE

Legal and regulatory compliance is monitored by the

members of the Audit and Risk Management Committee

in respect of the relevant legislation applicable to the

company’s operations. Major legislation and regulations

under consideration (for which the company has

achieved compliance except for those instances detailed

in the Director’s Report) includes the Companies Act

and the Public Finance Management Act and Treasury

Regulations.

__________________________

Mr. JRD Modise

Audit and Risk Management Committee Chairman

Audit and Risk Management Committee members:

Mr. JRD Modise

Dr.ZZRRustomjee

Mr. KJ Morgan

Mr.MZSithole

REPORTOFTHEAUDITANDRISKMANAGEMENTCOMMITTEE




REPORT OF THE DIRECTORSFOR THE YEAR ENDED 31 MARCH 2009



The directors present their report for the year ended 31 March 2009. This report forms part of the audited financial statements.

1. DIRECTORSTheArticlesofAssociationrequirethatElectricityDistributionIndustryHoldings(Pty)LtdiscontrolledandmanagedbyaBoardcomprisingofsixteendirectors.

The Board of Directors is as follows:

NAME & SURNAME DATE APPOINTED DATE RESIGNED Total no. of ordi-nary meetings No. attended Total No. of Ad hoc

meetings No. attended

NONEXECUTIVEDIRECTORS

MR D M NKOSI * (CHAIRMAN) 1-Dec-2008 4 1 3 0

MS DD MOKGATLE 21-Apr-2005 30-Nov-2008 4 2 3 3

MR AB ALLY 1-Apr-2006 4 4 3 3

MR RJ FIELD 1-Sep-2005 4 4 3 3

MR OJ KOMANE 1-Apr-2006 4 3 3 2

MR K MOHOLOLA 1-Dec-2006 30-Apr-2008 4 0 3 1

MRRSMAPHUMULO 1-Jun-2005 4 4 3 3

MR KJ MORGAN 1-Jan-2006 4 4 3 3

MR L JOEL 2-Feb-2006 4 3 3 3

DRZZRRUSTOMJEE 1-Apr-2006 4 3 3 1

MR EC KIESWETTER 1-Jan-2008 4 2 3 2

MR MM NTSOKOLO 1-Jan-2008 4 3 3 3

DR AMB MOKABA 1-Jan-2008 19-Feb-2009 4 1 3 1

MR JRD MODISE 1-Jan-2008 4 1 3 0

MR X GEORGE 1-Jan-2008 4 3 3 0

MRTAAUDAT** 1-Jan-2009 4 1 3 0

EXECUTIVEDIRECTORS

MSPNZIMANDE 1-Apr-2003 4 4 3 3

DR WJ DE BEER 1-Jan-2004 4 2 3 1

MR TKE MOKOTO 15-Sep-2006 31-May-2008 4 1 3 1

* Chairman D Nkosi appointed on 1 December 2008

** Mr Thabang Audat appointed on 1 January 2009



2. POLICY AND STRATEGY COMMITTEEThe composition of the Policy and Strategy Committee is as follows :

NAME & SURNAME DATE APPOINTED DATE RESIGNED Total no. of ordinary meetings No. attended Total No. of Ad hoc


MR DM NKOSI *(CHAIRMAN) 1-Dec-2008 1 1

MS DD MOKGATLE 21-Apr-2005 30-Nov-08 1 0

DRZZRRUSTOMJEE 1-Apr-2006 1 1 MR KJ MORGAN 1-Jan-2006 1 1 MRRSMAPHUMULO 1-Jun-2005 1 1 MR X GEORGE 1-Jan-2008 1 1 MR EC KIESWETTER 1-Jan-2008 1 0 MR OJ KOMANE 1-Apr-2006 1 0 MR JRD MODISE 1-Jan-2008 1 1

MR MM NTSOKOLO 1-Jan-2008 1 1 MRTAAUDAT** 1-Jan-2009 1 1

* Chairman D Nkosi appointed on 1 December 2008

** Mr Thabang Audat appointed on 1 January 2009

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31 MARCH 2009



3. AUDIT AND RISK MANAGEMENT COMMITTEEThe composition of the Audit and Risk Management Committee is as follows:



MR JRD MODISE (CHAIRMAN) 1-Jan-2008 6 4 1 1DRZZRRUSTOMJEE 1-Apr-2006 6 6 1 1 MR KJ MORGAN 1-Jan-2006 6 6 1 1 MRZSITHOLE(CO-OPTED) 18-Aug-2006 6 4 1 0

4. FINANCE AND PROCUREMENT COMMITTEEThe composition of the Finance and Procurement Committee is as follows:



MR AB ALLY (CHAIRMAN) 1-Apr-2006 8 7 2 2

MR L JOEL 2-Feb-2006 8 7 2 2

MR K MOHOLOLA 1-Dec-2006 30-Apr-08 8 0 2 0

DR AMB MOKABA*** 1-Jan-2008 19-Feb-09 8 0 2 0

MRTAAUDAT** 1-Jan-2009 8 1 2 1

** Mr Thabang Audat appointed on 1 January 2009.

*** Dr Bennie Mokaba resigned 19 February 2009.





5. PROGRAMME MANAGEMENT BOARD COMMITTEE

The composition of the Programme Management Board Committee is as follows:

NAME & SURNAME DATE APPOINTED DATE RESIGNED Total number of ordinary meetings No. attended Total number of

Ad hoc meetings No. attended

MRRSMAPHUMULO(CHAIRMAN) 1-Jun-05 5 5 0 0MR K MOHOLOLA 1-Dec-06 30-Apr-08 5 1 0 0MR EC KIESWETTER 1-Jan-08 5 2 0 0MR MM NTSOKOLO 1-Jan-08 5 4 0 0

6. COMMUNICATION AND ADVOCACY COMMITTEE

The composition of the Communications and Advocacy Committee is as follows:

NAME & SURNAME DATE APPOINTED DATE RESIGNED Total no. of ordinary meetings No. attended Total No. of Ad

hoc meetings No. attended

MR L JOEL (CHAIRMAN) 2-Feb-2006 3 2 1 1MR RJ FIELD 1-Sep-2005 3 3 1 1MR AB ALLY 1-Apr-2006 3 3 1 0DR AMB MOKABA *** 1-Jan-2008 19-Feb 2009 3 0 1 0

*** Dr Bennie Mokaba resigned 19 February 2009





7. HUMAN CAPITAL AND REMUNERATION COMMITTEE

The composition of the Human Capital and Remuneration Committee is as follows:



MR OJ KOMANE (CHAIRMAN) 1-Apr-2006 4 3 MS DD MOKGATLE 21-Apr-2005 30-Nov-2008 4 2 MR RJ FIELD 1-Sep-2005 4 4 MR X GEORGE 1-Jan-2008 4 3 MR D M NKOSI * 1-Dec-2008 4 1

* Mr Duma Nkosi appointed on 1 December 2008

8. PRINCIPAL ACTIVITIES OF THE COMPANY

The main object of the company is to restructure the electricity distribution industry into financially viable independent Regional Electricity Distributors in South Africa in accordance

with National Government policy to ensure a more effective and efficient electricity distribution industry capable of providing affordable and accessible electricity to consumers.

9. OPERATING RESULTS

A government grant amounting to R10m was received from Department of Mineral and Energy to fund the National Electricity Response Team’s (NERT) project managed by EDI

Holdings on behalf of the Department of Minerals and Energy (DME) .

Total income received for the year in respect of government funding, interest and other income amounted to R260.5 million (2008: R99.8 million). Of this income an amount of R69.3

million (2008: R65.9 million) was received from the Department of Minerals and Energy (DME) to cover corporate operational expenditure, whilst the balance of R 191.2 million which

relates to restructuring project expenses.

Operational expenditure for the financial period amounted to R258.4 million (2008: R97.2 million).





The net result of the year reflects a net surplus (deficit)

amounting to R2.1 million (2008: R2.6 million).

No provision for taxation has been made in the financial

statements of the company since the company is directly

funded by the government for the public benefit to effect

the restructuring of the electricity distribution industry.

Exemption from taxation in terms of S10.9B has been

granted to the company by the South African Revenue

Services (SARS).

Unutilised government grants and funding amounted

to R104 million (2008: R181 million) at the end of the

financial year.

10. FUNDING

Fundingforoperationalrequirements

Financerequiredtofundtheoperationaloverheadsofthe

company is provided for by the Department of Minerals

and Energy and the National Treasury.

Funding for special projects

An amount of R10 million was made available by the DME

during the current financial year to fund the programme

Management unit of the National Electricity Response

Team (NERT).

At the end of the current financial year the total costs

incurred in respect of the NERT project amounted to

R9.58 million. The balance of R0.42 million will be utilised

to defray other administrative expenses related to this

project during the next financial year.

Funding for Electricity Distribution Industry Restructuring

The company obtained approved funding through the

National Energy Regulator of South Africa (NERSA)

amounting to R1.2 billion over a three-year period for

the restructuring of the electricity distribution industry

effective from 1 April 2006 to 31 March 2009.

This funding, to be borne by electricity customers through

being included in the NERSA-approved ESKOM Multi-

Year Price Determination (MYPD) for the period 2006 to

2009, will be received from ESKOM who are the collection

agent. As at the end of March 2009, the total amount

received in respect of the MYPD transfer payments

amounted to R378.9 million (2008: R260.4 million).

An amount of R104.5 million (2008: R181.9 million) has

been received during the current financial year being part

payment of the R1.2 billion MYPD Restructuring funding.

11. SHARE CAPITAL

There were no changes in the authorised and issued

share capital of the company during the period under

review. The issued share certificates and the register

of share capital are kept at the registered office of the

company.





12. ASSETS

The company acquired computer software and office

equipment,aswellas furnitureandfittings to thevalue

of R3.566 million during the current financial year

(2008: R1.841 million).

13. MANAGEMENT AND CONTROL

Electricity Distribution Industry Holdings (Pty) Ltd, a

Scheduled 3A public entity is wholly owned by the State

through the Department of Minerals and Energy

14. NOTE ON ACCOUNTING STANDARDS

The financial statements have been prepared in

accordance with the Prescribed Standards of Generally

Recognised Accounting Practice (GRAP), issued by the

Accounting Standards Board replacing the equivalent

GAAP statement, in accordance with the South African

Statements of Generally Accepted Accounting Practice

(GAAP), including any interpretations of such statements

issued by the Accounting Practices Board, as well as in a

mannerrequiredbytheCompaniesAct,1973.

15. GOING CONCERN

The directors believe that the company is a going

concern and will continue to be a going concern for the

foreseeable future until such time that the Company has

achieved its main objective as outlined in paragraph 4 of

its Memorandum of Association and as decided by the

Minister of Minerals and Energy in line with paragraph 8

of the Memorandum of Association.





R’000 R’000 ASSETS

Non-current assets 8,025 6,805

Property,plantandequipment 2 7,327 6,004

Investment property (SPO) 30 - - Intangible assets 3 698 801

Current assets 246,530 272,713

Trade and other receivables 4 605 572

Cashandcashequivalents 5 245,925 272,141

TOTAL ASSETS 254,555 279,518

NET ASSETS AND LIABILITIES

Net Assets 17,613 14,087

Contributions from owners 6 - -

Accumulated surplus 16,225 14,087

Revaluation reserve 7 1,388 -

Current liabilities 236,942 265,431

Unutilisedtransferpayment 8 191,371 244,487

Trade and other payables 9 43,608 18,012

Provisions 10 1,963 2,932

TOTAL NET ASSETS AND LIABILITIES 254,555 279,518

STATEMENT OF FINANCIAL POSITIONAS AT 31 MARCH 2009



NOTE 2009 2008 R’000 R’000

REVENUETransfers and subsidies received 11 232,811 81,878 Finance income 12 27,491 17,927 Other income 13 40 48 National Skills Fund income 14 191 -

TOTALREVENUE 260,533 99,853

EXPENDITURE

Staff costs 15 63,137 44,219 Administrative expenses 16 12,678 13,709 Marketing costs 2,093 7,820 Audit fees 17 606 327 Other operating expenses 18 27,348 16,919 Project expenses 19 152,531 14,148 Losses on disposal of assets 2 78

258,395 97,220

Surplus/(Deficit) for the year 2,138 2,633

STATEMENT OF FINANCIAL PERFORMANCEFOR THE FINANCIAL YEAR ENDED 31 MARCH 2009



Accumulated

Surplus/(Deficit) TotalR’000 R’000

Balance at 31 March 2007 11,454 11,454

Surplus for the year 2,633 2,633

Balance as at 31 March 2008 14,087 14,087

Surplus for the year 2,138 2,138

Balance as at 31 March 2009 16,225 16,225

STATEMENT OF CHANGES IN NET ASSETSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2009



CASHFLOWSFROM/(USEDIN)OPERATINGACTIVITIES NOTE 2009 2008 R’000 R’000

Receipts

-Transfers and subsidies 183,697 65,934 -Interest received 27,491 17,927 -Other Receipts 231 275

Payments

-Employee Cost (63,137) (44,219)-Suppliers (289,478) (38,905)

Net cash inflows/ outflows from operating activities 20.1 (141,196) 1,012

CASHFLOWSFROMINVESTINGACTIVITIES (3,567) (1,841)

Property,plantandequipment (2,102) (728)

Capitalised refurbishment (1,146) (108)

Purchase Intangible assets (319) (1,005)

(144,763) (829)

CASHFLOWSFROMFINANCINGACTIVITIES 118,547 181,919

Restructuring Project Funding 118,547 181,919

Netincrease/(decrease)incashandcashequivalents (26,216) 181,090 Cashandcashequivalentsatthebeginningoftheyear 272,141 91,051 Cashandcashequivalentsatendoftheyear 20.2 245,925 272,141

CASH FLOW STATEMENTFOR THE FINANCIAL YEAR ENDED 31 MARCH 2009



1 ACCOUNTING POLICIES

1.2 Basis of preparation

The financial statements have been prepared in accordance with the South African Statements of Generally Accepted Accounting Practice (GAAP) including any interpretations of

such Statements issued by the Accounting Practices Board, with the Prescribed Standards of Generally Recognised Accounting Practice (GRAP) issued by the Accounting Standards

BoardreplacingtheequivalentGAAPStatementasfollows:

Standard of GRAP Replaced Statement of GAAP

GRAP 1: Presentation of financial statements IAS 1(AC 101): Presentation of financial statements

GRAP 2: Cash flow statements IAS 7(AC 118): Cash flow statements

GRAP 3: Accounting policies, changes in accounting

estimates and errors

IAS 8(AC 103): Accounting policies, changes in ac-

counting estimates and errors

Recognition and measurement principles in the above GRAP and GAAP Statements do not differ or result in material differences in items presented and disclosed in the financial

statements. The implementation of GRAP 1, 2 & 3 has resulted in the following significant changes in the presentation of the financial statements:

1. Terminology differences:

Standard of GRAP Replaced statement of GAAP

Statement of financial performance Income statement

Statement of financial position Balance sheet

Statement of changes in net assets Statementofchangesinequity

Net assets Equity

Surplus/deficit for the period Profit/loss for the period

Accumulated surplus/deficit Retained earnings

Contributions from owners Share capital

Distributions to owners Dividends

Reporting date Balance sheet date

NOTES TO THE ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2009



The financial statements have been prepared on a going

concern basis and the accounting policies have been

applied consistently throughout the period except in the

case where omission and /or errors were detected and

rectified.

In preparing the financial statements, management is

required tomakeestimatesandassumptions that effect

the amounts represented in the financial statements and

relateddisclosures.Useofavailable informationandthe

application of judgement is inherent in the formation of

estimates .

2. The cash flow statement can only be prepared in

accordance with the direct method.

3. Specific information such as:

(a) receivables from non-exchange transactions,

including taxes and transfers;

(b) taxes and transfers payable;

(c) trade and other payables from non-exchange

transactions must be presented separately on the

statement of financial position.

4. The amount and nature of any restrictions on cash

balancesisrequiredtobedisclosed.

Paragraph 11 – 15 of GRAP 1 has not been implemented

due the fact that the local and international budget reporting

standard is not effective for this financial year. Although

the inclusion of budget information would enhance the

usefulness of the financial statements, non-disclosure will

not affect the objective of the financial statements.

The financial statements are prepared on the historical cost

basis. Recognition has also been given to the alignment of

South African Standards and certain International Financial

Reporting Standards (IFRS). The statements are presented

in South African Rands since that is the currency in which

the company’s transactions are denominated, rounded

to the nearest R’000. The following are the principal

accounting policies used by the company.

1.2 Irregular and fruitless and wasteful expenditure

Irregular expenditure means expenditure incurred in

contraventionof,ornotinaccordancewith,arequirement

of any applicable legislation, including the Public Finance

Management Act 1 of 1999 (as amended by Act 29 of

1999).

Fruitless and wasteful expenditure means expenditure

that was made in vain and would have been avoided had

reasonable care been exercised.

All irregular, fruitless and wasteful expenditure is charged

against income in the period in which it is incurred.

1.3 Property,PlantandEquipment

Computer equipment, office equipment and furniture

andfittingsequipmentarewhollyownedandarestated

at historical cost less accumulated depreciation and

accumulated impairment losses.

Capitalised refurbishments costs relate to the cost of

improvements of the office building leased under an

operating lease for its intended use and are depreciated

over the lease period.

After recognition as an asset, an item of property, plant

and equipment whose fair value can be measured

reliably shall be carried at revalued amount, being its fair

valueatthedateoftherevaluationlessanysubsequent

accumulateddepreciationandsubsequentaccumulated

impairment losses. Revaluations shall be made with

sufficient regularity to ensure that the carrying amount

does not differ materially from that which would be

determined using fair value at the reporting date.

Depreciation is calculated on a straight-line basis to write

off the cost of each asset (less its residual value) over its

estimated useful life as follows:

Computerequipment 3-8years

Officeequipment 3-5years

Furniture and fittings 6-15 years

Capitalised refurbishment costs 5 years

NOTESTOTHEANNUALFINANCIALSTATEMENTS




The depreciation method, useful life and residual value

of each class of assets are verified during the asset

verification process.

1.4 Leases

Assets leased with a useful life and where substantially

all the risks and rewards are transferred to the lessee is

recognised as financial leases. In the case of leases and

where the risks and rewards associated with ownership

of the leased asset do not transfer to the company, these

leases are recorded as operating leases.

Leases of assets in which the risks and rewards of

ownership do not transfer to EDI Holdings are classified

as operating leases and are not capitalised.

Payments made under operating leases are recognised

in the Statement of Financial Performance on a straight

line basis over the period of the lease.

1.5 Heritage Assets

Heritage assets, including paintings and sculptures, are

recorded at cost and it is foreseen that these assets will

have an indefinite life as indicated in IPSAS 17. Therefore

Heritage assets are not depreciated over their useful lives.

1.6 Intangible Assets

Computer software classified as intangible assets is

stated at historical cost less accumulated amortisation

and impairment losses. Amortisation is calculated on

a straight-line basis to write off the cost of each asset

(less its residual value) over its estimated useful life as

follows:

Computer software 3 years

1.7 Provisions

Provisions are recognised when the company has a

present obligation as a result of a past event and it is

probable that this will result in an outflow of economic

benefits that can be estimated reliably. Provision was

made for legal fees, leave and other costs.

Leave

The provision for annual leave commutation is based on

calculations of leave days outstanding as at financial year-

end for the company’s employees. Leave payments are

due to the employees during the date when employees’

engagement date becomes due.

Other Costs

The provision for other costs consists mainly of consulting

expenses incurred for which no invoices have been

received. The amounts due were estimated based on the

work completed at year end

1.8 Impairment

At each reporting date, the company reviews the carrying

amounts of its tangible and intangible assets to determine

whether there is any indication that those assets may be

impaired. If any such indication exists, the recoverable

amount of the asset is estimated in order to determine

the extent of the impairment loss (if any). Where it is

not possible to estimate the recoverable amount for an

individual asset, the recoverable amount is determined

for the cash-generating unit to which the asset belongs.

If the recoverable amount of an asset (cash-generating

unit) is estimated to be less than its carrying amount, the

carrying amount of the assets (cash-generating unit) is

reduced to its recoverable amount. Impairment losses

are immediately recognised as an expense.

Where an impairment loss subsequently reverses, the

carrying amount of the asset (cash-generating unit) is

increased to the revised estimate of its recoverable

amount, but so that the increased carrying amount does

not exceed the carrying amount that would have been

determined had no impairment loss been recognised

for the asset (cash-generating unit) in prior years. A

reversal of an impairment loss is recognised as income

immediately.





1.9 Employee benefits

EDI Holdings contributes 50 percent of the employee’s

contributions to the defined contribution plan and the

medical aid fund . Participation in these funds is voluntary

and available to all employees. EDI Holdings has no legal

or constructive obligations to pay further contributions to

the pension and medical fund if the fund does not hold

sufficient assets to pay employees the benefit relating

to employee service in the current and prior periods.

Obligation for contributions to the defined contribution

plan is recognised in surplus/deficit when due.

1.10 Transfer Payments

Government grants are recognised when they are

received.

Transfer payments related to income.

Grants awarded with no related conditions are recognised

as transfers and subsidies in the period in which they

were received.

Transfer payments related to projects.

Grants for specific projects are recorded as deferred

income and recognised as income as and when the

expenses are incurred.

1.11 Financial instruments

Financial instruments carried on the statement of financial

position include cash and bank balances, investment,

receivables, and payables. The particular recognition

methods for each of these items are as follows:

Financial assets

Financial assets are recognised at their fair values plus

transaction costs.

Financial liabilities

The company’s financial liabilities are sundry payables, and

are measured at amortised cost, comprising original fair

value plus transaction costs less principle payments and

amortisations.

1.12 Taxation

No provision for taxation has been made since the

company is directly funded by the government to affect

the restructuring of the electricity distribution industry.

Exemption from taxation in terms of S10.9B has been

granted to the company by the South African Revenue

Service (SARS).

ThecompanyisnotregisteredforValue-AddedTax(VAT)

as it is classified as a Schedule 3A Public Entity and as

suchisnotrequiredtoregisterforVAT.

1.13 Investments

All surplus cash realised in the company’s bank account

is invested on a short term basis with the Corporation for

Public Deposits. All investments are recorded at cost and

no revaluation principles are applied. Interest earned on

investments is recognised on the accrual basis when

it is determined that such income will accrue to the

company.

1.14 Other operating income

Insurance payments received are in respect of compensations

forproperty,plantandequipmentitemslost.

Surplus funds of the company are invested with the

Corporation for Public Deposits. Interest received on

investments is recognised using the effective interest

method as set out in IAS 39 par 9 and AG5-AG8.

Interest income is separately disclosed as part of

investments income on the income statement and is

recognised on the accrual basis in the Statement of

Financial Performance.

The income is recognised as other operating income

and is separately disclosed in the Statement of Financial

Performance.





2. PROPERTY, PLANT AND EQUIPMENT

Cost Accu-

mulated

depre-

ciation

Carrying

value

Carrying

value at

beginning of

year

Additions Impairment Change in

estimate

(Revaluation)

Disposals /

Write-offs

Deprecia-

tion

Carrying

value at end

of year

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Year ended 31 March 2009 Capital refurbishment costs 7,506 (5,063) 2,443 2,083 1,146 564 - (1,350) 2,443 Heritage assets 412 - 412 178 234 - - - 412 Plantandequipment 10,355 (5,884) 4,472 3,743 1,868 (517) 871 (13) (1,480) 4,472 Computerequipment 2,781 (1,196) 1,586 1,059 883 (487) 621 (13) (477) 1,586 Officeequipment 2,685 (1,939) 746 762 160 250 - (426) 746 Furniture and fittings 4,889 (2,749) 2,140 1,922 825 (30) - (577) 2,140 18,273 (10,947) 7,327 6,004 3,248 (517) 1,435 (13) (2,830) 7,327 Year ended 31 March 2008 Capital refurbishment costs 5,796 (3,713) 2,083 3,131 108 - - - (1,156) 2,083 Heritage assets 178 - 178 256 - - - (78) - 178 Plantandequipment 8,224 (4,481) 3,743 3,218 728 - 1,019 - (1,222) 3,743 Computerequipment 2,399 (1,340) 1,059 386 481 - 602 - (410) 1,059 Officeequipment 2,275 (1,513) 762 1,018 208 - (127) - (337) 762 Furniture and fittings 3,550 (1,628) 1,922 1,814 39 - 544 - (475) 1,922 14,198 (8,194) 6,004 6,605 836 - 1,019 (78) (2,378) 6,004





3. INTANGIBLE ASSETS

Cost Accu-mulated

Amortisat-ion

Carrying

value

Carrying

value at

beginning of

year

Additions Disposals /

Write-offs

Amortisa-

tion

Carrying

value at end

of year

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Year ended 31 March 2009 Computer Software 3,409 (2,711) 698 801 319 - (422) 698 Year ended 31 March 2008 Computer Software 3,075 (2,274) 801 464 1,005 - (668) 801





4. TRADE AND OTHER RECEIVABLES 2009 2008

R’000 R’000

Deposits 572 572

Prepayments 33 -

605 572

Trade and other receivables consist of rental deposit amounting to R0.57 million ( 2008 R0.57 million) and R0.033

million relating prepaid suppliers ( 2008 nil).

5. CASH AND CASH EQUIVALENTS 2009 2008

R’000 R’000

Short-term investments 240,870 272,046 Bank and cash balances 5,055 95

245,925 272,141

As at the end of the year an amount of R240.8 million(2008 :R272 million) was invested with the Corporation for Public

Deposits(CPD).These funds invested with CPD earned interest of R27 million(2008 :R17 million) for the year.





6. CONTRIBUTION FROM OWNERS 2009 2008

R’000 R’000

Authorised and issued 0 0 100 Ordinary shares of R1 each 0 0

The values for Authorised and Issued Share Capital for 2009 and 2008 are reflected as zero due to the rounding up of

figures to the nearest one thousand rand.The actual figures are R100.00 for both 2009 and 2008.

7. REVALUATION RESERVE 2009 2008

R’000 R’000

RevaulationofProperty,PlantandEquipment 1,388 - 1,388 -





8. UNUTILISED TRANSFER PAYMENT 2009 2008

R’000 R’000

Government Grant

Eskom MYPD and NERT EDI restructuring Funding

Opening balance (MYPD) 244,487 78,512

Add: ESKOM funding 108,553 181,919

Add: NERT funding 10,000 -

363,040 260,431

Less:UtilisedESKOMMYPDfunding (161,804) (15,944)

Less:UtilisedNERTfunding (9,865) -

191,371 244,487

Eskom Multi-Year Price Determination Funding Reconciliation 2009 2008

R’000 R’000

Budgeted amount 677,000 406,000

Restructuring levy to 31 October 2009 (2007:to 31 October 2007) 416,293 235,387

Amounts withheld (140,742) (68,261)

-Taxation (120,724) (68,261)

-Restructuring costs(ESKOM) (20,018) 0

Total funds to be transferred by ESKOM 167,126

Amount received due previous year 108,553 14,793

Amounts due at the year-end - -

Amount received NERT 10,000 -

Total funds received 118,553 181,919

Balance previous year 260,431 78,512

Accumulative balances of funds received 378,984 260,431

Amount utilised (187,613) (15,944)

Total funds available 191,371 244,487





9. TRADE AND OTHER PAYABLES 2009 2008

R’000 R’000

Trade creditors 1,780 7,071 Deferrals on operating leases 476 850 Accruals 41,352 10,091 bonuses 6,707 3,896 other accruals 34,646 6,195

43,608 18,012

10. PROVISIONS Opening

Balance

Additional

Provisions

Utilisationof

Provisions

Unused

Amount

Reversed

Closing

Balance

Year Ended 31 March 2009 R’000 R’000 R’000 R’000 R’000

Leave 1,465 1,961 (1,619) - 1,807 Legal fees 630 - (630) - - Other 837 156 (837) - 156

2,932 2,117 (3,086) - 1,963

Year Ended 31 March 2008

Leave 1,378 2,561 (2,474) - 1,465 Legal fees 663 - (33) - 630 Other 828 436 - (427) 837

2,869 2,997 (2,507) (427) 2,932





11. TRANSFER AND SUBSIDIES 2009 2008

R’000 R’000

Grant received from government Department of Mineral and Energy 69,250 65,934 Eskom MYPD EDI restructuring funding recognised 153,696 15,944 National Eelectricity Response Team (NERT) 9,865 -

232,811 81,878

12. FINANCE INCOME 2009 2009

R’000 R’000

Interest Received: Bank 614 255 Interest Received: DME Investments 532 709 Interest Received: MYPD 26,345 16,963

27,491 17,927

13. OTHER OPERATING INCOME 2009 2008

R’000 R’000

Insurance receipts 40 - Management fees - 48

40 48





14. NATIONAL SKILLS FUND INCOME 2009 2008

R’000 R’000

Refund from the Department of Labour 191 - 191 -

15. STAFF COSTS 2009 2008

R’000 R’000

Staff Costs 63,137 44,219 Included in staff costs are Employer contributions to pension fund 1,474 267 Employer contributions to medical fund 1,171 562







16. ADMINISTRATIVE EXPENSES 2009 2008

R’000 R’000

Administrative expenses consist of the followingGeneral administrative expenses 11 23 Staff Refreshments and Welfare 379 203

Suscriptions & Registrations 344 215

Recruitment Fees 350 485

Security 345 -

Fees for services 4,480 8,860 - Administrative 240 2,438 - Managerial 3,520 2,251 - Secretarial 45 1,350 - Technical - 2,123 - Board members 674 697

Short Term Insurance 301 214

Internal audit fees 1,148 610 Legal fees 583 57 Stationery and printing 990 383 Venuesandfacilities 2,484 1,745 Bad debt written off - 594 Bank charges 60 44 Training and staff development 1,205 276

Total 12,678 13,709

17. AUDIT FEES 2009 2008

R’000 R’000External Auditors remunerationAudit Fees-prior year 83 298 Audit Fees-current year 427 29 Forensic audit fees 96 -

606 327





18. OTHER OPERATING EXPENSES 2009 2008

R’000 R’000

Other operating costs 27,348 16,919

Included in other operating expenses are the followingFruitless and wasteful expenditure 173 - Maintenance, repairs and running costs 1,006 681 - Property and buildings 749 614 -MachineryandEquipment - - - Other maintenance, repairs and running costs 257 67 Impairment recognised / (reversed) 517 - Depreciation 2,800 1,359

- Depreciation charge for the year 2,800 2,660 -Adjustment to estimated useful life of fixed assets - (1,301)

Amortisation 422 668 Municipal services 1,391 1,296 Travel and subsistence 11,152 6,526 Courier and delivery charges 244 127 Communication costs 1,041 967

Rentals in respect of operating leases 8,603 5,295 - Buildings 4,441 3,792 -Plant,machineryandequipment 4,010 1,403 -Vehicles 153 100

Future commitments under operating lease are as followsMinimum future lease payments:-Uptooneyear 3,168 4,415 -One to five years 10 3,178 Minimum future lease payments 3,178 7,593





EDI Holdings occupies three office premises which are under long term operating leases.These lease agreements

range over periods varying between three to five years and are subject to escalation of 8% to 10% per annum.

19. PROJECT EXPENSES 2009 2008

R’000 R’000

National Electricity Response Team (NERT) 9,865 - Electricity Distribution Restructuring 142,666 14,148

152,531 14,148

20. NOTE TO THE CASH FLOW STATEMENT 2009 2008

R’000 R’000

20.1 Net cash flow from/(used in) operating activities

Surplus/(deficit) for the year 2,138 2,633

Non-cash movements Depreciation 2,800 1,359 Impairment 517 - Amortisation 422 668 Loss on disposal/Write-off of assets 2 78 Provisions -969 63 Bad debts written off - 596 Recognition of grant funds (171,669) (15,944)

(166,759) (10,547)Movement in working capital 25,563 11,559 (Increase)/Decrease in accounts receivables -33 -369 Increase/(Decrease) in accounts payables 25,596 11,928

Cash utilised in operating activities (141,196) 1,012





20.2CashandCashequivalentsatendoftheyear

CashandcashequivaletsconsistingofcashonhandandbalanceswithbanksCashandcashequivaletsincludedinthecashflowstatementcomprisethefollowingamounts

- Cash at bank 5,046 87 - Petty cash 9 8 - Short term investment 240,870 272,046

245,925 272,141

2009 2008R’000 R’000

Investment in cash as at year end 245,925 272,141

Sensitivity if interest rates increase or decrease by 50 basis points.

Increase or decrease in surplus of defict

1,230 1,361



21. DIRECTOR’S EMOLUMENTSDIRECTORSANDEXECUTIVEMANAGEMENT

EMOLUMENTSDate appointed Date resigned Director’s fees Remune-ration for

services rendered Travel & Subsistence

allowancesOther Payments Total Employment

Cost 2008

R’000 R’000 R’000 R’000 R’000Year ended 31 March 2009Non-Executive DirectorsMr. DM Nkosi 1-Dec-08 18 18 Ms DD Mokgatle 21-Apr-05 30-Nov-08 42 - - - 42 DrZZRRustomjee 1-Apr-06 54 - - - 54 Mr AB Ally 1-Apr-06 85 - - - 85 Mr OJ Komane 1-Apr-06 36 - - - 36 Mr RS Maphumolo 1-Jun-05 58 - - - 58 Mr RJ Field 1-Sep-05 67 - - - 67 Mr KJ Morgan 1-Jan-06 67 - - - 67 Mr L Joel 2-Feb-06 81 - - - 81 Mr EC Kieswetter 1-Jan-08 27 - - - 27 Dr AMB Mokaba 1-Jan-08 19-Feb-09 9 - - - 9 Mr JRD Modise 1-Jan-08 31 - - - 31 Mr. K Moholola (DME) 1-Dec-06 30-Apr-08 - - - - - Mr. TA Audat (DME) 1-Jan-09 - - - - - Mr. MM Ntsokolo 1-Jan-08 49 - - - 49 Mr X George 1-Jan-08 31 - - - 31 MrZSithole(co-opted) 18-Aug-08 18 - - - 18

674 - - - 674 Year ended 31 March 2008Non-Executive DirectorsMs DD Mokgatle 21-Apr-05 89 - - - 89 DrZZRRustomjee 1-Apr-06 63 - - - 63 Mr AB Ally 1-Apr-06 101 - - - 101 Dr S Lennon 1-Apr-06 1-Jan-08 63 - - - 63 Ms A Jacobs 1-Apr-06 20-Jun-07 10 - - - 10 Mr OJ Komane 1-Apr-06 52 - - - 52 Mr PJ Maroga 1-Apr-06 18-Jul-07 10 - - - 10 Mr RS Maphumolo 1-Jun-05 98 - - - 98 Mr RJ Field 1-Sep-05 73 - 1 - 74 Mr KJ Morgan 1-Jan-06 42 - - - 42 MrZSithole(co-opted) 18-Aug-06 24 - - - 24 Mr L Joel 2-Feb-06 70 - - - 70 Mr EC Kieswetter 1-Jan-08 - - - - - Dr AMB Mokaba 1-Jan-08 - - - - - Mr JRD Modise 1-Jan-08 - - - - - Mr X George 1-Jan-08 - - - - -

696 - 1 - 697





DIRECTORSANDEXECUTIVEMANAGEMENTEMOLUMENTS

Date appointed Date resigned Salary Annual Bonuses/ Incentives

Allowances Pension Contributions

Medical Aid Contributions

Total Employment Cost

R’000 R’000 R’000 R’000 R’000Year ended 31 March 2009Executive DirectorsMs P Nzimande 1-Apr-03 1,725 485 40 - 47 2,297 Dr WJ de Beer 1-Jan-04 1,309 301 32 - - 1,642 Mr TKE Mokoto 15-Sep-06 31-May-08 1,103 - 37 - - 1,140

Total Director’s emoluments 4,136 787 109 - 47 5,079

Year ended 31 March 2008Executive Directors 3,837 339 186 68 4,454

Ms P Nzimande 1-Apr-03 1,605 192 56 - 25 1,877 Dr WJ de Beer 1-Jan-04 1,216 147 80 40 - 1,482 Mr TKE Mokoto 15-Sep-06 1,016 - 50 28 - 1,095

Total Director’s emoluments 3,837 339 186 68 25 4,454

Emoluments to senior managementYear ended 31 March 2009Ms R Govender 1-Feb-04 31-Jan-09 1,216 - 21 - - 1,237 Mr S Nkese 1-Feb-06 1,235 630 32 68 17 1,983 Mr M Musi 1-Apr-07 998 122 25 55 5 1,206 Mr. S. Dlamini 1-Dec-08 423 - 8 - - 432

3,873 752 86 124 4,857

Year ended 31 March 2008Ms R Govender 1-Feb-04 916 127 30 - 43.26 1,117 Mr S Nkese 1-Feb-06 1,147 211 46 36 21.37 1,462 Mr M Musi 1-Apr-07 858 86 42 27 10 1,023

2,922 424 118 63 - 3,602

Summary Total Employment Costs 2009 R’000

Total Employment Costs 2008 R’000

Non-Executive Board members 899 697

Key Management 9,936 8,056

Executive Board members 5,079 4,454 Executive management 4,857 3,602





22. FINANCIAL INSTRUMENTS

Inthecourseofthecompany’soperationitisexposuretointerestrisk,creditriskandliquidityrisk.

Interest rate risk

AsrequiredbytheTreasuryRegulations,thecompanyhasinvestedit’ssurplusfundswiththeCorporationforPublic

Deposits (CPD). At year-end , surplus funds were maintained in the CPD call account, while a minimal balance was held

in the company’s current bank account. The company is exposed to movement in money market interest rate as and

when surplus cash is invested.

Sensitivity analysis for variable rate instruments

The sensitivity has been determined based of the movement of interest rates on the surplus funds invested in the CPD

call accounts. Based on the investment amount as at year end, if interest had been 50 basis points higher or lower the

increase/( decrease) on the company surplus or deficit are set out on the table below

2009 2008R’000 R’000

Investment in cash as at year end 245,925 272,141

Sensitivity if interest rates increase or decrease by 50 basis points

Increase or decrease in surplus or deficit

1,230 1,361

Credit risk

The company is not exposed to any other credit risks.





Liquidityrisk

Thecompanymanages liquidity risk throughpropermanagementofworkingcapital,capitalexpenditureandactual

versusforecastedcash-flows.Adequateliquidresourcesaremaintained.

Fair values

The company’s financial instruments consist mainly of cash and cash equivalents, trade receivables and trade

payables.

No financial asset was carried at an amount in excess of its fair value and fair values could be reliably measured for all

financial assets that are available-for-sale.

The following methods and assumptions are used to determine the fair value of each class of financial instruments:

Cashandcashequivalents

Thecarryingamountofcashandcashequivalentsapproximatesfairvalueduetotherelativelyshort-termmaturityof

these financial assets and financial liabilities.

Trade receivables

The carrying amount of trade receivables, net of impairment, approximates fair value due to the relatively short-term

maturity of this financial asset.

Trade payables

The carrying amount of trade payables approximates fair value due to the relatively short-term maturity of this financial

liability.

The fair values of financial assets and financial liabilities at reporting date are as follows:





Fair Value Carrying

Amount R’000 R’000

Year ended 31 March 2009

Assets 245,925 245,925 -Trade receivables 605 605

Total financial assets 246,530 246,530

Liabilities-Trade payables 43,608 43,608

Total financial liabilities 43,608 43,608


Assets 272,141 272,141 -Trade recivables 572 572








22.FINANCIAL INSTRUMENTS (continued)

Maturity Profile

The maturity profile of financial assets and liabilities at reporting date is as follows

1 year or less Total Year ended 31 March 2009

Assets-Investment in cash 245,925 245,925 -Trade receivables 605 605





Assets-Investment in cash 272,141 272,141 -Trade recivables 572 572








23. RELATED PARTY TRANSACTIONS

EDI is 100 percent owned by the Government of South Africa represented by the Department of Minerals and Energy

Grant income received from the Department Of Minerals and Energy is treated as Revenue Income and is mainly used

to cover operating expenses of the company.

Directors appointed by the Department of Minerals and Energy to the Board of Directors of the company do not receive

compensation in the form of Directors Emoluments, or any other financial benefits.

The remuneration of Executive Directors of the company is disclosed in note 21.

One of the Non-Executive Directors of the company is also a Non-Executive Director of Landelahni Recruitment Agency,

a company which has had arms-length dealings with EDI Holdings during the current financial year.

The balance outstanding to Landelahni at the end of the 2008/9 financial year is R43 thousand.

24. COMPLIANCE REPORTING 24.1 Commitments

As at 31 March 2009 the company has entered into major restructuring contract with service providers to conduct ring-

fencing, section 78 and due diligence on participating Municipal entities. An amount of about R65.9 million has been

committed as at financial year-end, and work will commence in the preceding financial year.

24.2 Contingent liabilities

As at 31 March 2009, the company has received a legal claim amounting to R4.5 million relating to a dispute with a

service provider whose tender was selected amongst the panel of service providers but has not as yet been selected to

render services. At the date of reporting, no fixed court dates are as yet available.





24.3 Irregular expenditure

No irregular expenses were reported during the financial year ending 31 March 2009.

24.4 Fruitless and wasteful expenditure

The following expenditure has been incurred in the current period which is considered as fruitless and wasteful

expenditure:

A total amount of R13 436 (2008: R94 432) was spent on potential fruitless and wasteful expenditure in respect of interest

and penalties incurred on late payments to various suppliers.

24.5 Losses resulting from criminal conduct

An amount of R 159 209 (2008: nil) was lost as a result of fraudulent payment made to a third party posing as one of the

preferred suppliers. This matter was reported to the South African Police Services case number SAP 379/08/2008.

24.6 Litigation Settlements

An amount of R 2 million reported as a contingent liability in the prior financial year was settled for an amount of R865 000

being the last and final out of court settlement with B&H Building and Project Management (B&H).





25. COMPARATIVE FIGURES

The comparative figures have been restated where necessary to align with National Treasury classifications as disclosed

in note 25.1

25.1 Change in classification of other operating expenses in Statement of Financial Performance

Previous Adjustment Current2008 2008 2008

R’000 R’000 R’000

Other operating expenses 31,067 (14,148) 16,919

Project expenses - 14,148 14,148

Total 31,067 - 31,067





26. PRIOR PERIOD ERROR

The financial statements were corrected with the following prior period error;

26.1Property,plantandequipment

The correction of prior period error relates to the assets that were included in the asset register ,but were not recorded

in the general ledger.

Effect of restatement

Increase in Accumulated Surplus

Decrease in expenses 80,887 Increase in depreciation (2,247)

Net increase in accumulated surplus 78,640

IncreaseinProperty,plantandequipment 80,887 Increase in Accumulated Depreciation (2,247)

NetincreaseinProperty,plantandequipment 78,640

27. EVENT POST THE DATE OF THE STATEMENT OF FINANCIAL POSITION

Thedirectorsarenotawareofanycircumstancesarisingsubsequenttotheendofthefinancialyear,nototherwisedealt

with in the annual financial statements and the notes thereto, that would affect the operations or the results of operations

significantly.





NOTES

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