defence -...

CASTEEL

1 6 6 6D E G O E D E H O O PD E G O E D E H O O P

Department:DefenceREPUBLIC OF SOUTH AFRICA

defence

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TOP: Where Block B meets Block F with Devil’s Peak in the background, pre 1910. RIGHT: A bugler of the British Garrison by the Lion Gateway, pre First World War (1914-1918). TOP LEFT: A sentry on duty, outside the Castle’s main entrance, late 19th Century.

The Castle Control Board Annual Report is available on the Castle of Good Hope website: www.castleofgoodhope.co.za

RP233/2012 ISBN: 978-0-621-41110-2

Vision

The Castle Control Board strives to be a centre of global significance that is the epitome of social, cultural and military heritage, accessible to all citizens of South Africa and the world. It will be the centre of national pride for a “nation of good hope”; an internationally known and recognised cultural and heritage centre for ubuntu and human rights recognition; and a smooth functioning, self-sustaining, “must-see” visitor and learner destination.

Castle Control Board

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Mission

The Castle Control Board is a service-oriented public entity, striving to optimise its tourism potential and accessibility to the public and to preserve and protect its cultural and military heritage.

C A S T L E C O N T R O L B O A R D A N N U A L R E P O R T F O R F Y 2 0 1 1 / 1 2

Ms N.N. MAPISA-NQAKULA, MPMinister of Defence and Military Veterans

Dear Minister

THE CASTLE CONTROL BOARD ANNUAL REPORT FY 2011/12

In accordance with the provisions of the Public Finance Management Act, Act 1 of 1999, I have the honour of submitting the Castle Control Board Annual Report for the reporting year 01 April 2011 to 31 March 2012.

I hereby formally submit this report to the National Assembly as a statutory requirement to Parliament.

(LIEUTENANT GENERAL J.T. NKONYANE)CASTLE CONTROL BOARD: CHAIRPERSON

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Castle Control BoardANNUAL REPORT FY 2011/12


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As a public entity under the Minister of Defence and Military Veterans and mandated by the Castle Management Act, Act 207 of 1993, the Board attempted to align itself with National Government’s Medium Term Strategic Framework (STMF) outcomes, with specific reference to Outcome 1 (Improved quality basic education), Outcome 10 (Environmental assets and natural resources that are well protected and continually enhanced) and Outcome 12 (An efficient, effective and development-oriented public service and an empowered, fair and inclusive citizenship).

The year under review was a challenging one for the Castle Control Board. The limited staff complement at the Castle and the ever increasing corporate governance requirements required an urgent response from the Board to ensure that the eight Batho Pele principles were adhered to with regard to service delivery and that ‘business as usual’ was contained within the limited capabilities.

The Castle Control Board has made a positive resolution towards complying with the National Treasury Framework for Strategic Plans and Annual Performance Plans resulting in the first-time development and tabling of the Strategic Plan for the

strategiC overview

FY2012/13-2016/17 and the Annual Performance Plan for the FY2012/13 – I would like to express my gratitude to the Department of Defence as one of the most significant stakeholders for providing technical advice and assisting the Board with this achievement.

True to the mission of the Castle Control Board, the Board, as well as Castle Management, has committed themselves to building good relationships with all South Africans and stakeholders. The need for the Castle Control Board to work in unison with all stakeholders represented on the Board, as well as all role players, has never been greater and the Board will continue with this networking initiative at all levels to ensure that this very important objective is achieved. Without the expert and enthusiastic contributions of the members of the Castle Control Board and Castle Management, many initiatives for the year under review would not have been successful or even executed. To them I express great thanks and appreciation. Collaboration with the Department of Defence was to the advantage of the Board in terms of the development of the Strategic Plan and Annual Performance Plan, and the Department of Public Works assisted the Board with the protection of the fabric of the Castle by funding the much needed maintenance project at the Castle. The Board also endeavoured to align its Supply Chain Management policy with the Public Finance Management Act and National Treasury guidelines and established a forum of similarly sized small public entities in the Western Cape to assist with the development of a policy. The Board also appointed KPMG to conduct an independent review of the events management process in use at the Castle of Good Hope, which resulted in recommendations to be implemented during the financial year 2012/13.

I would like to use this opportunity to convey my thanks and appreciation to the former Minister of Defence and Military Veterans, Ms Lindiwe Sisulu, for the support we have received throughout the year and I look forward to introducing the current Minister to the Board and its activities. I believe an exciting year lies ahead of us and I wish all stakeholders involved in the Castle of Good Hope a productive year ahead.

by the Chairperson of the Castle Control Board, Lieutenant General J.T. Nkonyane

(LIEUTENANT GENERAL J.T. NKONYANE)CASTLE CONTROL BOARD: CHAIRPERSON


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taBle oF Contents

Strategic Overview by the Chairperson of the Castle Control Board, Lieutenant General J.T. Nkonyane 3

CHAPTER 1: THE BOARDCastle Control Board as Public Entity

Castle of Good Hope 7

Introduction to the Castle Control Board 7

Stakeholder Participation 7

Appearances before the Portfolio Committee on Defence and Military Veterans 9

Parliamentary Questions 9

Composition of the Castle Control Board 9

Castle Control Board Priorities for FY 2012/13 9

Delivery of the Castle as Heritage Site 9

Governance and Oversight 10

Sustainability 11

Castle Control Board – Statement of Responsibility 11

CHAPTER 2: MANAGEMENT REPORTOperational Management

Events 13

Castle Military Museum 14

Visitors 14

Maintenance, Preservation and Protection of the Castle 14

CHAPTER 3: STRATEGIC PROFILEIntroduction 17

Legislative Framework 17

Vision 18

Mission 18

Value Statement 18

Success Factors 18

Medium Term Strategic Orientation 19

CHAPTER 4: STRATEGIC OBJECTIVE PERFORMANCEStrategic Objectives

Programme 1: Administration through good Corporate Governance 20

Programme 2: Preservation, Interpretation and showcasing of the history of the Castle 21

Programme 3: Maximising the tourism potential of the Castle of Good Hope 21

Programme 4: Increased public profile and positive perception across all sectors of the community 21


CHAPTER 5: ORGANISATIONAL STRUCTURE AND HUMAN RESOURCESOrganisational Structure 22

Castle Management 23

CHAPTER 6: FINANCIAL PERFORMANCEReport of the Audit Committee

Audit Committee Members and Attendance 24

Internal Audit 24

Internal Control and Accounting Records 24

Performance against Predetermined Objectives 25

Supply Chain Management Practices and Procedures 25

Evaluation of Financial Statements 25

Report of the Auditor-General 26

Annual Financial Statements for year ending 31 March 2012 29

LIST OF TABLESTable 1: Stakeholders currently represented on the Castle Control Board 9

Table 2: Breakdown of visitors to the Castle during 2010 and 2011 14

Table 3: Programme 1 - Administration through good Corporate Governance 20

Table 4: Programme 2 - Preservation, interpretation and showcasing of the history of the Castle 21

Table 5: Programme 3 - Maximising the tourism potential of the Castle of Good Hope 21

Table 6: Programme 4 - Increased public profile and positive perception across all sectors of the community 21

Table 7: Total number of permanent workers as employed by the Department of Defence and seconded to the Castle Control Board (as on 31 March 2012)

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Table 8: Total number of contract workers as appointed by the Castle Control Board (as on 31 March 2012) 23

Table 9: Audit committee for the period 1 April 2011 to 26 October 2011 24

Table 10: Audit Committee with effect from March 2012 24

LIST OF FIGURESFigure 1: Organisational Structure of the Castle Control Board 22

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ABOVE LEFT: King Cetswayo and his entourage were conveyed to the Castle on 15 September 1879 and were accommodated in the upstairs room in E Block nearest to the Porvost Cells.ABOVE RIGHT: Painting of King Cetswayo by artist, Lizelle Kruger, followed by an old photograph of King Cetswayo. ABOVE: 101 Place Settings’ was an exciting temporary installation by Iziko Social History that enlivened the Lady Anne Barnard Banqueting Hall. Consisting of a rich array of ceramic place settings and centerpieces created by contemporary South African ceramists, it co-incided with the opening of Fired – an exhibition of South African ceramics. Photograph by Carina Beyer, Iziko Museums. LEFT: Fired – an exhibition of South African ceramics opened in the evocative Granary space at the Castle on 25 February 2012. It was conceived and developed by Iziko Social History and comprises mainly South African ceramics from the museum’s permanent collection. Fired celebrates the artistry of southern African potters and ceramists from the archaeological past to the present. Photograph by Carina Beyer, Iziko Museums.


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the BoardChaPter 1

CASTLE CONTROL BOARD AS PUBLIC ENTITY Castle oF good hoPe

The Castle of Good Hope has been the centre of life at the Cape since its inception in January 1666. It has survived many challenges in its day and was constantly under threat of being demolished. It is thanks to the military authorities at the time that a strong public reaction in favour of retaining the Castle of Good Hope was evoked.

The Castle takes one back in history and represents life at the Cape of Good Hope. From 1678 it was the centre of civilian, administrative and military life at the Cape until the settlement grew and some functions and activities moved away from the Castle.

introdUCtion to the Castle Control Board

In terms of the Castle Management Act, Act 207 of 1993, the Castle of Good Hope has been placed under the juristic control of the Castle Control Board. The Castle Management Act also stipulates specific objectives to be achieved by the Castle Control Board which is a public entity under the Minister of Defence and Military Veterans.

These objectives are as follows:• To preserve and protect the military • and cultural heritage of the Castle • of Good Hope.

• To optismise the tourism potential • of the Castle.

• To optimise accessibility to the Castle • by the public.

The Castle Control Board cannot achieve these objectives in isolation

and is constantly striving towards active stakeholder involvement and participation.

staKeholder PartiCiPation

Minister of Defence and Military Veterans

As the Executive Authority, the Minister of Defence and Military Veterans is the primary stakeholder on the Castle Control Board and is represented by two appointed Board members, namely Ms Adre Aggenbach and Adv Dave Mitchell.

The Minister of Defence and Military Veterans, Ms Lindiwe Sisulu, played a significant role in guiding the way towards achieving the predetermined priorities, as well as strengthening ties by arranging an introductory meeting with the Board on 13 February 2012. The Minister also favoured the Castle as her venue of choice for hosting guests at prestigious functions.

The Minister of Defence and Military Veterans meeting with the Castle Control Board.

From left to right: Ms Sue Rabkin (Special Advisor to the Minister), Ms Sonja Warnich (Board member), Lt Gen J.T. Nkonyane (Chairperson of the Castle Control Board), Col Richard Mongo (Board member), Minister Lindiwe Sisulu, Mr Mohammed Parker (Board member), Ms Ellen Molekane (Office of the Minister), Ms Rooksana Omar (Board member), Mr Kennedy Jimba (Board member), Adv Dave Mitchell (Board member), Ms Adré Aggenbach (Board member), Mr Lindsay Madden (Interim Executive Director) and Mr Fred Johnson (Board member). Photograph by Iziko Photographer, Carina Beyer.


Department of Defence

The Department of Defence is represented by two stakeholders, namely the Chief of Logistics (Department of Defence), Lieutenant General Justice T. Nkonyane, and Colonel Richard Mongo.

Lt Gen Nkonyane is the appointed Chairperson of the Castle Control Board who takes full responsibility for reporting to the Minister of Defence and Military Veterans, as well as Parliament, on all strategic matters. In addition, Chief of Logistics is accountable for the management of the Castle as a Defence Endowment Property and Immovable Heritage Asset and personnel from the Logistics Division are responsible for administration by the Chairperson and act as liaison between the Chairperson and the Board.

The Officer Commanding Army Support Base Western Cape, Colonel Richard Mongo, is also appointed to the Castle Control Board and is responsible for the Castle as a SANDF facility.

The Chief of Logistics and involved personnel are fully supported by the Department of Defence in terms of subsistence and travel

allowance, transport and accommodation funds, as stipulated in chapter 6 of the notes to the annual financial statements.

The Departmental of Defence’s strategic planning directorate provided technical guidance throughout the development of the Castle Control Board Strategic Plan and Annual Performance Plan for the year under review.

South African National Defence Force personnel from Army Support Base Western Cape, seconded to the Castle Control Board, take full responsibility for the operational management, ie administration, function co-ordination, tourism, marketing, etc. These members are fully supported by the South African National Defence Force in terms of wages and salaries and other human resources related to funding and amounting to R2,5 million per annum.Soldiers are deployed from 9 SAI (South African Army) and Reserve Force units to assist with the safeguarding of the Castle and also to perform the existing key ceremony dressed in period costume.

The Department of Public WorksThe Department of Public Works, as a

prominent stakeholder of the Castle of Good Hope, contributed by taking full responsibility for all major maintenance projects at the Castle of Good Hope that resort outside the definition of day-to-day maintenance, which is the responsibility of the Board. The Department of Public Works executed a Phase 1 Repairs and Maintenance project to the value of R13 846 725. Phase 1 included the repair of roofs, the pointing of the outer Bastion walls and repairs to wooden beams.

The Department of Public Works also supported the Castle Control Board by rendering horticultural services and providing a team of 20 staff members for the maintenance of the gardens and surrounding site.

Cape Town Regional Chamber of Commerce and Industry

The Cape Chamber of Commerce has been an active participant in the Castle Control Board through Mr Roland Hudson-Bennett since January of 1994 until 2011. The Cape Chamber is the oldest and biggest organised business organisation in South Africa. The Chamber’s value proposition is “creating an

RIGHT: President Jacob Zuma attends the commemoration celebration of the life of the first recognised Griqua Chief Adam Kok at the Cape Castle of Good Hope in Cape Town. Photographer, Nardus Engelbrecht, Sapa. LEFT BELOW: Castle Manager meeting with Chairman Wu, Chairman of the Standing Committee of the National People’s Congress of the People’s Republic of China. RIGHT BELOW: SATSA Western Cape welcoming function held at the Castle of Good Hope, from left to right, Ms Rooksana Omar, representing the Castle Control Board, Ms Nox Ntentetya from DEEDAT, Min Alan Winde, Ms Charmaine Beukes Vice Chairperson of SATSA Western Cape, Mr Howard Johnson Chairperson of SATSA Western Cape and Captain Francois Morkel, Castle Manager.


Stakeholders that are currently represented on the Castle Control Board are indicated in Table 1 below:

CASTLE CONTROL BOARD PRIORITIES FOR FY2011/12

The Castle Control Board identified specific critical issues in support of the Board’s mandate, which were the main focus for the year under review.

deliverY oF the Castle as heritage site

Protection of the Fabric of the Castle

The developed Maintenance Management Plan guided the Department of Public Works and the specialist consultants in the execution of the Phase 1 maintenance project, ensuring alignment with the guidelines prescribed by the South African National Heritage Resources Agency.

The Castle Control Board participated in this priority by appointing a small team responsible for the preventative maintenance of the Castle throughout the year.

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Table 1: Stakeholders currently represented on the Castle Control Board

Stakeholders Name

Representative of the South African National Defence Force – Chief of Logistics Lieutenant General J.T. Nkonyane (Chairperson)

Representative of the Cape Town Regional Chamber of Commerce and Industry Mr K. Jimba

Representative of the Iziko Museums of South Africa Ms R. Omar

Representative of the Department of Public Works Mr F. Johnson

Representative of the South African Heritage Resources Agency Mr G. Ontong

Officer Commanding Army Support Base Western Cape Colonel R. Mongo

Representative of the City of Cape Town Mr D. Hart

Representative of the South African Tourism Board (WESGRO) Mr M. Parker (Vice Chairperson)

Two representatives appointed by the Minister of Defence and Military Veterans Adv D. MitchellMs A. Aggenbach

Representative of the Western Cape Provincial Legislature Mr C. Dowman

Executive Director Mr L. Madden (interim appointment)

Secretary Mr D. Williams

enabling business environment” for all its members. This relationship allows for the Castle to leverage on the expertise available at the Chamber to meet its business objectives, but not in isolation. November 2011 saw a change in representation from the Chamber with Mr Kennedy Jimba taking over from Mr Hudson-Bennett.

Iziko Museums of South AfricaThe Iziko Museums of South Africa regards the Castle Control Board as a valuable and important strategic partner. This partnership between the Castle and Iziko goes back a number of decades. It enables both these institutions to position their very complex history, traditions and legacy in the shaping of our country’s heritage in a meaningful and dynamic manner through exhibitions, joint events, educational programmes and workshops.

The Iziko Museums of South Africa is represented on the Castle Control Board by its Chief Executive Officer, Ms. Rooksana Omar since November 2010.

It thus gives the Iziko Museums of South Africa great pleasure to congratulate the Minister of Defence and the Chairman of the Board for the successes they have

achieved in 2011/2012 as reflected in the Annual Report.

aPPearanCes BeFore the PortFolio CoMMittee on deFenCe and MilitarY veterans

The Castle Control Board appeared before the Portfolio Committee on Defence and Military Veterans to brief the Committee on the Castle Control Board Annual Report for FY2010/11.

ParliaMentarY QUestions

The Castle Control Board replied to parliamentary questions addressed to the Minister of Defence and Military Veterans and entities reporting to her on various issues.

CoMPosition oF the Castle Control Board

In terms of the above-mentioned Castle Management Act, the Castle of Good Hope has been placed under juristic control of the Castle Control Board, which should comprise representatives of the various national and provincial stakeholders.


governanCe and oversight

Evaluation and Revision of Management Processes - KPMG Review

The Castle Control Board appointed KPMG to conduct an independent review of the events management process in use at the Castle of Good Hope with the following primary objectives:

• To investigate the relationships, roles• and/or areas of responsibility of all• stakeholders at the Castle.

• To operationalise the Board’s mandate.

• To optimise the current capabilities • of the Castle with regard to events.

• To investigate whether there were any • prime facie irregularities and breaches of • authority or responsibility by any person • regarding specific events.

• To review the accounting processes and • controls in place at Het Bakhuys and the • Board to ensure that any monies due to • the Castle are appropriately accounted for.

• To establish whether events • management constitutes a breach

Strategic Planning Process

The Castle Control Board, under guidance of the Department of Defence, was successful in tabling its first National Treasury-compliant Medium-Term Strategic Plan FY2012/13 – FY2016/17 and Annual Performance Plan FY2012/13 during the year under review. The Board is constantly striving towards the goal that all management documents, plans and programmes will be directly linked to the National Treasury-compliant Plans.

Establishment and Effective Implementation of Policy - Supply Chain Management Policy

Section 51(1)(a)(iii) of the Public Finance Management Act and Treasury Regulation 16A3.2 require the Castle Control Board to have an effective and efficient supply chain management system for procurement and provisioning that is fair, equitable, transparent, competitive and cost-effective and that is also appropriate for a small public entity such as the Castle Control Board.

• of responsibility under the Castle • Management Act or the Heritage • Resources Act, or any other law or • regulation governing the Board, as well as • management and oversight of the Castle.

A plan will be developed in order to implement the recommendations made by KPMG.

Reconstitution of the Board

The Castle Control Board prioritised the appointments of all the stakeholders on the Board according to prescribed guidelines. The degree of commitment required from the Board members, as stakeholders, was continuously a topic of discussion, resulting in Board members adopting the given mandate with an understanding of their roles and functions regarding participation in Board decisions, efforts and sub-committees.

As prescribed by the Castle Management Act, an interim Executive Director was appointed by the Board during the year under review.

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The Castle Control Board developed a new (or renewed) focus and determination to follow good Supply Chain Management prescripts, which included moving away from arbitrary or rushed procurement practices that might cause difficulties for the Board in the external audit process. The Board established a forum consisting of entities of similar size that work together on a Supply Chain Management policy applicable and generic to all.

sUstainaBilitY

Income Growth

The Castle Control Board, through Castle Management, continues to seek opportunities for income generation and to encourage visitors to attend events and activities at the Castle, thus achieving self-sustainability.

CASTLE CONTROL BOARD – STATEMENT OF RESPONSIBILITY

The Castle Control Board members are responsible for monitoring the preparation and the integrity of the financial statements and related information included in this annual report.

In order for the Board to discharge its responsibilities, management has developed and continues to maintain a system of internal control. The Board has ultimate responsibility for the system of internal control and reviews its operation, primarily through quarterly Board meetings.

The internal controls include a risk-based system of internal accounting and administrative controls designed to provide reasonable but not absolute assurance that assets are safeguarded and that transactions are executed and recorded in accordance with generally accepted business practices and the entity’s policies and procedures. These controls are implemented by trained, skilled personnel with an appropriate segregation of duties.

PAGE 10 LEFT: Block A during the Second World War (1939-1945). BOTTOM LEFT: Swords and firearms of the Second British Occupation (1806-1814) on display in the Castle Military Museum. PAGE 11 LEFT: A guard for the Castle after being formed up, c1910. TOP RIGHT: The barracks in Block E, prior to the First World War. BOTTOM RIGHT: The surrender of the Cape by Batavian soldiers to the British in 1806 from a painting on display in the Castle Military Museum.

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They are monitored by management and include a comprehensive reporting system operating within strict deadlines and an appropriate control framework.

The Auditor-General is responsible for reporting on the financial statements. The board members believe that the entity will be a going concern in the year ahead.

For this reason they continue to adopt the going concern basis in preparing the entity’s annual financial statements. The annual financial statements of the Castle Control Board for the year ended 31 March 2012, set from chapter 6, were approved by the Board on 18 May 2012 and are signed on its behalf by -

LIEUTENANT GENERAL J.T. NKONYANE CASTLE CONTROL BOARD: CHAIRPERSON


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ChaPter 2

OPERATIONAL MANAGEMENT

events

During the year under review, the Castle Control Board, by mandating Castle Management, made progress in terms of achieving outputs as linked to Programme 3 (Maximise the tourism potential of the Castle of Good Hope) and Programme 4 (Increase public profile and positive perception across all sectors of the community).

Highlights for the year under review would include state visits Chairman Wu, Chairman of the Standing Committee of the National People’s Congress of the People’s Republic of China on 26 April 2011, President Zuma on 7 August 2011 and Minister Lindiwe Sisulu’s meeting with the Castle Control Board on 13 February 2012.

Other military events included the Cape Town Highlanders’ Freedom of the City Parade on 7 May 2011 and the Al Alamein Parade on 30 October 2011.

Exhibitions included the World Press Photo Foundation sponsored by Investec for the period 15 January 2012 to 17 February 2012 and Fired an exhibition of South African ceramics, hosted by Iziko Museums of South Africa.

Functions and events that increased the public profile and positive perception of the Castle of Good Hope were the Military Sunset Parade, hosted by the Reserve Force Office Western Cape on 18 & 19 November 2011 and the Fidelio Opera hosted by the Cape Town Opera in March 2012. Both events were well attended and commended by the general public.

In conjunction with the Regiment Western Province and the “VOC” Foundation, the 360th Birthday of Cape Town commemoration and birthday parade were hosted at the Castle of Good Hope and included performances by the Cape Malay choir, Cape Town Muzzle Loaders and marching by soldiers of the Regiment Western Province. The keynote address was conducted by Councillor Grant Pascoe.

Considering that the Castle Control Board receives no government grants and is supplemented by eight (8) members from the Department of Defence, it continues to generate income through two thirds of gate revenue (one third goes to Iziko Museums) and venue hire, which amounted to R2.6 million for the year under review. This is a 17% increase on last year’s revenue.

ManageMent rePort

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RIGHT: Members of the Cape Town Opera performing Beethoven’s opera Fidelio at the Castle of Good Hope, held on 7-10 March 2012. PAGE 12: Castle of Good Hope is the scene for the Great British Story shot on location in November 2011, and preparing the scene for Beethoven’s opera Fidelio.


Table 2: Breakdown of visitors to the Castle during 2010 and 2011

Adults Pensioners Child/studentBooked

School GroupsConcessions Total

2010 80 331 5 256 23 006 17 802 374 126 769

2011 78 273 4 424 24 644 23 079 62 130 482

Castle MilitarY MUseUM

For the year under review, the Castle Military Museum completed a diorama of a Xhosa village for the Eastern Cape Frontier War display, as well as the Birkenhead display.

The Museum is currently finalising a publication entitled “The Cape Regiment in Peace and War, 1781-1817” and has acquired 291 publications for the Museum Library.

In addition, the Museum spent R65 405,00 on the restoration and maintenance of artefacts that form an integral part of any Museum’s mandate.

visitors

The figures portrayed in the table below show an increase of visitor figures in comparison to 2011 and are calculated from January to December of the respective years. The Castle of Good Hope remains dedicated to education. Although the statistics indicate a total amount of 130 482 visitors for 2011, it must be taken into account that these are limited to paying visitors only. It excludes functions and events that would increase the figure considerably.

The Castle has shown a 22% increase in school visits in comparison to 2010.

The number of school visits is a clear indication of the Castle’s commitment to continue to showcase the history of the Castle, as mentioned in Programme 2.

MaintenanCe, Preservation and ProteCtion oF the Castle

In the financial year 2011/12, the Castle Control Board attempted to focus on the maintenance, preservation and protection of the Castle, thus ensuring professional and effective immovable heritage asset management in line with South African Heritage Resources Agency.

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Phase 1

For many years the Board has been negotiating to obtain the necessary funds for the maintenance and preservation of this unique heritage site and during April 2011 the appointment of specialist heritage consultants was approved by the Department of Public Works to complete Phase 1 to the value of R13 846 725, which included the repairs to the various roofs, pointing (grouting) of the outer Bastion walls, repairs to the wooden beams that had rotted due to the leaking roofs and the complete renovation of Blocks B and C.

Additional work arose when it was discovered after the site handover that the outer wall of the Leerdam Bastion had started to collapse and this required urgent reinforcing to prevent further damage.

The original contract value was R11 585 172. However, due to the nature of heritage buildings, additional work only came to light after the commencement of the project. The planned completion date was February 2012 but, due to the unforeseen additional work, the revised completion date has now been moved to the right and it is envisaged that Phase 1 will be finalised by September 2012.

Phase 2

The current estimate for the much needed Phase 2 is R37 266 795 and this will include both the internal and external maintenance and renovations to the entire Castle complex. This includes external works at the bastions, ramparts, arsenals, courtyards and moat walls, etc. A number of sections of the Castle have not been

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PAGE 14 LEFT: A 1:50 scale model ship of the Dutch East Indiaman Africa on display in the Military Museum.TOP RIGHT: A model of the Castle of Good Hope, c 1710-1790 on display in the Military Museum. BOTTOM RIGHT: One of the Anglo-Boer War display rooms of the Castle Military Museum. PAGE 15: Phase 1 of the maintenance en restoration of the Castle of Good Hope. LEFT: Restoration of the Kat Balcony by specialist restoration architects. TOP RIGHT: Restoration of collapsing Leerdam Bastion. BOTTOM RIGHT: Restoration of Kat Balcony.

painted during the last 20 years and this must be done as a matter of urgency as this is the first impression that is made on the general public. The leaking roofs have also caused damage to the unique hand painted murals and their restoration is a priority. It was also found that the copper water piping has perished and their replacement is imperative. Besides the restoration of the hand painted murals damaged by the leaking roofs and the replacement of copper piping, Phase 2 will also include electrical work.


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ChaPter 3 strategiC ProFile

introdUCtion

The Castle Management Act, Act 207 of 1993, stipulates specific objectives to be strived towards in order to efficiently manage and preserve the Castle as a cultural heritage resource. These objectives are set as follows as the strategic objectives on which all planning and operations are based:

• To preserve and protect the military • and cultural heritage of the Castle of • • • Good Hope.

• To optimise the tourism potential • of the Castle.

• To optimise accessibility to the Castle • by the public.

As a heritage site protected in terms of the National Heritage Resources Act, Act No 25 of 2000, the strategic objectives must also include the following:

• The promotion, development • and interpretation of the Castle as • a place of education and learning.

• The development of the capacity of • the Castle to promote understanding, • reconciliation and nation-building.

• An agreement with the Department • of Defence in terms of the management • of the Castle as a defence • endowment property.

The different key objectives of each strategic objective guide management in terms of key performance areas and performance indicators against determined targets.

legislative FraMeworK

This report is submitted in compliance with the Constitution of the Republic of South Africa, 1996, Act 108 of 1996; the Public Finance Management Act, Act 1 of 1999, as amended by Act 29 of 1999; the Castle Management Act, Act 207 of 1993; Treasury Regulations; and other applicable Acts and Regulations.

The Defence Endowment Property and Account Act, Act 33 of 1922, transferred the Castle to the Republic of South Africa for the benefit of defence force organisations, establishments and land defences, or to conserve the value of such property. Since then, the Castle of Good Hope has been governed and managed by the Minister of Defence.

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PAGE 16 TOP LEFT: Officers of the Garrison at the Castle during the First World War. TOP RIGHT: The Captain’s Tower where previously orders were given from to the Castle’s artillery. MIDDLE LEFT: A sentry on duty, at the Castle’s main entrance, in the front inner courtyard, late 19th Century. BOTTOM RIGHT: The Castle’s granary with its beautiful vaulted ceiling, once also used as a storeroom. PAGE 17 RIGHT: The Shell UK event is just one of a few large corporate companies that host their events at the Castle of Good Hope.


The Castle Management Act, Act 207 of 1993, provides for the Castle Control Board to govern and manage the Castle of Good Hope on behalf of the Minister of Defence and Military Veterans and to deal with the aspirations and concerns of all stakeholders.

The National Heritage Resources Act, Act 25 of 1999, provides for the management of the Castle as a heritage site.

vision

As the management board for the Castle of Good Hope, the Castle Control Board strives for the Castle to be a centre of global significance that is the epitome of social, cultural and military heritage, accessible to all citizens of South Africa and the world. It will be the centre of national pride for a “nation of good hope”; an internationally known and recognised cultural and heritage centre for Ubuntu and human rights recognition; and a smoothly functioning, self-sustaining, “must-see” visitor and learner destination.

Mission

The Castle Control Board is a service-oriented public entity, striving to optimise the Castle’s tourism potential and accessibility to the public and to preserve and to protect its cultural and military heritage.

valUe stateMent

The Castle Control Board adheres to and endeavours to uphold the following value system, which is the statement of how the Castle Control Board operates in order to achieve results and perform in the best interests of the Castle as a public entity and to communicate decisions effectively.

Core valUes

The Castle Control Board, in its management of the Castle of Good Hope, has committed itself to contain, manifest, reflect and model the following core values:• Service quality and excellence.• Operating with honesty and dignity.• Diversity in military and cultural history.

• Added value service.

• Partnerships and collaborative • relationships.

• Community engagement.

• Fiscal responsibility, accountability, • transparency and sustainability.

sUCCess FaCtors

In order to achieve the vision and mission statement of the Castle Control Board, it is essential to manage it strategically. As part of this process, the following factors that are fundamental to achieving success were identified as success factors:

• The delivery of the Castle as a • heritage site.

• Effective Governance and Oversight.

The Castle Control Board strives towards financial independence (self-sustainability) from the Department of Defence for any financial assistance in terms of operational management. However, the Department of Defence remains responsible for maintenance of the Castle due to its defence endowment property status.

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MediUM-terM strategiC orientation

As a public entity under the Minister of Defence and Military Veterans, it is essential that critical strategic issues identified by the Ministry be included in the strategic thinking process and addressed in the strategic direction and plan for the Castle Control Board. As a contribution in support of such critical strategic issues, the Castle Control Board addressed the incorporation of certain actions into its management perspective in terms of the following:

• Self-sustainability of the Castle • Control Board and the Castle of • Good Hope.

• Management and maintenance of the • Castle as a defence endowment • property.

• Participation in asset management • reforms as initiated by National Treasury.

• Compliance with statutory legislation.• Improved maintenance and facilities • management.

• The adoption of sound acquisition and • procurement principles.

• Human Resources development.

• Sound financial management.

The ability of the Castle Control Board to deliver on many of these critical issues is dependent on collaboration with the Department of Defence and other line/support departments and institutions, as well as consultants. Therefore, the Castle Control Board strengthened established relationships and sought to develop new relationships in order to support the Minister’s initiatives.

The Castle of Good Hope can never be managed in isolation and has a large role to play in supporting efforts by the tourism, conservation and education industries.

As a bastion of heritage, the Castle played an important role in major military and cultural events, in close collaboration with stakeholders including, but not limited to, the Parliament of South Africa, DPW, South African Heritage Resources Agency (SAHRA), Iziko, Cape Town Heritage Trust and the City of Cape Town. Close relations exist with stakeholders who are also represented on the Castle Control Board and who, therefore, share and assist in management efforts as part of the strategic objectives of the Castle Control Board, as stipulated in the Castle Management Act.

18 19

PAGE 18 LEFT: Seat of the General Staff during the time of the Imperial Garrison and today the offices of Castle Management. TOP LEFT: The Cape Town Highlanders, who have their officer’s mess in the Castle, shown marching. BOTTOM LEFT: Physical training by members of the Royal Naval Volunteer Reserve at the Castle during the early stages of the Second World War. PAGE 19 LEFT: A soldier on guard duty, c First World War. TOP RIGHT: Soldiers marching in the Castle’s rear courtyard, post Second World War.


CHAPTER 4: STRATEGIC PROFILE

20 21

STRATEGIC OBJECTIVES

The three strategic objectives as listed in the Castle Management Act are to preserve and protect the military and cultural heritage of the Castle of Good Hope, to optimise the tourism potential of the Castle of Good Hope and to optimise the accessibility of the Castle of Good Hope to the public. Within these three strategic objectives we identified four programmes and the respective key performance indicators (un-audited) nl:

Table 3: Programme 1 - Administration through good Corporate Governance

Key Objective Output Performance Indicator Performance against target

The Castle Control Board (CCB)will undertake to improve the operational support for the management of the Castle taking cognisance of, in particular, the Castle Management Act, the PFMA Act and Treasury regulations.

Implement developed mechanisms for attracting, acquiring and retaining the desired employees.

Transfer management of Het Bakhuys including asset acquisition and operational management.

Investigation Report was compiled by KPMG in August 2011 relating to the management of functions and events and the relationship between Het Bakhuys and Castle Management.

Process of appointing a maintenance team to attend to day-to-day repairs.

Procurement meeting conducted by IA and attended by the Institute for Drug free sport and CCB was conducted in October 2011. A maintenance team was then re-appointed in February 2012 on an hourly basis in accordance with NTR 16A-6.4 of the SCM Policy.

Appointment of Executive Director and CFO in accordance with Treasury Regulations.

Appointment of Executive Director to be addressed as matter of urgency. CFO to be appointed on a part time basis.

Interim Executive Director was appointed in February 2012 for a period of three months. Part time CFO was appointed in May 2012 to draft financials for year ending 31 March 2012.

Ensure effective office administration capability.

Strategic business plan for 2012-17 to be implemented and approved within the financial year ending 31 March 2012.

Strategic Business Plan and Annual Performance Plan were approved by the Exco and presented to Parliament on 07 February 2012.

Establish effective communication and reporting channels between management, audit committee and CCB.

Quarterly meetings to be conducted.

11x CCB meetings and 4 x Audit and Risk Committee meetings were held during year under review.

strategiC oBJeCtive PerForManCeChaPter 4


Table 5: Programme 3 - Maximising the tourism potential of the Castle of Good Hope


To ensure promotion of the Castle as a must-see and vibrant tourist destination, accessible to all citizens of South Africa and the world, networking with local and national organizations and utilizing suitable opportunities to establish educational and social programmes.

Market activities/social calendar to other museums, SANDF and general public within existing capacity constraints.

Expected number of tourists to the Castle: 130 000

137 473 tourists visited the Castle in 2011/12.

Budget allocation on publication for marketing purposes: R64 000.00

Amount spent on marketing: R55 903.00

CHAPTER 4: STRATEGIC PROFILE

20 21

Table 4: Programme 2 - Preservation, interpretation and showcasing of the history of the Castle


To develop the museum and interpretative components of the Castle and its related themes, through continuous research and development projects in order to establish effective exhibitions and strive towards maximum educational outreach.

Marketing activities/social cal-endar to schools within existing capacity constraints.

Present school tours to 20 000 learners per annum.

Total amount of 20 124 scholars visited the Castle between April 2011 and March 2012.

CCB oversight of cultural material and content for exhibitions and display purposes.

Completion of Phase 2 of the Frontier War displays.

Phase 2 of Frontier War Displays completed.

To ensure professional and effective immovable heritage asset management ito facilities maintenance in line with SAHRA guidelines through the establishment of a proper networking platform with role players ito maintenance operations and quality control within a safe and secure environment.

Maintenance Plan in line with SAHRA requirements, monitored and augmented by the Castle Control Board.

R67 400.00 was allocated for restoration and security of artefacts in storage and on display.

R 65 405.00 was spent on restoration and security of artefacts.

Approved safety and security programme framework.

Repair to leaking roofs, walls and woodwork of the Castle.

DPW approved Phase 1 of a R13 million rand restoration project for the Castle of Good Hope in April 2011. Maintenance to roofs, walls and woodwork will be completed in June 2012. This resulted that CCB funding allocated for maintenance were not spent within the year under review.

Upgrade current CO2 Fire Control system at the Castle.

Due to ongoing maintenance the upgrade was postponed.

Table 6: Programme 4 - Increased public profile and positive perception across all sectors of the community


To ensure promotion of the Castle as an attractive, user friendly tourist destination also available to the business and corporate community as high profile conference and function venue.

An integrated communication strategy that utilises the available printed, verbal and e-media effectively.

Marketing and Communication strategy refined to ensure access and target non-visitors.

Published advertisements in the official guides of Cape Town Tourism and the then Cape Town Routes Unlimited. Free publicity on both SABC and DSTv.

Market the Castle as a location for film/fashion shoots and events.

Expected generated income from film/fashion shoots and events: R250 000.00

Total income of R531 930.00 was generated through film/fashion shoots and events.


ORGANISATIONAL STRUCTUREAs a public entity, the Castle Control Board has the mandate to manage and protect the Castle of Good Hope as a valuable military and cultural heritage asset of the Minister of Defence and Military Veterans and a Defence Endowment Property of the Department of Defence. In order to fulfil its tasks, functions can be divided into two levels of management, ie the strategic and operational management.

Figure 1: Organisational Structure of the Castle Comtrol Board

22

organisational strUCtUre and hUMan resoUrCesChaPter 5


Permanent Employees

Table 7: Total number of permanent workers as employed by the Department of Defence and seconded to the CCB (as on 31 March 2012)

Post LevelMALE FEMALE

TotalAfrican Coloured Indian White African Coloured Indian White

Level 9 - 1 - - - - - 1 2

Level 8 - - - 2 - - - 1 3

Level 7 - - - - - - - - -

Level 6 - - - - - - - - -

Level 5 - - - - - - - - -

Level 4 1 - - 2 - - - - 3

Level 3 - - - - - - - - -

Level 2 - - - - - - - - -

Total 1 1 - 4 - - - 2 8

Contract workers

Table 8: Total number of contract workers as appointed by the Castle Control Board (as on 31 March 2012)

Post LevelMALE FEMALE

TotalAfrican Coloured Indian White African Coloured Indian White

Professionally Qualified

- 1 - 1 1 1 - 2 6

Semi-skilled and discretionary decision making

- - - 1 - 1 - 1 3

Total - 1 - 2 1 2 - 3 9

23

CASTLE MANAGEMENT

Castle Management, provided for by the Castle Management Act (‘civilian staff’), continued with the operational management of the Castle under the strategic guidance of the Castle Control Board during the year under review.

An interim appointment of the Executive Director was approved by the Castle Control Board and Mr Lindsay Madden took office on 01 February 2012. Although his services were terminated on 30 April 2012, a Castle Manager remains appointed, mandated by a management directive, signed by the

Chairperson of the Board, which includes tasks and functions related to those of the Executive Director.

After careful consideration, the Board decided on the appointment of a part-time Chief Financial Officer. However the appointment was only finalised after31 March 2012.

Castle Management comprises a total of 17 members of whom eight (8) are remunerated by the Department of Defence.

It is necessary for the Castle Control Board to employ additional staff to execute

duties related to posts no longer occupied by SANDF personnel. These posts include three (3) guides, a bookkeeper, financial clerk, cashier, museum assistant, librarian and a collection manager.

Other services include permanent cleaning services, char services during the festive season and weekends, as well as temporary replacement personnel during leave periods and public holidays.


REPORT OF THE AUDIT COMMITTEE

We are pleased to present the Audit Committee Report for the Castle Control Board for the financial year ended 31 March 2012.

aUdit CoMMittee MeMBers and attendanCe

Composition of the Audit Committee changed during the year following the termination of the previous committee. One member has continued to serve on both committees. All members have the required expertise and experience in business and financial matters.

aUdit CoMMittee resPonsiBilitY

Except for the period when no committee existed, the Audit Committee can report that it has complied with its responsibilities arising from sections 51(1)(a)(ii) and 76(4)(d) of the Public Finance Management Act and Treasury Regulation 27.

The Audit Committee further reports that it has reviewed and updated the audit committee charter, since assuming office, has regulated its affairs in compliance with this charter, and has discharged its responsibilities as contained therein.

internal aUdit

Working in accordance with an approved risk-based internal audit plan, internal audit support was provided by Mazars Internal Audit Services who carried out reviews of expenditure and on the status of records. Both areas were rated as satisfactory, except for one instance of non-compliance in respect of the supplier database. A mid-year follow-up review was also performed of previously reported audit items.

internal Control and aCCoUnting reCords

Internal control is the system of controls and directives that are designed to provide assurance that assets are safeguarded, that liabilities and working capital are efficiently managed and that the Board fulfils its mandate to manage and control the Castle as a respected national heritage site, in compliance with all relevant statutory and governance duties and prescripts.

Discussions with KPMG (who conducted the 2012 external audit on behalf of the Auditor-General) provide assurance that the Castle Control Board’s internal controls, core bookkeeping, record keeping and retention of records are sound, effective and efficient, and no unexplained instances have been reported of significant or material non-compliance with approved policies and

FinanCial PerForManCe

24

ChaPter 6

Table 9: For the period 1 April 2011 to 26 October 2011, the Committee consisted of three independent persons and met three times:

Present Representing Attendance of Meetings: 3

Members

Mr P.J. Strachan (Chairperson)

Mrs F. Allie

Ms B. Khumalo

Audit Committee of the CCB

CFO Iziko Museums

CFO SAHRA

3

2

1

Table 10: A new committee was appointed with effect from March 2012, with its first meeting being held on 3 May 2012.

Present Representing Attendance of Meetings: 2

Members

Mr D. Mitchell (Chairperson)

Mrs F. Allie

Mr D. Rossouw

Audit Committee of theCastle Control Board

CFO Iziko Museums

Department of Public Works

2

2

2

procedures. The Auditors’ observations and recommendations regarding areas for improvement in compliance, oversight and governance have been noted for further attention.

During the year, the Board initiated a special study (performed by KPMG Consulting Services) into circumstances surrounding the staging of a widely-advertised liquor promotion event at the Castle on 25 June 2011. This study has highlighted the need for the Board to monitor and control more closely the broader utilisation of the Castle by all stakeholders, especially as regards the sale of liquor during public events and at private functions, the usage of the Castle for advertising purposes, and the showing of television and video footage of the Castle in the course of non-Castle related commercial activities.


25

PerForManCe against PredeterMined oBJeCtives

The Auditor-General did not assess the Board’s performance against predetermined objectives as the Board’s Strategic Plan and Annual Performance Plan had not been lodged within the required timeframes. In discussion, the Auditor-General has encouraged management to ensure that the Board’s targets and indicators are clearly and crisply defined so that actual performance can be readily determined in future assessments.

sUPPlY Chain ManageMent PraCtiCes and ProCedUres

Various improvements were noted in the context of modifying the Board’s supply chain management practices and procedures, so that a pattern of smoother adherence to National Treasury prescripts can be achieved on a continuing basis.All instances of non-compliant expenditure

have been explained to the Board and formally condoned, and Audit Committee is accordingly able to report that there was no uncondoned irregular or unauthorised expenditure, also that no instances of fruitless and wasteful expenditure have been noted or detected.

evalUation oF FinanCial stateMents

The Audit Committee has:

• Reviewed and discussed the audited • annual financial statements to be • included in the annual report with the • Auditor-General, with management • (in the absence of a Chief Executive • Officer) and with the Board as the CCB’s • accounting authority.

• Reviewed the Auditor-General’s • management report and • management’s response.• Reviewed changes in accounting policies • and practices, as applicable.

The Committee concurs with and supports the Auditor-General’s opinion on the annual financial statements, and is of the view that the audited annual financial statements can be accepted and read together with the Auditor-General’s report.

TOP LEFT: The moat was renovated and restored to its original form during extensive maintenance in the 1980’s. Today the Castle Moat is fed by a constant stream of fresh water from Table Mountain. TOP RIGHT: The front courtyard of the Castle where Block B meet prior to the Castle’s restoration.BOTTOM LEFT: The front courtyard of the Castle prior to the First World War. BOTTOM RIGHT: This baroque gable is typically Cape-Dutch displaying four basic military elements. The gable is flanked by the Roman gods Neptune (on the left) and Mercury (on the right) representing sea power and commerce.


REPORT ON THE FINANCIAL STATEMENTS

Introduction1. I have audited the financial statements of the Castle Control Board set out on pages 30 to 43, which comprise the statement of financial position as at 31 March 2012, the statement of financial performance, statement of changes in net assets and the cash flow statement for the year then ended, and the notes, comprising a summary of significant accounting policies, other explanatory information.

Accounting authority’s responsibility for the financial statements2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Public Finance Management Act, 1999 (Act No.1 of 1999) (PFMA) and the Castle Management Act of South Africa, 1993 (Act 207 of 1993) (Castle Management Act), and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor-General’s responsibility 3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2001) (PAA), the General Notice issued in terms thereof, section 20 of the Castle Management Act and International Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. 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.

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

Opinion6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Castle Control Board as at 31 March 2012, and its financial performance and cash flow for the year then ended in accordance with SA Standards of GRAP and the requirements of the PFMA and the Castle Management Act.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

7. In accordance with the PAA and the General Notice issued in terms thereof, I report the following findings relevant to performance against predetermined objectives, compliance with laws and regulations and internal control, but not for the purpose of expressing an opinion.

Predetermined objectives8. I am unable to report findings on the usefulness and reliability of the annual performance report of the Castle Control Board as it was not prepared as required by section 55(2)(a) of the PFMA.

26

rePort oF the aUditor-general to ParliaMent on the FinanCial stateMents oF the Castle Control Board For the Year ending 31 MarCh 2012


Compliance with laws and regulations9. I performed procedures to obtain evidence that the entity has complied with applicable laws and regulations regarding financial matters, financial management and other related matters. My findings on material non-compliance with specific matters in key applicable laws and regulations as set out in the General Notice issued in terms of the PAA are as follows:

Audit committee10. Audit committee members were not appointed by the accounting authority for the period 1 November 2011 to 31 March 2012, as required by Treasury Regulation 27.1.4.

Budgets11. The public entity accumulated surpluses without the approval of National Treasury, in contravention of section 53(3) of the Public Finance

Management Act.

Procurement and Contract Management12. Goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations, as required by Treasury Regulation 16A6.1.

13. Contracts and quotations were awarded to bidders that did not score the highest points in the evaluation process, as required by section 2(1)(f) of Preferential Procurement Policy Framework Act.

Expenditure management14. The accounting authority did not take effective steps to prevent irregular expenditure as required by section 51(1)(b)(ii) of the Public Finance Management Act.

Annual financial statements15. The financial statements submitted for auditing were not prepared in all material respects in accordance with the requirements of section 55(1)(b) of the PFMA. Material misstatements of fixed assets, employee costs, and irregular expenditure identified by the auditors in the submitted financial statement were subsequently corrected resulting in the financial statements receiving an unqualified audit opinion.

Strategic planning and performance management16. The accounting authority did not finalise and submit a strategic plan for approval to the relevant executive authority on or before 1 April 2011 as required by Treasury Regulations 30.1.1 and 30.1.2

17. The accounting authority did not establish procedures for quarterly reporting to the executive authority in order to facilitate effective performance monitoring, evaluation and corrective action as required by Treasury Regulations 30.2.1

18. The accounting authority did not ensure that the public entity has and maintains an effective, efficient and transparent system of internal control regarding performance management, which described and represented how the entity’s processes of performance planning, monitoring, measurement, review and reporting was conducted, organised and managed as required by section 51(1)(a)(i) of the PFMA.

Internal control19. I considered internal control relevant to my audit of the financial statements, annual performance report and compliance with laws and regulations. The matters reported below under the fundamentals of internal control are limited to the significant deficiencies that resulted in the findings on the annual performance report and the findings on compliance with laws and regulations included in this report.

Leadership20. The accounting authority did not exercise oversight responsibility regarding performance reporting and compliance with laws and regulations.

21. The accounting authority did not implement a supply chain management and performance reporting framework that complies in all respects with the requirements of the PFMA and the Supply Chain Management Regulations, as issued in terms of the Treasury Regulations.

Financial and performance reporting22. There was no functioning system of internal control to prevent the occurrence of irregular expenditure for the period under review.

27


23. Financial statements contained numerous misstatements that were corrected. This was mainly due to inadequate review by management of information included in the financial statements and incorrect application of the applicable accounting standards.

Governance24. The entity’s audit committee was not fully operational for the year under review. An oversight function that promotes accountability, the monitoring of controls over financial and performance reporting and compliance with laws and regulations was not performed for the period November 2011 to March 2012.

OTHER REPORTS

InvestigationsA review of the governance structures in place at the Castle was performed in the current financial year, incorporating and evaluating the legislative compliance and established event management procedures followed by the entity in October 2011. This report reflects certain remedial functions that are still in progress at the date of this audit report.

Auditor General Century City31 July 2012

28


ANNUAL FINANCIAL STATEMENTS 2011/12

29


Statement of financial performancefor the year ended 31 March 2012

2012 2011

Note R’000 R’000

Revenue (from exchange transactions)

Tickets sales 2 1 745 1 484

Rental received 746 555

Other income 2 89 207

Income from investments 3 602 630

3 182 2 876

Expenditure

Audit fees (344) (332)

Cost of maps sold (43) (56)

Depreciation 6.1 (63) (69)

Staff Costs 4 (796) (557)

Other operating expenses 5 (1 123) (969)

(2 369) (1 983)

Surplus for the year 813 893

30


31

Statement of financial position as at 31 March 2012

2012 2011

Note R’000 R’000

Assets

Non-current assets 1 271 1 260

Equipment 6.1 143 133

Museum antiquities 6.2 1 128 1 127

Current assets 12 164 11 270

Inventories 7 83 126

Trade and other receivables 8 103 66

Cash and cash equivalents 9 11 978 11 078

Total assets 13 435 12 530

Current liabilities

Trade and other payables 10 163 71

Accumulated surplus 11 13 272 12 459

Total equity and liabilities 13 435 12 530


Statement of changes in net assets for the year ended 31 March 2012

Accumulated surplus

Total

R’000 R’000

Balance at 1 April 2010 11 566 11 566

Net surplus for the year 893 893

Balance at 1 April 2011 12 459 12 459

Net surplus for the year 813 813

Balance at 31 March 2012 13 272 13 272

32


33

Cash flow statement for the year ended 31 March 2012

2012 2011

Note R’000 R’000

Net cash inflows from operating activities

Cash receipts from visitors 2 558 2 132

Cash paid to suppliers and employees (2 184) (1 829)

Cash paid to suppliers (1 454) (1 272)

Cash paid to employees (730) (557)

Cash generated from operations 12 374 303

Finance income received 600 630

Cash generated from operating activities 974 933

Cash flows from investing activities

Acquisition of equipment 13 (73) (53)

Acquisition of museum antiquities 13 (1) (13)

Net cash outflows from investing activities (74) (66)

Net increase in cash and cash equivalents 900 867

Cash and cash equivalents at the beginning of the year 11 078 10 211

Cash and cash equivalents at end of the year 11 978 11 078


Notes to the Annual Financial Statementsfor the year ended 31 March 2012

1. ACCOUNTING POLICIES

1.1 Statement of complianceThe financial statements have been prepared in accordance, with the effective Standards of Generally Recognised Accounting Practices (GRAP), issued by the Accounting Standards Board, together with the interpretations, guidelines and directives issued.

1.2 Basis of preparationThe financial statements have been prepared on a going concern basis and the following policies have been consistently applied in all material aspects.The financial statements are prepared in thousands of South African rands (R’000) on the historical cost basis.

1.3 Revenue recognition Revenue is recognised when it is probable that future economic benefits will flow to the enterprise and these benefits can be measured reliably.Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods have been transferred to the buyer.Revenue arising from the rendering of services is based on the stage of completion determined by reference to the physical amount of work performed in relation to the total project.Finance income is accrued on a time proportion basis, taking into account the principal outstanding and the effective interest rate over the period to maturity.

1.4 Leasing Finance leases as per the Treasury Regulations refers to a contract that transfers the risks, rewards, rights and obligations incident to ownership to the lessee and is recorded as a purchase of equipment by means of long-term borrowing. All other leases are classified as operating leases which are applicable to this entity.

The entity as a lessee Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.

1.5 Employee benefits The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service. The accruals for the employee entitlements to salaries, bonuses and annual leave represent the amounts which the enterprise has a present obligation to pay as a result of employees’ services provided to the reporting date. The provisions have been calculated at undiscounted amounts based on current salary levels at the reporting date. 1.6 Equipment and museum antiquities Recognition and measurementThe cost of an item of equipment and museum antiquities is recognised as an asset when:• it is probable that future economic benefits associated with the item will flow to the enterprise; and• the cost of the item can be measured reliably

Costs include costs incurred initially to acquire or construct an item of equipment and museum antiquities and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of equipment and museum antiquities, the carrying amount of the replacement part is derecognised.

Gains and losses on disposal of an item of equipment and museum antiquities are determined by comparing the proceeds from disposal with the carrying amount of equipment and museum antiquities and are recognised net within “other income” in profit and loss.

Equipment Items of equipment are stated at cost less accumulated depreciation.

Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight line method, on the following bases:

Equipment (including computers) 15 - 33%

Museum Antiquities Museum Antiquities are stated at cost and are not depreciated.

34


35

Notes to the Annual Financial Statements (continued)for the year ended 31 March 2012

1.6 Equipment and museum antiquities (continued )

Impairment reporting At each reporting date, the entity reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets may be impaired. If any such indication exists, the recoverable amount of the assets 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 asset (cash-generating unit) is reduced to its recoverable amount. Impairment losses are immediately recognised as an expense, unless the relevant asset is carried at a re-valued amount under another standard, in which case the impairment loss is treated as a revaluation decrease under the standard.

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, unless the relevant asset is carried at a revalued amount under another standard, in which case the reversal of the impairment loss is treated as a revaluation increase under that other standard.

1.7 InventoriesInventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated selling price in the ordinary course of business less any costs of completion and costs to be incurred in marketing, selling and distribution.

Cost is determined on the following basis. Finished goods are valued on the FIFO basis.

1.8 Financial instruments policyRecognitionFinancial assets and financial liabilities are recognised on the entity’s reporting date when the entity becomes a party to the contractual provisions of the instrument.The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

MeasurementFinancial instruments are initially measured at cost, which includes transaction costs. Subsequent to initial recognition these instruments are measured as set out below in Notes 1.9 to 1.12.

1.9 Trade receivablesTrade receivable are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

1.10 Financial liabilitiesThe entity’s principle financial liabilities are accounts payable.The entity’s principle financial liabilities are measured at amortised cost, comprising original debt less principle payments and amortisations, except for financial liabilities held-for-trading and derivative liabilities, which are subsequently measured at fair value.

1.11 Trade payablesTrade and other payables are stated at their nominal value.

1.12 Cash and cash equivalentsCash and cash equivalents are stated at their nominal value.

1.13 Related partiesParties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions or if the related party entity and another entity are subject to common control.

1.14 Use of estimates, judgements and assumptionsManagement is required to make estimates and assumptions in preparing the annual financial statements. These assumptions and estimates are made on the best available information relating to impairments, useful life, depreciation and disclosures.

1.15 Comparative informationCertain comparative amounts in the notes have been reclassified to conform to the current year presentation.


36


2012 2011

R’000 R’000

2. Revenue from exchange transactions

Ticket sales

Gross ticket sales 2 618 2 226

Less: Paid to Iziko Museums (William Fehr Collection) (873) (742)

Net ticket sales 1 745 1 484

Other

Sale of goods 71 90

Sundry income - 1

Military Tattoo 18 116

89 207

3. Income from investments

Interest income - Bank deposits 602 630

4. Staff Costs

Acting Executive Director (Interim) 133 -

Acting Chief Financial Officer 64 77

Salaries 577 431

Bonuses 22 18

Other - 31

796 557

5. Other operating expenses

Consulting fees 429 96

Advertising 56 77

Bad debts 1 -

Cleaning services and materials 115 95

Communications 27 27

Computer services 20 13

Entertainment 48 19

Maintenance repairs and running costs

- Property and buildings 41 207

- Other maintenance repairs and costs 45 68

Museum expenses 140 146

Transport costs 19 7

Training and staff development 1 13

Venues and facilities 1 1

Uniforms and laundry 63 56

Other 117 144

1 123 969


37


2012 2011R’000 R’000

6. Non-current assets

6.1 Equipment

Cost 371 318

Accumulated depreciation (238) (169)

Opening book value 133 149

Additions 73 53

Depreciation (63) (69)

Closing book value 143 133

6.2 Museum antiquities

Cost 1 127 1 114

Additions 1 13

Closing book value 1 128 1 127

7. Inventories

Finished goods 83 126

8. Trade and other receivables

Trade receivables 25 -

Accrued interest 64 62

Prepaid expenses 14 4

103 66

9. Cash and cash equivalents Cash and cash equivalents comprise cash and short-term, highly liquid investments that are held with registered banking institutions with maturities of three months or less and that are subject to insignificant interest risk. The carrying amount of these assets approximates to their fair value.

Cash at bank 103 15

Cash on hand 5 5

Short-term investment instruments 11 870 11 058

11 978 11 078

As required in section 7(2) and 7(3) of the Public Management Act, the National Treasury has approved both banks where the bank ac-counts are held.


38


2012 201110. Trade and other payables R’000 R’000

Trade creditors 83 61

Other payables 57 4

Leave pay 18 5

Deposits 5 1

163 71

11. Reserve in accumulated surplus (Military Tattoo)

Opening balance 341 225

Military tattoo income for the year (surplus) 18 116

Closing balance 359 341

The Military Tattoo Reserve has been created to be able to monitor the results of this annual event and ensure that any surpluses can be utilised for future events.

12. Reconciliation of surplus before taxation to cash generated from operations

Surplus for the year 813 893

Adjusted for:

- Depreciation 63 69

- Finance income (602) (630)

- Leave pay 13 2

Operating cash flows before working capital changes 287 334

Working capital changes 87 (31)

- Decrease in inventories 43 (27)

- Increase in receivables (35) (4)

- Increase in payables 79 -

Cash generated from operations 374 303

13. Net cash outflow from investing activities

Acquisition of equipment (73) (53)

Acquisition of museum antiquities (1) (13)

Cash outflow from investing activities (74) (66)


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14. Related parties

Related Party Nature of the relationship/transactionAmount

2012R’000

Amount 2011

R’000

Iziko Museums of South AfricaShare of income from gate takings and related business in terms of agreement .Salary costs

873

5

742

-

South African National Defence Force *

Management and Administrative Support to the Castle Control Board, which includes salaries.

2 457 2 281

Army Support Base Western Cape

Regular lessees of CCB managed facilities and equipment.

360 216

South African National Defence Force

Recipient of payment for Fixed line telecommunications equipment.

10 10

RM Hudson-Bennett

As vice-chairperson of the CCB also responsible for the preparation of financial statements, including Estimates of National Expenditure (ENE) and attending related workshops as initiated by National Treasury.

64 78

SAHRA As lessee. 76 72 * The management and administrative support costs of the Department of Defence shown above are not included in the expenses of the Castle Control Board.

15. Financial InstrumentsFinancial Risk ManagementFinancial instruments are used to cover risks linked to the entity’s activities. Each instrument is tied to an asset or liability as an operational or financing transaction.

15.1 Financial risk factors (a) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Castle Control Board’s income. The objective of market risk management is to manage and control market risk exposure within acceptable parameters while optimising return. (b) Credit risk Credit risk is the risk of financial loss to the Castle Control Board if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Castle Control Board’s receivable from customers.Reputable financial institutions are used for investing and cash handling purposes.An allowance for impairment is established based on management’s estimate of identified incurred losses in respect of specific trade and other receivables. Bad debts are written off as they incur.

(c) Liquidity risk Liquidity risk is the risk that the Castle Control Board will not be able to meet its financial obligations as they fall due. The Castle Control Board’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.

The liquidity risk is considered as low, because the Castle Control Board has adequate funds at their disposal. (d) Interest rate risk The Castle Control Board’s exposure to changes in interest rates is on a floating rate basis relating to funding invested with treasury approved financial institutions.


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15. Financial Instruments (continued)

(e) Capital management The policy of the management is to maintain a strong capital base so as to maintain public sector confidence and to sustain future developments of the Castle Control Board. There were no changes in the management’s approach to capital management of the Castle Control Board during the year.

f) Analysis of financial assets and liabilitiesThe entity’s principle financial assets are investments, accounts receivable and cash and cash equivalents.

FloatingInterest rate

R’000

Non-interestbearing

R’000

Total

R’000

31 March 2012

Assets

Trade receivables - 103 103

Cash and cash equivalents 11 978 - 11 978

Total assets 11 978 103 12 081

Liabilities

Trade payables - 163 163

Total liabilities - 163 163

Net financial assets/(liabilities) 11 978 (60) 11 918

31 March 2011

Assets

Trade receivables - 66 66

Cash and cash equivalents 11 078 - 11 078

Total Assets 11 078 66 11 144

Liabilities

Trade payables - 71 71

Total liabilities - 71 71

Net financial assets/(liabilities) 11 078 (5) 11 073

15.2 Interest risk sensitivity analysis 2012 2011

R’000 R’000

Cash and Cash equivalents 11 978 11 078

1% interest fluctuation impact 119.78 110.78


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15. Financial Instruments (continued)

Currency riskThe Castle Control Board does not enter into forward exchange contracts and therefore has no currency risk. Liquidity risk The carrying amounts of financial liabilities at the reporting date were:

2012R’000

2012R’000

Trade and other payables 163 71 The contractual maturities for all borrowings and payables outstanding at both 31 March 2012 and 2011 were 12 months or less.

15.3 Fair value estimationThe face value of cash, trade receivables and trade payables less any estimated credit adjustments are the approximately fair values on 31 March 2012 and 2011, as a result of the short-term maturity of these assets and liabilities.

16. Reconciliation of budget surplus with the surplus of financial performance

Net surplus from the approved budget 61 985

Adjusted for:

Income received less than budget (199) (922)

Expenditure incurred less than budget 951 830

Net surplus form statement of financial performance 813 893

17. Standards approved but not yet effective The following Standards have been approved but the effective dates have not yet been determined by the Minister of Finance. The statements will only be effective when a date is announced by the Minister.

GRAP 18 Segment reportingGRAP 25 Employee benefitsGRAP 105 Transfers of Functions Between Entities Under Common Control GRAP 106 Transfers of Functions Between Entities Not Under Common ControlGRAP 107 Mergers

Standard approved for which an effective date has been determinedThe following standards have been approved and an effective date has been determined by the Minister of Finance:

Standard Issue Date

GRAP 21 Impairment of Non-cash-generating assets Mar 2009

GRAP 23 Revenue from Non-Exchange transactions (Taxes and Transfers) Feb 2008

GRAP 24 Presentation of Budgeted Information in Financial Statements Nov 2007

GRAP 26 Impairment of Cash-generating assets Mar 2009

GRAP 103 Heritage Assets Jul 2008

The Minister of Finance announced that the application of GRAP 21, GRAP 23, GRAP 24, GRAP 26 and GRAP 103 will be effective for financial years commencing on or after 1 April 2012.

All applicable Standards will be adopted at the relevant effective date.The management is of the opinion that the impact of the application of the Standards will not have a material effect on the financial position performance or disclosure of the Castle Control Board for the following standards being GRAP 18,21,23,24,25,26,and 104.


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18. Irregular Expenditure The Castle Control Board has a Board approved Procurement Policy. However, expenses in contravention of Treasury Regulation 16A were incurred. It is acknowledged that due to the size and nature of the entity, which has limited resources, it is impractical to comply with the stringent application of the regulations.

2012 2011

R’000 R’000

Reconciliation of irregular expenditure

Opening balance 566 -

Instances incurred in the current year 619 566

Less: Amounts condoned - -

Irregular expenditure awaiting condonation 1 185 566

IncidentsAmount

R’000Disciplinary steps taken/criminal proceedings/explanation

In contravention of PFMA and Treasury Regulations in that 3 quotes were not obtained for procurement

58 The CCB’s SCM policy requires only 2 quotes for procurement amounts between R2 000 and R5 000, whereas Treasury Regulations stipulate that a minimum of 3 quotes must be obtained. The Board’s SCM policy is being revised and updated to improve compliance with Treasury Regulations, where this is practical and sensible. The board and audit committee are satisfied that all expenditure is valid and incurred in the best interest of the board, and in accordance with Board-approved instructions and prescripts.

Prescripts of PPPFA not applied 132 The board and audit committee are satisfied that the expenditure is valid and incurred in the best interest of the board.

In contravention of PFMA and Treasury Regulations in that 3 quotes were not obtained for procurement and not applying PPPFA

429This relates to a single item when the Board appointed a commission of inquiry into the circumstances and implications of the “J&B Start-a-Party” event that was held at the Castle on 25 June 2011. The Board dispensed with the requirement to obtain 3 quotes owing to the nature, scope, importance, sensitivity and urgency of the services to be procured, resolving unanimously to use the services of KPMG Services (Pty) Ltd, the consulting arm of KPMG who had just completed the 2011 external audit on behalf of the Auditor-General. The Auditor-General’s Office had been consulted and the AG’s prescribed tariffs were to apply.


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18. Irregular Expenditure (continued)

2012 2011

Nature of spend R’000 R’000

Advertising 15 -

Building maintenance 28 -

Cleaning 132 98

Museum expenses 10 -

Printing 5 -

Consulting services – Special investigation 429 -

Maintenance of heritage assets - 211

Heritage displays and uniforms - 77

Internal audit and part time accounting services - 180

619 566

19. Contingent liabilitiesThe Castle Control Board has not as yet received approval from National Treasury to retain the accumulated surplus disclosed in the statement of financial position, as required by section 53(3) of the Public Finance Management Act, 1999, despite having submitted application for this. All accumulated amounts are disclosed as a contingent liability pending the required approval. The Board has however complied with the Castle Management Act under which the Board was constituted which act allows and requires the Board to retain all surpluses arising from its operations, for these funds to be utilised by the Board in fulfilling its obligations and statutory mandate.

20. TaxationA tax exemption has been granted by the South African Revenue Service. Consequently no tax has been provided in these accounts.

21. Fruitless and wasteful expenditureIn accordance with Section 55(2)(b)(i) of the Public Finance Management Act, 1999, the Board is satisfied to report that no fruitless and wasteful expenditure was incurred during this year or the previous year.



CASTEEL

1 6 6 6D E G O E D E H O O PD E G O E D E H O O P

Department:DefenceREPUBLIC OF SOUTH AFRICA

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