Page 88 - KZN Film A Report

KWAZULU-NATAL FILM COMMISSION
(Registration number M3/15/32 (834/15))
Annual Financial Statements for the year ended 31 March 2021
Notes to the Financial Statements (continued)
9. Investments in associates (continued)
- Interchange of managerial personnel, board of KZNFC appointed all 3 executive members as representatives of the KZNFC in the project and the representation is currently 2 members of the executives which can be interchanged.
- Provision of essential technical information,according to paragraph 4.5 (2) of the Framework the KZNFC was to commit and make available resources in assisting the project in completing feasibility studies, business plans and other associated pre- operational activities in respect of the project.
In looking at the definition of significant influence the standard goes beyond ownership to include power to participate in the financial and operating policy decisions. KZNFC has two members on the KZN Studio (Pty) Ltd Board representing 50% of the board membership and therefore has significant voting rights as well as influence on financial and operating policy decisions.
The framework agreement which governs the relationship further provides that:
- Both parties undertake to conclude on the memorandum of interest and the shareholder agreement - Yearly contributions for the phases of the project
- KZNFC is as a co-signatory to the bank account
- KZNFC is party to establishing all governance matters
Based on the above the KZNFC concluded that the entity has significant influence over the investee and therefore the investment is disclosed as investment in an associate and is recognised at cost.
The investment in associate was kept as cost due to:
Following the findings of the Auditor-General in July 2019, the KZN film studios project was placed on hold and no further expenditure or activities took place for the balance of the financial year. Furthermore, based on the audit findings and legal opinion obtained, a letter of termination was issued to Contento Pty limited in December 2019. Due to the legal engagement, KZN studios company has not produced annual financial statements and therefore there is no basis on which to determine the fair value of the investment in associates. Whilst we have copies of the investment bank account indicating the current balance in the investment account in KZN studios we do not have an expenditure report to indicate what the funding was utilized for.
Figures in Rand
2021
2020
Movements in carrying value
Opening balance
Investment in associate at March 31, 2021 of R15,000,000 (2020: R15,000,000).
10. Operating lease asset (accrual)
Current liabilities
11. Provisions
Reconciliation of provisions - 2021
Other provisions
15,000,000
-
15,000,000
(411,822)
Total
2,345,213
Opening Balance
Additions
-
2,345,213
The provision relates to accounting for salary scale adjustments for the period April 2020 to March 2021 for qualifying employees.
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KZN FILM COMMISSION ANNUAL REPORT 2020/2021