HDA Annual Report

ANNUAL REPORT 2023/24 Notes to the Annual Financial Statements

Restated 2023

Figures in R’000

2024

30. Properties held on behalf of others (continued)

31. Financial risk management

The HDA, in the course of normal operations, has limited exposure to the financial risks, e.g liquidity risks, credit risks and interest rate risks. However, the HDA attempts to manage the following financial risks: Liquidity risks Liquidity risk refers to the risk that sufficient liquidity is not available when required. The goal of the entity is to maintain adequate liquidity at all times. The HDA is exposed to liquidity risk only with regards to the payment of its payables and undertaking unfunded projects. The payables are all due within a short time, the National Treasury instruction requires payments of invoices within 30 days of receipt. The HDA manages its liquidity risk by conducting monthly forecasting, holding sufficient cash in its bank accounts, supplemented by cash available in a money market account. The HDA manages liquidity risk according to its investment policy and working capital management, expenditure versus forecasted cash flows. The amount of cash invested in call deposits of 30 days, 60 days and 90 days is guided by the projected future cash requirements. The issue of unfunded projects remains a challenge, as the funding agreements signed with some of the stakeholders entails that funding in a form of management fee is earned over a period of time, with no bridging finance available to cover preliminary expenses.

The clients retain the risks and benefits attached with the land. The major risks include land encroachment/ illegal invasions by squatters. No significant risks attach to the Agency other than compliance risks with the PFMA. The Agency is exposed to the risk of Irregular expenditure; fruitless and wasteful expenditure that arise from noncompliance to procurement processes. The Agency mitigates this risk by continuously monitoring its internal control and risk management frameworks. Transfer of various land parcels held by the agency to various municipalities During financial the year, the HDA Board approved the donation of the following land parcels listed above to various Eastern Cape municipalities: Rem of Ptn 19 farm Geelhouteboom 688 Humansdorp Rem of Portion 23 and Portions 41, 42 and 43 of Farm South Gorah No. 397 Portions 24 and 290 of the Farm Strathsomers Estate No 42 Rem of Ptn 22,64 and 65 and Portion 23 of the Farm Strathsomers Estate No 42, Uitenhage The properties were acquired with funding from the Eastern Cape province and approved to be temporarily held for and on behalf of the municipalities on condition that they will be subsequently released to the respective municipalities for informal settlements upgrading purposes. The donation of the land parcels to the respective municipalities is in accordance with the original acquisition intent. The land parcels will be removed from the Agency’s books upon transfer and registration of the land parcels in the names of the municipalities, the process is underway. > > > > The Properties affected are listed above.

154