| Fri 30 Oct 2020, 13:59 | | Delay in submission of TCTA's 2019/20 Annual Report and the Release of the Annual Financial Statements |
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Delay in submission of TCTA's 2019/20 Annual Report and the Release of the Annual Financial Statements
Trans-Caledon Tunnel Authority (TCTA)
WSP5 (LHWP) ZAG000020017
As established by Notice No 2631 in Government Gazette No 10545 of 12 December 1986, and revised
by Notice No 277 in Government Gazette No 21017 of 24 March 2000 (the Notice of Establishment).
A Schedule 2 Public Finance Management Act No. 1 of 1999 (PFMA) entity.
DELAY IN SUBMISSION OF TCTA’S 2019/20 ANNUAL REPORT AND THE RELEASE OF THE ANNUAL FINANCIAL STATEMENTS
Noteholders are notified of the following with regards to TCTA’s Annual Report and Annual Financial
Statements (AFS) for the year ended 31 March 2020.
Background
In terms of the Government Notice No. 437 of 31 March 2020 and subsequently amended by the
Government Notice No. 665 of 11 June 2020, an exemption was given to institutions in complying with
Section 55(d) of the Public Finance Management Act, with the condition that the relevant functionary or
institution must comply with a provision in the legislation in two months after the stated deadline This
exemption gave TCTA until the 31 October 2020 to submit the Annual Report, which include the annual
financial statements (AFS), to the Minister of Human Settlements, Water and Sanitation, for tabling in
Parliament. Once tabled in Parliament the Annual Report becomes a public document.
Problem Statement
There has been a delay in the conclusion of the audit by TCTA’s auditors, the Auditor-General of South
Africa (AGSA). The delay occurred due to the challenges experienced by members of LHDA’s auditors
who are based South Africa in conducting elements of the audit related to payments made by TCTA to the
Government of Lesotho, LHDA and the LHWC in the discharge of the RSA’s financial obligations in terms
of the Treaty. The delay was caused by the closure of the South Africa – Lesotho border due to COVID-19.
This prevented auditors, who were based in South Africa, crossing into Lesotho to undertake their
work for LHDA.
Potential Consequences of the Delay:
At this stage, these relate mostly to the potential failure to submit the AFS in a timely manner to various
stakeholders. The timely submission of the AFS is a legal (Public Finance Management Act No 1 of 1999– PFMA),
regulatory (Financial Markets Act 19 of 2012 – FMA, Financial Sector Regulation Act of 9 of
2017 – FSRA, JSE Debt Listing Requirements - DLR) and contractual (various loan agreements with
various lenders) requirement. The table below indicates the various submission deadlines and the
potential consequences of failure to comply with each:
Requirement Deadline Status Consequences of Non-Compliance
s55(1)(c) PFMA to Auditors 31 Jul 2020 Submitted N/A
s55(1)(d) PFMA submission to 31 Oct 2020 - Internal
Minister/DWS and National
Treasury
s65(1)(a) PFMA Minister to 30 Nov 2020 - Minister must table written
table AFS to National (or the last day explanation to the National Assembly
Assembly that Parliament setting out the reasons for failure
sits in 2020) s65(2)(a) PFMA.
s90(b) FMA Regulated Person 31 Aug 2020 Extension granted Administrative penalty levied in terms
must submit AFS to FSCA to 30 October of s167 FSRA.
2020
s7.4 DLR: make AFS publicly 30 Oct 2020 - s7.7(b) DLR JSE will publish SENS
available & publish JSE SENS after deadline informing investors of
announcement potential suspension of listing.
S7.7(c) DLR if AFS are still
outstanding after end of Nov 2020,
JSE will suspend listing.
s7.8 DLR grant JSE discretion as to
the application of 7.7(b) and (c)
above.
Various Loan Agreement Between the TCTA is engaging Varies from no consequences to
end of Jul 2020 with the lenders. being a potential event of default.
and the end of
Sep 2020
There is a potential for some lenders to regard the failure to provide the AFS in a timely manner either to
themselves (in terms of the information undertakings under their loan agreements) or to the National
Assembly, as either an Event of Default or as a breach of law (loan agreements generally require the
borrower to act lawfully), which can also be an Event of Default.
A further risk exists in that should the AFS remain outstanding after the end of November 2020, the JSE
may, at its discretion, suspend TCTA’s listed debt.
TCTA will update Noteholders promptly when the Annual Report has been completed and
submitted to Parliament and when it will be tabled, enabling it to be released to the public or the
actions of its lenders on this matter.
30 October 2020
For further information please contact
Darshana Jeeva, TCTA Sponsor +27 12 683 1311
Page 2 of 2
Date: 30-10-2020 01:59:00
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