In terms of our confidentiality agreements, no client names are specified in the text. However, should you choose to consult with us, we have a select number of clients who have volunteered to serve as references that may be contacted for this purpose.
This client operates numerous steel fabrication plants across South and Sub-Saharan Africa. The company is part of a large group listed on the JSE.
The company approached DCSA to advise on eligibility and opportunities to secure grants on multiple capacity investments at multiple locations, and, the implementation of SAP ERP across the business.
DCSA investigated the circumstances and recommended that an application be submitted for an MCEP grant, which was approved.
For expenditure on expanding manufacturing operations and the implementation of SAP –
Actual capex incurred – R300m
MCEP Grant approved – R75m
The full grant is scheduled for payment by March 2014.
A listed manufacturing conglomerate approached DCSA to evaluate their 3 year investment plans. The group structure included the holding company, various operating subsidiaries each with numerous divisions as well as businesses with minority shareholders. The capex was spread throughout the group comprising expansions to existing lines and new product start-ups. The CFO wanted clarity on which investments would qualify; which companies should apply; for which programmes – and – what the value and timing of incentives would be.
DCSA identified 3 qualifying projects
2 expansions of existing operations (R42m)
1 new product line (R77m)
Qualifying R&D expenditure of R17m
Both expansions qualified for an MIP Grant but the new product line was to be established on the same premises as an existing business within the same legal entity. DCSA ring-fenced this investment into a new division and secured the MIP grant on all three projects.
The client has already been paid R13.5m in incentives and a further R4.5m is due at financial year end. As a bonus, the client claimed a 50% tax allowance on the R&D expenses which resulted in a tax saving of R2,4m.
A junior mining group wanted to establish a greenfields ferrochrome mine and beneficiation plant. The site was remote requiring extensive capex on infrastructure including roads, electricity, water, sewage and other essential services.
The CEO believed that Government Incentives are only available for manufacturing entities and that mines are excluded. DCSA was engaged to evaluate the projects and recommend which incentives were applicable if any.
DCSA recommended, as was appointed to apply for the following incentive programmes
Critical Infrastructure Programme (CIP) – for expenditure on establishing the infrastructure. Actual capex incurred – R41,4m
CIP Grant approved – R10,3m
Manufacturing Investment Programme (MIP) – for expenditure on the processing plant.
Actual capex incurred – R217m
MIP Grant approved – R30m
The MIP Grant was approved subject to claiming manufacturing depreciation rates on the processing plant. ROI calculations supported DCSA’s recommendations.
This facility comprises a chemical manufacturing plant. The company is part of a large leisure group listed on the JSE.
The CFO had applied for incentives under MIP but although the project complied with requirements in most respects, the application was rejected since funding was to be supplied by the listed holding company, i.e., the manufacturing operation could not prove a funding gap.
DCSA investigated the circumstances and source of funding for the project from the holding company and recommended that the rejection of the project be appealed on the basis that the holding company could prove that external funding was raised for the subsidiary project. DCSA subsequently lodged the appeal which was successful and the client received an approval for the MIP Grant
For expenditure on establishing the manufacturing facility –
Actual capex incurred – R800m
MIP Grant approved – R30m
The full incentive has already been claimed and paid to the client.
Software Development Client
The company develops software for the banking industry. They colloborate closely with their clients to develop IT solutions for on-line home loan applications and also provide a secure network switch which enables the technology.
The solution is subsequently sold to banks and other financial institutions throughout Africa. The CFO was unsure whether this development would qualify for a S11D R&D tax allowance and engaged DCSA to evaluate eligibility.
DCSA evaluated the client’s technology and processes, and specifically the level of innovation / uniqueness of the software solution. It was concluded that the development of new modules, providing major new functionality would qualify for the allowance. DCSA subsequently applied for the S11D Allowance which was successful and the client received an additional 50% tax deduction.
Actual R&D Cost – R45,0m
Actual Tax Saved – R6,3m
The allowance has already been claimed and assessed by SARS.
Clothing & Textile Client
The CEO of this well known textile mill knew that promotion of the clothing & textile sector is a major priority for the SA Government, but was unsure which incentive scheme/s would be suitable for their expansion plans.
DCSA accepted an engagement to evaluate the proposed investment.
DCSA recommended, and was successful in securing the following incentive programmes:
Production Incentive (PI) – for expenditure on the additional production lines
Actual capex incurred – R45,0m
PI Grant approved – R9,3m
Manufacturing Investment Programme (MIP) – for expenditure on the same capex
Actual capex incurred – R45.0m
MIP Grant approved – R6.75m
Both incentives were approved subject to the final amount claimed not exceeding the total capex amount (referred to as double-dipping).
Note: We are widely respected in Government circles for our technical expertise, as demonstrated in the success stories above. Although these refer mostly to large businesses, we may be able to achieve the same success for your company irrespective of your size. Complete our free assessment to see what government incentives you’re eligible for. You may be pleasantly surprised.