2013 / 2014 annual report - provincial government · mr. j siyaya – director date appointed :01...

1

2013 / 2014 ANNUAL REPORT

33

ANNUAL REPORT FOR THE PERIOD1 APRIL 2013 TO 31 MARCH 2014

This Annual Report of Mjindi Farming (Pty) Ltd describes and details the activities of the entity for the period from 1 April 2013 to 31 March 2014.

This report has been prepared for submission to the Executive Authority and the Parliament of South Africa in line with the requirements of the

Public Finance Management Act (No 1 of 1999).

CONTACT DETAILS

MJINDI FARMING (Pty) LtdPO Box 28 JOZINI 3969

MAKHATHINI FLATS, 3969

TEL:035 572 9015/20Fax: 035 572 9023

Email: [email protected]

PART A: GENERAL INFORMATION 6

Vision, Mission, and Values 7Mandate 7Organisational Structure 8 Board of Directors and Executive Management 9 - 13Foreword by the MEC 14Chairman’s Report 15Overview of the Accounting Offi cer 16 - 18

PART B: PERFORMANCE INFORMATION 19

Statement of Responsibility for Performance Information 20 Overall Objectives of Mjindi Farming (Pty) Ltd 21Purpose 21Situational Analysis 21 - 22Preformance information by Programme 22 Programme 1: Administration and Support Services 22 - 24Programme 2: Farmers Development and Support 24 - 37Programme 3: Infrastructure and Water Services 38 - 41

PART C: CORPORATE GOVERNANCE 42

Introduction 43Shareholding 43Shareholder Compact 43Governing Bodies and Board of Directors 43Role and Function of the Board 43Director Induction and Orientation 44Directors’ Remuneration 44Board Sub-Committees 44Audit, Risk and Compliance Committee 45Finance and Human Resources Committee 46Infrastructure Committee 47Farmer Development Committee 48Chairperson’s Committee (EXCO) 49 Public Finance Management Act 49Risk Management 50Fraud and Corruption 50Internal Audit 50Responsibility of Reporting 51Communication with Stakeholders 51Company Secretariat Function 51Board and Sub-Committees meeting attendance 2013/2014 52

PART D: HUMAN RESOURCE MANAGEMENT 53Human Resource Management 54 - 59

PART E: ANNUAL FINANCIAL STATEMENT 61Annual Financial Statements 62 - 100

5

PART AGENERAL INFORMATION

5

PART AGENERAL INFORMATION

6

GENERAL INFORMATION

REGISTERED NAME : MJINDI FARMING (PTY) LTD

REGISTRATION NUMBER : 1993/007159/07

PHYSICAL ADDRESS : SECTION 2 OFFICES MAKHATHINI FLATS JOZINI 3969

POSTAL ADDRESS : P. O. BOX 28

JOZINI

3969

TELEPHONE NUMBER/S : +27 35 572 9015/20

FAX NUMBER : +27 35 572 9023

EMAIL ADDRESS : [email protected]

WEBSITE ADDRESS : www.mjindifarming.co.za

EXTERNAL AUDITORS : OFFICE OF THE AUDITOR GENERAL SA

BANKERS : FIRST NATIONAL BANK

COMPANY/ BOARD SECRETARY : C & H ACCOUNTING INCORPORATED

7

VISION, MISSION AND VALUESVision

Mjindi Farming (Pty) Ltd aims at becoming an internationally recognized thriving farmer-driven and socially relevant entity driving sustainable and green agricultural production.

Mission

To develop and sustain the agricultural potential, supply effective farmer support services and maximise agri-busi-ness development for the benefit of the farmers and communities of Makhathini in partnership with stakeholders.

Values

Mjindi Farming (Pty) Ltd commits itself to the promotion of the following values in all its programmes and activi-ties:

• Integrity – we commit to ethical and moral conduct that promotes honesty at all times. • Respect – we will treat stakeholders with courtesy and acknowledge and value their rights and those of the environment. • Accountability – we involve stakeholders in the organization’s activities with a culture of openness whilst we remain answerable for the outcome of our actions and activities. • Team Work – we will work together to achieve our common vision. • Innovation – will become an adaptable organisation that embraces the culture of creativity and learning. • Excellence – we are a progressive organisation applying best practices to achieve the highest quality and standards. • Commitment – we undertake our activities with passion, loyalty and dedication at all times. • Productivity – we undertake to produce results timeously, efficiently and effectively. • Self sufficiency – we want to promote self-sufficiency in our programmes to empower our clients to be more independent and entrepreneurial. • Batho Pele Principles- we remain committed to upholding the values and principles of Batho Pele as a public entity.

Mandate

Mjindi Farming (Pty) Ltd has the following specific mandate:

• Repair and upgrade of the existing 3 500 ha currently under irrigation; • To sustain the Makhathini Irrigation Scheme as a viable and sustainable farmer settlement project; • To transform Mjindi Farming (Pty) Ltd into a land user/landowner/farmers driven entity; • To assist with the planned and approved expansion of the irrigation scheme (area in total aimed for is 15 000 ha) for the settlement of additional farmers; • To assist and support the shareholder with the planning and implementation of the Makhathini Integrated Master Development Plan; • Explore and facilitates new agri-business opportunities on the irrigation scheme.

8

ORGANISATIONAL STRUCTURE

Accounting Authority/Board

Chief Executive Officer

Senior Manager - Farmer Development

Chief Financial OfficerSenior Manager

- Infrastructure and Water Services

Senior Manager - Agribusiness

Development and Marketing

9

BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENTDuring the year under review, Mjindi Farming (Pty) Ltd Board Members comprised of eight Non-Executive Directors and one Executive Director, who is the Chief Executive Offi cer. The Chairman and Chief Executive Offi cer are Mr .Sipho M. Ngxongo and Mr Masango M. Sifundza.

The Board is the focal point of corporate governance in the organisation, and is ultimately accountable and respon-sible for the performance and aff airs of Mjindi Farming (Pty) Ltd. The Board is responsible for enforcing adequate and eff ective corporate governance standards applicable to the operations and functions of Mjindi Farming (Pty) Ltd.

The Board composition optimises the business, professional and management abilities of its individual Directors as well as their collective experience in a way that adds value to Mjindi Farming (Pty) Ltd and in particular the farming and irrigation activities.

Mr. S.M Ngxongo - ChairmanBSc (Parasitology), MSc (Parasitology),

M.Comm.H (Master of Community Health)

Mr. M.M Sifundza - Chief Executive Offi cerDip (Agric), BSC (Agric), MSc (Agric Economics)

Date Appointed: 01 March 2010Areas of Expertise • Commercial Farming • Organisational Development • Change Management • Policy Development, Implementation, Monitoring and Evaluation • Human Resource Management • Research • Leadership

Date Appointed : 01 March 2011Areas of Expertise • Financial Management • Enterprise Development • Organisational Development • Rural Resource Management • Agribusiness Finance and Management • Farming • Training and Development

10

Date Appointed : 01 March 2010Areas of Expertise • Water Law • Hydropower • Infrastructure, Water and Wastewater Management • Human Resources • Monitoring and Evaluation • Skills Development, Capacity Building and Training • Performance Management • Budget Management • Auditing and Risk Management

Date Appointed :01 March 2010Areas of Expertise • Farming • Project Management • Construction • Supply Chain Management

Mrs. B.T Tembe – Deputy ChairpersonChairperson of Finance and Human Resources

Portfolio Committee

Diploma (Specialist Local Governement Management)

Diploma ( Management Development)

Date Appointed :01 March 2010Areas of Expertise • Financial Management • Business Management • Human Resource Management • Organisational Behaviour, Development and Change • Marketing Management • Development Banking • Service Delivery Management • Strategic Management • Local Government Law and Management • Policy Development & Ethics

Mr. I.Z Ngcobo – DirectorChairman - Infrastructure Portfolio Committee

BBA Degree

Mr. M.D Myeni – DirectorChairman – Farmer Development Portfolio Committee

Diploma (Structural)

11

Date Appointed : 01 March 2010Areas of Expertise • Medical Technology Cytology • Women in Agriculture Empowerment • Training and train a trainer • Agro Processing Farming • HIV and AIDS Management • Management

Date Appointed : 01 March 2010 Areas of Expertise • Community Building and Development • Property Management • Business Development • Team Building • Budgeting • Customer Service

Ms. M.V Xakaza – Director Diploma (Medicinal Technology)

International Academy of Cytology - AgriprocessingCommunity Developement Co-operative Governance

Mr. S.H. Nxumalo – Director

Mr. J Siyaya – Director

Date Appointed :01 March 2010Areas of Expertise • Community Development and Rural Development • Management • Human Resources

12

Date Appointed : 2003Areas of Expertise • Journalism • Good Governance

Mr. Z. Nyuswa – Representavive: ShareholerSenior Manager - Co-oporate Government

B-Tech Journalism

Date Appointed :01 March 2010Areas of Expertise • Farming • Home base care • Agro-processing

Date Appointed :15 November 2010Areas of Expertise • Policy Development, Implementation, Monitoring and Evaluation • Financing and Investment Management • Audit and Risk Management • Financial Management and Reporting • Taxation

Ms. Z.G Gumede – Director

Mrs. S Ngidi – Chief Financial Offi cerBCompt; Honours; Acc. Sc; Post Grad: Acc. Sc; Post Grad:

Finance, Banking and Investment Management, Member of the Institute of Acc & Commerce

13

Date Appointed : 01 August 2011Areas of Expertise • Crop Production Management • Agricultural business management • Agricultural Extension management • Applied soil science • Horticulture • Farm management

Date Appointed : 01 August 2011Areas of Expertise • Roads • Sanitation and water related projects • Construction • Infrastructure • Water engineering

Mr. W Tom – Senior Manager BSC Degree in Agriculture( Management)

Development Support

Mr. M.E Thekiso – Senior EngineerN.Dip, B-Tech (Civil)

14

FOREWORD BY THE MEC

It is with honour and appreciation that I present the Annual Report for Mjindi Farming (Pty) Ltd for the 2013/14 fi nancial year. Mjindi Farming (Pty) Ltd is the entity of the Department of Agriculture that has been tasked with the promotion of agricultural development in the Makhathini Irrigation Scheme in Northern KwaZulu Natal.

The report presents a refl ection of the concerted eff ort by the Mjindi Farming to reach out to the people of Makha-thini to improve their quality of life through agriculture and agribusinesses.

One of the most important tasks of Mjindi Farming has been the rehabilitation of the irrigation scheme. It is pleasing to note that this tasked has progressed very well during the year under review and has resulted in a constant unin-terrupted supply of water to the farmers. The rehabilitation of the scheme together with the provision of technical advice to the farmers has resulted in the production of over 190,000 tons during the year. Of this total production, 20,000 tons was food crops. It is noted that this production is still far below the potential of the area, taking into account the fallow lands and the low yields received by some farmers.

We want to ensure that the irrigation scheme realizes its potential of becoming the food basket of the province and the country. This will only be achieved by ensuring that farming is treated as a business and apply all business principles. Mjindi farming and the Department of Agriculture will promote the commercialization of farming operations to en-sure increase and reliable production. The increase in production will have to be accompanied with agro processing facilities in the area.

With all the successes achieved in spite of the challenges in the past fi nancial year, one can only look forward to this current fi nancial year with more determination and vigour. The achievement of Mjindi Farming in the Makhathini area will have a huge bearing to our goals and primary objectives of alleviating poverty, creating jobs and food security.

__________________________Mr. VC XabaMember of ExecutiveDepartment of Agriculture and Rural Development

__________________________Mr. VC XabaMember of Executive

15

CHAIRMAN’S REPORT

The year under review has been a very diffi cult one. The Shareholder instituted a forensic investigation. This appears to have been based on hear-says and malicious misinformation. Despite the fact that the investigation took a year, the report of such has not been made available to Mjindi Farming.

In line with the directive from the Shareholder, the board was stripped of its function regarding oversight on pro-curement. Cedara provided this function, hence all procurement applications had to get approval from Cedara.

The delays in refuting or giving approval to applications were the order of the day. At times there were no respons-es to such requests. Consequently there were high levels of under-expenditure. This seriously aff ected the service delivery. Farmers blamed Mjindi Farming for such non-delivery of services.

As a result of the compromised function of the board, members of the management team, dealt directly with Ceda-ra. As such there is not much to report on except that:

- The entity continued to supply pressurised water to farmers. Diffi culties were encountered with emergencies that needed urgent attention.- Funds made available to the entity were managed very well except that the level of expenditure was low.- Some programmes targeting farmers continued although some could not implemented.- The focus for the forth coming fi nancial year will be on:- Turning the irrigation scheme into blocks of viable commercial units. This will help in ensuring that the scheme as a whole becomes productive. The focus will be on food production.- Production of food crops without identifi cation of the off -takers leads to waste. The emphasis during the forth-coming fi nancial year will be on fi nding the reliable markets for food crops as cash crops have markets.-

- The pressure on the irrigation scheme is mounting.

Everyone wants irrigated land. Mjindi farming will assist with the expansion of the irrigation scheme in terms of its planning and implementation. Such expansion will not only settle more farmers but will also create jobs and wealth in this economically depressed Umkhanyakude district.

Despite the problems experienced, on behalf of the Board of Directors, I would like to extend a word of gratitude to:

- The Chief Executive Offi cer for his dedication and strong leadership role. - The entire staff members for keeping Mjindi Farming afl oat during these diffi culties times. - C and H Accounting for continuing to provide an excellent service as the Company Secretary - Those members of the board who sticked to their core functions and did not take advantage of the confusion that prevailed to advance their own courses. They are the pillars of Mjindi Farming. - The board as a whole for its support to the management and for coming to a decision to regularise the situation a Mjindi Farming.

_____________________________Mr SM NgxongoChairperson: Board of Directors

16

OVERVIEW OF THE ACCOUNTING OFFICER

Introduction

The 2013/14 fi nancial year is seen as a year of misfortune for Mjindi Farming. I write this overview of the accounting offi cer not knowing whether I was the accounting offi cer of the institution during the 2013/14 fi nancial year. Decisions that are vested to the accounting offi cer by the PFMA were removed from the accounting offi cer and were vested to the HOD and the offi cer of the MEC of Department of agriculture, Environmental Aff airs and Rural Development. This, according to the department, was due to the forensic audit that the department institut-ed on Mjindi Farming. This was initially viewed as a minor disturbance as Mjindi Farming is a small company. It was expected that the forensic audit would take at most 3 months and things are back to normal. This was however not the case. To date, Mjindi Farming has not received any formal report on the forensic audit. Requests submitted to the department to employ staff and fi ll critical positions in accordance with the approved organogram were neither approved nor disapproved. With 49% vacancy rate, staff was overworked and demoralised. Requests to implement projects were delayed and some were only approved late. This has actually aff ected service delivery and has resulted in underspending of the budget.

While things were upside down, I am happy to report that staff did not give up and gave above average perfor-mance to ensure the provision of services to the Makhathini farming community. The dedication of staff led to minor disturbances to the normal provision of services.

The Department of Agriculture is responsible and holds the funds for capital projects inside the irrigation. The im-plementation of infrastructure projects in the irrigation scheme remains a challenge with some projects remaining incomplete and some not serving the desired outcome. Eff orts to have Mjindi as implementing agent for all projects in the scheme are being pursued.

The irrigation scheme serves as a prime employer in the area, employing over 5000 people. This is a major contri-bution in terms of jobs in an area where there are no job opportunities and poverty is widespread. The irrigation scheme also provides employment opportunities in other support industries like transport, machinery repairs and servicing, etc.

Highlights of the year

During the year under review, Mjindi continued to provide uninterrupted water services to the farmers. The rehabil-itation of pump stations continued to ensure continuous supply of water at all times. 12 new pumps were installed during the year. To ensure the effi ciency and eff ectiveness of our irrigation scheme, 26 plots were received irrigation pipes. It is worth mentioning that these pipes are available for all farmers who comply with distribution criteria that were set by the Board in accordance with corporate governance. However, some farmers choose not to follow the law.

There has been progress in the construction of the input store and the nursery. On completion, both the input store and the nursery will contribute positively in ensuring that there is suffi cient food production in the irrigation scheme.

The irrigation scheme produced over 190,000 tons during the year. Of this total production, 20,000 tons was food crops. It is noted that this production is still far below the potential of the area, taking into account the fallow lands and the low yields received by some farmers.

17

The finances of Mjindi have also been kept and utilized in accordance with all prescripts of the law. We are proud to mention that all funds are safe at Mjindi. While there are still challenges on revenue collections from farmers, there have been improvements from 3.35 million rands in the 2012/13 financial year to 4.02 million rands in the 2013/14 financial year. With this achievement, Mjindi can only do better in coming years.

The expansion of the irrigation started during the year under review. The Department of Agriculture has employed a team of consultants to carryout a feasibility study for the expansion of the irrigation scheme. This is a very important action plan towards the implementation of the Makhathini Master Plan. The expansion of the irrigation scheme will ensure increased production and food security for South Africa.

Current Status and Future Plans

The current status is that farmers produce individually. They decide on what to produce, how much to produce, when to produce and on how to market the produce. This current structure in the Makhathini Irrigation Scheme has proved to be failing. Some reasons contributing to the failure are as follows;

- The fact that our farmers are community people who have access to land but with very little farming background and knowledge. - The size of the land is very small to be an economic viable farming unit. - The land disputes in the area. - The inheritance syndrome that has developed over the years. - The lack of working capital due to inability to raise working capital. - The lack of coordination amongst farmers to produce for a market.

Mjindi Farming, the organization that facilitates agricultural development in the Mjindi Irrigation Scheme in Makhathini has decided to commercialise farming operations. It is anticipated that this is the only way to see the potential of the Makhathini Irrigation Scheme being realized.

Challenges

While there were a multiply of challenges during the year, I would like to highlight 3 major challenges;

The land disputes in the area are a major cause of non-achievements of objectives. This challenge has deep roots and requires consented efforts from everyone to resolve.

Theft and vandalism of infrastructure is a major cause of concern. Centre pivots are vandalised for copper and fences are removed. This is a threat to the sustainability of the irrigation scheme. The community at large and farmers will have to take a leading role to eradicate this theat.

The current farming system where farmers produce individually and independently is a challenge. This makes it dif-ficult to organize production and makes production unreliable. The unreliability nature of the production results in fragmented and unreliable marketing of produce.

Acknowledgements

The commitment of staff cannot go unnoticed. Staff members have played a very important role during this difficult year. This of course excludes the few individuals who decided to report directly to the office of the MEC and causing tension and disorganization of the entity. Special thanks go to the entire management team, without whose sup-port, nothing achieved during the period under review would have been delivered.

The Board members have played a crucial role during the current in ensuring that Mjindi performed on its mandate. The majority of the Board members showed courage and dedication. I would like to single out the Chairman of the Board, Mr S. Ngxongo and Deputy Chairperson, Mrs B. Tembe for providing strong leadership and direction to the oversight activities of Mjindi Farming (Pty) Ltd.

The Honourable Members of the Agriculture Portfolio Committee for their support and dedication to the promotion of agriculture and agribusinesses in the Makhathini area.

All stakeholders, more especially Inkosi Gumede, Inkosi Myeni, Ntenga Trust and Silwane Community Development Trust. Special thanks goes to the provincial department of Rural Development and Land Reform who played a crucial role in trying to resolve land disputes in the area. A word of gratitude also goes to Umhlosinga Development Agency for all the support and contributions to the development of Makhathini.

The Department of Agriculture has also played an important role during the year. While the Acting HOD, Ms Y E Ba-cus, joined the department late in the year, her contribution cannot go unnoticed.

The Department staff s who are members of the Infrastructure Technical Committee have also contributed a lot during the year.

All the farmers who have entrusted their farming businesses to Mjindi Farming and provided good working condi-tions to the entire staff .

Conclusion

The year under review has been very tough with the shareholder appearing to be working against their own compa-ny. A forensic audit on Mjindi Farming took over a year and is still to be fi nanlised as a report is still outstanding. The company however strived to work towards achieving its objectives and has performed exceptionally well. While a lot has been achieved in terms of infrastructure and farming, a lot still lies ahead to ensure that Makhathini becomes a food basket of the province. This will only be achieved through the employment of commercial farming methods and techniques and make viable and sustainable farming businesses.

_________________________Mr. M.M SifundzaChief Executive Offi cer

18

PART BPERFOMANCE INFORMATION

20

STATEMENT OF RESPONSIBILITY FOR PERFORMANCE INFORMATIONStatement of Responsibility for Performance Information for the year ended 31 March 2014.

The Chief Executive Officer is responsible for the preparation of the public entity’s performance information and for the judgments made in this information.

The Chief Executive Officer is responsible for establishing, and implementing a system of internal control designed to provide reasonable assurance as to the integrity and reliability of the performance information.

In my opinion, the performance information fairly reflects the actual achievements against planned objectives, indi-cators and targets as per the strategic and annual performance plan of the public entity for the financial year ended 31 March 2014.

Mjindi Farming performance information for the year ended 31 March 2014 have been examined by the external auditors and their report is presented on pages 65 to 68.

_________________________Mr. M.M. SifundzaChief Executive Officer

21

OVERALL OBJECTIVE OF MJINDI FARMING (PTY) LTDIn a nutshell the main responsibility of Mjindi Farming is to provide a pressurised water to Makhathini Irrigation Scheme to farmers, repair and maintain the associated infrastructure, provide agricultural advisory service and collect payments from farmers for services rendered.

PURPOSE• Increase agricultural production• Promote agri-business• Enhance agricultural multipliers and linkages and• Offer advisory and support services to farmers of Makhathini Irrigation Scheme.

SITUATIONAL ANALYSISOverview of Mjindi Farming’s Performance

Mjindi acts in line with both the Provincial and the National Development Plan’s vision to mobilise domestic invest-ment around activities that can unleash the agriculture potential to create sustainable employment in agriculture. Mjindi Farming is in fact a public intervention that is being nurtured with the aim of ensuring the realization of the potential of Makhathini of being the food basket of the province.

Performance delivery environmental

Mjindi Farming operates in Makhathini area where there is a subtropical climate and that water is available from the Phongolapoort Dam for the irrigation of approximately up to 15 000 ha. The availability of such water allows crop production under irrigation throughout the year. A further benefit is that some crops grown in the Makhathini area can reach the market 3 to 4 weeks before those grown in other areas of South Africa because of the favourable heat units of the area.

Mjindi Farming’s responsibility is to promote effective utilization of the fertile agricultural land for the purposes of agricultural development. As Mjindi Farming operates in areas that are largely rural; its activities are aligned to the rural development initiatives of the government. Mjindi therefore sought to align its strategic goals with the four pillars that will underpin rural development in the province, namely:

• Increased agricultural production• Promotion of agri-business• Enhancement of agricultural multipliers and linkages; and • General advisory and support services.

To achieve on stated objectives, the entity provides agricultural advisory service to the farmers. The entity also pro-vides pressurised irrigation water to the farmers.

Organizational Environment

While promoting agricultural development in the irrigation scheme, the main focus has been the rehabilitation of the scheme. This, in the past 2 years, has been done with great successes. Major improvements have been the reha-bilitation of pump stations and the repairing of leaks. There are still major challenges lying ahead. One of the major challenges will be the replacement of all underground asbestos pipes which have far exceeded its life expectancy and are now giving massive problems.

While there has been an improvement in the production of crops in the scheme, the current organization of the farming activities is not sustainable. Community members who have access to land are the current farmers in the scheme. They each farm on some 10ha plot and all operate individually and independent of each other. This method is not viable and is unsustainable and there is need to reorganize the farming system. Farmers are being mobilised to adopt the collaborative farming system by combining their plots into viable reasonable sized farming units.

Mjindi Farming has also experienced its own problems during the year. The institution of the forensic audit by the department and the withdrawal of operational powers affected service delivery. The entity was short staffed for the entire year and could not fill budgeted critical positions. During the year, 1 critical infrastructure staff (electrician) resigned and two passed on but could not be replaced. The hardwork and dedication of staff, working extended

22

hours have seen the entity through this dark cloud.

Key Policy Developments and Legislative Changes

None

PREFORMANCE INFORMATION BY PROGRAMMEProgramme 1: Administration and Support Service

Purpose:

To ensure effective management of the entity’s financial resources in line with statutory requirements and to pro-vide administrative support services

Strategic goal:

- Sound Management of Finance - Effective Management of StaffStrategic objectives, Performance indicators planned targets and actual achievements

Performance Indicator

Actual Achievement 2012/2013

Planned Target 2013/2014

Actual Achievement

2013/2014

Deviation from planned

target to Actual Achievement for

2013/2014

Comment on deviations

Reviewed and up-dated risk manage-ment strategy

5 4 6 - Achieved

Review and update procurement and provisioning system

12 1 2 - Achieved

Percentage com-pliance with the approved procure-ment and provi-sioning system.

100% 100% 100% - Achieved

Increase in number of current financial year collected Debt-ors

284 240 393 - Achieved

Increase in number of previous finan-cial year collected Debtors

35 28 68 - Achieved

Review and update cash management policy

3 1 - 1

Targerts not achieved due to that when the policies were reviewed no

updates were required

Percentage com-pliance with the approved cash management policy

100% 100% 100% - Achieved

No. of signed declarations 8 8 8 - Achieved

23

Total number of Staff appointed 62 80 49 31

Target not achieved due to delays in obtain-ing approval to

appoint staff from the Department of Agriculture, Environmental

Affairs and Rural Development

No of Staff trained 110 60 107 - Achieved

No. of staff induct-ed 73 60 36 24




Review and update human resources policies

20 1 1 - Achieved

Percentage com-pliance with the approved human resources policies

100% 100% 100% - Achieved

Number of signed performance agree-ments

49 60 49 11




Number of staff assessed 49 60 46 14




24

Linking performance with budget

Programme Name

2012/2013 2013/2014

Budget Actual Expenditure

(Over)/Under Expenditure Budget Actual

Expenditure(Over)/Under Expenditure

R’000 R’000 R’000 R’000 R’000 R’000

Administration R 45,726 R 37,286 R 8,440 R 13,509 R 9,643 R 3,866

Programme 2: Farmer Development and Support Service

Purpose:

Provision of advisory services for optimal land utilisation to increase agricultural productivity and production.

Strategic goal:

Farmer Development, Farmer Support, Agribusiness Development, Strategic Stakeholders Relations and partner-ships and Optimal land management.

Strategic objectives, Performance indicators planned targets and actual achievements





Deviation from planned target to

Actual Achievement for 2013/2014


No of ha under vegetables production

2741.1 250 2367.68 - Achieved

No of vegetable farmers supported 1711 125 880 - Achieved

Number of ha under fruit planted 35.5 50 - 50 No funding

No of fruit farmers supported 19 10 16 - Achieved

No of Farmers trained 1059 600 1074 - Achieved

No. of Courses offered 20 10 22 - Achieved

No of project established - 1 - 1 No funding

Functional logistical system established

110000 110000 122000 - Achieved

No of meetings held 6 4 7 - Achieved

No. of ha profiled 3071,15 1000 2671 - Achieved

25


Programme Name 2012/2013 2013/2014




R’000 R’000 R’000 R’000 R’000 R’000

Farmer Development & Support Services 1,816 369 1,447 5,896 2,578 3,318

Highlights

Farmer development is the core of the existence of Mjindi Farming in the Makhathini irrigation scheme. The par-ticipation of Mjindi Farming with farmers is hinged on farmer development through ensuring adequate and stable supply of irrigation water and together with agricultural skills training and advisory services to promote increased food production in the region and the province.

The Department of Agriculture assisted with free crop production inputs in the Makhathini irrigation scheme to promote food security programme.

However, there are constraints which have perennially existed and hinder the full potential realization of the irriga-tion scheme. These range from among others the lack of mechanization for farmers to produce accordingly for the market requirements, lack of capital, transport, market and old age without a defined succession plan thus from generation to another occupation of plots.

Profiling of farmers

To effectively provide efficient services to the farmers, Mjindi conducted a process of profiling all the farmers oper-ating within the irrigation scheme.

During the year under review, the irrigation scheme had a total of 4,572ha fully serviced with pipe network for irri-gation. Farmers have average plot sizes of 10 hectares under sprinklers and the bigger plots under centre pivots. The 34 centre pivots are under cooperatives and their sizes ranges between 17 to 30 hectares each. The dominant crops in the irrigation scheme were sugarcane, maize, cabbage and beans.

The beneficiaries of the Makhathini irrigation scheme includes:

• 314 individual farmers

• 230 male • 84 female • 26 Primary cooperatives with 420 members.

• 62 male members • 358 female members

Breakdown of Group formations.

Co-operatives Female Male Total

Ubuhlebesizwe 36 2 38

Jabulani 37 2 39

Mbusowesizwe 3 4 7

Sbonelo 30 3 33

Mjindi Women 151 151

Zamukuphila 26 12 38

Abanguni Farming 1 4 5

Zenzele 13 5 18

Vezokuhle Emakhathini 14 15 29

Makhathini Nursery 3 2 5

Langanani Farming 8 8 16

Total 358 62 420

26

Mjindi women’s cooperative � eld of cabbages. The cooperative relies on hiring machinery and implements farming operations.

Diversifying farmer opportunities

Mjindi continues to advise farmers to diversify their farming operations. The diversifi cation initiative includes the promotion of fruit trees in the irrigation scheme. During the year under review the Mjindi Board of Directors ap-proved the budget to source inputs for 10 hectares of mango fruit trees to continue the fruit production campaign in the Makhathini irrigation scheme. It is well known that the soils and climatic conditions in Makhathini provides potential in fruit production. It is for the reason that Mjindi Farming has decided to start the fruit production initia-tive in the year ahead.

Meeting for information exchange and planning.

27

Farmer Capacity building

In the fi nancial year 2013/2014, 1074 farmers were trained in 22 strategic agricultural skill courses in the Makhathini irrigation scheme. 5 fruit farmers were supported technically with agronomic advice. The increase in number of veg-etable farmers is due to the increased hand outs of agricultural inputs support by the Department of Agriculture. The agricultural extension approaches used are; Training of farmers using the group and individual approaches strategy which enabled to achieve and exceed above the set target.

Most of the trainings and demonstrations were conducted within the localities of the farmers to save on transport costs and to increase attendance. The number of hectares under crop target was exceeded because there were free hand outs of seeds and chemicals to farmers in the irrigation scheme from the Department of Agriculture. That also promoted crop production and the demand for more capacity building. The increase in number of trained farmer is as the result of funding from Agriseta which includes a stipend for the learners.

Farmers’ Information Day

To strengthen relations and mobilize farmers in adopting innovations in farming, Mjindi farming organised and hosted exhibiting occasions where scientists, manufactures and market experts were invited to share their products information. Researchers from Makhathini research station, sugar industry, banks and chemical industry were pre-senters on the days. Three farmers’ days were held at Makhathini irrigation in the last fi nancial year.

28

Courses off ered

The following were courses off ered: land preparation methods and techniques, planting methods, fertilizer appli-cation methods and techniques, crop rotation, monitoring and establishment of a crop, pest scouting, pest control, disease control, precautionary measures of handling chemicals, operation and maintenance of irrigation, weed con-trol methods, harvesting methods, water conservation, sorting and grading, post-harvest care, gross margin bud-get, calibration, marketing among others.

Training in motion.

An informative day on market requirements.

Training in motion.

29

Farm production

Great strides were made to achieve the increased crop yields as shown below with emphasis on production entail-ing quantity and quality of farm produce in Makhathini irrigation scheme. Sugarcane was major in terms of area of production followed by green maize and beans on third position.

Year 2013 / 2014 -194 873.3 tons valued at R 140 510 30

Crop production survey, April 2013 – March 2014.

Crop Total land (ha) Yiteld/ha Total Yield (tons) Price/ton Total Value (R)

Banana 12 30 360 4500 1620000

Beans 274.5 3 823.5 3500 2882250

Butternut 67 15 1005 1800 1809000

Cabbages 123.64 30 3709.2 1000 3709200

Calabash 53.2 15 798 4000 3192000

Carrot 2 20 40 3000 120000

Egg plant 2 15 30 4000 120000

Green pepper 6.7 15 100.5 3000 301500

Hot chillies 13 7 91 2000 182000

Madumbe 32.8 15 492 4000 1968000

Mangoes 0.5 8 4 4500 18000

Maize 1651.94 5 8259.7 6000 49558200

Potatoes 60 20 1200 2000 2400000

Soya beans 123 2.8 344.4 5500 1894200

Spinach 3 10 30 2100 63000

Sugarcane 2110 83 175130 376 65848880

Sweet potatoes 28 20 560 3200 1792000

Tomatoes 26.8 30 804 3200 2572800

4590.08 193781.3 140051030

Cane harvesting, loading and transport.

Makhathini irrigation has given birth to businesses such as cane cutting, loading and transport which are the signif-icant impact signs of crop production activities changing people’s lives.

30

Private Joint venture/Partnership

The partnerships of cooperatives and private sector are continuing in the irrigation scheme. As a strategy to secure crop markets, acquire diversifi ed agricultural skills, the Makhathini cooperatives formed joint ventures with well-es-tablished players in farming and processing of raw materials sector. The joint ventures mainly promote primary agriculture with skills transfer, logistical solutions and market information.

Farmer gearing up for vegetable sales.

Three joint ventures with one company called Packo (Pty) Ltd based in Verulam and local agricultural cooperatives namely; Ubongwa (100ha), Zamakuphila (20ha) and Mjindi Women’s cooperative (110ha)

Investor Company Community Group.

Packo (Pty) Ltd Ubongwa

Zamakuphila

Mjindi women

Nilazone Agricultural Investment (Pty) Ltd has six joint ventures with the following cooperatives:

Investor Company Community group

Nilazone Lubanzi

Ibandla

Linganani

Makhathini agric Nursery

Zamakuphila fruit and vegetables

Abanguni

Makhathini Blocks 6 & 7, Soya bean project. Employed 15 permanent and 50 temporary workers. Estimate total cost R4 million and actual expenditure R3.9 million on 123 hectares.

31

Private sector Joint venture / Partnership with Mjindi Farming.

The Department of Agriculture, Environmental Aff airs and Rural development is building an inputs store and a seed-ling nursery at Makhathini irrigation scheme which are near completion. The facilities will serve as source of agricul-tural inputs for both dry land and irrigation farmers in the Makhathini area as a whole. At present Mjindi farming is exploring the effi cient arrangements of fully operating the facilities to the best advantage of the farmers and there are prospects of partnership with a seasoned company in retail of agricultural products within the province.

32

Marketing initiatives

Vegetable markets are fragmented and unreliable. This is largely due to the unreliable nature of vegetable produc-tion. Despite the marketing challenges, Mjindi continued to facilitate the marketing of farmers produce. During the year under review, several buyers bought vegetables in the scheme. These include;

• The South African Social Security Agency (SASSA) • Food Bank • Ilembe Enterprise • Boxer Store • SparThe South African Social Security Agency (SASSA) ordered vegetables through two companies namely; Bright Ideas Project cc and Buhlebodwa Trading Enterprise. The Department of Social Development requested Mjindi Farming to organise marketing meetings for SASSA where the farmers arranged for their vegetables sale for the purposes of feeding the vulnerable groups.

Farmers with their vegetables to supply SASSA.

A farmer busy packing vegetables for transportation to Durban.

33

Farmers participating on demonstration and consultation

Toilets establishment in the irrigation scheme.

Consultancy work began to locate suitable points to build toilets in the irrigation scheme to conform to the export requirements of vegetable markets. Advice and guidance was sort from the Perishable Products Export Control Board of South Africa. The UMkhanyakude District Municipality Environmental department is assisting with the tech-nical planning of the project and once a report is produced funding will be sourced and the project will commence.

34

A � ourishing bean crop.

Bean crop near maturity.Bean crop near maturity.

35

Butternut ready for delivery to the market.

Vegetables packed and awaiting collection by Food Bank.

36

An agricultural advisor waiting to discuss with farmers’ association members at a neutral point.

A Calabash, one of the selling crops in the irrigation scheme.

37

The absence of a nursery in the irrigation scheme serves as one of the reasons of the low food production in the scheme. Farmers currently buy seedlings from Eshowe and Pongola. The Mjindi seedling nursery will benefi t the Makhathini farmers to buy seedlings at reasonable transport costs to their fi elds. The facility will also impart skills and provide permanent employment.

The inputs store under construction to service over 300 farmers in Makhathini irrigation scheme and the outlying areas. At present 20 temporary workers are employed to build the store and seedling nursery. The total estimated cost is R16 705 758.67 and the current actual expenditure is R11 146 239.10. When the store begins trading it will provide the much needed retail entrepreneurial skills and permanent employment to local communities. Smallhold-er farmers will procure inputs at cheaper prices within reach.

Farmers supply vegetables to SASSA and FoodBank.

38

Programme 3: Infrastructure and Water Services

Purpose:

To upgrade and maintain the irrigation infrastructure in order to provide sustainable water service to farmers of Makhathini irrigation scheme.

Strategic goal:

Efficient Management of infrastructure

Strategic objectives, Performance indicators planned targets and actual achievements




Actual Achievement

2013/2014

Deviation from planned

target to Actual Achievement for

2013/2014


No of buildings renovated 84 50 50 - Achieved

No of leaks repaired 168 260 157 103

It was expected that 260 faults will

be reported this financial year but only 166 reported and we managed to attend to 157

faults. Delays due to rain fall

Number of contracts managed

9 9 9 - Achieved

No. of pumps maintained 151 30 56 - Achieved

No of Km maintained 7.9km 200km - 200km

Target not achieved due to

capacity constrain


Programme Name 2012/2013 2013/2014




R’000 R’000 R’000 R’000 R’000 R’000

Infrastructure and Water Services

41,921 14,530 27,391 63,537 29,587 33,950

Highlights

The 2013/2014 year has been the most challenging year for infrastructure unit. The unit has been faced with enor-mous pressure of work. This was due to the loss of three key personnel in the unit (electrician, assistance mainte-nance officer and control technician) and also because the Mjindi Farming was not able to appoint more staff due to moratorium issued to Mjindi Farming by Department of Agriculture. However our priority of rehabilitating and maintaining the irrigation scheme had to continue. The table above indicates achievements against the targets for this financial year

39

Main Canal

Project of rehabilitation of main canal continued during the year. 3km of main canal had been casted with new con-crete at the end of the year under review. The project has created 80 jobs opportunities from local communities. This is one of the projects that are being implemented by the department of agriculture on behalf of Mjindi.

Fences and Cattle

There are challenges experienced with the vandalism of fences around the scheme. During the year under review, Mjindi embarked on an awareness campaign to protect these valuable assets. Sign boards were put up around the scheme as part of the awareness.

During the year, 23 new cattle grids are installed and 8 cattle grids were refurbished to ensure that farmer’s crops are protected from livestock. 8 new job opportunities were created for this project. The new cattle grids appears to be of little help as livestock walk through into the fi elds.

Repairs of leaks

The irrigation scheme is very old and is bound to have problems. It was expected that 250 leaks will be reported for the year under review but only 166 leaks were reported. This indicates some improvement as far as maintenance is concern. During the 2013/2014 year, 157 leaks were repaired.

40

Pumps

Mjindi Farming has managed to rehabilitate the 6 pump stations by removing old pumps and installing new pumps. During the 2013/2014 year Mjindi Board approved energy saving programme which has already saved over R 2.7 million at the end of the year. The following is a status of all 6 pump stations as at the end of 2013/2014 year.

Pumps

• 6 Pumps Stations • 64 pumps in total • 33 pumps have been replaced (new pumps) • 25 pump have been refurbished • 2 pumps still needs to be replaced • 4 pumps needs to be refurbishedControl valves

• 8 control valves needs to be replaced • 28 control valves have been refurbishedMotors

• Rewinding of 10 electric motors

A programme for regular maintenance of pumps has been put in place. Repairing and regular maintenance of pumps to ensure effi ciency with respect to provision of pressurised water to farmers.

41

Centre Pivots

1000ha of fertile land is under 34 centre pivots irrigation and all pivots were repaired. Stealing and vandalism of cen-tre pivots has been a serious problem in the area. Security company contract was not renewed due to disapproval from the department to continue with the contract.

4242

PART CCORPORATE GOVERNANCE

CORPORATE GOVERNANCE

INTRODUCTION Mjindi Farming (Proprietary) Limited Board of Directors regards corporate governance as an essential tool that forms the basis of an organisation that is governed eff ectively and within the prescripts of relevant legislative and regula-tory frameworks. The Board continues its committed to sound corporate governance in all its business activities as it is fundamental to the success of the business and continues its fully commitment in ensuring that good governance is practiced at all levels of the entity. Good governance is underpinned by the principles of openness, transparency, integrity, accountability and social responsibility as well as an inclusive approach that recognises the importance of all stakeholders. The Board has committed itself to ensuring that the solid foundation that has been laid aids the organization in accelerating implementation of its objectives.

While compliance remains a priority for the entity, as a state owned business enterprise, the entity is guided by the principles of the Code of Corporate Practices and Conduct contained in the King III report on Corporate Governance for South Africa. Furthermore, the statutory duties, responsibilities and provisions imposed on the Directors of Mjin-di Farming by the Companies Act 71 of 2008, are augmented by those contained in the Public Finance Management Act of 2009.

SHAREHOLDINGThe entity is wholly owned by the Government of the Republic of South Africa as represented by the Member of the Executive Council of Provincial Department of Agriculture and Environmental Aff airs, KwaZulu-Natal, by Dr B M Radebe.

SHAREHOLDER COMPACT Mjindi Farming annually concludes a Shareholder Compact Agreement which documents the mandated key per-formance measures and indicators to be attained by Mjindi Farming, as agreed between the Board of Directors (Accounting Authority) and the Executive Authority. The Shareholder Compact agreement formalizes the relation-ship between the Shareholder and the Board and establishes the terms and conditions under which the Board will administer the Funds in order to achieve its objectives in good governance.

GOVERNING BODIES AND BOARD OF DIRECTORSThe Board of Directors of Mjindi Farming is the designated accounting authority appointed by the Member of the Executive Council which governs and controls Mjindi Farming in accordance with the provisions of the Public Fi-nance Management Act of 1999 (PFMA), Treasury Regulations and South African Companies Act, 71 of 2008, as well as good corporate governance principles.

Mjindi Farming has a Board structure comprising ten Non- Executive Directors and the Chief Executive Offi cer serv-ing as a Managing Director with only eight positions fi lled. The directors have extensive experience across a diverse range of sectors, which enables the Board to provide a balanced and an independent advice and judgement in the decision-making process. Profi les of each director appear on page 9 to 12. The Board was appointed with eff ect from March 2010 and was serving the last year of its three-year term. The term of the board has been extended by another year.

ROLE AND FUNCTION OF THE BOARDThe Board is the accounting authority of Mjindi Farming (Pty) Ltd in terms of the PFMA. The Board has a Board Char-ter that sets out clear a direction on the roles and responsibilities of the Board.

The Board embraces the following responsibilities:

• Establish the vision, mission and values • Set the entity’s strategies and structure • Provide strategic direction and leadership • Determine the goals and objectives of the entity and monitor performance of the entity • Approve all policies and procedures • Approve the annual fi nancial statements • Ensure good and sound corporate governance and ethics

43

44

• Ensure the effective, efficient and transparent systems of financial and risk management and internal controls • Ensuring effective communication with relevant stakeholders • Liaising with and reporting to the Shareholder

DIRECTOR INDUCTION AND ORIENTATIONDuring the year under review, Directors conducted a strategic workshop with management to reinforce the un-derstanding of the entity’s vision, mission, values, mandate and strategic objectives. Continuous training is also provided on request to meet the needs of Directors. Directors are also made aware of new laws and regulations on an on-going basis.

DIRECTORS’ REMUNERATIONNon-Executive Directors who are not employed by government receive fees for their contribution to the Board and the Committees on which they serve. Fees are determined by the Member of the Executive Council, from time to time, with the concurrence of the Minister of Finance. Non-Executive Directors are also reimbursed for out-of-pocket expenses for the execution of work incurred on behalf of the entity.

BOARD SUB-COMMITTEESBoard Sub-Committees have been established to assist the Board in discharging its responsibilities. This assistance is rendered to the Board in the form of recommendations and reports received from Management which are sub-mitted to Board meetings in ensuring transparency and full disclosure of Sub-Committee activities. Each Committee operates within the ambit of its defined terms of reference that sets out the composition, role, and responsibilities, delegated authority and meeting requirements of the Committee. All Board Members may attend the Sub-Commit-tees by invitation.

The Board reviewed the Board Sub-Committees during the year under review in order to align them with the recom-mendations of the King III Report on Corporate Governance as well as to reassign the skills of Directors to the rele-vant Committees, where their skills will be more effective. The exercise of reconstituting the Board Sub-Committees resulted in the the following Committees:

• Audit, Risk and Compliance Committee • Finance and Human Resource Committee • Infrastructure Committee • Farmer Development Committee • Chairperson’s Committee (EXCO)

Each of these committees comprises members of the Board, executives attend by invitation. The responsibilities of the Board Sub-Committees are outlined below.

45

AUDIT, RISK AND COMPLIANCE COMMITTEE

The Audit, Risk and Risk Compliance Committee is a Sub-Committee of the Mjindi Farming Board and it is estab-lished in terms of section 51(1)(a)(ii), section 76(4)(d) of the PFMA and section 27.1.1 of the Treasury Regulations, also supported by King III Report and Code on Governance in South Africa. In terms of King III, the Board of the state-owned company must establish an Audit committee; as well the Board should appoint a committee responsible for risk. Thus the Audit, Risk and Compliance Committee, the committee is chaired by Mr KM Gwala who obtained a National Diploma in Internal Auditing from Border Technikon which is currently known as Walter Sisulu University and a B. Tech Degree in Internal Auditing from Durban University of Technology. Mr Gwala has currently enrolled for Post Graduate Diploma in Business Management with MANCOSA. He started his career in 2001 as an Internal Auditor at KZN Provincial Treasury, in 2004 he was promoted to be an Audit Supervisor. He then joined Ezemvelo KZN Wild-life as an Internal Audit Manager in 2007 till to date.

The committee assists the Board in discharging its responsibilities in the form of recommendations and reports submitted to Board meetings regarding risk governance, eff ectiveness of internal and external auditors and fi nan-cial controls, annual fi nancial statements, annual report, in which transparency and full disclosure of committee activities are ensured.

Specifi c responsibilities of the committee include:

• Monitoring compliance with relevant legislation and ensuring that appropriate systems of internal control are implemented and maintained to protect Mjindi Farming’s interests and assets. • Ensuring that the entity’s internal audit function is independent and has the necessary resources, budget, standing and authority within the entity to enable it to discharge its functions.• Evaluating the independence, objectivity and eff ectiveness of internal and external auditors and the review of accounting and auditing concerns identifi ed by internal and external audits. • Reviewing accuracy, reliability and credibility of fi nancial reporting, and recommends the Annual Financial Statements, the Annual Report together with the external auditors ‘report, for approval by the Board• Reviewing the adequacy and overall eff ectiveness of the entity’s Risk Management strategy, policy, procedures and functions as well as the implementation by Management of internal risk control and risk recommendations, and ensures that appropriate actions have been taken.• Report internally to the Board on how it has discharged its duties, statutory as well as those assigned to it by the board, during the fi nancial year.

The membership of this committee comprises of four independent non-executive directors, suffi ciently qualifi ed, fi nancially literate and experienced to fulfi l their duties and the members are:

Mr KM Gwala Chairperson Ms A Stock Independent Non-Executive Director Mr S Myeza Independent Non-Executive Director

Mrs TB Tembe Independent Non-Executive Director

46

FINANCE AND HUMAN RESOURCES COMMITTEE

The Finance and Human Resources Committee is a Sub-Committee of Mjindi Farming Board chaired by Mrs BT Tem-be, a Bookkeeper and an Associate Member of the Institute of Certifi ed Bookkeepers in South Africa. Mrs BT Tembe has graduated in Management Development Programme at Graduate School of Business Westville UKZN and in Local Government Management Programme at Business Development Unit Nelson Mandela Metropolitan Univer-sity. Mrs BT Tembe has fi nance and human resources experience that she gained during her previous work at Ithala Limited from 1991 to 2006. She is currently a Councillor and Exco member at Umhlabuyalingana Municipality, and Umkhanyakude District Municipality.

The committee assists the Board in discharging its responsibilities in the form of recommendations and reports submitted to Board meetings regarding fi nancial matters such as, fi nance and human resources policies, fi nancial reports, budgets, revenue, expenditure, insurance, salaries and salary Increments, staffi ng, labour relations in which transparency and full disclosure of committee activities are ensured.


• Providing advice to the Board on all policy and strategy issues relating to Finance and Human Resources.• Making recommendations to the Board on the annual budget, monitor expenditure of the budget in the course of the year and report to the Board in every Board meeting.• Make recommendations to the Board on strategies for revenue generations.• Make recommendations to the Board on strategies to improve revenue collections by Mjindi Farming.• Review the entity’s Financial Statements for each year, and makes recommendations to the Board for approval of the Financial Statements.• Provide advice to the Board on all staff matters, including salaries and salary adjustments.• Serves as a lead committee for the Board for providing guidance on strategies to be implemented for fi nancial viability and sustainability of Mjindi Farming.• Serves as a lead committee for the offi ce of both the Internal Auditors and the Auditor General.

The membership of this committee comprises of four independent non-executive directors, suffi ciently experienced to fulfi l their duties and the members are:

Mrs BT Tembe Chairperson Mr IZ Ngcobo Mr J Siyaya Mr SH Nxumalo

47

INFRASTRUCTURE COMMITTEE

The Infrastructure Committee is a Sub-Committee of Mjindi Farming Board chaired by Mr IZ Ngcobo, who has ob-tained a Bachelor’s degree in Business Administration. Mr Ngcobo has vast experience in water management after having worked for Rand Water and uMhlathuze Water and he also have vast human resources experience. Mr IZ Ngcobo is currently a member of the Human Resources and Remuneration Committee for the Agribusiness Devel-opment Agency and the Chairperson of the Audit Committee for the Jozini Municipality.

The committee assists the Board in discharging its responsibilities in the form of recommendations and reports submitted to Board meetings regarding overseeing all Mjindi Farming infrastructures and the functioning of the Engineering Division, in which transparency and full disclosure of committee activities are ensured.


• Providing advice to the Board on all policy and strategy issues relating to Infrastructure Development.• Overseeing the repairing of all infrastructure, including drains, pipelines, pump stations, canals, fences, buildings, roads, etc.• Overseeing the provision of water to farmers.• Overseeing the use of electricity in the provision of water to farmers.• Making recommendations to the Board on the activities and strategies to promote better resource utilization in the Makhathini Irrigation Scheme.• Advise the Board on the overall resource mobilization and utilization in terms of infrastructure.• Serves as a lead committee of the Board on strategies to improve the supply of water to farmers.• Serves as a lead committee of the Board on strategies to reduce water supply costs which will eventually improve the fi nancial viability and sustainability of the Makhathini Irrigation Scheme Farmers.• Serves as a lead committee to advice the Board on the expansion of the irrigation system.

The membership of this committee comprises of fi ve independent non-executive directors, suffi ciently experienced to fulfi l their duties and the members are:

Mr IZ Ngcobo Chairperson Mrs BT Tembe Mr MD Myeni Ms MV Xakaza Ms ZG Gumede

48

FARMER DEVELOPMENT COMMITTEE

The Farmer Development Portfolio Committee is chaired by Mr MD Myeni. Mr MD Myeni graduated with a Diploma in Structural at Nongoma Technical College. He has business experience in which he gained during his previous work as a Chief Works Inspector at the Department of Public Works for 24 years. He currently runs his own business in Construction, transport and farming.

The committee assists the Board in discharging its responsibilities in the form of recommendations and reports sub-mitted to Board meetings regarding promotion of agri-business, Increased agricultural production, enhancement of agricultural multipliers and linkages and General advisory and support services, in which transparency and full disclosure of committee activities are ensured.


• Providing advice to the Board on all policy and strategy issues relating to Farmer Development. • Overseeing the provision of production and marketing advice to farmers.• Making recommendations to the Board on the activities and strategies to promote agri-businesses in the Makhathini Irrigation Scheme.• Advise the Board on the overall resource mobilization and utilization in terms of farmer development.• Serves as a lead committee of the Board on strategies to improve productivity of the farmers.• Serves as a lead committee of the Board on strategies to improve the fi nancial viability and sustainability of the Makhathini Irrigation Scheme Farmers.

The membership of this committee comprises of six independent non-executive directors suffi ciently experienced to fulfi l their duties and the members are:

Mr MD Myeni Chairperson Mrs BT Tembe Ms MV Xakaza Ms ZG Gumede Mr J Siyaya Mr SH Nxumalo

49

CHAIRPERSON’S COMMITTEE (EXCO)

The Chairperson’s Committee is chaired by the Board Chairperson and comprises of all Chairpersons of the above mentioned Board Sub-Committees. The Chief Executive Offi cer is a member of the Chairman’s committee and Man-agement may attend the meeting by invitation.

The Committee is responsible for guiding and leading the strategic direction of Mjindi Farming and the implemen-tation thereof.

The role includes:

• Defi ning Mjindi Farming strategy in line with Mjindi Farming’s mandate • Guiding and leading the implementation of the strategy• Developing and managing the strategy capability requirements• Managing business needs• Evaluate Mjindi Farming’s governance structures, meeting terms of references, governance in Mjindi Farming in general, and to make recommendations to the Board and Management on the improvement, execution and control of governance and ethics in the entity.• Defi ne Mjindi Farming Stakeholder Management strategy in line with the Mjindi Farming mandate• Guide and lead the implementation of the strategy• Monitor the development and implementation of the strategy• Ensure effi cient stakeholder relations• Monitor the strategy capability requirements

PUBLIC FINANCE MANAGEMENT ACTThe PFMA regulates fi nancial management inclusive of all revenue, expenditure, assets and liabilities in state owned business enterprises in order to ensure that they are managed effi ciently and eff ectively and to provide for the responsibilities of persons entrusted with fi nancial management. The Board, as the Accounting Authority, complies with these fi duciary duties as set out in the PFMA.

In terms of the PFMA, the responsibilities of the Board include inter alia taking appropriate action to ensure that:

• Economic, effi cient, eff ective and transparent systems of fi nancial and risk management and controls are in place;• All major capital projects are evaluated prior to a fi nal decision on each project;• Appropriate and eff ective measures are implemented to prevent unauthorised, irregular, fruitless and wasteful expenditure, expenditure not complying with legislation, or losses from criminal or fraudulent conduct;• All revenues due to Mjindi Farming are accounted for;• There is economic and effi cient management of available working capital;• The defi nition of objectives and the allocation of resources are allocated in an economic, effi cient, eff ective and transparent manner.

50

In terms of the Treasury Regulations (TR 28.3.1), Mjindi Farming as Accounting Authority must, for purposes of ‘ma-terial’ and ‘significance’, in terms of sections 54(2) and 55(2) of the PFMA, develop and agree on a framework of ac-ceptable levels of materiality and significance with the relevant Executive Authority.

The King III report requires that disclosure be made on matters of significance, interest and relevance to the Share-holder and a wide range of stakeholders. The Accounting Authority should establish guidelines of materiality for disclosure by the organisation. The materiality and significance framework for the financial year under review, which is determined by Management and approved by the Board and is at R80,890.

RISK MANAGEMENTPublic Finance Management Act section 51(1)(a)(i) requires that the Board has and maintains an effective, efficient and transparent system of financial and risk management and internal control. The recommendations of the King III report and Code on Governance have been considered, applied and integrated in the daily activities of all employees within the entity. The entity continues to implement the risk management policy which assists Mjindi Farming in addressing key elements of the risk management, allows for the management of risks within defined risk parameters, risk appetite and tolerances as well as the risk management standards. It also provide a framework for the effective identification, evaluation, management, measurement and the reporting of Mjindi Farming’s risks.

The Board is responsible for the governance of risk, ensuring that a comprehensive Risk Management strategy has been developed and implemented, as well as the acceptable risk appetite and risk tolerance levels have been set. The Board has ensured that appropriate mechanisms for the monitoring and reporting of risks by Management have been implemented. A formal strategic risk assessment is conducted annually by the Board and Management, this process includes the identification and assessment of key strategic risks, the implementation and continual review and monitoring of the process to ensure that all risks are managed and mitigated to acceptable levels set by the Board. The Strategic Risk register is maintained to ensure that all identified risks are cascaded to operational risk with proper mitigation recommendations.

FRAUD AND CORRUPTIONMjindi Farming is committed to eradicating all forms of fraud and corruption. Mjindi Farming continues to imple-ment the approved fraud prevention plan and the desired outcome is the elimination of cases of fraud. The main aim of the plan is to fight fraud and corruption, while encouraging the public and employees to report any allegations of fraud, corruption, improper conduct and other contraventions of Mjindi Farming’s code of conduct. Investiga-tions will be conducted independently and reported to the Audit, Risk and Compliance Committee. Internal Audit monitors the outcome and actions taken. The plan is reviewed annually and updated where necessary to reduce the number of incidents, possible risks, irregularities and fraud. Mjindi Farming has adopted a policy of ‘zero tolerance’ against any acts of fraud and corruption.

INTERNAL AUDITPublic Finance Management Act (PFMA) section 51(1) (a) (ii) requires that the Accounting Authority ensures that Mjindi Farming has and maintains a system of internal audit under the control and direct supervision of the Audit, Risk and Compliance Committee. The purpose, authority and responsibility of the Internal Audit function is formal-ly defined in the internal audit charter which is annually reviewed by the Audit, Risk and Compliance Committee. and submitted to the Board for approval. In accordance with the overriding requirement of independence and ob-jectivity, Internal Audit, reports functionally to the Chairman of the Audit, Risk and Compliance Committee and administratively to the Chief Executive Officer. Internal Audit provides assurance services to evaluate and assist Management in improving the effectiveness of risk management, control and governance processes within Mjindi Farming.

Internal Audit conducts its audits and reviews in accordance with the standards set by the International Professional Practices Framework (IPPF) as promulgated by The Institute of Internal Auditors (IIA) and the standards set by the Information Systems and Control Association (ISACA). All internal auditors are required to apply and uphold the principles of integrity, objectivity, independence, confidentiality and competency under the IIA’s Standard and Code of Ethics.

Internal Audit function has been perfomed by KwaZulu-Natal Provincial Treasury, and they keep abreast with the latest developments within the profession. The Internal Audit Plan for the 2013/14 finan-cial year was developed through the identification of key high risks that were derived from Mjindi Farm-ing’s risk management processes, discussions with management and Mjindi Farming’s strategic plan.

51

The Internal Audit should follow a risk based approach to its audit plan after considering the strategy and risk of the entity.

The best practice recommendations of the King III report and code of Governance and the requirements of the Companies Act of 2008 were considered in developing the Internal Audit Plan. The Internal Audit Plan was approved by the Audit, Risk and Compliance Committee. at the beginning of the financial year. The Internal Audit Plan is regu-larly reviewed and is updated when necessary in response to any new and emerging risks identified that may impact on the risk profile of the entity.

Internal Audit attends all Audit, Risk and Compliance Committee. meetings where reporting occurs on all identified material or significant control weaknesses, the actions taken by Management to address the control deficiencies, progress and performance made on its plan including any significant matter that may need to be brought to the attention of the Audit, Risk and Compliance Committee. The Internal Audit quarterly report assists the Audit, Risk and Compliance Committee. in discharging its responsibilities.

RESPONSIBILITY OF REPORTINGIn order to present a balanced and understandable assessment of its position, Mjindi Farming continuously strives to ensure that reporting and disclosure to stakeholders are comprehensive, relevant, transparent, clear and effec-tive. It places great emphasis on addressing both positive and negative aspects in order to demonstrate the long-term viability and sustainability of the entity.

COMMUNICATION WITH STAKEHOLDERSMjindi Farming recognises the rightful interests of stakeholders in its affairs, including government as shareholder, Amakhosi, Trusts, government departments, employees, Farmers, Suppliers, the media, policy and regulatory bod-ies. Communication and interactive initiatives with stakeholders are ongoing and are addressed through appropri-ate channels depending on the different needs of the various stakeholders.

COMPANY SECRETARIAT FUNCTIONDirectors have unrestricted access to the advice and services of the Company Secretary. In addition to the Compa-ny Secretary’s normal duties and functions as prescribed in the Companies Act and further outlined in the King III report, the Company Secretary assists with other assurance functions in the monitoring of Mjindi Farming’s compli-ance with the provisions of the PFMA, Companies Act and other relevant legislation. During the year under review, C&H accounting performed the Company Secretariat function.

BOARD AND SUB-COMMITTEES MEETING ATTENDANCE 2013/2014

Board Member

Board meetings attended

EXCO meetings

Finance & HR meetings

Infrastructure meetings

Farmer Development

meetings

Audit Committee meetings

Other meeings( stakeholer,

site visits, parliament, interviews)

Mr Sipho Ngxongo 09 05 01 02 03 N/A 04

Mrs Thobi Tembe 06 05 03 N/A 01 01 02

Mr Zama Ngcobo 08 05 03 03 N/A N/A 06

Ms Victoria M Xakaza 05 N/A N/A 02 04 N/A 06

Mr Hebron Nx-umalo 07 N/A 01 N/A N/A N/A 03

Mr John Siyaya 06 N/A 02 N/A 02 N/A 03

Mr Dumisani Myeni 09 05 N/A 03 05 N/A 05

Miss Zandile G Gumede 06 N/A N/A 03 05 N/A 05

Mr Mnqobi Gwala 05 N/A N/A N/A N/A 03 02

Mr Siphamandla Myeza N/A N/A N/A N/A N/A 03 02

Mrs Antoinette Stock N/A N/A N/A N/A N/A 03 02

52

5353

PART DHUMAN RESOURCE MANAGEMENT

54

1. PERSONNEL RELATED EXPENDITURETable 1.1 - Personnel expenditure

Total expenditure

(R’000)

PersonnelExpenditure

(R’000)

TrainingExpenditure

(R’000)

Professionaland Special

ServicesExpenditure

(R’000)

Personnel Expenditure

as a % of Total Expenditure

AveragePersonnel cost

peremployee

(R’000)

Mjindi Farming R 42 024 R 12 949 R 252 R 1 189 31% R 270

Table 1.2 – Personnel costs by Salary band

Salary Band

Personnel Expenditure

(R’000)

% of totalpersonnel cost Number of

employees

Average personnelcost per employee

(R’000)

Skilled (Level 3-5) R 3 334 26% 24 R139

Highly skilled production(Levels 6-8)

R 3 384 26% 14 R242

Highly skilled supervision(Levels 9-12)

R 2 076 16% 6 R346

Senior and Top management (Levels13-16)

R 4 028 31% 4 R1 007

Contracts R 127 1 3 R 42

Total R 12 949 100% 48

Table 1.3 - Salaries, Overtime, Home Owners Allowance and Medical Aid

Salaries Overtime Housing Allowance Medical Aid

Amount (R’000)

Salaries as a % of

personnel costs

Amount (R’000)

Overtime as a % of

personnel costs

Amount (R’000)

HOA as a % of personnel

costs

Amount (R’000)

Medical aid as a % of

personnel costs

Mjindi Farming R 12 139 93% R127 1% R 347 3% R 336 3%

55

Table 1.4 - Salaries, Overtime, Home Owners Allowance and Medical Aid by salary band

Salaries Overtime Housing Allowance Medical Aid

Amount (R’000)

Salaries as a % of

personnel costs

Amount (R’000)

Overtime as a % of

personnel costs

Amount (R’000)

HOA as a % of

personnel costs

Amount (R’000)

Medical aid as a

% of personnel

costs

Skilled (Level 3-5) R 2 952 23% R 15 0.12% R 212 1.64% R156 1.20%

Highly skilled production(Levels 6-8)

R 3 072 23% R 57 0.44% R 103 0.80% R 152 1.17%

Highly skilled supervision(Levels 9-12)

R 1 960 15% R 55 0.42% R 32 0.25% R 29 0.22%

Senior and Top management (Levels 13-16)

R 4 028 31% - - - - - -

Contracts R 127 1% - - - - - -

Total R 12 139 93% R 127 0.98% R 347 2.68% R 336 2.59%

2. EMPLOYMENT AND VACANCIESTable 2.1 – Employment and vacancies

Number of posts on approved

establishmentNumber of posts filled Vacancy rate

Number of employees additional to the establishment

Mjindi Farming 89 45 49% -

56

Table 2.2 - Employment and vacancies by salary bands

Salary bandNumber of posts on

approved establishment

Number of posts filled Vacancy RateNumber of

employees additional to the establishment

Skilled (Level 3-5) 41 23 44% -

Highly skilled production (Levels 6-8) 29 13 55% 1

Highly skilled supervision (Levels 9-12) 14 05 64% -

Senior Management (Levels 13-16) 05 04 20% -

Total 89 45 49% -

3. JOB EVALUATIONDuring the 2013-14 financial year, there were no job evaluation conducted.

4. EMPLOYMENT CHANGESTable 4.1 - Annual turnover rates by salary band

Salary bandNumber of employees at

beginning of period - April 2013

Appointments Terminations Turnover Rate

Skilled (Level 3-5) 24 - 1 4

Highly skilled production (Levels 6-8) 15 - 2 13

Highly skilled supervision (Levels 9-12) 6 - 1 17

Senior Management (Levels 13-16) 4 - - -

Total 49 - 4 8

Table 4.2 – Reasons why staff are leaving the entity

Termination Type Number % of total

Resignation 2 50%

Death 2 50%

Total 4 100%

Total number of employees who left as a % of the total employment 8%

57

5. EMPLOYMENT EQUITYTable 5.1 - Total number of employees (including employees with disabilities) in each of the following occu-pational bands on 31 March 2014

Occupational bandMale Female

TOTALAfrican Coloured Indian White African Coloured Indian White

Top Management (levels 15 -16) 1 - - - - - - - 1

Senior Management (levels 13 - 14) 2 - - - 1 - - - 3

Professionally qualified and experienced specialists and mid-management

4 - - 1 - - - 5

Skilled technical and academically qualified workers, junior management, supervisors, foreman and superintendents

6 - - - 7 - - - 13

Semi-skilled and discretionary decision making

16 - - - - - - - 16

Unskilled and defined decision making 7 - - - - - - 7

Total 36 - - - 9 - - 45

Table 5.2 - Recruitment

During the 2013-14 financial year, there were no recruitments.

Table 5.3 - Terminations

Occupational bandMale Femaie

TotalAfrican Coloured Indian White African Coloured Indian White

Profesionally Qualified and Experienced Specialists andMid-Management

- - - 1 - - - 1


2 - - - - - - - 2

Semi Skilled and Directionary desion making 1 - - - - - - - 1

58

Table 5.4 Disciplinary action

Disciplinary actionMaie Femaie



1 - - - 1 - - - 2

6. PERFORMANCE REWARDSDuring the 2013-14 financial year, there were no perfomance rewards.

7. FOREIGN WORKERS

Occupational bandMale Femaie


Senior Management (Levels 13-16) 1 - - - - - - - 1

8. LEAVE UTILISATIONTable 8.1 - Sick leave

Salary band Total daysTaken

Average daysper employee

Number of employees who took leave

Skilled (Level 3-5) 116 4.83 24

Highly skilled production (Levels 6-8) 61 4.07 15

Highly skilled supervision (Levels 9-12) 77 12.83 6

Senior Management (Levels 13-16) 21 5.25 4

Total 275 5.61 49

Table 8.2 - Annual leave taken during the period

Salary band Total daysTaken

Average daysper employee

Number of employees who took leave

Skilled (Level 3-5) 371 15.46 24

Highly skilled production (Levels 6-8) 367 24.47 15

Highly skilled supervision (Levels 9-12) 142.50 23.75 6

Senior Management (Levels 13-16) 78 19.50 4

Total 958.50 19.56 49

59

Table 8.3 - Leave payouts

Reason Total Amount (R’000) Number of Employees Average per employee (R’000)

Current leave payout on termination of service for 2013/14 R 151 2 R7,5

9. HIV/AIDS & HEALTH PROMOTION PROGRAMMESDuring the 2013/14 financial year the Entity continued promoting a culture of care within the organization.

10. LABOUR RELATIONSDuring the 2013/2014 financial year there were no misconduct and displinary hearing finalised.

11. SKILLS DEVELOPMENTThe Entity recognize the importance of developing employees, 107 training interventions were undertaken by em-ployees during the year under review.

12. INJURY DUTYDuring the 2013/14 financial year, there were no injuries on duty.

13. UTILISATION OF CONSULTANTSTable 13.1 - Report on consultant appointments using appropriated funds

Project Title Number of Consultants that worked on the project

DurationWork days

Contract value inRand

(R000’s)

Performing labour relations function 1 86 R40

Performing infrastructure function 1 216 R947

Table 13.2 - Analysis of consultant appointments using appropriated funds, in terms of Historically Disadvantaged Individuals (HDIs)

Project Title Percentage ownership by HDI groups

Percentage management by HDI groups

Number of Consultants from HDI groups that work on the

project

Performing labour relations function None None None

Performing infrastructure function None None None

6161

PART EANNUAL FINANCIAL STATEMENT

62

CONTENT

The reports and statements set out below comprise the annual financial statements presented to the shareholder:

Index

Report Of Audi, Risk and Compliance Commitee 63 - 64

Report of the Auditor General 65 - 68

Chairman’s report 69

Directors’ Responsibilities and Approval 70

Directors’ Report 71 - 73

Statement of Financial Position 74

Statement of Profit and Loss and Other Comprehensive Income 75

Statement of Changes in Net Assets 76

Statement of Cash Flows 77

Accounting Policies 78 - 84

Notes to the Annual Financial Statements 85 - 97

Detailed Income Statement 98 - 100

63

Mjindi Farming (Proprietary) Limited(Registration number 1993/007159/07)Annual Financial Statements for the year ended 31 March 2014

REPORT OF THE AUDIT, RISK AND COMPLIANCE COMMITTEE

Overview

The Audit, Risk and Compliance Committee of Mjindi Farming (Pty) Ltd presents its report for the financial year ended 31 March 2014 of Mjindi Farming Pty Ltd in compliance with the Companies Act, 2008 (as amended) and the Public Finance Management Act No.1 of 1999, Sec 51 (a) 76 & 77. The committee’s operation is guided by a detailed charter that is informed by the Act and King III and approved by the Board.

The Audit, Risk and Compliance Committee of Mjindi Farming (Pty) Ltd reports that it has complied with its respon-sibilities arising from Section 38 (1)(a) of the PFMA and Treasury Regulation 3.1.13.

Audit Committee Responsibility

The Audit, Risk and Compliance Committee of Mjindi Farming (Pty) Ltd is established in compliance with and refer-ence to the following:(i) Public Finance Management Act No. 1 of 1999, Sec 51 (a), 76 & 77(ii) King 3 Report on Corporate Governance.

The Audit, Risk and Compliance Committee of Mjindi Farming (Pty) Ltd reports that it has fulfilled its responsibilities arising from Section 38 (1) (a) of the PFMA and Treasury Regulation 3.1.13. The Audit, Risk and Compliance Commit-tee of Mjindi Farming (Pty) Ltd has regulated its affairs in compliance with its Charter, and has discharged all its re-sponsibilities and carried out all its functions as contained in its terms of reference and as required by the Companies Act, 2008, as amended (the Act).

This report relates to the Committee’s statutory duties only. Its functions and responsibilities are set out in its charter, as approved by the Board and adopted by the Committee.

Internal Audit

Provincial Internal Audit Services completed their 2013/14 annual plan as approved by the Audit, Risk and Compli-ance Committee of Mjindi Farming (Pty) Ltd. We have met with the Internal Audit during the year to ensure that the function is executed effectively and objectively (from management). We are satisfied with the content and quality of quarterly reports prepared and issued by the internal auditors during the year under review.

The Effectiveness of Internal Control

During the year under review, three meetings were held. The internal audit reports as per the approved internal audit plan for the 2013/2014 financial year were presented to the Audit, Risk and Compliance Committee of Mjin-di Farming (Pty) Ltd for review by the Internal Auditors. The system of internal control employed by the entity to financial and risk management is that the controls were satisfactory implemented to mitigate against the major identified risks and to provide assurance in respect of integrity of reported information, safeguarding of assets and compliance to legislation, however there is a room for improvement.

Significant control weaknesses were detected in the following areas reviewed where attention should be given to strengthen and improve the controls:

* Supply Chain Management.* Infrastructure and Asset Management.* Human Resource Management and Development.* Performance Information.

In line with the PFMA and the recommendations from King III Report on Corporate Governance requirements, Internal Audit provides the Audit, Risk and Compliance Committee of Mjindi Farming (Pty) Ltd and management with assurance that the internal controls are appropriate and effective. This is achieved by means of the risk man-agement process, as well as the identification of corrective actions and suggested enhancements to the controls and processes. Accordingly, we can report that the system of internal control and risk management over the financial reporting period under review was efficient and effective.

64


REPORT OF THE AUDIT, RISK AND COMPLIANCE COMMITTEE

Risk Management

The National Treasury Regulations 27.2.1 requires the Accounting Authority to ensure that a risk assessment is con-ducted regularly to identify emerging risks of the Public Entity. The Internal Audit Risk and Advisory Section facilitat-ed the strategic risk assessment during the first quarter and the operation risk assessment during the fourth quarter of the 2013/14 financial year. The aim of these assessments was to identify risks that could prevent the entity from achieving its objectives.

The business sustainability and information management safeguarding were the two risks that had major residual risk rating. These risks pose a serious threat to the achievement of the entity’s objective.

The implementation of action plans that emanated from the risk register is key in strengthening the control environ-ment for the so called risky areas in the organization.

The risk register is closely monitored by the entity and updated on a regular basis

The Committee has been encouraged by efforts and the commitment of management in putting in place effective strategies and plans for risk management. The management responsibility will continue to be monitored on an on-going basis by the Audit, Risk and Compliance Committee of Mjindi Farming (Pty) Ltd.. Evaluation of Financial Statement

The audit committee has evaluated the annual financial statements for the year ended 31 March 2013 prior to submission to the Office of the Auditor General and is satisfied that it complies in all material respects with the requirements of the Act and has recommended them for adoption by the Board. On behalf of the audit committee

---------------------------------------Mr. M.K Gwala

Chairman of the Audit, Risk and Compliance Committee of Mjindi Farming (Pty) Ltd.

65


REPORT OF THE AUDITOR-GENERAL TO THE KWAZULU-NATAL PROVINCIAL LEGISLATURE ON MJINDI FARMING (PROPRIETARY) LIMITED

REPORT ON THE FINANCIAL STATEMENTS

Introduction

1. I have audited the financial statements of Mjindi Farming (Proprietary) Limited set out on pages 74 to 97, which comprise the statement of financial position as at 31 March 2014, the statement of profit and loss and other comprehensive income, statement of changes in net assets and statement of cash flows for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

Accounting authority’s responsibility for the financial statements

2. The board of directors, which constitutes the accounting authority, is responsible for the preparation and fair presentation of these financial statements in accordance with South African Statements of Generally Accepted Accounting Practices (SA Statements of GAAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999)(PFMA) and the Companies Act of South Africa, 2008 (Act No. 71 of 2008)(Companies 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 the 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 2004)(PAA), the general notice issued in terms thereof 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.

Opinion

6. In my opinion, the financial statements present fairly, in all material respects, the financial position of Mjindi Farming (Proprietary) Limited as at 31 March 2014 and its financial performance and cash flows for the year then ended, in accordance with SA Statements of GAAP and the requirements of the PFMA and the Companies Act.

Emphasis of matter

7. I draw attention to the matter below. My opinion is not modified in respect of this matter.

Restatement of corresponding figures

8. As disclosed in note 31 to the financial statements, the corresponding figures for 31 March 2013 have been restated as a result of an error discovered during 2014 in the financial statements of Mjindi Farming (Proprietary) Limited at, and for the year ended, 31 March 2013.

66


Material under spending of the capital budget

9. As disclosed in the in note 28, the entity has materially underspent the capital budget by an amount of R 24,78 million. As a consequence, the entity has not achieved its objectives of farmer development and infrastructure services.

Additional matter

10. I draw attention to the matter below. My opinion is not modified in respect of this matter:

Other reports required by the Companies Act

11. As part of our audit of the financial statements for the year ended 31 March 2014, I have read the Directors’ Report, the Audit Committee’s Report for the purpose of identifying whether there are material inconsistencies between these reports and the audited financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports I have not identified material inconsistencies between the reports and the audited financial statements

Financial reporting framework

12. As a result of the new Companies Act, SA Statements of GAAP have been withdrawn for financial years commencing on or after 1 December 2012. The Accounting Standards Board (ASB) is currently researching and re-evaluating the appropriate reporting framework for public entities listed in schedules 2, 3B and 3D to the PFMA. In the interim the ASB has approved that entities that previously applied SA Statements of GAAP should continue to apply SA Statements of GAAP as at 1 April 2012.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

13. In accordance with the PAA and the general notice issued in terms thereof, I report the following findings on the reported performance information against predetermined objectives for selected objectives presented in the annual performance report, non-compliance with legislation as well as internal control. The objective of my tests was to identify reportable findings as described under each subheading but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives

14. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected objectives presented in the annual performance report of the public entity for the year ended 31 March 2014:

• farmer development on pages 24 to 37• infrastructure and water services on pages 38 to 41

15. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

16. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury’s annual reporting principles and whether the reported performance was consistent with the planned objectives. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing programme performance information (FMPPI).

17. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

18. The material findings in respect of the selected objectives are as follows:

Infrastructure and water services

Usefulness of reported performance information

19. Measurability of indicators and targets

67


Performance indicators not well defined

20. The FMPPI requires that performance indicator must be well defined by having clear data definitions so that data can be collected consistently and is easy to understand and use. A total of 40% of the indicators were not well defined. This was due to the fact management was aware of the requirements of the FMPPI but did not receive the necessary training to enable application of the principles.

21. Relevance of indicators

Performance indicators not relevant

22. The FMPPI requires indicators to relate logically and directly to an aspect of the institution’s mandate, the realisation of strategic goals and objectives. A total of 20% of indicators did not relate logically and directly to an aspect of the institution’s mandate and realisation of strategic goals and objectives as per the service delivery agreement. This was because proper performance planning and management practices had not been developed and implemented to provide for the development of performance indicators and targets included in the annual performance plan.

Reliability of reported performance information

23. Validity / accuracy / completeness

24. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. Significantly important targets were not reliable when compared to the source information or evidence provided. This was due to a lack of standard operating procedures or documented system descriptions for the accurate recording of actual achievements for the accurate measurement, recording and monitoring of the completeness of source documentation in support of actual achievements reported achievements against source documentation.

Farmer Development

Usefulness and Reliability of reported performance information

25. I did not raise any material findings on the usefulness and reliability of the reported performance information for the selected objectives.

Additional matter

26. I draw attention to the following matter:

Achievement of planned targets

27. Refer to the annual performance report on pages x to x and x to x for information on the achievement of the planned targets for the year. This information should be considered in the context of the material findings on the usefulness of the reported performance information for the selected objectives reported in paragraphs 17 and 25 of this report.

Compliance with legislation

28. I performed procedures to obtain evidence that the public entity had complied with applicable legislation regarding financial matters, financial management and other related matters. My findings on material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA, are as follows:

Annual financial statements

29. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework as required by section 55(1)(a) of the PFMA and section 29(1)(a) of the Companies Act. Material misstatements of current liabilities, revenue and the cash flow statement identified by the auditors in the submitted financial statement were subsequently corrected, resulting in the financial statements receiving an unqualified audit opinion.

68


Procurement and contract management

30. Goods or service were not procured through a procurement process which is fair, equitable, transparent and competitive as required by the PFMA section 51(1)(a)(iii).

Expenditure management

31. The accounting authority did not take eff ective steps to prevent irregular expenditure as required by section 51(1) (b) (ii) of the PFMA.

Revenue management

32. Eff ective and appropriate steps were not taken to collect all money due, as required by section 51(1)(b)(I) of the PFMA and Treasury Regulations 31.1.2(a) and 31.1.2(e).

Internal control

33. I considered internal control relevant to my audit of the fi nancial statements, report on performance against strategic objectives and compliance with legislation. The matters reported below are limited to the signifi cant internal control defi ciencies that resulted, the fi ndings on the report on performance against strategic objectives and the fi ndings on non-compliance with legislation included in this report.

Leadership

34. Vacancies in key positions in fi nance negatively impacted on the oversight and monitoring functions that are the responsibility of leadership and management. This has also impacted on the credibility of the information and reports provided to leadership for oversight and decision-making.

Financial and performance management

35. There was inadequate supervision and monitoring of the fi nancial management functions of the entity, resulting in the system of fi nancial and internal controls not preventing, detecting and correcting non-compliance and material misstatement in the fi nancial statements.

OTHER REPORTS

Investigations

36. Independent consulting fi rms performed investigations at the request of the executing authority for Agriculture, Environmental Aff airs and Rural Development, which covered the fi nancial years ended 31 March 2012 and 31 March 2013. The investigation was initiated based on an allegation of the possible misappropriation of the assets and supply chain irregularities of the department and Mjindi Farming (Proprietary) Ltd, an entity under the department’s control. The investigation was still on-going at the reporting date and the expected date for the outcome of the investigation was not known.

_________________________

Pietermaritzburg

31 July 2014

69

Mjindi Farming (Proprietary) Limited(Registration number 1993/007159/07)Annual Financial Statements for the year ended 31 March 2014Chairman’s report

The year under review has been a very difficult one. The Shareholder instituted a forensic investigation. This appears to have been based on hear-says and malicious misinformation. Despite the fact that the investigation took a year, the report of such has not been made available to Mjindi Farming.

In line with the directive from the Shareholder, the board was stripped of its function regarding oversight on pro-curement. Cedara provided this function, hence all procurement applications had to get approval from Cedara.

The delays in refuting or giving approval to applications were the order of the day. At times there were no responses to such requests. Consequently there were high levels of under-expenditure. This seriously affected the service de-livery. Farmers blamed Mjindi Farming for such non-delivery of services.

As a result of the compromised function of the board, members of the management team, dealt directly with Ceda-ra. As such there is not much to report on except that:

- The entity continued to supply pressurised water to farmers. Difficulties were encountered with emergencies that needed urgent attention.

- Funds made available to the entity were managed very well except that the level of expenditure was low.

- Some programmes targeting farmers continued although some could not be implemented.

The focus for the forth coming financial year will be on:

- Turning the irrigation scheme into blocks of viable commercial units. This will help in ensuring that the scheme as a whole becomes productive. The focus will be on food production.

- Production of food crops without identification of the off-takers leads to waste. The emphasis during the forth-coming financial year will be on finding the reliable markets for food crops as cash crops have markets.

- The pressure on the irrigation scheme is mounting.

Everyone wants irrigated land. Mjindi farming will assist with the expansion of the irrigation scheme in terms of its planning and implementation. Such expansion will not only settle more farmers but will also create jobs and wealth in this economically depressed Umkhanyakude district.

Despite the problems experienced, on behalf of the Board of Directors, I would like to extend a word of gratitude to:

- The Chief Executive Officer for his dedication and strong leadership role.

- The entire staff members for keeping Mjindi Farming afloat during these difficulties times.

- C and H Accounting for continuing to provide an excellent service as the Company Secretary

- Those members of the board who sticked to their core functions and did not take advantage of the confusion that prevailed to advance their own courses. They are the pillars of Mjindi Farming.

- The board as a whole for its support to the management and for coming to a decision to regularise the situation at Mjindi Farming.

___________________________Sipho Mfanovele Ngxongo Chairman

70


Directors’ Responsibilities and Approval

The directors are required in terms of the Companies Act 71 of 2008 to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the entity as at the end of the financial period and the results of its operations and cash flows for the period then ended, in conformity with South African Statements of Generally Accepted Accounting Practice and in a manner required by the Public Finance Management Act No. 1 of 1999 and South African Companies Act, 71 of 2008. The external auditors are engaged to express an independent opinion on the annual financial statements.

The annual financial statements are prepared in accordance with South African Statements of Generally Accepted Accounting Practice and in a manner required by the Public Finance Management Act No. 1 of 1999 and South African Companies Act, 71 of 2008 and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control estab-lished by the entity and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, they have set standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. These standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an ac-ceptable level of risk. These controls are monitored throughout the entity and all employees are required to main-tain the highest ethical standards in ensuring the entity’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the entity is on identifying, assessing, managing and monitoring all known forms of risk across the entity. While operating risk cannot be fully eliminated, the entity endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable and not absolute, assurance against material misstatement or loss.

The directors have reviewed the entity’s cash flow forecast for the period 1 April 2014 to 31 March 2015 and in the light of this review and the current financial position, they are satisfied that the entity has or has access to adequate resources to continue in operational existence for the foreseeable future.

The external auditors are responsible for independently auditing and reporting on the entity’s annual financial statements. The annual financial statements have been examined by the entity’s external auditors and their report is presented on page 65 to 68.

The annual financial statements set out on page 71 to 100, which have been prepared on the going concern basis, were approved by the Board of Directors on 28 May 2014 and were signed on its behalf by:

_____________________________Sipho Mfanovele Ngxongo Chairman

71


Directors’ Report

The directors have pleasure in submitting their report on the annual financial statements of Mjindi Farming (Pty) Ltd for the period ended 31 March 2014 and have pleasure in presenting this report, which forms part of the audited annual financial statements of Mjindi Farming (Pty) Ltd for the year ended 31 March 2014. This report and the annual financial statements comply with the requirements of the Public Finance Management Act No. 1 of 1999, and the South African Companies Act 71 of 2008. The Board of Directors is the Accounting Authority in terms of section 49(2) (a) of the Public Finance Management Act.

1. Review of financial results and activities

Main business and operations

The main business of the entity is to act as an agent on behalf of the Provincial Department of Agriculture, Environ-mental Affairs and Rural Development, KwaZulu-Natal, in the administration of the Makhathini Irrigation Scheme and operates in South Africa. The entity’s main sources of revenue are the provision of water to farmers and grant funding from the Provincial Department of Agriculture and Environmental Affairs, KwaZulu-Natal.

The operating results and state of affairs of the entity are fully set out in the attached annual financial statements.

2. Going concern

The annual financial statements have been prepared on the basis of accounting policies applicable for going con-cern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

The Board of Directors confirm that they are satisfied that the entity has adequate resources to continue in business for the twelve-month period from the date of this report. For this reason they continue to adopt the going concern basis for preparing the annual financial statements as confirmed in the Director’s Responsibilities and Approval above.

3. Events after the reporting period

The directors are not aware of any matter or circumstance arising since the end of the reporting period that has a material impact on the annual financial statements.

4. Ownership

The entity is wholly owned by the Government of the Republic of South Africa as represented by the Member of the Executive Council of the Provincial Department of Agriculture, Environmental Affairs and Rural Development, KwaZulu- Natal, Dr B M Radebe.

5. Share capital

There were no changes to either the authorised or issued share capital of the entity during the year ended 31 March 2014. Details of the authorised and issued share capital can be found in note 8

6. Financial highlightsFinancial perfomance is summarised as follows

Revenue 5,375,157 5,921,912

Net Surplus 5,272,120 7,070,512

Total Assets 87,803,877 79,744,456

Total Net Assets 38,664,453 33,392,333

Cash Generated from Operations 9,451,671 19,364,097

72


Directors’ Report

7. Dividends

There were no dividends declared or paid during the reporting period.

8. Internal control

The Board of Directors has the ultimate responsibility for establishing, implementing and maintaining a framework of internal controls. The controls are designed to provide cost-effective assurance that assets are safeguarded and that liabilities and working capital are efficiently managed.

An Audit Committee which is responsible for monitoring the entity’s internal control structure, including financial controls, accounting policy implementation and financial reporting, as well as reviewing and agreeing internal con-trol plans has been appointed and have been able to discharge their responsibility with the assistance of Internal Audit.

9. Public Finance Management Act

Public Finance Management Act Compliance

Various sections of the Public Finance Management Act place responsibility on the Board of Directors to ensure that the entity complies with all applicable legislation. Any non-compliance with legislation is reported at Executive Committee and the Board of Directors.

Materiality and Significance Framework

A Materiality and Significance Framework has been developed for reporting losses through criminal conduct and irregular, fruitless and wasteful expenditure, as well as for significant transactions.

Material Losses through Criminal Conduct, Irregular, Fruitless and Wasteful Expenditure

Section 55(2) (b) of the Public Finance Management Act requires that the entity include in the Annual Report partic-ulars of any material losses through criminal conduct and any irregular and fruitless and wasteful expenditure that occurred during the financial year.

Irregular, Fruitless and Wasteful Expenditure

The entity has not incurred fruitless and wasteful expenditure during the year under review, as set out in the Public Finance Management Act.

Particulars of irregular expenditure incurred by the entity are disclosed in Note 33 of the Annual Ffinancial State-ment.

Basis of Presentation

The annual financial statements are prepared in accordance with the South African Statements of Generally Accept-ed Accounting Practice, and in a manner required by the Public Finance Management Act 1999 and South African Companies Act, 71 of 2008.

10. Directors

The directors of the entity during this reporting period are as follows:

73


Directors’ Report

Non-executive Directors NationalitySipho Mfanovele Ngxongo South AfricanZama Israel Ngcobo South AfricanMichael Dumisani Myeni South AfricanZandile Goodness Gumede South AfricanJohn Siyaya South AfricanBusi Thobi Tembe South AfricanVictoria Makhosazana Xakaza South AfricanSiphwe Hebron Nxumalo South African

11. Secretary

The company secretary is C & H Accounting Incorporated and continued to act as secretaries during the reporting period.

74


Statement of Financial Position as at 31 March 2014

Figures in Rand Note(s) 2014 Restated 2013

Assets

Non-Current Assets

Investment property 2 7,873,639 8,300,357

Property, plant and equipment 3 33,134,047 30,358,598

Intangible assets 4 317,290 327,104

41,324,976 38,986,059

Current Assets

Inventories 5 737,528 363,719

Trade and other receivables 6 2,621,115 3,473,617

Cash and cash equivalents 7 43,120,258 36,921,061

46,478,901 40,758,397

Total Assets 87,803,877 79,744,456

Equity and Liabilities

Equity

Share capital 8 100 100

Reserves 9&10 36,777,074 37,053,693

Accumulated surplus / (deficit) 1,887,279 (3,661,460)

38,664,453 33,392,333

Liabilities

Non-Current Liabilities

Provision 11 6,000,000 6,000,000

Current Liabilities

Finance lease obligation 12 40,187 39,420

Trade and other payables 13 6,062,487 3,395,822

Provisions 14 29,122 -

Transfers and subsidies 15 37,007,628 36,916,881

43,139,424 40,352,123

Total Liabilities 49,139,424 46,352,123

Total Equity and Liabilities 87,803,877 79,744,456

75


Statement of Profit and Loss and Other Comprehensive Income


Water supply services and rental income 16 5,375,157 5,921,912

Transfers and subsidies 15 40,792,587 46,680,209

46,167,744 52,602,121

Other income 17 165,083 82,451

Operating and administration expenses (42,026,454) (46,414,412)

Operating surplus 4,306,373 6,270,160

Investment revenue 18 1,005,344 852,149

Finance costs 19 (39,597) (51,797)

Surplus for the year 5,272,120 7,070,512

76


Statement of Changes in Net Assets

Figures in Rand Share capital

Revaluation reserve

Other NDR Total reserves

Accumulated deficit

Total equity

Opening balance as previously reported

100 18,772,205 8,756,912 27,529,117 (10,709,659) 16,819,558

AdjustmentsPrior period error

- - - - (22,313) (22,313)

Balance at 01 April 2012 as restated

100 18,772,205 8,756,912 27,529,117 (10,731,972) 16,797,245

Surplus for the year (restated)Revaluation

- - - - 7,070,512 7,070,512

- 9,524,576 - 9,524,576 - 9,524,576

Total comprehensive income for the year

- 9,524,576 - 9,524,576 7,070,512 16,595,088

Balance at 01 April 2013 100 28,296,781 8,756,912 37,053,693 (3,661,460) 33,392,333

Surplus for the year Transfer between reserves

- - - - 5,272,120 5,272,120

- (276,619) - (276,619) 276,619 -

Balance at 31 March 2014 100 28,020,162 8,756,912 36,777,074 1,887,279 38,664,453

Note(s) 8 9 10

77


Statement of Cash Flows

Figures in Rand

Restated 2013Note(s) 2014

Cash flows from operating activities

Cash receipts from customers 47,966,174 51,050,127

Cash paid to suppliers and employees (38,514,503) (31,686,030)

Cash generated from operations 23 9,451,671 19,364,097

Interest income 1,005,344 852,149

Interest paid (39,597) (51,797)

Net cash from operating activities 10,417,418 20,164,449

Cash flows from investing activities

Purchase of property, plant and equipment 3 (4,218,988) (6,502,217)

Sale of property, plant and equipment 3 - 2,066

Purchase of intangible assets 4 - (327,120)

Net cash from investing activities (4,218,988) (6,827,271)

Cash flows from financing activities

Finance lease payments 767 (19,084)

Total cash and cash equivalents movement for the year 6,199,197 13,318,094

Cash and cash equivalents at the beginning of the year 36,921,061 23,602,967

Total cash and cash equivalents at end of the year 7 43,120,258 36,921,061

78


Accounting Policies

1. Presentation of Annual Financial Statements

The annual financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice and in a manner required by the Public Finance Management Act No. 1 of 1999 and South African Companies Act, 71 of 2008. The annual financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in South African Rands. These accounting policies are consistent with the previous period

Comparative information

When the presentation or classification of items in the annual financial statements is amended, prior period com-parative amounts are restated. Where accounting errors have been identified in the current year, the correction is made retrospectively as far as is practicable and the prior year comparatives are restated accordingly. Where there has been a change in accounting policy in the current year, the adjustment is made retrospectively as far as is prac-ticable, and the prior year comparatives are restated accordingly.

1.1 Significant judgements and sources of estimation uncertainty

In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available informa-tion and the application of judgement is inherent in the formation of estimates. Actual results in the future could dif-fer from these estimates which may be material to the annual financial statements. Significant judgements include:

Trade receivables

The entity assesses its trade receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit, the entity makes judgements as to whether there is ob-servable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

The provision for impairment of trade receivables is calculated based on the company policy and when there is evidence that the company will not be able to collect all amounts due according to the original terms of receivable. The policy implemented states that, that for debtors balance outstanding from 150 days to 180 days, the provision is 50%, and debtors balance outstanding for 180 days and over, the provision is 100% of the outstanding balance. Trade receivables are recovered by means of cash received or by way of cessions signed with the sugar millers against the respective growers sugar cane crops.

Impairment testing

The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations and fair values less costs to sell. These calculations require the use of estimates and as-sumptions. It is reasonably possible that the assumption may change which may then impact our estimations and may then require a material adjustment to the carrying value of goodwill and tangible assets.

The entity reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of tangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number of factors together with economic factors such as inflation and interest rate.

Provisions

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 14 - Provisions. Provisions are measured at manage-ment’s best estimate of the expenditure required to settle the obligation at the reporting date, and are discounted to present value where the effect is material.

79


Accounting Policies

1.1 Significant judgements and sources of estimation uncertainty (continued)

Useful lives of Property, plant and equipment

The company re-assesses the useful lives and residual values of property, plant and equipment on an annual basis. In reassessing the useful lives and residual values of property, plant and equipment management considers the condition and useof the individual assets, to determine the period and the remaining period over which the asset can and will be used.

1.2 Investment property

Investment property is recognised as an asset when, and only when, it is probable that the future economic benefits that are associated with the investment property will flow to the entity, and the cost of the investment property can be measured reliably.

Investment property is initially recognised at cost. Transaction costs are included in the initial measurement.

Cost model

Investment property is carried at cost less depreciation less any accumulated impairment losses.

Depreciation is provided to write down the cost, less estimated residual value over the useful life of the property, which is as follows:

Item Useful lifeProperty - buildings 50 years

1.3 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when:

* it is probable that future economic benefits associated with the item will flow to the entity; and

* the cost of the item can be measured reliably.

Property, plant and equipment, except property, is measured at cost. Costs include costs incurred initially to acquire or construct an item of property, plant and equipment. Property, plant and equipment is carried at cost less accu-mulated depreciation and any impairment losses except for property which is carried at revalued amount being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

When an item of property, plant and equipment is revalued, any accumulated depreciation at the date of the reval-uation is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount and subsequently depreciated. The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred directly to retained earn-ings when the asset is derecognised. Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value of 10% of cost. Finance lease assets are depreciated to nil residual value.

Property is revalued to market related values every 5 years and is depreciated at 2% per annum. In September 2012 the properties were revalued by the directors with reference to market related values issued by an independent valuer. The surplus arising from the revaluation has been transferred to revaluation reserve (refer note 9) is carried at cost less accumulated depreciation and any impairment losses.

80


Accounting Policies

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Useful life

Tractors 15 years

Trailers 20 years

Motor vehicles 8 years

Buildings 50 years

Workshop equipment, Implements and Sundy equipment

10 years

Fences, Gates and Water provision equipment 10 years

Office equipment, household furniture and air conditioners

10 years

Computer equipment 5 years

Office furniture, Advertising boards and Buildings upgrade

15 years

1.3 Property, plant and equipment

Finance lease assets Over the lease agreement term

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset.

Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset.The gain or loss arising from the derecog-nition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

1.4 Intangible assets

An intangible asset is recognised when:

* it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and * the cost of the asset can be measured reliably.

Intangible assets are initially recognised at cost.

Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognised when:

* it is technically feasible to complete the asset so that it will be available for use or sale. * there is an intention to complete and use or sell it. * there is an ability to use or sell it.

* it will generate probable future economic benefits. * there are available technical, financial and other resources to complete the development and to use or sell the asset. * the expenditure attributable to the asset during its development can be measured reliably.

81


Accounting Policies

Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indica-tion that the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful life.

The amortisation period and the amortisation method for intangible assets are reviewed every period-end.

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indica-tor that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life.

Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not rec-ognised as intangible assets.

Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as fol-lows:

Item Useful life

Intangible assets 30 years

1.5 Financial instruments

Initial recognition and measurement

Financial instruments are recognised initially when the entity becomes a party to the contractual provisions of the instruments.

The entity classifies financial instruments, or their component parts, on initial recognition as a financial asset, a finan-cial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are measured initially at fair value. For financial instruments which are not at fair value through surplus or deficit, transaction costs are included in the initial measurement of the instrument.

Transaction costs on financial instruments at fair value through surplus or deficit are recognised in profit or loss.

Impairment of financial assets

At each reporting date the entity assesses all financial assets, other than those at fair value through surplus or defi-cit, to determine whether there is objective evidence that a financial asset or group of financial assets has been impaired.

For amounts due to the entity, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default of payments are all considered indicators of impairment.

Impairment losses are recognised in surplus or deficit.

Impairment losses are reversed when an increase in the financial asset’s recoverable amount can be related objec-tively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Reversals of impairment losses are recognised in profit or loss.

Where financial assets are impaired through use of an allowance account, the amount of the loss is recognised in surplus or deficit within operating expenses. When such assets are written off, the write off is made against the rel-evant allowance account. Subsequent recoveries of amounts previously written off are credited against operating expenses.

82


Accounting Policies Trade and other receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method.

Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the ef-fective interest rate method.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid invest-ments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value.

1.6 Taxation

No provision has been made for taxation as the entity acts as an agent for the Provincial Department of Agriculture and Environmental Affairs, KwaZulu-Natal and has therefore been exempted from income tax.

1.7 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Finance leases – lessee

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

The lease payments are apportioned between the finance charge and reduction of the outstanding liability.The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset. This liability is not discounted.

Any contingent rents are expensed in the period they are incurred.

1.8 Inventories

Inventories are measured at the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of com-pletion and the estimated costs necessary to make the sale.

The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

When inventories are sold, the carrying amount of those inventories are recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, are recognised as a reduc-tion in the amount of inventories recognised as an expense in the period in which the reversal occurs.

83


Accounting Policies 1.9 Impairment of assetsThe entity assesses at each end of the reporting period whether there is any indication that an asset may be im-paired. If any such indication exists, the entity estimates the recoverable amount of the asset.

Irrespective of whether there is any indication of impairment, the entity also:

* tests intangible assets with an indefinite useful life or intangible assets not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed during the annual period and at the same time every period.

* tests goodwill acquired in a business combination for impairment annually.

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual as-set. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised imme-diately in surplus or deficit. Any impairment loss of a revalued asset is treated as a revaluation decrease.

An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in surplus or deficit. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.

1.10 Employee benefits

Short-term employee benefits

The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs.

The expected cost of surplus sharing and bonus payments is recognised as an expense when there is a legal or con-structive obligation to make such payments as a result of past performance.

Defined contribution plans

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contri-bution plans where the entity’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.

84


Accounting Policies 1.11 Provisions and contingencies

Provisions are recognised when:

* the entity has a present obligation as a result of a past event; * it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and * a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Provisions are not recognised for future operating losses.

1.12 Revenue

Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receiv-able for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax. Revenue is recognised when it is probable that future economic benefits will flow to the entity and these benefits can be measured reliably.

Water supply services and rental income

Sales are recognised at the date services are provided net of value-added tax and discounts, if any.

Transfers and subsidies

Monetary government grants are received from the Department of Agriculture and Environmental Affairs Kwa-Zulu Natal, and are recognized as income over periods necessary to match them with the related costs which they are intended to compensate in terms of the mandate from the shareholder, on a systematic basis. They are not credited directly to shareholders’ interest. Monetary government grants received are not refundable to the Department and are utilized to cover operational and overhead expenditure. Unexpended funds arising at year end are carried for-ward to the following year. Also refer to note 15.

Interest received

Interest is recognised, in surplus or deficit, using the effective interest rate method.

85


Notes to the Annual Financial Statements

Figures in Rand 2014 2013

2. Investment property

2014 2013

Cost Accumulated depreciation

Carrying value Cost Accumulated depreciation

Carrying value

Investment property

8,323,523 (449,884) 7,873,639 8,300,357 - 8,300,357

Reconciliation of investment property - 2014

Investment propertyOpening balance Disposals Depreciation Total

8,300,357 (268,558) (158,160) 7,873,639

Reconciliation of investment property - 2013

Investment propertyOpening balance Transfers Total

- 8,300,357 8,300,357

Amounts recognised in profit and loss for the year

Rental income from investment property 303,381 313,319

3. Property, plant and equipment

2014 2013

Cost / Valuation

Accumulated depreciation

Carrying value

Cost / Valuation

Accumulated depreciation

Carrying value

Buildings and building upgrade

21,203,223 (1,085,148) 20,118,075 21,203,223 (632,072) 20,571,151

Fence and gates, boards and water provision

3,014,119 (449,676) 2,564,443 2,840,742 (372,403) 2,468,339

Finance lease assets 143,150 (112,005) 31,145 112,794 (83,144) 29,650

Office furniture 648,282 (164,966) 483,316 647,944 (160,736) 487,208

Tractors, vehicles and trailers

5,803,844 (1,244,768) 4,559,076 2,479,844 (849,674) 1,630,170

Office equipment and household furniture

710,437 (147,548) 562,889 710,437 (146,992) 563,445

Computer equipment 1,807,345 (739,676) 1,067,669 1,804,965 (452,722) 1,352,243

Workshop equipment and implements

1,057,986 (229,332) 828,654 814,295 (185,571) 628,724

Electric transformers and fridges

3,544,538 (625,758) 2,918,780 3,099,692 (472,024) 2,627,668

Total 37,932,924 (4,798,877) 33,134,047 33,713,936 (3,355,338) 30,358,598

86



Figures in Rand

Reconciliation of property, plant and equipment - 2014Opening balance Additions Disposals Revalua-

tionsOther changes,

movements Depreciation Total

Buildings and build-ing upgrade 20,571,151 - - - - (453,076) 20,118,075

Fence and gates, boards and water provision

2,468,339 173,377 - - - (77,273) 2,564,443

Finance lease assets 29,650 30,356 - - - (28,861) 31,145

Office furniture 487,208 - - - (3,892) 483,316

Tractors, vehicles and trailers

1,630,170 3,324,000 - - - (395,094) 4,559,076


563,445 - - - (556) 562,889

Computer equipment 1,352,243 2,380 - - - (286,954) 1,067,669


628,724 244,029 - - - (44,099) 828,654

Electric transformers and fridges

2,627,668 444,846 - - - (153,734) 2,918,780

30,358,598 4,218,988 - - - (1,443,539) 33,134,047

Reconciliation of property, plant and equipment - 2013

Opening balance Additions Disposals Transfers Revaluations

Other changes,

movements

Deprecia-tion Total

Buildings & build-ing upgrade 19,849,247 42,000 - (8,300,357) 9,644,397 (202,920) (461,216) 20,571,151

Fence & gates, boards & water provision

366,792 2,390,354 - - - - (288,807) 2,468,339

Finance lease assets 33,230 31,199 - - - - (34,779) 29,650

Office furniture 431,516 85,212 (948) - 15,050 - (43,622) 487,208

Tractors, vehicles and trailers 1,830,223 15,200 - - - - (215,253) 1,630,170


331,293 227,430 (494) - 68,051 - (62,835) 563,445

Computer equip-ment 705,302 913,013 (1,375) - - - (264,697) 1,352,243


272,547 420,070 - - - - (63,893) 628,724

Electric trans-formers and fridges

396,358 2,377,739 (208) - - - (146,221) 2,627,668

24,216,508 6,502,217 (3,025) (8,300,357) 9,727,498 (202,920) (1,581,323) 30,358,598

87




4. Intangible assets

2014 2013Cost /

ValuationAccumulated amortisation

Carrying value

Cost / Valuation

Accumulated amortisation

Carrying value

Intangible assets 327,120 (9,830) 317,290 327,120 (16) 327,104

Reconciliation of intangible assets - 2014

Opening balance Amortisation Total

Intangible assets 327,104 (9,814) 317,290

Reconciliation of intangible assets - 2013

Opening balance Additions Amortisation Total

Intangible assets - 327,120 (16) 327,104

5. Inventories

Consumables - 3,314

Spare parts 737,528 360,405

737,528 363,719

Inventories comprising diesel fuel valued at the lower of cost and net realizable value determined on the average cost basis and spare parts valued at the lower of cost and net realizable value. Cost includes all costs incurred in bringing inventories to their present location and condition. Provision is made against slow and obsolete stock.

6. Trade and other receivables

Trade receivables 13,582,588 11,389,481

Less: Provision for allowances for credit losses (12,108,886) (9,553,656)

Deposits 1,113,589 1,054,535

Value added tax - 553,084

Pension - 5,000

SARS penalties recoverable 24,571 24,571

Prepaid expenses 718 602

Unemployment insurance fund 8,535 -

2,621,115 3,473,617

88




6. Trade and other receivables (continued)

Trade receivable is made up of the following:

Water charges 12,163,593 10,129,363

Accommodation 138,676 102,952

Business 152,803 162,094

Staff 7,919 3,219

Other 823,565 991,853

13,286,556 11,389,481 7. Cash and cash equivalents

Cash and cash equivalents consist of: Cash on hand 2,501 2,090

First National Bank – Money market account 41,674,328 35,267,195

First National Bank – Current account 158,221 260,302

First National Bank – Call account 38,001 37,739

First National Bank – Management account 1,247,207 1,353,735

43,120,258 36,921,061

A guarantee for R32,251 in favour of Telkom is held by First National Bank Limited.

Unused Operational Grant Funding 2,832,742 7,450,425

Infrastructure and water services grant - unexpended funds carried forward

30,857,077 28,022,281

Farmer development support grant - unexpected funds carried forward 2,070,602 92,530

Vegetable project grant - unexpected funds carried forward 1,247,207 1,353,735

Cash on hand 2,501 2,090

37,010,129 36,921,061

8. Share capital

The above shares are held by the Provincial Department of Agriculture and Environmental Affairs, KwaZulu-Natal. Authorised and Issued

100 ordinary shares of R1 each 100 100

89




9. Revaluation reserve

The reserve arose from the revaluation of properties, the latest revaluation was conducted in September 2012 and fair valuing of all the entities assets that are in use.

Revaluation reserve arises from gains made from the periodic revaluation of assets to their fair value on the reval-uation date. The reserve is transferred directly to retained earnings upon disposal of the asset. If revalued asset is impaired the loss will first be set off against any available revaluation reserve before being expensed in the state-ment of profit and loss and other comprehensive income.

Opening balance 28,296,781 18,772,203

Revaluation - 9,727,498

Movement (276,619) (202,920)

28,020,162 28,296,781

10. Capital reserve

The below represents funds introduced by Government prior to 1994 primarily to acquire fixed assets.

Gains made in the ordinary course of business that are capital in nature are accounted for directly in equity in the form of a capital reserve.

Opening balance 8,756,912 8,756,912

11. Provision

Value Added Tax 6,000,000 6,000,000

12. Finance lease obligation

Minimum lease payments due

- within one year 14 320 10 938

- in second to fifth year inclusive 25 867 28 482

Present value of minimum lease payments 40,187 39,420

The entity has leased certain equipment over a finance lease from Vodacom South Africa. The lease is for the period of 2 years with monthly lease instalments and interest rate is linked to prime interest rate.The average lease term was 2 years and the average effective borrowing rate is linked to the prime rate as deter-mined by the South African Reserve Bank. Interest rates are linked to prime at the contract date. All leases have fixed repayments and no arrangements have been entered into for contingent rent.

90



13. Trade and other payables

Trade payables 2,607,537 2,523,648

Skills development levies - 9,715

Accrued leave 611,771 465,387

Pay as you earn - 145,556

Unemployment insurance fund - 4,317

Workman compensation 323,484 245,199

Accrued audif fees 9,950 -

Other accrued expenses 247,003 -

Staff bonus savings 6,000 2,000

Value added tax 2,256,742 -

6,062,487 3,395,822 14. Provisions

Directors fees 29,122 -

15. Revenue from non exchange transactionUnexpended grant funds brought forward from previous year 36,916,881 23,597,967

Add: Grant funds received during the year 46,607,000 68,399,000

Less: Output VAT (5,723,667) (8,399,877)

Less: Grant funds utilised to cover expenditure (40,792,586) (46,680,209)

37,007,628 36,916,881 16. Revenue from exchange transaction Water supply services 4,953,275 5,453,737

Rental income 421,882 468,175

5,375,157 5,921,912 17. Other income Sundry income 11,570 17,147

Storage charges and discount received 4,665 15,764

Proceeds from insurance 148,848 49,540

165,083 82,451 18. Investment revenue Interest received 1,005,344 852,149

19. Finance costs Finance leases 39,597 51,797

91



Figures in Rand 2014 2013 20. Operating surplus

Operating surplus for the year is stated after accounting for the following:

Proceeds from insurance 148,848 49,540 Accounting Fees - (100,328)

Auditors remuneration (812,494) (908,829)

Increase in allowance for credit losses (2,555,231) (2,474,924)

Depreciation (1,601,191) (1,581,323)

Amortisation (9,814) (16)

(1,611,005) (1,581,339)

Directors fees Directors fees (581,073) (616,993)

Directors costs (415,563) (410,224)

(1,611,005) (1,027,217) Profit on sale of assets - 1,151

Loss on sale of assets - (2,110)

Loss on sale of investment property (268,558) -(268,558) (959)

Professional fees (1,189,352) (634,717)

Write off - inventory (69,991) -

Salaries (9,225,616) (8,621,916)

Employee costs - Medical (336,246) (328,992)

- Pension (1,341,060) (1,465,485)

- Unemployment insurance fund (73,286) (72,040)

- Skills development levy (112,019) (108,973)

- Housing allowance (347,375) (366,474)

(2 209,986) (2 341,964)

21. Auditors’ remuneration External audit 734,390 644,439

Internal audit 78,104 264,390

812,494 908,829

92




22. Operating lease Minimum lease repayments due

- less than 1 year 5,733 7,900

- between 1 and 5 years - 14,383

5,733 22,283 The entity has a leased photocopying machine from Canon. The Canon lease agreement provides for a 36 months minimum rental of R818.94 payable in advance. The lease expires in October 2014. Ownership of the photocopy-ing machines will not pass to Mjindi at the end of the lease period. 23. Cash generated from operations Surplus for the year 5,272,120 7,070,512

Adjustments for:

Depreciation 1,601,191 1,581,323

Loss on sale of assets 268,558 959

Interest received - investment (1,005,344) (852,149)

Finance costs - Finance lease 39,597 51,797

Movements in provisions 29,122 (145,754)

Amortisation 9,814 16

Other non-cash items 508

Allowance for credit losses 2,555.231 2,474,924

Write off inventory 69,991 -

Changes in working capital:

Inventories (443,800) (290,534)

Trade and other receivables (1,702,729) (4,026,919)

Trade and other payables 2,666,665 181,008

Transfers and subsidies 90,747 13,318,914

9,451,671 19,364,097 24. Contingencies There is no reimbursement from any third parties for potential obligations of the entity.

93




25. Related parties Relationships Shareholder

Provincial Department of Agriculture and

Close family member of key management Environmental Affairs, KwaZulu Natal

Member of key management T Mpontshane

Directors SM Ngxongo

Transactions were at arms length Refer to note 26 Related party balances Amounts owed at year end Transactions for the year 43,409 28,009

Trade debtor account - S Ngxongo 7,467 6,667

Trade debtor account - SM Ngxongo 85,422 85,442 Related party transactions Transactions for the year Provincial Department of Agriculture and Environmental Affairs, KwaZulu-Natal 46,607,000 68,399,000

Trade debtor account - S Ngxongo 15,400 9,654

Trade debtor account - SM Ngxongo - 282,250

Transactions for the year 8,800 6,667

Trade debtor account - S Ngxongo 102,080 147,494 26. Directors’ emoluments Director’s emoluments related to Board of Directors and Management Committee remuneration. Executive 2014

Salary Travel and Subsistence Total

Chief Executive Officer 1,083,547 134,164 1,217,711

Chief Financial Officer 877,823 99,858 977,681

Senior Manager Farmer Development 691,974 44,475 736,449

Senior Manager Infrastructure and Water 691,973 29,173 721,146

3,345,317 307,670 3,652,987

94



Figures in Rand 2014 2013 2013

Salary Travel and Subsistence Total

Chief Executive Officer 984,622 146,346 1,130,9681

Chief Financial Officer 797,679 94,591 892,270

Senior Manager Farmer Development 648,374 19,062 667,436

Senior Manager Infrastructure and Water 648,398 40,268 688,666

3,079,073 300,267 3,379,340

Non-executive 2014

Directors fees Travel and Subsistence Total

Sipho Mfanovele Ngxongo 155,164 47,493 202,657

Zama Israel Ngcobo 78,019 89,703 167,722

Michael Dumisani Myeni 54,947 11,961 66,908

Zandile Goodness Gumede 41,865 - 41,865

John Siyaya 30,922 2,239 33,161

Busi Thobi Tembe 59,458 38,400 97,858

Victoria Makhosazana Xakaza 47,810 51,210 99,020

Siphwe Hebron Nxumalo 31,524 4,553 36,077

499,709 245,559 745,268

2013

Directors fees Travel and Subsistence Total

Sipho Mfanovele Ngxongo 195,420 30,592 226,012

Zama Israel Ngcobo 107,148 100,753 207,901

Michael Dumisani Myeni 68,703 16,468 85,171

Zandile Goodness Gumede 49,913 - 49,913

John Siyaya 44,431 2,000 46,431

Busi Thobi Tembe 98,289 46,908 145,197

Victoria Makhosazana Xakaza 58,642 53,039 111,681

Siphwe Hebron Nxumalo 5,906 - 5,906

628,452 249,760 878,212

95




27. Events after the reporting period There were no events after reporting date that requires reporting or disclosure in the annual financial statements.

28. Reconciliation between budget and statement of Financial performance Budget on cash basis as compared to actual amounts on accrual basis

Net surplus per the statement of Financial Performance 5,272,119 7,070,513

Under budget in revenue 1,650,859 1,993,772

Over budget in other operating expenditure 15,034,501 10,143,493

Over budget in vegetable project 1,247,207 1,353,735

Depreciation and amortisation 1,611,005 1,581,339

Loss on disposal of property, plant and equipment 268,558 959

Increase in allowance for credit losses 2,555,231 2,474,924

Write off inventory 69,991 -

Capital expenditure (24,773,012) (26,075,681)

Net timing difference pertaining to the receipt of grant monies versus their accounting treatment (2,936,459) 1,456,946

Net surplus/deficit per the approved budget - - 29. Commitments

Already contracted for but not provided for * Capital expenditure 476,480 5,133,021

* Operating expenditure 3,385,426 -

Approved and not yet contracted for 39,255,851 31,783,860

30. Change in estimate Property, plant and equipment The useful life of certain property, plant and equipment was estimated to be 3, 5, 6.67 and 10 years. In the current period management have reassessed and revised their estimate to 10 and 15 years. The effect of this revision was the reverse of depreciation charged, decrease in accumulated loss and increase in carrying value property, plant and equipment current period R703 380 and (2013: R 531,643).

31. Prior period errors

The following errors were identified in the prior year’s annual financial statements:

31.1 Certain investment property were incorrectly classified as property, plant and equipment. The effect has in creased investment property and decreased property, plant and equipment for the prior period by R1 373 545.

31.2 Intangible asset was incorrectly classified as computer equipment. The effect has increased intagible asset and decrease computer equipment for the prior period R327 106.

96



Figures in Rand 2014 2013 31.3 Buildings and investment property were depreciated at incorrect remaining useful life. The effect has increased depreciation charges for the period R997, decrease in accumulated loss for the prior period R 997. Finance lease assets were errorly not recognised in the prior years. The effect has increased finance lease asset for prior period R 29 650 and increase the finance lease obligation for prior period R39 420 and has increased the accumulated loss for the prior period R 9 770.31.4 Business rental that relates to the previous year was mot raised in the previous year. The effect has increased trade and other receivable and decrease accumulated loss for the prior period R31 088.

31.5 Leave accrual and workmans compansation were incorrectly classified as provisions. The effect has increased trade and other payables and decreases provisions for the prior period R710 585.

31.1 Buildings and buildings upgrade - carrying amount Previously stated - 21,943,696

Rectification of prior period errors - (1,373,545)

- 20,570,151

31.1 Investment property - carrying amount Previously stated - 6,926,812

Rectification of prior period errors - 1,373,545

- 8,300,357

31.2 Computer equipment - carrying amount Previously stated - 1,679,347

Rectification of prior period errors - (327,104)

- 1,352,243

31.2 Intangible assets - carrying amount Rectification of prior period errors - 327,104

31.3 Property, plant and equipment - carrying amountPreviously stated - 32,028,600

Rectification of prior period errors - buildings and buildings upgrade - (1,373,545)

Rectification of prior period errors - computer equipment (327,104)

Rectification of prior period errors - Finance lease assets 29,650

Rectification of prior period errors - depreciation 997

- 30,358,598

97


Notes to the Annual Financial Statements Figures in Rand 2014 2013

31.4 Trade and other receivables Previously stated - 3,442,529

Rectification of prior period errors - 31,088

- 3,473,617

31.5 Provisions Previously stated - 6,712,585

Rectification of prior period errors - (710,585)

- 6,002,000 Accummulated loss Previously stated - (3,683,773)

Rectification of prior period errors - 22,313

- (3,661,460) Statement of Financial Position Increase in investment property - (1,373,545)

Decrease in property, plant and equipment - (1,670,000)

Increase in intangible assets 327,104

Increase in trade and other receivables 22,313

Decrease in Accumulated loss (32,084)

Increase in trade and other payables 710,585

Decrease in provision (710,585)

Profit or LossIncrease in revenue - (31,088)

Decrease in expenses - (16,500)

Increase in deficit - 47,588 32. Comparative figures Certain comparative figures have been reclassified to conform to changes in presentation in the currect year. Changes in accountng policies and fundamental errors are also restated in the prior year figures. 33. Irregular expenditure Opening balance Add: Irregular Expenditure - current year 946,614 -

Due to the high electricity expenditure incurred by the entity, a Supplier was awarded to implement energy sav-ings methods. The award was through unsolicited bid which was not conducted in compliance with supply chain management regulations.

98


Detailed Income Statement


16 5,375,157 5,921,912

Water supply services

Direct expenditure

Labour 1,512,668 1,400,869

Irrigation maintenance 2,145,299 630,796

Electricity 9,838,976 10,942,452

Water usage 4,920,099 3,895,256

Total direct expenditure 18,417,042 16,869,373

Transfers and subsidies 40,792,587 46,680,209

Gross profit 46,167,744 52,602,121

Operational and overhead grants and other income

Sundry income 11,570 17,147

Storage charges and discount received 4,665 15,764

Proceeds from insurance 148,848 49,540

Interest received 18 1,005,344 852,149

1,170,427 934,600

Expenses (Refer to page 31) (42,026,454) (46,414,412)

Operating surplus 5,311,717 7,122,309

Finance costs (39,597) (51,797)

Surplus for the year 5,272,120 7,070,512

99




Operating and administration expenses

Accommodation and hire (18,425) (149,341)

Accounting fees - (100,328)

Advertising and appointment costs - (138,484)

Allowance for credit losses (2.555,231) (2,474,924)

Amortisation (9,814) (16)

Auditors remuneration 21 (812,494) (908,829)

Bad debt recovered - 2,936,352

Bank charges (47,182) (50,324)

Building maintenance (51,242) (194,748)

Cleaning and refreshments cost (252,695) (278,515)

Computer licenses (87,047) (21,940)

Depreciation (1,601,191) (1,581,323)

Direct expenditure (18,417,042) (16,869,373)

Directors fees (581,073) (616,993)

Directors travelling (415,563) (410,224)

Donations (4,867) (3,983,781)

Electricity (222,554) (358,773)

Farmers workshop expenditure (23,750) (53,835)

Government levies (3,650) (3,000)

Hire other equipment (10,433) (246,750)

Housing allowance (347,375) (366,474)

Insurance (282,247) (201,222)

Land preparations and inputs (106,528) (315,830)

Legal expenses (19,187) (2,498)

Loose tools and workshop consumables (55,009) (42,081)

Medical aid (336,246) (328,992)

Motor vehicle expenses (215,078) (257,449)

Pension contribution (1,341,060) (1,465,485)

Printing and stationery (186,307) (256,637)

Proffesional fees (1,189,352) (634,717)

Loss and sales assets (268,558) (959)

Protective clothing (87,915) (84,227)

Rentals (18,804) (24,363)

Repair and maintanance (132,183) (4,564,034)

Salaries and wages (9,225,616) (8,621,916)

100


Skills development levies (112,019) (108,973)

Subsistence and travel (384,870) (399,724)

Telephone and fax (243,523) (201,403)

Training and bursary (252,438) (272,871)

Unemployment insurance fund (73,286) (72,040)

Vehicle fuel and lubricants (265,692) (747,058)

Vehicle licenses (10,081) (6,174)

Workmens compensation (323,484) (245,199)

Write off inventory (69,991) -

(42,026,454) (46,414,412)



102

CONTACT DETAILS

MJINDI FARMING (Pty) LtdPO Box 28 JOZINI 3969

MAKHATHINI FLATS, 3969

TEL: 035 572 9015/20Fax: 035 572 9023

Email: [email protected]

PR118/2014ISBN:978 ‐ 0‐621 ‐ 42691 ‐5

Title of Publications: Mjindi Farming (Pty) Ltd ‐ Annual Report 31 March 2014.

2013 / 2014 annual report - provincial government · mr. j siyaya – director date appointed :01...

Documents