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JOBURG MARKET (SOC) LTDCompany Registration No: 2000/023383/07

(Tabled in terms of Section 88 of theMunicipal Finance Management Act, 2003 and Section 44 of the Municipal Systems Act, 2000)

(Version 1.2F)

JOBURG MARKET (SOC) LTD

Joburg Market - Celebrating 120 years of freshness

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COMPANY INFORMATION:

Registration number : 2000/023383/07

Registered Address : Heidelberg RoadCity DeepJohannesburg

Postal Address : P O Box 86007City Deep2049

Telephone number : (011) 992-8000

Fax number : (011) 613-7381

Website : www.joburgmarket.co.za

Bankers : Standard Bank of SA Limited

Auditors : Auditor-General

Glossary of Terms

ABS Absolute Value


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http://www.joburgmarket.co.za/

AG Auditor GeneralBEE Black Economic EmpowermentCAPEX Capital ExpenditureCEO Chief Executive OfficerCFO Chief Financial OfficerCOJ City of JohannesburgEE Employment EquityEPWP Expanded Public Works ProgrammeEXCO Executive CommitteeGAAP Generally Accepted Accounting PracticesGDARD Gauteng Department of Agriculture and Rural DevelopmentGDS Growth and Development StrategyGIFSS Gauteng Integrated Food Security StrategyGRAP Generally Recognised Accounting PracticesGWK Griekwaland West Co-operativeHACCP Hazard Analysis and Critical Control PointsIACP Internal Audit Coverage PlanIDP Integrated Development PlanIPM Institute of People ManagementJM Joburg MarketJMTF Joburg Market Tenants ForumMANCO Management CommitteeMEs Municipal EntityMFMA Municipal Finance Management ActMMC Member of the Mayoral CommitteeMotF Market of the FutureMSA Municipal Systems ActNDAFF National Department of Agriculture, Forestry and FisheriesNEEA National Energy Efficiency AgencyNGO Non-Governmental OrganisationNVC New Venture CapitalOHASA Occupational Health and Safety ActOPCAR Operation Clean Audit ReportOPEX Operational ExpenditurePMA Produce Marketing Association of AmericaPPECB Perishable Produce Export Control BoardSANAS South African National Accreditation SystemSEZ Soweto Empowerment ZoneSETA Sector Education Training AuthoritySHU Shareholder UnitSADC Southern African Development CommunityWUWM World Union of Wholesale Markets

Vision


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The preferred world class African Fresh Produce Market

Mission

To build long-term sustainability and promote socio-economic transformation through the provision of world-class facilities and services to the fresh produce industry.

Mandate

The company is mandated to manage and operate the fresh produce market facility located in City Deep.

Values

The values of JM are embedded in the trust relationship with our stakeholders operating within the fresh produce marketing environment. As an entity, we hold the following values:-

• Transparency in our systems and service delivery practices;• Integrity in all Market management practices;• 24 hour quality support in line with our real time operations;• Value for money services produced with diligence;• Care for the disadvantaged through human and enterprise development as well as indigent support;• Corporate citizenship through practicing good governance and legislative imperatives;

JM is a unique entity with a strong sense of direction and subscribes fully to GDS 2040, the long term Growth and Development Strategy of the City of Johannesburg.

Strategic Intent

The strategic intent of JM represents the mission of being world class and a driver of transformation.

Every element of the Market of the Future embodies the company’s aspiration to ensure an effective and leading Fresh Produce Market system. The Blue Print towards Market of the Future represents the strategic intent and forms its overarching strategy for the company.

In the latter regard, the choice of strategy is remaining to do what the entity does best and to develop on its strengths, refining World Class Market services, which it proudly delivers from our base in Johannesburg on African soil. JM’s strengths are underpinned by more than a century of growth and development and will continue to build industry and community partnerships locally and across the globe. The JM will in creating its facilities and services employ its dedication to innovation, food quality and safety, human capital development and being customer centric. Organisational integration forms part of the Market of the Future strategy and will deliver safe, efficient, clean and compliant Market services.

Sustainability Vision

The company’s vision of a sustainable future is embedded in its quest to deliver world-class market services to the citizens of Johannesburg and the broader client base it serves. This includes nourishment on a daily basis through the provision of suitable quantities and qualities of fresh produce.

In achieving this task, the company views human creativity as a precious input in ensuring innovative services that will through proper and transparent market systems enable producers to continue to produce fresh produce on a sustainable basis. The company therefore seeks to provide services and facilities on an equitable basis at fair value to all its stakeholders.


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The MotF project was developed specifically to ensure long-term sustainability for the operation, through aligning the company’s activities with industry requirements. The company constantly engages with its stakeholders and to exchange ideas as part of its active sustainability drive.


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TABLE OF CONTENTS

CHAPTER ONE: INTRODUCTION AND CORPORATE PROFILE..........................................................................................8Section 1.....................................................................................................................................................................................8Corporate profile/overview of the entity......................................................................................................................................8Section 2:....................................................................................................................................................................................9Strategic objectives....................................................................................................................................................................9Section 3:..................................................................................................................................................................................13Chairperson’s foreword............................................................................................................................................................13Section 4:..................................................................................................................................................................................14Chief Executive Officer’s (“CEO”) report..................................................................................................................................14CHAPTER TWO: PERFORMANCE HIGHLIGHTS.................................................................................................................15Section 1:..................................................................................................................................................................................15Highlights and achievements....................................................................................................................................................15Section 2:..................................................................................................................................................................................17Performance against idp and city scorecard............................................................................................................................17Section 3:..................................................................................................................................................................................26Amounts owed by joburg market for service charges...............................................................................................................26Section 4:..................................................................................................................................................................................26Statement on amounts owed by Government departments and public entities.......................................................................26Section 5:..................................................................................................................................................................................27Plans for the next coming six months.......................................................................................................................................27CHAPTER THREE: DIRECTORS’S REPORT AND GOVERNANCE.....................................................................................28Section 1:..................................................................................................................................................................................28Corporate governance statement.............................................................................................................................................28Section 2:..................................................................................................................................................................................29Board of directors.....................................................................................................................................................................29Section 3:..................................................................................................................................................................................30Board committees.....................................................................................................................................................................30Section 4:..................................................................................................................................................................................34Director’s remuneration............................................................................................................................................................34Section 5:..................................................................................................................................................................................35Board of Director’s: Corporate Governance............................................................................................................................35Section 6:..................................................................................................................................................................................37Risk management and internal controls...................................................................................................................................37Section 7:..................................................................................................................................................................................43Sustainability report..................................................................................................................................................................43CHAPTER FOUR: HUMAN RESOURCES AND ORGANISATIONAL MANAGEMENT........................................................46Section 1:..................................................................................................................................................................................46Human Resource Management................................................................................................................................................46Section 2:..................................................................................................................................................................................51Skills development....................................................................................................................................................................51Section 3:..................................................................................................................................................................................54EPWP.......................................................................................................................................................................................54Section 4:..................................................................................................................................................................................54Bonus payment and Performance management......................................................................................................................54Section 5:..................................................................................................................................................................................55Employee wellness...................................................................................................................................................................55Section 6:..................................................................................................................................................................................55Employee benefits....................................................................................................................................................................55CHAPTER FIVE: FINANCIAL ASSESSMENT.......................................................................................................................57Section 1: Financial performance............................................................................................................................................57Financial performance..............................................................................................................................................................57Section 2:..................................................................................................................................................................................65Capital projects.........................................................................................................................................................................65Section 3:..................................................................................................................................................................................67Supply chain management.......................................................................................................................................................67Section 4:..................................................................................................................................................................................70Internal Audit and Auditor General management letter issues.................................................................................................70CHAPTER SIX: SPECIAL PROJECTS..................................................................................................................................80


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Section 1:..................................................................................................................................................................................80Market of the Future (Including Sweating of the Asset)...........................................................................................................80CHAPTER SEVEN: OPERATIONAL ASSESSMENT............................................................................................................92Section 1:..................................................................................................................................................................................92Commission business...............................................................................................................................................................92Section 2...................................................................................................................................................................................97Complementary serivces..........................................................................................................................................................97Section 3:..................................................................................................................................................................................98Infrastructure............................................................................................................................................................................98Section 4...................................................................................................................................................................................99Maintenance.............................................................................................................................................................................99Section 5:................................................................................................................................................................................103Marketing................................................................................................................................................................................103Section 6:................................................................................................................................................................................107Targeted groups.....................................................................................................................................................................107Section 7:................................................................................................................................................................................108Information technology...........................................................................................................................................................108

CHAPTER ONE: INTRODUCTION AND CORPORATE PROFILE

SECTION 1:

CORPORATE PROFILE/OVERVIEW OF THE ENTITY

As the City of Johannesburg has adopted a new Growth and Development Strategy, a new era in service delivery has arrived for the City and consequently the entity.


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The Joburg Market has evolved from its humble formative years in Newtown with a turnover of R1.5 million in 1913 to an entity heading for a turnover of R4.9 Billion.

The JM at its inception during the gold rush also shared in the difficult times experienced by the entire South Africa and World Nations. During the depression era in the early 1900’s, the concept of markets and distribution of food to nourish a growing urban population offered a good intervention in assisting with issues of food security.

Following World War 2, rapid rate of population growth and urbanization entrenched the ability of Fresh Produce Markets to provide sufficient quantities of Fresh Produce.

The Industry was deregulated during 1992, which enabled the private sector to compete with Municipal Markets. Emanating from the various historical challenges, the municipality become the custodian of Markets and had to invest significantly in establishing suitable Market facilities.

The Joburg Market has consistently grown to arguably, now, hold the position as the largest fresh produce market in the world by volume, trading in excess of 1 100 000 tons (1.1 million kg of fresh produce). Mozambique has emerged as a rapid growing market segment for Joburg Market and reconfirms the observation that Joburg Market has become an important regional Market.

Close to 47 percent of all Fresh Produce traded on Markets in SA is being channelled through the Joburg Market. It remains a hub for formal and informal entrepreneurs, from a local as well as regional perspective.

Currently, in excess of 10 000 buyers conduct business at JM on a daily basis.

At any given time during the various marketing seasons, approximately 6 000 producers provide fresh produce from within South Africa as well as from destinations such as Mozambique, Botswana, China, Spain, and Greece.


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SECTION 2:

STRATEGIC OBJECTIVES

The strategic objectives of the company derive from the imperatives set in the IDP, the GDS and Priority Implementation Plans of the City of Johannesburg.

The strategic imperatives set for the entity is highlighted in the table below:

IDP Programmes and Delivery Agenda for 2013/14

5-year IDP Programme2012/16

IDP SUB Programme

Delivery Agenda

GDS Outcome GDS Output Projects PerformanceTarget 2013/14

Sector diversification through support for emerging and new sectors and retention of competitive economic sectorsEnsure a continuous and adequate supply of suitable quality fresh produce at reasonable prices, (Food Security)

Food Security Programme:Ensure a continuous and adequate supply of suitable quality fresh produce at reasonable prices

Promoting legislation that supports greater food security

[Bylaw adjustment]

Improved quality of life and development-driven resilience for all

Food security that is both improved and safeguarded

Funding and establishment of MotF

Achieve finance through the parent Municipality


JM facilitates the establishment of fresh produce retail market facilities in marginalised areas with the proviso that products sold are from JM




Increase donations to Food Bank



Facilitate fresh produce retail market facilities in marginalised areas with the proviso that products sold are from

Roll out of 4 units in PDA’s


Introduction of a real time trading information system on mobile and alternative platforms to further streamline transparent price discovery

A high performing metropolitan government that proactively contributes to and builds a sustainable, socially inclusive, locally integrated and globally

Meaningful citizen participation and empowerment

Development of a virtual trading option


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IDP SUB Programme

Delivery Agenda


competitive Gauteng City Region

Sector diversification through support for emerging and new sectors and retention of competitive economic sectorsSupport Implementation of Green Economy interventions

Conducive Environment

Improve Business Efficiency

A high performing metropolitan government that proactively contributes to and builds a sustainable, socially inclusive, locally integrated and globally competitive Gauteng City Region

A responsive, accountable, efficient and productive metropolitan government

Converting waste to energy

Establish processes to separate Organic and non-organic materials and conclusion of at least 1 operating agreement

Facilitating enterprise development and support through capacity development, strategic procurements and access to finance for small, micro and medium enterprises (SMMEs), including cooperativesCatalyse support and opportunities for BBEE/SMME through creative public/private partnerships

Transformation Programme: Ensure greater inclusion of previously disadvantage groups and individuals across the agricultural value chain

Support Emerging Farmers

A high performing metropolitan government that proactively contributes to and builds a sustainable, socially inclusive, locally integrated and globally competitive Gauteng City Region

An active and effective citizen focused Global City Region

Increase in market share of fresh produce received from emerging farmers

Emerging producer support programme intensified

Transformation Programme: Ensure greater inclusion of previously disadvantage groups and individuals across the agricultural value chain

Support Emerging Market Agent

An inclusive, job-intensive, resilient and competitive economy that harnesses the potential of citizens

Promotion and support to small businesses

Introduce 1 new emerging agent at and enhance trading opportunities for establishment

Transformation Provide targeted Provide a Sustainable and Increase in Link emerging


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IDP SUB Programme

Delivery Agenda


Programme: Ensure greater inclusion of previously disadvantage groups and individuals across the agricultural value chain

groups with access to commercial and industrial property through the development of vacant land.

resilient, livable, sustainable urban environment - underpinned by infrastructure supportive of a low carbon economy

integrated delivery of water, sanitation, energy and waste

market share of fresh produce sold by emerging Agents.

agents and producers and achieve support for all existing emerging agents from formal agents at

Implementation of skills development and re-skilling programmes that are linked to the needs of the marketDevelop a City skills strategy, focused on the skills supply/demand chain, first lends to the identification of consolidation of a list of critical scarce skills in the City to guide other initiatives

Skills Development Programme: Increased number of beneficiaries reached by City-facilitated skills development initiatives

Establish and maintain a training academy


Increased literacy, skills and lifelong learning amongst all our citizens

Establish and maintain a training academy in partnership with CoJ Departments and entities.

Provision of formal training during 2013/14

Skills Development Programme: Increased number of beneficiaries reached by City-facilitated skills development initiatives

Training people over the next 5 years through the EPWP process to become employable in the job market


Reduced poverty and dependency

Training people over the next 5 years through the EPWP process to become employable in the job market

Intensify EPWP participation at JM

The Market of the Future development as captured in the CoJ IDP aims at refining the JM and its systems to full world-class compliant facilities within which previously disadvantaged individuals can fully participate.

The strategic objectives are aimed at the following practical outcomes:

All the other strategic projects are linked as support projects and programmes to enable the MotF to be activated and operated seamlessly into its new environment from the current and to ensure its long-term sustainability.


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Joburg Market (JM) will in developing the Market of the Future (MotF) be the first Municipal owned market on the globe to serve according to a new fresh produce trading model acceptable to all categories of clients.

The sub programmes within the Market of the Future are an integral part of the economic transformation programme, which will enable the following:

- Emerging farmers, emerging agents and emerging traders will be able to conduct business with large corporate companies in South Africa and SADC from the premises.

- These trading opportunities will be enabled by the integrated distribution chain created through new services offered by MotF.

- Will develop a new generation of young entrepreneurs in fresh produce trading in fully compliant facilities, participating in mainstream business opportunities.

- The development of additional high quality facilities on the vacant land will enable large business to establish efficient distribution centres closer to the new generation of entrepreneurs.

- The concentration of more food related businesses on the market site will enable the exponential growth of the Foodbank and will form a crucial part of efforts to fight hunger in the City.

SECTION 3:

CHAIRPERSON’S FOREWORD

The Joburg Market is an organisation in transformation. Revisiting the methodologies of operations and refining its systems underlines the vital ‘DNA’ redesign as part of its new focus representing the hallmark of the newly created market environment.


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The redesign embodies the thrust to ensure participation by the previously disadvantaged across the agricultural value chain. In short, more and more emerging farmers must be assisted to achieve fully-fledged sustainable farming enterprises. A key outcome for emerging agents and traders must be that they are enabled to trade with large corporates in the food services and distribution logistics chain.

JM will continue to seek the co-operation of key stakeholders in the fresh produce industry to forge partnerships facilitating the establishment of a healthy fresh produce sector, representative of the people of this country.

A vital objective of the MotF is to ensure food security to the citizens of Johannesburg. JM serves as a physical enabler of the CoJ food security plan. Over the past months, great strides were made in amongst others. The exceptional growth of the Foodbank as well as execution of SLA’s with CoJ: Human Development and the Pikitup Food for Waste programmes.

A number of natural disasters severely affected the production of fresh produce. In the North West Province up to R100 mil. of crop damages were suffered due to hail storms. A similar situation materialized in the Cape fruit production areas. In the Western Cape, work stoppages and protest action resulted in lower fruit harvest.

These incidents caused substantial increases in produce prices. In the circumstances, I would like to thank every fresh produce producer for the continued efforts to keep our markets stocked with suitable quantities of fresh produce. In these difficult times, I would like to assure you of our well wishes and sincerely hoping that all producers will be able to overcome their setbacks.

I would further like to extend the Boards’ sincere gratitude to the Agents, Wholesalers and Traders who worked tirelessly to serve the large client base, resulting in the efficient distribution of fresh produce.

JM remains the fastest growing market in Africa/SADC. Looking back at the midyear review stage, I would like to commend management and staff of JM for their contributions, commitment and the sound market management practices, which ensured a healthy and sustainable business.

I would like to convey the Board’s best wishes towards all our stakeholders for the year 2014. May our mutual endeavours be rewarded with success and may all our undertakings grow from strength to strength.

__________________________Mpumi MpofuChairperson: Board of Directors.

SECTION 4:

CHIEF EXECUTIVE OFFICER’S (“CEO”) REPORT

The mid-year review coincides with the summer fruit season. In relation to the same period the previous year, the prices of fruit and other basic commodities like potatoes have escalated strongly. The latter is attributable to adverse weather conditions being experienced in a number of production areas. As a consequence, overall prices outperformed budgeted prices by 14.12%, and 18% respectively in the second quarter.


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The impact of such sharp price increases adversely affected the consumer and the small entrepreneur trading in such commodities.

The small traders has limited funds available to buy and resell during times of high prices. The trader would therefore have to introduce measures enabling him/her to continue trading. A first response is inter alia to trade in fewer lines of commodities, which unfortunately affect the competitiveness of the trading stall where the end consumer cannot access the entire basket of required commodities. The higher prices also affected wholesalers serving the food services industry. Strong resistance was experienced especially from restaurants and caterers against price hikes wholesalers had to introduce.

The substantial growth in relation to other conventional markets is indicative of a sustained good level of trust amongst producers and traders in the services of JM.

With the dedication of managers and staff shown towards business optimization and cost control, the company was able to achieve a net surplus of R37.9 mil. The latter result exceeded the budgeted surplus by R21.2 mil.

Closely linked to this result is the ability of the entity to save on interest charges. Such savings amounted to a figure of R4.3 mil.

The effort to improve the fabric of the Market, which was constructed during 1975, is also reaping results. Following intensive evaluations, preventative maintenance programmes were rolled out. Contractors have been appointed and whilst it would still require a period of time to show more visible results, management is confident that it will achieve the targets set in this regard.

The laboratory of the entity now conducts analysis as accredited facility according to world food standards, which presents the achievement of an important milestone towards the services to be rendered within the Market of the Future concept.

____________________________Simangele SekgobelaChief Executive Officer

CHAPTER TWO: PERFORMANCE HIGHLIGHTS

SECTION 1:

HIGHLIGHTS AND ACHIEVEMENTS


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The entity is able to report a bottom line surplus of R37.9 mil. at the conclusion of the second quarter of 2013/14. The surplus recorded exceeds the budgeted surplus of R16.7 mil. by R21.2 mil.

A major contributor to this phenomenon is the sharp increase in the prices of commodities during the period under assessment. For instance, the overall rand per ton return rate increased at a growth rate of 7.1 percent in comparison to the growth rate during the comparable period in 2012/13. In the latter regard, the budget was exceeded by 10.4 percent.

October each year marks the month in which the best sales are recorded. During October 2013, an all-time record was achieved with a day record turnover an R29.7 mil. Significantly, during this period was the ability to also sustain high volumes of produce throughput and Joburg Market displayed a growth of 6.4 percent in mass sold in relation to the previous year. All other comparable fresh produce markets recorded negative growth in mass throughput

Relevant to operational development, the company was able once again to maintain its HACCP accreditation of its ripening facilities, which implies the maintenance of a worldwide-utilized food-handling standard at this specific centre within the market premises.

The entity was also able to sustain the improved growth in supplies from emerging producers to achieve 4.97 percent in market share at the conclusion of the mid-year.

In similar fashion, emerging agents increased their growth in turnover to 5.2 percent. In past years, their share was relatively static for a substantial period under 2 percent but the past fiscal year was closed at a 7 percent share.

The Joburg Market remains a dominant and growing player in market share of all produce markets in the country. The market is growing much faster than its counter parts.

The following Board of Director’s approvals and support was obtained:

Approval of high-level Organisational structure Critical appointments were filled (Company Secretary and Legal Advisor) BEE Support policy on Market Agents were approved IT and HR policies and procedures were approved Alignment of conditions of service with that of CoJ

The company was also able to increase the number of donations towards NGOs and indigent families. A record number of donations were done during the period under review, which indicates a growth of 2384 percent at the conclusion of the mid-term period.

Impediments

During the first half of the financial year, the company also faced a number of challenges.

The lack of sufficient floor space creates a barrier for the establishment of emerging market agents. The MotF development will create 40% more floor space to alleviate these challenges.


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The roll out of four fresh hubs was delayed because of insufficient responses by tenderers. This delay will be addressed by a focus group during the remainder of 2013/14 to achieve the targets set in this regard.

The company experienced technical difficulties to expense its targeted CAPEX as captured in the SDBIP. It became apparent that from a legislative compliance perspective a mid-year review report would be required to enable CAPEX spent on the MotF. In order to achieve full expenditure the company has concluded all preparatory work. The latter will enable timeous spent once the mid-year adjustments are formally approved.

Maintenance of the market facilities remains an important challenge and technical teams experienced substantial pressure to keep up the various installations and facilities of the entity.

The new preventative maintenance plan will start to display greater impact during the latter half of the 2013/14 fiscal year.

Plan of action to achieve overall targets:

The company has provided for the following interventions to ensure overall achievement of all its targets.

No.

Action plan / Intervention Due date

1 Population of remaining critical senior positions 28 February 20142 Implementation of Phase 1 of the new company structure 28 February 20143 CAPEX Forum established to monitor and assist with CAPEX

implementation as per SDBIPMonthly, fully expensed by 31 July 2014.

4 Focussed projects: Task team for mobile markets deployment in PDA’s for achieving delivery of all units as per SDBIP

31 July 2014

SECTION 2:

PERFORMANCE AGAINST IDP AND CITY SCORECARD

Presented below is the Company’s performance as measured against targets set in the approved business plan and its scorecard imperatives. The entity achieved 75% of KPI’s which were due for achievement.


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2.1 KPI: MotF Construction Planning – Number of Plans / specifications is prepared

PeriodUnit of measur

e

Base-line Q1 Q2 Q3 Q4 YTD

Target 13/14 No.New 1 x

Study1 x Spec

1 x Tender

1 x Spec

4 Documents

Actual No. 1 12 Documents

Achieved XNot AchievedExceeded

Project/programme leader: Sello MakhubelaThe company achieved the target. The tender specification was concluded.

2.2 KPI: No of IT Infrastructure plans developed for support of MotF


e


Target 13/14 No. New 0 1 Plan 1 Plan 1 Plan 3 PlansActual No. 0 1 Plan 1 PlanAchieved XNot AchievedExceeded

Project/programme leader: Billy VorsterThe entity achieved the target.

2.3 KPI: No. of phases for one Business Continuation plan for JM during MotF construction phases


e


Target 13/14 No. New 0 0 Phase 1

Phase 2 2 Phases

Actual No. 0 0 0AchievedNot AchievedExceeded

Project/programme leader: Marius PietersThe KPI is not due for the Midyear (Q2)

2.4 KPI: Emerging Agents Growth – Achieved target turnover (R/M)


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PeriodUnit of measure


Target 13/14 R/M (Cum)

200 50 100 150 200 200

Actual R/M (Cum) 42 114 114

Achieved XNot AchievedExceeded X

Project/programme leader: Charles ParkThe entity achieved and exceeded the target.Disclosure: The Q1 target was forecasted at R59.3M. The Actual data is R42M. The actual figure is incorporated.

2.5 KPI: Emerging Farmers – Number of Farmers Local Gap Compliant


e


Target 13/14 No. (Cum)

New 0 0 2 5 5

Actual No. (Cum) 0 0 0

AchievedNot AchievedExceeded

Project/programme leader: Charles ParkThe target is not due for achievement during Q2

[Local Gap – The European Union has a food handling standard called “EUROGAP”. The need was identified to create a South African standard called “Local GAP”. Especially small-scale farmers will benefit from the standard, as it will enable them to participate in mainstream trading with large corporates and the food services industry.]

2.6 KPI: Food Safety – Number of traceability programmes in place


e



New 0 0 0 1 1



Project/programme leader: Craig PillayThe target is not due for achievement during Q2


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2.7 KPI: Business Excellence – Market Share in relation to other FPM’S.Project/programme leader: Charles Hamilton

Disclosure: The Q1 and Q2 results are forecasted as the National statistics are provided by the relevant authority after the closure of each quarter.The Company achieved and exceeded the target.Disclosure: The Q1 data was based on forecasts and the correct forecasts R/c value is included under Q1.

2.8 KPI: Market Turnover – Turnover achieved by JM on sales

Period Unit of measure


Target 13/14 R/C (Cum)

4.90BN 1.20BN 2.50BN

3.90BN

5.30BN 5.30BN

Actual R/C (Cum) 1.29BN 1.44B

N 1.44BN


Project/programme leader: Charles ParkThe Company achieved and exceeded the target.

2.9 KPI: Budget Management – R/M Surplus achieved vs budgeted surplus


e


Target 13/14 R/C (Cum)

≥0 ≥0 ≥0 ≥0 ≥0 ≥0

Actual R/C (Cum) 11.5m 37.9M 37.9M



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Target 13/14 % 37.5 38.0 38.20 38.4 38.75 38.34

Target Abs value

R/c*AN=R4BN

1.08BN 2.47BN 3.87BN 4.93BN 4.93BN

*P/Q=R1M 1.08BN 1.39BN 1.40BN 1.06BN 4.93BNActual % 39.0 39.2 39.1Actual Abs value

R/c 1.08BN 1.27BN 1.18BN

Achieved X * AN = Annual data (Cum)* P/Q = Quarterly data

Not AchievedExceeded X

Project/programme leader: Bafana DhlaminiThe entity achieved and exceeded the target.

2.10 KPI: Clean Audit – Achievement of a clean audit finding


e



Yes Yes Yes Yes Yes Yes

Actual No. (Cum) Yes Yes Yes


Project/programme leader: Bafana DhlaminiThe internal controls of the company are on track to achieve a clean audit.

2.11 KPI: Collection Levels - % of billing collected Project/programme leader: Bafana Dlamini

Disclosure: During Q1, the data was forecasted. The adjustment for Q1 is reflected in the table above.The entity did not achieve the target.Current situation: The late payment by a few large debtors affects the collection rate.Mitigation action: The entity is interacting with its debtors through both focussed attendance to late paying debtors as well as dealing with tenants on lease payments in general.

2.12 KPI: Cashiering – Research user trend and implementation plan


e


Target 13/14 No. New 0 0 0 1 1Actual No. 0 0 0Achieved


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e


Target 13/14 % (Cum) New 95% 95% 95% 95% 95%

Target Abs valueR/C (Cum) R11.1M R22.2M

R29.8M R40.4M R40.4M

Actual % (Cum) 78% 91% 91%

Actual Abs valueR/C (Cum) R9.77M R20.857M R20.857M

AchievedNot Achieved XExceeded

Not AchievedExceeded

Project/programme leader: Bafana DhlaminiThe target is not due for achievement in Q2

2.13 KPI: Supply Chain – A paperless system for SCM approvals implemented


e



New 0 0 0 1 1



Project/programme leader: Bafana DhlaminiThe target is not due for achievement during Q2

2.14 KPI: Succession Plan – Plan in place for continuity in all key positions Project/programme leader: Thuli Nkosi

The entity did not achieve the target.Current Situation: The implementation of a new company structure was delayed.Mitigating Measures: The new company structure phase 1 will be implemented during February 2014. The succession plan drafting will be fast tracked upon implementation of the structure.

2.15 KPI: Filling vacancies – Average number calendar days to fill vacanciesProject/programme leader: Thuli Nkosi


e



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e


Target 13/14 % (Cum) New 0 50 100 100 100

Target Abs value No. 01/2 Plan

3/4 Plan

1 Plan 1 Plan

Actual % (Cum) 0 0 0Actual Abs value No. 0 0 0AchievedNot Achieved XExceeded

Target 13/14No. Days (Cum)

New0 90 90 90 90

ActualNo. Days (Cum)

0 58 58


The entity achieved and exceeded the target.

2.16 KPI: Staff up Skilling (Phase 1) – MotF training plan developed and implemented (75 Candidates)Project/programme leader: Thuli Nkosi

The entity achieved and exceeded the target.

2.17 KPI: Information Distribution promoted – Number of training sessions provided to traders



Target 13/14 No. (Cum) 0 30 50 80 80



Project/programme leader: Wandile MasoekThe entity did not achieve the target.Situation Analysis: Traders do not want training during peak trading months (Oct. – Dec.)Actions to mitigate: The entity’s marketing team will establish a smaller trader’s support workgroup to catch up on all training targets during Q3 and Q4.


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e


Target 13/14 % (Cum) New 0 30 70 100 100Target Abs Value No. 0 22.5 52.5 75 75Actual % (Cum) 0 70.7 70.6Actual Abs No. 0 53 53Achieved X

Not Achieved

Exceeded X

2.18 KPI: Satisfaction Index – Result from independent study


e


Target 13/14 Index 46 point 0 0 0 50

points 50 points

Actual Index 0 0 0AchievedNot AchievedExceeded

Project/programme leader: Wandile MasoekThe target is not due for achievement during Q2

2.19 KPI: SHE Legislative Compliance – Number of Compliance checklists / action lists completed


e



New 1 2 3 - 3



Project/programme leader: Charles HamiltonThe company achieved the target

2.20 KPI: Occupational Health and Safety – Reduction in number of injuries


e



New 5 10 20 55 55



Project/programme leader: Charles HamiltonThe entity achieved and exceeded the target

2.21 KPI: Bylaw enforcement – number of fines issuedPeriod Unit of Base- Q1 Q2 Q3 Q4 YTD


23

measure

line


New ≤ 75 ≤90 ≤180 ≤300 ≤300



Project/programme leader: Charles HamiltonThe company did not achieve the targetSituation Analysis: Due to intensified bylaw application during the high alert season, a large number of transgressions were observed and fines issued accordingly.Actions to mitigate: The entity will be introducing a compliance drive in a public friendly programme to nurture stakeholder support and refine awareness of Market rules.

2.22 KPI: Food Security - Plan and Execute the Food Summit


e


Target 13/14 No. New 0 0 1 0 1Actual No. 0 0 0AchievedNot AchievedExceeded

Project/programme leader: Wandile MasoekThe target is not due for achievement during Q2

2.23 KPI: Donations: Numbers of Donations done to NGO’s and indigent beneficiaries.


e



550 400 450 475 550 550

Actual No. (Cum) 7346 13667 13667


Project/programme leader: Charles HamiltonThe entity achieved and exceeded the target by 2384%.


24

2.24 KPI: Increase throughput: Increase in product on offer – No of tons of produce processed through SPS (Cum)




1087 300 605 907 1188 1188

Actual No. (Cum) 329 655 655


Project/programme leader: Charles ParkThe entity achieved and exceeded the target.

2.25 KPI: Transformation: Change Management – No. of plans for phase 1 implemented.Project/programme leader: Thuli Nkosi

The entity did not achieve the target.Current situation: The final transformation plan will serve with Board during February 2014.Mitigation measure: The change management plan will then be implemented as per the scorecard breakdown. A task team will be established to facilitate the arrears in achieving the plan.

2.26 KPI: Employee Equity Plan - % of plan implementedProject/programme leader: Thuli Nkosi


25



Target 13/14 % (Cum) New 0 30 60 100 100

Target Abs valueNo. (Cum)

00.3 of plan

0.6 of plan

1 complete plan

1 complete plan

Actual % (Cum) 0 0 0

Actual Abs valueNo. (Cum)

0 0 0


The entity achieved the target.

2.27 KPI: Support for people with disabilities – No of people with disabilities employed


e



6 6 6 7 8 8



Project/programme leader: Thuli NkosiThe entity achieved the target.However intensified efforts are being employed to enable appointment of more people with disabilities.

2.28 KPI: BEE Supplier Support – BEE portion of total procurement spentProject/programme leader: Thivu Mbedzi

The entity achieved and exceeded the target for the BEE portion.Disclosure : (1) During Q1 the target was incorrectly indicated as R 25.5 mil.. The correct data is R2.5M. (2) the correct baseline is 24.4M.Disclosure: The R/c targets for Q1 and Q2 are subject to confirmation as the entity is revisiting the National Treasury guideline to ensure full compliance.


26


e


Target 13/14 % 97 0 100 100 100 100Target Abs value No. 0 1 Plan 1 Plan 1 Plan 1 PlanActual % 0 100 100Actual Abs value No. 0 1 Plan 1 PlanAchieved XNot AchievedExceeded



Target 13/14 % 112 100 100 100 100 100Target Abs value R/C 24.4M 2.5M 2.5M 46.5M 49.0M 25.1MActual % 0 110 110Actual Abs value R/C 0 0.9K 0.9KAchieved XNot AchievedExceeded X

SECTION 3:

AMOUNTS OWED BY JOBURG MARKET FOR SERVICE CHARGES

The company has accrued an amount of R15.5m for utility account payments in abeyance of service accounts to be rendered an evaluated. The company also do not hold any outstanding accounts with any organ of state

SECTION 4:

STATEMENT ON AMOUNTS OWED BY GOVERNMENT DEPARTMENTS AND PUBLIC ENTITIES

The company is not owed any amounts by government departments or public entities.

SECTION 5:

PLANS FOR THE NEXT COMING SIX MONTHS

The company will focus on the following activities during the forthcoming six months:

• Conclusion of the final design of the Market of the Future project

• Finalization of a comprehensive transformation policy

• Establishment of one further emerging market agents

• Roll out of four fresh produce hubs in previously disadvantaged areas

• Roll out of the JM high level organizational structure

• Finalization of a comprehensive food security strategy

• Intensification of the company facilities maintenance programme

• Continuation with the programme to increase the scope of the laboratory accreditation

• 120 Years celebration


27


28

CHAPTER THREE: DIRECTORS’S REPORT AND GOVERNANCE

SECTION 1:

CORPORATE GOVERNANCE STATEMENT

The Board of Directors and the Executive Committee of the Company acknowledge that good governance is essentially about effective leadership. This is attained through implementing the principles of transparency, integrity and accountability. This process requires the Board of Directors and management to define strategies that will provide direction and establish the ethics and values that will influence and guide practices and behaviour with regard to sustainable performance. In turn, this would provide greater assurance to shareholders, as well as providing stakeholders with greater assurance that the Company is being ethically managed within prudent risk parameters in compliance with generally accepted corporate practices.

The release of the King III Code on Good Corporate Governance has broadened the scope of corporate governance with its core philosophy revolving around leadership, sustainability and corporate citizenship. Sustainability is now the primary moral and economic imperative and it is one of the most important sources of both opportunities and risks for businesses. Nature, society and business are interconnected in complex ways that need to be understood by decision makers.

The Audit and Risk Committee, in accordance with its mandate, monitors the Company’s compliance with legislation and National Treasury Regulations. King III standards of governance are also being pursued and development towards compliance is constantly evaluated. The Company complied during the financial year under review and timeously submitted its Quarterly Legislative Compliance Report to the Group Governance for tabling at the respective Mayoral Committee meeting. The Legal and Legislative compliance testing session will be conducted during the 3rd Quarter of 2013/2014.

The Company has lodged its annual return and all such returns as required in terms of the Companies Act of 2008 with the Registrar of Companies and is, to the best of knowledge and belief, true, correct, and up to date.


29

SECTION 2:

BOARD OF DIRECTORS

Attendance at meetings held during the half-year was as follows:Membership ARC Board HRC Remco SDC SE

Number of meetings during the period 63 Ordinary3 Special

72 Ordinary5 Special

5 1 2 1

Non- Executive DirectorsMpofu Nompumelelo Board (Chair) - 7 - - - -Maesela Patrick Board, HRC, SDC - 6 5 - 2 -Mbedzi Silas ARC, Board, HRC, Remco 5 6 5 1 - -Morokolo Matome Board ,HRC, SDC - 6 4 1 2 -Ngqangweni Simphiwe (resigned 13 Aug ’13) Board, SE - 0 - - 0 0Netshiswinzhe Bethuel Board, SDC - 0 - - 0 -Singh Nadira ARC (Chair), Board, Remco 4 5 - 0 - -Tselane Terry Board, SDC, SE - 2 - - 1 1Zulu Ethel Board, HRC, SDC, SE - 6 3 - 2 1Independent Audit Committee MembersTheunissen Rob ARC 4 0 0 0 0 0Sanangura Cleopas ARC 5 0 0 0 0 0Moodley Poovandren ARC 5 0 0 0 0 0Executive DirectorsSekgobela Simangele 3 7 4 - 2 1Dhlamini Bafana 5 6 4 - 2 1

Legend: ARC= Audit & Risk Committee; Board = Board of Directors; HRC= Human Resources Committee; Remco=Remuneration Committee; SDC = Service Delivery Committee; SE = Social and Ethics Committee

Joburg Market - Celebrating 120 years of freshness 30

SECTION 3:

BOARD COMMITTEES

The Board of Directors has four sub-committees namely: the Audit and Risk Committee, the Remuneration Committee, the Service Delivery Committee and the Social and Ethics Committee. All committees are properly constituted and mandated and comprise of the members of the Board of Directors and or Independent Members.The Board in addition appointed a Task Team to deal with Legal Legacy matters.

At the reporting date the Board of Directors, consist of ten members 8 non-Executive and 2 Executive Directors. The Board of Directors are listed in the table above. The Board of Directors, collectively, has the following duties:

act in good faith by acting as a collective and refraining from acting in an individual capacity; act within the scope of their authority; execute their fiduciary duties in a bona fide manner; and exercise their duties with due care, diligence and skill.

The Board of Directors is responsible for ensuring the continued success of the Company and is guided by its charter. The Board of Directors are the link between management and stakeholders. The Board of Directors appreciate that strategy, risk, performance and sustainability are inseparable and to give effect to this by:

contributing to and approving the strategy; satisfying itself that the strategy and business plans do not give rise to risks that have not been

thoroughly assessed by management; identifying key performance and risk areas; ensuring that the strategy will result in sustainable outcomes; and considering sustainability as a business opportunity, that guides strategy formulation.

The Board of Directors inform and approve the Company’s strategy and satisfy itself that the business plan is not encumbered by unexamined risks.

Audit and Risk Committee

The Audit and Risk Committee consists of the following Non-Executive Directors and Independent Members:

Nadira Singh (Chairperson, Non-Executive Director); Silas Mbedzi (Non-Executive Director) Poovan Moodley (Independent Audit Committee Member) Rob Theunissen (Independent Audit Committee Member) Cleopas Sanangura (Independent Audit Committee Member)


The role of the Audit and Risk Committee is to assist the Board of Directors by performing an objective and independent review of the functioning of the Company’s finance, accounting control mechanisms and risk management. The Audit and Risk Committee exercises its functions through close liaison and communication with the Internal and External Auditors.

The Audit and Risk Committee operates in accordance with an Audit and Risk Charter authorised by the Board of Directors and assists the Board of Directors with regard to:

ensuring compliance with applicable legislation and the requirements of regulatory authorities; matters relating to financial accounting, accounting policies, reporting and disclosures; internal and external audit policy; activities, scope, adequacy and effectiveness of the internal audit function and audit plans; review/ approval of external audit plans, findings, problems, reports and fees; compliance with code of ethics; and monitoring of risk in terms of the COJ risk standards and policy.

The Audit and Risk Committee executed its responsibilities properly in terms of the Audit and Risk Charter during the financial year under review. The Audit and Risk Committee has reviewed and considered the Annual Financial Statements without management or the external auditors being present. The Audit and Risk Committee subsequently recommended the approval the Annual Financial Statements to the Board for approval.

The Board of Directors and the Audit and Risk Committee consider the Annual Financial Statements of the Company to be a fair presentation of the Company’s financial position.

Remuneration Committee

The Remuneration Committee consists of the following Non-Executive Directors: Silas Mbedzi (Chairperson) Matome Morokolo (Non -Executive Director) Nompumelelo Mpofu (Non – Executive Director) Terry Tselane (Non-Executive Director) Nadira Singh (Non-Executive Director)

The Remuneration Committee advises the Board of Directors on remuneration policies, remuneration packages and other terms of employment for all Directors and Senior Executives. Its specific terms of reference also include recommendations to the Board of Directors on matters relating inter alia, general policy remuneration, surplus bonuses, Executive remuneration, Director’s remuneration and fees, service contracts, and retirement funds.

Evaluations to conduct:

- Alignment of employment conditions to that of CoJ- Redrafting of HR policies- Analysys of the pension fund and alignment to CoJ- Assessment of remuneration elements in packages payable to members of staff


Human Resource Committee

The Service Delivery Committee consisted of the following non-executive directors:

Mr M. Morokolo (non-executive director and chairperson)Dr S. Ngqangweni (non-executive director) Dr P. Maesela (non-executive director)Ms E. Zulu (non-executive)

The Service Delivery Committee was established to guide and assist the Board with its oversight and monitoring of the mandate of the service delivery agreement of the Shareholder. This includes overseeing and directing the development of strategy in view of economic developments affecting the fresh produce industry, increased competition and market requirements and the development of new requirements for food safety, quality and security.

The Service Delivery Committee is responsible for reviewing the organisational needs and objectives in line with the Company’s mission and /or goals in the functional areas of marketing and communications strategy operations adequacy within the market environment, information services / technology support to the Company and strategic planning and alignment with shareholders.

The committee conducted the following during the year to date:

- The refinement of the scorecards of the executive and its linkage to the company scorecard

- Conducted evaluation of senior and executive staff performance assessments

- Standardization evaluations of CoJ processes- Development of a new corporate structure

Service Delivery Committee

The Service Delivery Committee consists of the following Non-Executive Directors: Matome Morokolo (Chairperson) Terry Tselane (Non-Executive Director) Ethel Zulu (Non-Executive Director) Patrick Maesela (Non-Executive Director) Bethuel Netshiswinzhe (Non-Executive Director)

The Service Delivery Committee was established with the role of guiding and assisting the Board of Directors to ensure strategy fits into the thrusts of the Service Delivery Agreement, directing and guiding the Company in terms of strategy and policy formulation and guiding the Company on alignment of resources in relation to implementation of strategic objectives. This includes overseeing


and directing the development of the enterprise strategy in view of economic developments affecting the fresh produce industry, increase competition and market requirements and increase requirements in investment of food quality and security. The Service Delivery Committee met twice in the period under review. The Service Delivery Committee is responsible for reviewing the organisational needs and Objectives in line with the Company’s mission and/or goals in the following functional areas:

Marketing and communications strategy; Operations adequacy within the market environment; Information Technology (IT) support to the Company; and Strategic planning and alignment with shareholders.

The committee focussed on the following activities:

- The committee continued to consider project/programmes progress- Monitoring and directing the implementation of MotF- Consideration of the Food Security Strategy for JM and its integration into CoJ projects- Served as lead committee for the finalization of a transformation strategy for JM

Social and Ethics Committee

The Social and Ethics Committee consists of the following Non-Executive Directors:

Terry Tselane (Chairperson) Ethel Zulu (Non-Executive Director) Simphiwe Ngqangweni (Non-Executive Director) Chief Executive Officer (ex officio)

The functions of the Committee are summarized as follows:

- Social and economic development, including the company’s standing in terms of the goals and purposes of:

o The ten principles set out in the United Nations Global Compact Principles, o The OECD recommendations regarding corruption,o The Employment Equity Act, ando The Broad-Based Black Economic Empowerment Act

- Good corporate citizenship, including the Company’s:

o Promotion of equality, prevention of unfair discrimination, and reduction of corruption,o Contribution to development of the communities in which its activities are predominantly

conducted or within which its products or services are predominantly marketed, and record of sponsorship, donations and charitable giving;

o The environment, health and public safety, including the impact of the Company’s activities and of its products or services;

o Consumer relationships, including the Company’s advertising, public relations and labour and employment, including;


The Company’s standing in terms of the International Labour Organization Protocol on work and working conditions

The Company’s employment relationships, and its contribution toward the educational development of its employees;

o To draw matters within its mandate to the attention of the board as occasion requires; ando To report, through its Chairperson or a member delegated by the Chairperson one, to

shareholders at the Company’s Annual General Meeting on the matters within its mandate.

The committee considered the following matters:

- The drafting of an ethics framework for the company- Consideration of key inputs into a transformation strategy for JM- Directing the legal / legislative and code compliance testing for 2013/14 relevant to the entity.

SECTION 4:

DIRECTOR’S REMUNERATION

Non-Executive Directors Remuneration

Mid-Year YTDName Meeting Fee Other TOTAL Meeting Fee Other Retainer TOTALRob Theunissen 29,760 - 29,760 29,760 - 19,840 49,600Nadira Singh 108,138 - 108,138 108,138 - 19,840 127,978Matome Morokolo 89,298 - 89,298 89,298 - 19,840 109,138Simphiwe Ngqangweni - - - - - 19,840 19,840Rosalie Manning - - - - - 14,880 14,880Cleopas Sanangura 29,760 - 29,760 29,760 - 19,840 49,600Ethel Zulu 75,412 - 75,412 75,412 - 19,840 95,252Poovandren Moodley 29,760 - 29,760 29,760 - 19,840 49,600Terry Tselane 39,692 - 39,692 39,692 - 19,840 59,532Nompumelelo Mpofu 134,912 - 134,912 134,912 - 39,675 174,587Silas Mbedzi 138,896 - 138,896 138,896 - 19,840 158,736Patrick Maesela 81,370 - 81,370 81,370 - 19,840 101,210

756,998 - 756,998 756,998 - 252,955 1,009,953


Executive Remuneration

Mid – Year YTD

Position Basic

Allowances & Contributions Total Basic

Allowances & Contributions Bonus Total

COO (resigned 31 Aug ’13)

196,613

190,713

387,326

196,613

190,713

217,525

604,851

HR Exec487,733

53,767

541,500

487,733

53,767

541,500

CFO536,595

85,204

621,799

536,595

85,204

621,799

CEO756,737

130,638

887,375

756,737

130,638

887,375

Acting COO211,320

70,458

281,777

211,320

70,458

281,777

SECTION 5:

BOARD OF DIRECTOR’S: CORPORATE GOVERNANCE

Ms T Melk was appointed as Company Secretary on 1 July 2013.

Accountability Statement

The following principles shape the accountabilities and duties of members of the Board of Directors of JM:

The Board’s responsibility is to provide strategic guidance and oversight over the entity’s performance.

The Board is committed to establishing and maintaining well-developed governance processes, which includes policies of the Shareholder, MFMA, Companies Act and the provisions of King III.

The JM Terms of Reference for the Board of Directors, the mandates of the Board Committees, the Board’s policies, and the accountability statement for Directors, form the cornerstones of the Board’s governance system.

Knowledge, Skills and Expertise


• Each Director will be familiar with the Board Terms of Reference, the mandate of the Committees on which he/she serves, the Board’s policies, and other key documents that form part of the Board’s corporate governance system as provided for by the Shareholder

• Each Director will be well informed on the major affairs and operations of the Company and the economic and political environment, in which it operates, with a particular emphasis on those elements that fall within the mandate of any Board Committee of which he/she is a member.

Personal Qualities

• Each Director will foster and promote the integrity of the Board and a culture where the Board works for the long-term benefit of the Company and its Shareholder.

• Directors are selected for their integrity and character, sound and independent judgment, breadth of experience, insight and knowledge, and business acumen. Directors are expected to bring these personal qualities to their role as a JM Director and apply sound business judgment to help the Board make wise decisions and provide thoughtful and informed counsel to senior management.

Integrity

• Directors are expected to possess and demonstrate the highest personal and professional integrity at all times, to adhere, in letter and spirit, to the relevant CoJ code of conduct and participate in the compliance program along with all officers, employees and independent contractors.

Compliance with Board Policies

• The Board maintains written policies that address a number of subjects, including matters pertaining to the operations of the Entity, Conflict of Interest, and a code of ethics. It is each Director’s individual accountability to ensure their adherence to these policies in both letter and spirit.

Participation in Board & Committee Meetings

• Directors are expected to demonstrate their commitment to the Board through preparation for and participation in Board and Committee meetings.

• Board meeting dates will be established sufficiently in advance (at least one year and longer if practical) to minimize conflict with other commitments on Directors’ schedules. Directors are accordingly expected to make every reasonable effort to attend all meetings of the Board and its Committees.

• Board and Committee agendas and reports are provided to Directors in advance of all Board and Committee meetings. Directors are expected to have reviewed these materials prior to


attendance at Board and Committee meetings, and are expected to be prepared to engage in meaningful discussion and provide considered, constructive and thoughtful feedback and commentary at meetings, expressing opinions and asking questions to enable the Board to exercise its best business judgment in decision making and advising management.

While the Board does not restrict the number of public company boards that a Director may serve on, each Director should ensure that he or she is able to devote sufficient time and energy to carrying out their duties effectively

SECTION 6:

RISK MANAGEMENT AND INTERNAL CONTROLS

In line with the risks standards set by the CoJ the entity continued to refine its risk management programme. Such risk management programmes are executed in terms of Sections 62 (C) and 95 (C) of the MFMA.

In addition to independent risk, assessments and valuations conducted by JRAS the Audit& Risk Committee of the company conducts oversight of all matters of risk and through the expertise represented on the committee provides guidance to the entity in respect of risk mitigating controls.

During the period under review, the Board of Directors monitored the execution of the following risk policy documents, which are all aligned to the CoJ Risk Standards Manual:

• Risk policy• Fleet Risk policy• Risk appetite assessment• Fraud prevention policy• Code of ethics and ethics framework

The strategic risk register was duly updated during the first half of the fiscal year

The top 7 risks of the company are as follows:-

RISK MITIGATING MEASURESAgeing infrastructure Introduction of the MotF conceptLitigation (commercial) Expert advisorsFood security Serve as physical enabler of CoJ food security

programmeTransformation is developing an unique transformation

programmeTurnover in senior staff core has developed a new corporate structure and

succession planPotential fraud /corruption in trading practices Review of bylaws and development of SLA with


agentsAlternative Market mechanisms has developed and tested an electronic trading

system for web-based trading.

Risk activity report

The entity participated in the following risk management activities:

DATE ITEM/EVENT PURPOSE VENUE PARTICIPANTS

Oct-Dec 2013

In-house

Operational risk management trainingTraining on JM insurance incidentsTraining on COID incidents

Staff

October 2013

COJ:Chief Risk

Compliance Officer Forum

Finalising Terms Of Reference & accepted proposed changes(MOEs/Departments of CoJ)

Metro CentreMunicipal Entities & Departments’ Risk

Managers

November 2013

GRCMReporting to the Group Risk Committee. Presentations by various departments

Thuso house (Shangrilla boardroom)

Municipal Entities; Departments Executives

October 2013

Annual Insurance

Presentation

Annual insurance presentation conducted by Sipho Makhanya - (CRO Acting)

Manco

November 2013

Underwriting Survey

Survey of physical risksConducted by Clive Mortimer appointed

by Marsh

November 2013

Underwriting Survey (Infrared

Services)Survey of electrical installation risks

Conducted by Carla de Sena & Service Provider appointed by Marsh and CoJ

JRAS and Maintenance;

Electrician

December 2013

Quarterly Motor Fleet meeting

Extensive meeting in motor fleet risk control measures

Indwe Risk Services - Constantia

Park

Indwe Risk Services; COJ

(JRAS); MOEs and Departments

Oct-Dec 2013

Cost Recovery Motor Fleet

Indwe Risk fully compensated for the loss of the Mercedes Benz Viano. Amount recovered R435,483.60 (market value)

JRASIndwe Risk


Risk Register

The updated Risk Register of the entity is depicted in the risk register below:

Risk Assessment

Ref Objectives Risk CategoryRisk

Descrip-tion

Back-ground to the risk Impact Like-

lihood

In-herent Risk

Current controls

Control Effec-tive-

ness

Re-sidual risk

Im-pact

Like-lihood

Risk Owner

Actions to improve manage-

ment of the risk

Action Owner

Time scale

1

Food Security Programme:

A continuous and adequate supply of suitable quality fresh produce at

reasonable prices availed through

compliant facilities

Financial Cashflow risks

Ageing infra-structure;Increasing operational costs;Insufficient revenue collections;Lack of diversified trading options andAbuse of proxy-sales

Major 4 Likely 4

Ambe

r

16 Fraud investiga-tions;Internal audit reviews;Agency manage-ment andOther monitoring activities

Fair 0.75

Ambe

r

12 4 3 CEO Market of the future project (which was approved) will upon imple-mentation minimise most of the risks

COO Aug. 2014

2 Financial Litigation risk

Non-compliance to SCM policies;Poor handling of food handling procedures;Insufficient controls

Major 4 Possible 3

Ambe

r

12 Market bylaws; Business upgrades;Segre-gation of duties;Com-pliance audit reviews;

Fair 0.75

Ambe

r

9 4 2.25 CEO Penalties for non-complian-ce by employeesOn-going risk assess-ments on supply chain manage-ment processes;Complian-ce serving notices and reporting

CFO Sept. 2014

3 External environment

Food security

Food insecure households in CoJPeople flock to

Major 4 Likely 3

Red

12 Foodbank and CoJ Human Development Food parcels

Fair 0.75

Ambe

r

9 4 2.25 CEO Implement food security strategy

Manager Targeted Groups

Sept. 2014


Ref Objectives Risk Category

Risk Descrip-tion


lihood

In-herent Risk

Current controls

Control Effective-

ness

Re-sidual

risk

Im-pact

Like-lihood

Risk Owner

Actions to improve

manage-ment of the risk

Action Owner

Time scale

4 To satisfy legitimate stakeholder expectations

Reputational Stakeholder expectations

Service innovations to ensure effective support to Market users

Moderate 4 Possible 3

Ambe

r

12 Stakeholder forums established

Good 0.40

Gre

en

4.80 4 1.2 CEO Refine and consolidate stakeholder forums

COO Nov. 2014

5 Encourage conducive Environment

Human Capital

High senior manage-ment turnover

Most positions are filled on acting basis due to executive manage-ment leaving the Market;Contractual appoint-ments andWorking conditions

Major 4 Likely 4

Red

16 Retention strategy;Succession planning;Re-muneration policies;Re-muneration committee proposals andOc-cupational Safety and Environment policies

Poor 0.90

Ambe

r

4 3 Board Imple-mentation of retention strategies;Remco to compare salaries with related sister companies

CEO Sept. 2014

6 Effective fraud prevention measures

Integrity Fraud and corruption

Incidences of fraud owing to insufficient internal control frameworks;Inadequate manage-ment reviews;Insufficient fraud risk ownership amongst senior manage-ment

Major 4 Likely 4

Red

16 Anti-fraud policies;Internal controls;Segregation of duties;Policies and procedures;Internal auditing and reporting;Fraud hotlineRecon-ciliations andDisciplinary proceedings

Fair 0.75

Ambe

r

12 4 3 CEO Promote zero tolerance to fraud;Conside-ration of code of ethics;Fraud workshops and awareness by service providers andSetting tone from the top by manage-ment

Internal Audit and CEO

Nov. 2014



Risk Descrip-tion


lihood

In-herent Risk

Current controls

Control Effec-tive-

ness

Re-sidual

risk

Im-pact

Like-lihood

Risk Owner

Actions to improve


Action Owner

Time scale

7 Transformation Greater inclusion of previously disadvantage groups and individuals across the agricultural value chain

Reputational Slow economic returns to the investor

Growing alternative markets;Stake-holders circum-venting the trading system;Mergers amongst big corporateAvailability of substitute farm products;New competitor entrants;Virtual market bilateral andSolo arrange-ments between retailers and farmers disabling unskilled emerging agents and emerging producers.

Major 4 Likely 4

Red

16 Formal com-munications; Key client visitations; Supplementary consignment control; Updated market by-laws; Vigorous marketing initiatives.Emerging producers and emerging agents support programme.

Fair 0.75

Ambe

r

12 4 3 CEO Accelerate the implement-tation of the market of the future;Stake-holder manage-ment plans;Full analysis of com-petitors; revamping of JM's image and revisit and re-arrange proper contrac-tual terms with market agencies. Include trans-formation im-peratives in new agency contracts.

COO & Snr. Man. Market-ing

Jan.2015



Risk Descrip-tion


lihood

In-herent Risk

Current controls

Control Effec-

tiveness

Re-sidual risk

Im-pact

Like-lihood

Risk Owner

Actions to improve


Action Owner

Time scale

8 Continuous availability of trading system and operational environments

Process Power cuts/outages

Unexpected power failures

Major 4 Likely 4

Red

16 Generators installed for alternative energy supply;UPS;Revise current main-tenance plan to incorporate new generators

Good 0.40

Ambe

r

6.4 4 1.6 CEO Management to review when additional supply lines should be installed

COO Nov. 2014

9 Sustainable electronic sales processing system (IT)

Process Business Inter-ruption:

Possible failure of IT trading platform

Major 4 Likely 4

Red

16 Separate data back-up room elsewhere on site

Good 0.40

Ambe

r

6.4 4 1.6 CEO IT External Audit review in progress

IT Manager

Aug. 2014


SECTION 7:

SUSTAINABILITY REPORT

The company has continued with intensive evaluation to ensure its long-term sustainability.

Evaluation of methods to diversify income streams has continued. Additionally Research and Development was conducted on the company’s opportunities to extend services within the scope of its core business. Emanating from the latter is the development of the Market of the Future facilities ensuring compliance to statutory and client requirements and therefore continuous patronage of .

Continuous evaluations to ensure proper income capturing for services are also being undertaken. In particular, the consignment control function conducts actions to maximize such capturing.

Sustainability in the IT environment encompasses the ability to create cost saving operational methods, models and technology to ensure a lowered carbon footprint.

Its responsibility in this regard the JM is working diligently towards capturing it is in excess of 20 000 daily electronic transactions, in a virtualized environment as far as practically possible.

Being the custodian of a central trading system, it is also the intension to develop integrated systems serving all stakeholders better and to reduce emissions from standby power supply plants and battery support systems. will also dispose responsibly from obsolete equipment, as it is fully aware of the dangers embedded in scraped IT equipment.

It will also be a continuous drive to ensure lower power consumption and adherence to service level agreements.

IT improvements and refinements form part of the culture of the organization to continuously innovate. The latter will be done across the IT service delivery chain from the farm to our buyers. Food safety and traceability control elements will be built into the IT system and the services we provide to our clientele.

Strategic and operational risk control measures have been refined in conjunction with Joburg Risk Audit Services (“JRAS”) and Group Governance

The JM sustainability response matrix is illustrated in the table below:


Summary of Joburg Market sustainability response matrix

Key sustainability element Management ResponseFunding

Ageing infrastructure and potential fluctuation in incomes from ad valorem sales commission also requires from the entity to consider diversified trading options.

Financial

In process of obtaining permission from the shareholder to implement a Premium Hall trading system.

Competitor Actions

Bypassing of the Joburg market and its trading system. The latter include stakeholders posing the threat of establishing an alternative market.

External Environment

Continuous refinement of stakeholder’s relationships and the introduction of protocols in quality assurance.

Industry required credit facilities

Clients require longer term credit facilities. Producers often grant credit directly to buyers and in the process divert business away from the Joburg Market.

Financial

Credit facility management and debtors refined and improved. The Joburg Market plan to introduce a credit facilitation function.

Local and national regulatory environment

The Joburg Market finds itself exposed to complex agricultural regulations which the client base of JM is diverse widely dispersed and interpreted in different ways by stake-holders.

Regulatory

The JM continuously refine policies governing agents and tenants on the market site to develop a common understanding of laws and bylaws.

Processes are also continuously monitored for gaps and consequently adjusted.

Business Interruption

Power outages, including the risk of power load shedding may lead to loss of produce through cold storage failure or pilferage as the market facility is also a continuous operation.


- The JM focus strongly on:*Maintenance of power generation units*Backup units (UPS)

- Business continuity planning is also continuously refined.

Food Security

The Joburg Market is committed to food security in the COJ area of jurisdiction.


The Joburg Market has established- Its own Foodbank for fresh produce- Involved Foodbank SA, a NGO to

provide dry goodsThe Joburg Market is also refining a food security plan.

Service Delivery

The JM is competing with the private sector to retain critical skills.

Contracts of staff are limited to a fixed period

Human Capital

The JM has introduced succession, retention and skills development policies.

The JM has also through its efforts achieved


which often entices staff to explore alternative employment opportunities.

the rating as one of South Africa’s employers of choice.


CHAPTER FOUR: HUMAN RESOURCES AND ORGANISATIONAL MANAGEMENT

The JM has in the reporting period embarked on the organisational structure review to ensure that its structure aligns to the approved business strategy and is able to move the business forward as it grows.

The process was concluded with the Board approving the new organisational structure. The new structure has grown from four departments to six departments. The key considerations for the new structure were ensuring that all revenue generating functions are grouped together into the core business operations department. The support functions have also been grouped together; separating them from core operations, and their prominence being reduced against the core business functions.The structure was boosted with the creation of a Project Management Office that will drive all key business projects.

The JM is currently implementing the 2nd year of its 5-year employment equity plan. The plan is monitored and annual reports are submitted to the Department of Labour to ensure our compliance requirements are fully met.

Compliance to the skills development act is an on-going effort; is implementing its workplace skills plan and paying all levies on a monthly basis as required. All grants due to JM are claimed and received. JM’s tax compliance is on track with the e-filing done twice per annum as required. All tax directives are implemented as they are received.

SECTION 1:

HUMAN RESOURCE MANAGEMENT

The JM started a process to review HR policies to ensure they align to best practice and to ensure provision of good service and benefits to employees.

Part of the review process is to ensure alignment to the City’s policies as much as possible to promote harmonious labour relations in the company.

The Local Labour forum is fully operational and policies are also part of the agenda of the forum. The forum meets monthly to discuss matters of mutual interest; with the primary purpose of ensuring a sound labour relations environment. The forum uses the Organisational Rights Agreement as its guideline in all engagements. Employer representatives in the forum are at senior management level to ensure speedy decision making on matters discussed.

JM is in the process of converting our managers from fixed term to permanent employment status to align to the City and other entities. This will also assist its retention initiatives, as employees will realise its commitment to keeping critical skills.


JM is also implementing the aligned conditions of service to reduce labour disputes around collective agreement matters.

Over the past three (3) financial years the ratio of Personnel costs to Total Operating Expenses has reduced from 43% in 2010/11 to 39% in 2012/13. This first six (6) months of the 2013/14 financial year has revealed a ratio of 40%, which in ’s context is hardly out of the ordinary course of our business and operations. is continuing to pursue best practice for the operations of a frehs produce market.

EMPLOYMENT EQUITY

JM’s employment equity plan implementation is on track and is implementing the second year portion of its five-year plan.

still have a challenge with the employment of people living with disabilities (PLWD’s) due to; the nature of its operations which requires full mobility and are in a high activity state, while the structure of the buildings are also not suited to accommodate the needs of the PLWD’s

is working on a future building renovation plan to include all OHASA building requirements over a period of time.

The demographic profile of JM is skewed at the level below management towards more African that other groups. This is partly due to a lack of interest from other groups in working for municipal entities. At the management, levels have done very well with the recruitment of previously disadvantaged individuals.

Targets vs Actual Achievement

JM’s plan was revised setting out clear numerical goals that are aligned to the Gauteng demographics report as issued by the Department of Labour. The five-year plan runs for the period July 2012 to June 2017.

The plan is based on the JM’s business imperatives and as the business changes its strategy and new needs develop, the plan will be accordingly revised.


The table below provides the progress achieved to date on the plan.

EE Status as at December 2013 V target as at June 2017

OCCUPATIONAL LEVELS

TARGET AS AT JUNE 2017 STATUS AS ATDECEMBER 2013

MALE FEMALE

TOTA

L

MALE FEMALE

TOTA

LA C I W A C I W A C I W A C I W

Top Management 0 0 0 0 1 0 0 0 1 0 0 0 0 1 0 0 0 1Senior Manager 2 0 0 1 2 0 0 1 6 1 0 0 0 1 0 0 0 2Mid Manager / Professional 10 2 3 8 10 0 0 4 37 9 2 2 8 7 0 0 2 30Skilled Tech / Junior Manager

25 0 1 3 24 1 1 6 6122 0 1 3 22 1 1 3 53

Semi- Skilled 78 3 0 5 68 8 216

180 72 3 0 3 69 7 0

13

167

Unskilled 8 0 0 2 11 0 0 2 23 6 0 0 0 12 0 0 0 18

TOTAL 123 5 4 1

9116 9 3 2

9308

110 5 3

14

112 8 1

18

271

Employment of people with disabilities

The recruitment of people with disabilities will continue to challenge JM until it is able to address the building renovations and thereby create easy access for the accommodation of people in Wheel chairs. The company is in the process of exploring the possibility of acquiring expensive technological equipment that can be used by physically challenged individuals in areas like Cashiering, Switchboard and Consignment control.

The table below reflects people with disabilities as the 31 December 2013. In terms of the report in the table the target of 2% which is in line with the Disability Framework for Local Government 2009 – 2014, has been achieved and where possible will continue to find and employ more people with disabilities.

JM have identified areas where it believes it can be able employ these individuals and are planning to employ them during this financial year.


The table below depicts the PLWD’s report

Occupational LevelsMale Female Foreign

NationalsTotal

A C IW

A C I W M F

Top management 0 0 0 0 0 0 0 0 0 0 0

Senior management 0 0 0 0 0 0 0 0 0 0 0

Professionally qualified and experienced specialists and mid-management

0 0 0 0 0 0 0 0 0 0 0

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

0 0 0 0 0 0 0 0 0 0 0

Semi-skilled and discretionary decision making

2 1 0 0 1 1 0 0 0 0 5

Unskilled and defined decision making 0 0 0 0 0 0 0 1 0 0 1

TOTAL PERMANENT 2 1 0 0 1 1 0 1 0 0 6

Workforce Movement - Recruitment

The recruitment of key personnel includes the recruitment of the Company secretary and the Senior Legal Advisor. These two appointments have assisted the company; the Company Secretary to deal with all shareholder issues effectively, while the Senior Legal Advisor will help reduce the cost of employing external law firms to deal with litigation matters.

Other critical appointments were in the food safety environment where JM employed two quality assurance inspectors to improve capacity in food safety.

The maintenance unit was also capacitated with the appointment of Quantity Surveyor and an Assistant Electrician.

JM also beefed up our security with the appointment of the CCTV Monitoring Manager, which will improve the environment surveillance considering the vastness of its areas of operation and the activity involving huge numbers of buyers.


Recruitment Status

OCCUPATIONALCATEGORY

POSITION EQUITY STATUS

GENDER

A C I W M F

2: Senior Management Company Secretary 1 1Senior Legal Advisor 1 1

3: Mid-Management / Professional Quantity Surveyor 1Quality Assurance Inspector

2 2

4: Skilled Technical / Junior Management

Assistant Electrician 1 1

Manager: CCTV Monitoring

1 1

5: Semi-Skilled Personal Assistant 1 1Grand Total 8 5 3

EMPLOYMENT TERM PROFILE

The term profile is indicative of our current staff compliment.

JM’s employment term profile is set out in the table below:

OCCUPATIONAL LEVELS

FIXE

D T

ERM

C

ON

TRA

CT

PER

MA

NEN

T

TEM

POR

AR

Y

FIXE

D T

ERM

CO

NTR

AC

T

PER

MA

NEN

T

TEM

POR

AR

Y

TOTA

L

%

1: Top Management 1 0.37% 0.00% 0.00% 1 0.37%

2: Senior Management 2 0.74% 0.00% 0.00% 2 0.74%3: Mid-Management / Professional

12 17 4.43% 6.27% 0.00% 29 10.70%

4: Skilled Technical / Junior Management

2 55 0.74% 20.29% 0.00% 57 21.03%

5: Semi-Skilled 164 0.00% 60.52% 0.00% 164 60.52%

6: Unskilled 18 0.00% 6.64% 0.00% 18 6.64%

TOTAL 17 254 0 6.27% 93.73% 0.00% 271 100.00%

Promotions


Only one internal promotion was registered in the reporting period; with an additional seven individuals being upgraded from EPWP candidate status to being fully-fledged interns due to their academic qualifications.

Termination

The JM did not record any natural attrition terminations in the reporting period except for resignations. The resignations are mainly due to individuals identifying better opportunities elsewhere and some changing careers, while others want to work closer to their homes.

The JM has recorded one critical resignation over the period; that of the Chief Operations Officer. With the review of the structure process, the recruitment of the replacement was held in abeyance.

Terminations TableOccupational category

Gender and EquityDate of termination

Reason for termination

TotalMale FemaleA C I W A C I W

Senior Management

130 Aug 2013 Resignation 1

Administration 1 04 Oct 2013 Resignation 1

Professional 1 129 Nov 201331 Nov 2013

Resignation2

Administration 214 Dec 201329 Nov 2013

Resignation1

Administration 1 131 Dec 2013

Resignation2

Semi Skilled 129 Nov2013

Resignation1

SECTION 2:

SKILLS DEVELOPMENT

JM have started with its plans to focus on core business skills development. 30 employees were trained on food safety, Banana Ripened and Fresh Produce Hall. The training was targeted at the Consignment, Complimentary Services and Quality Assurance business units. These are they units when it comes to food safety quality control and monitoring,


JM has also enrolled a total 70 EPWP workers on Learnership programmes to development the much needed skills pool for ’s structure skills needs. A total of 15 of these are on Artisan Learnerships to help us reduce our cost of external maintenance companies. also have 5 permanent employees on a learnership programme.

The learnerships are funded by the SETA. also have two executives on a SETA funded Leadership programme.

Six of the Finance Department employees are undergoing the MFMA competency training. Other managers will also be enrolled for the training as required by MFMA.

Executives have been trained on Corporate Governance to ensure their governance roles are enhanced by them understanding their expectations around reporting.

The development of Managers is on-going with thirteen managers being trained on the running of procurement bid committees.

Employee Retention Scheme

As part of its policy review process, JM is revising its succession and retention policy. The turnover analysis has revealed that employees are poached by the National Department of Agriculture; especially those in the Quality Assurance Unit, This is indicative of the great emphasis, which is being placed on food safety at all spheres of government.

JM is planning to take up Interns within the Quality Assurance to ensure it develops its own professionals, which can be loyal to .

The table below is an indication of programs delivered for the period:DEVELOPMENT MALES FEMALES TOTAL AMOUNT

A C I W A C I WEffective purchasing and supplier management

1 1 R10,990.00

SABS-SCM 2 3 5 R15,000.00Calibration and Regression analysis for analytical chemist

2 2 R16,849.20

Ammonia training 1 1 R14,649.00Transport and Fleet management

1 1 R7,968.60

JDE ENTERPRISE 1 system administrator

1 1 R33,117.00

Comp TIA Network+ 1 1 R7,486.00Banana ripening 10 1 9 20 R54,000.00Power Point 5 1 1 1 7 1 1 17 R51,300.00Intro to Corporate Governance and board effectiveness

4 4 R14497.32

PPECB 17 12 1 30BID COMMITTEE 4 2 1 6 1 1 15 R104,400.00


Records and Information Management

1 1 R7,499.00

Advanced driving 1 1 R7 000.00Forklift driving 1 1 R12,116.10TOTAL BENEFICIARIES 41 1 3 4 44 1 1 5 101 R356,872.23

As part of improving capacity and ensuring that Managers are kept abreast of best practice in their respective professions, JM uses the attendance of Conferences and seminars. In the reporting period, the following attendances were recorded:

Conferences and SeminarsConferences Males Females Total Amount

A C I W A C I W

Companies ACT& King III 2 2 R7,592.00

The Institute of Directors in South Africa Being a Director Part 3

1 1 1 R6,563.71

Consumer goods forum 1 1 2 R4,780.00

Master class on new employment legislation

1 1 2 R3,192.00

Contemporary Payroll and Tax Reconciliation

1 1 2 R21,998.00

Leaders Seminar 1 1 R800.00

TOTAL BENEFICIARIES 2 1 7 10 R44,925.71

Education Assistance Scheme

The education assistance scheme ensures that employees are able to improve their educational qualifications with the assistance of funding from the company. Most of the assistance is provided over two to three years, which is mostly the duration of academic programs. In the quarter, only two claims were processed; as indicated:

Programmes Males Females Total Amount

A C I W A C I W

Certificate in Public Procurement & Supplier Chain management UNISA

1 1 2 R10,800.00

B-tech Agriculture UNISA 1 1 R1,180.00


Programmes Males Females Total Amount

A C I W A C I W

Management Accounting UNISA 1 1 R12,845.00

Electrical trade test (ANNICO TRAINING)

1 1 R9,462.00

Electrical Engineering (Central Joburg College)

1 1 R1,406.00

Certificate in Business Accounting (IBTC)

1 1 R15,750.00

Procurement and SCM management UNISA)

1 1 R4,680.00

CIS (WITS) 1 1 R8,600.00

Outstanding course fee (WITS) 1 1 R600.00

MBA (Regent Business School) 1 1 R24,500.00

TOTAL BENEFICIARIES 6 4 11 R89,823.00

SECTION 3:

EPWP

JM’s EPWP Programme is providing much valuable support to operations at JM. The EPWP workers are also receiving on the job training as they work within the departments.

JM has a total of seventy candidates that are registered for learneships and seven doing internships in line with their qualifications. The interns have a chance of being absorbed into the structure upon completion of their internship programme as vacancies became available.

The learnerships are funded by the SETA and they are one-year programmes. Upon completion, the Learners will have acquired job readiness skills to access job opportunities.

SECTION 4:

BONUS PAYMENT AND PERFORMANCE MANAGEMENT

The company has an approved Performance Management policy that covers all employees. The policy provides for the payment of Performance Bonus for Senior Managers and Executives, while all


other employees get paid a guaranteed thirteenth cheque in line with the collective agreement at the SALGBC.

SECTION 5:

EMPLOYEE WELLNESS

The wellness campaign continues with the running of monthly health awareness campaign. The campaigns are meant to provide education to employees on health issues and to ensure they live healthy lifestyles. During the monthly campaigns, the company distributes information leaflets and share information through its clinic.

Clinic utilisation continues to increase; with the accessibility of the clinic to non-employees, and the experience is that stakeholders are demanding services from the JM clinic.

Chronic cases are being monitored to ensure they abide by their treatment regimens and to avoid complications associated with chronic conditions. HIV /AIDS education and support progamme is ongoing with the distribution of 2000 condoms per month. The distribution is done to all facilities including public facilities within the premises. The Peer Educators committee provides support to all employees who consult them on coping with the disease or the effect thereof.

The following campaigns were conducted during the term:

Eye Care – 25% of our employees participated with two detected as requiring ophthalmic treatment.

Full Wellness Screening Campaign – covering HCT, Cholesterol, BP, Sugar, Prostate and Cervical Cancer test conducted. A total of 62% employees participated in the testing.

World Aids Day – 28% employees took the VCT and 5 new infections were found. Those employees were handled by the service provider for further assistance with treatment and care.

SECTION 6:

EMPLOYEE BENEFITS

JM is in the process of exploring the possibility of adopting the eJoburg Retirement Fund as the only fund for the in line with the City’s directive; however, the process involves extensive consultation with affected employees to ensure compliance with the provisions of the LRA.

Pension and Provident Funds


The company currently operates three funds (3) being: Momentum Funds at Work Provident Fund- has 228 employees belonging to this fund. City of Johannesburg Pension Fund- has 22 employees in this fund eJoburg Retirement Fund has 18 employees belonging to this fund.

Medical Aid Funds

The company has three accredited schemes; Bonitas; Discovery and LA Health, employees have to choose from the three accredited schemes. This is in line with the collective agreement as governed under the rules of the South African Local Government Association.


CHAPTER FIVE: FINANCIAL INFORMATION

SECTION 1: FINANCIAL PERFORMANCE

FINANCIAL PERFORMANCE


R’000 R’000Actual Actual

2013 Dec 2013 JuneASSETS

Non-current assets 291,604 297,133

Property, plant and equipment 284,158 289,361 Investment property 503 514 Intangible assets 812 1,127 Deferred tax 6,131 6,131

Current assets 202,200 179,587

Trade and other receivables 28,198 29,044 Loans to shareholders 60,213 65,367 Current Tax receivable 1,904 6,019 Current VAT receivable 582 Cash and cash equivalents 111,885 78,576

Total assets 493,804 476,720

NET ASSETS AND LIABILITIES

Net Assets and Liabilities 239,674 201,770

Contribution from owner 20,000 20,000 Accumulated funds 219,674 181,770

Non-current liabilities 145,190 145,355

Loans from shareholders 142,067 142,232 Finance lease obligation 44 44 Employee benefit obligations 3,079 3,079

Current liabilities 108,940 129,595

Trade and other payables 89,392 93,414 Loans from shareholders 16,852 33,704 Finance lease obligations 321 650 Provisions 2,375 1,828 Current Tax payable

Total net assets and liabilities 493,804 476,720

2.1. Non-current assets have decreased by R5.5 million at the second quarter. The decrease is the net effect of additions to property, plant and equipment of R2.3 million less depreciation charge for the second quarter of R7.8 million.

2.2. Current assets have increased by R22.6 million. The increase is as result of:

2.2.1. a decrease in trade and other receivables of R0.8 million

2.2.2. a decrease of loans to shareholders of R5.2 million.

2.2.3. a decrease of tax receivable of R4.1 million

2.2.4. an increase in cash and cash equivalents of R33.3 million

2.3. Included in current assets are trade debtors of R29.7 million compared to R29.8 million at year-end.

2.4. The average collection rate for the second quarter was 90.6%, which is below target of 95%. Trade debtors have decreased by R0.1 million.

2.5. The current liabilities as at the end of the second quarter amounts to R108.9 million compared to R129.6 million at year-end 2013. The current portion of shareholder loans for the remaining two quarters is R16.9 million.

2.6. Included in current liabilities are trade payables amounting to R52.0 million compared to R71.8 million at year-end 2013.


Trade and other receivables are made up of: R’000 R’0002013 Dec 2013 Jun

Trade debtors 29,687 29,805 Prepayments 608 270 Sundry Debtor 5,691 6,757 Less: Provision for doubtful debts -7,856 -7,856 Adjustment to fair value at amortised cost 67 67

28,198 29,044

2.7. Non-current liabilities for the second quarter ending 31 December 2013 is R145.2 million compared to R145.4 million at year-end 2013.

2.8. The company’s current assets currently exceed its current liabilities by R93.3 million compared to the year ending 30 June 2013 of R50.0 million. The company’s gearing percentage has improved from 58% in the previous financial year to 51% in the current year. There has been an improvement on the equity ratio from 42% in prior year to 49% in current year’s second quarter. Included in the current liabilities is the current portion of long-term liabilities of R16.9 million. The company is currently profitable and generating sufficient cash to meet its short-term obligations and has not defaulted on any loan repayments due to the City of Johannesburg.

3. STATEMENT OF FINANCIAL PERFORMANCE FOR THE 6 MONTHS ENDED 31 DECEMBER 2013

Overall Financial Performance

3.1. Surplus of R37.9 million was recorded compared to the budget of R16.7 million for the second quarter ending 31 December 2013, an increase of R21.2 million. The turnover increased by 14% compared to budget. The volumes are above budget by 3.3% and


Trade and other payables are made up of: R’000 R’0002013 Dec 2013 Jun

Trade payables 51,995 71,830 VAT 6,936 - Accrued leave pay 5,416 5,215

Accrued staff 13th cheques 364 2,400 Creditors accrual 8,427 742 Municipal charges, payroll and sundry accruals 12,801 12,575 Retentions 3,453 478 Related party creditor - 175

89,392 93,414

Actual Budget Last YearActual vs Budget

Actual vs Last Yr

Actual vs Budget

Actual vs Last Yr Forecast Budget Last Year

F'cast vs Budget

Actual vs Last Yr

F'cast vs Budget

Actual vs Last Yr

R '000 R '000 R'000 R'000 R'000 % % R '000 R '000 R'000 R'000 R'000 % %

Turnover 2,813,629 2,468,704 2,467,989 344,925 345,640 14.0% 14.0% 5,368,301 4,934,292 4,931,324 434,009 436,977 8.8% 8.9%Tonnage 655 635 616 21 39 3.3% 6.4% 1224 1224 1188 0 36 0.0% 3.0%

Rand/Ton R 4,292 R 3,889 R 4,006 R 403 R 286 10.4% 7.1% R 4,385 R 4,031 R 4,150 R 355 R 235 8.8% 5.7%

Revenue 170,156 151,112 151,003 19,045 19,153 12.6% 12.7% 331,300 302,200 297,878 29,100 33,422 9.6% 11.2%

Expenses -108,893 -114,773 -106,580 5,880 -2,313 -5.1% 2.2% -253,073 -230,156 -208,066 -22,917 -45,007 10.0% 21.6%

Surplus before interest & tax 61,264 36,339 44,424 24,925 16,840 68.6% 37.9% 78,227 72,044 89,812 6,183 -11,585 8.6% -12.9%

Net interest paid -6,615 -10,929 -7,613 4,315 998 -39.5% -13.1% -18,359 -21,859 -13,530 3,500 -4,829 -16.0% 35.7%

Surplus before tax 54,649 25,410 36,811 29,239 17,838 115.1% 48.5% 59,868 50,186 76,282 9,683 -16,414 19.3% -21.5%

Taxation -16,745 -8,704 -11,565 -8,041 -5,180 92.4% 44.8% -18,468 -17,231 -19,391 -1,237 923 7.2% -4.8%

Surplus 37,904 16,705 25,246 21,198 12,658 126.9% 50.1% 41,400 32,955 56,891 8,446 -15,491 25.6% -27.2%

Six Months Ended 31 Dec 2013Variance

Full Year Variance

higher than prior year by 6.4%. The price, in Rands per ton, increased by 7.1% compared to the previous year and increased by 10.4% compared to budget.

3.2. Operating expenditure of R108.9 million was recorded compared to budget of R114.8 million for the second quarter of the financial year, resulting in a net total savings of R5.9 million on budget. Detailed variances are explained below in the report.

3.3. The net interest paid for up to the second quarter amounted to R6.6 million compared to budget of R10.9 million. This is a saving of R4.3 million on budget. The net savings is a result of new Capex loans for the year being budgeted sooner than when the actual outflow has been realised.

Turnover and Revenue

3.4. Revenue improved in the second quarter compared to budget. High prices were evident due to the demand for summer fruits and the consistent high prices for potatoes. Turnover, for the second quarter of the year ended on R2.814 billion compared to budget of R2.469 billion and the actual for the previous year of R2.468 billion. This is an increase of 14% on budget and growth of 14% when compared to the previous year. Volumes for the six months increased by 6.4% when compared to the previous year and is ahead of budget by 3.3%. The price of produce per ton is higher than budget by 10.4% and is 7.1% higher than the previous year.

3.5. The average turnover per month for the second quarter was R506.7 million. The highest recorded turnover for a given month in the financial year to date was R530.0 million recorded for October 2013. The average price recorded per ton peaked at R5,042 for the month of December 2013 compared to the average for the year to date of R4,292 per ton.

3.6. For the second quarter under review, revenue is above by 12.6% compared to the budget and increased by 12.7% when compared to the previous year. Total revenue for the quarter ended on R170.2 million compared to the budget of R151.1 million and R151.0 million for the previous year. Commission business contributes to 82.68% of revenue, 10.27% from rental income and recoveries, and 2.82% from cold storage and banana ripening facilities and the balance of 4.23% from other related sources.

3.7. Commission income of R140.7 million was recorded; an increase of 14.0% when compared to budget and an increase of 14.0% when compared to the previous year. The cold store and ripening facilities revenue has increased from the previous year from R3.8 million to R4.8 million. Rental income, water and electricity recoveries closed at R17.5 million 1.3% higher than prior year’s second quarter.


Analysis of turnover and revenue for 6 months of the year comparing actual to budget and prior year

Results of Operations - Expenditure

3.8. The total operating expenditure for the six months ended 31 December 2013 amounts to R108.9 million compared to the budget of R114.8 million. This is a decrease of R5.9 million compared to budget.

Analysis of the Operating Expenditure for the 6 Months Ending 31 December 2013

3.9. Personnel expenses for the year are R0.9 million below budget as a result of:

3.9.1. Basic salaries are below budget by R3.0 million due to vacancies, however these saving are offset by the effect of non-executive remuneration that is above budget by R612 thousand and leave pay that is over budget by R308 thousand. The leave pay provision was reduced in the second quarter as staff took December leave.

3.9.2. back payment of acting allowances is above budget by R501 thousand.



Actual vs Last Yr

Actual vs Budget

Actual vs Last Yr Forecast Budget Last Year

F'cast vs Budget

Actual vs Last Yr

F'cast vs Budget

Actual vs Last Yr

R '000 R '000 R'000 R'000 R'000 % % R '000 R '000 R'000 R'000 R'000 % %

Turnover 2,813,629 2,468,704 2,467,989 344,925 345,640 14.0% 14.0% 5,368,301 4,934,292 4,931,324 434,009 436,977 8.8% 8.9%Tonnage 655 635 616 21 39 3.3% 6.4% 1224 1224 1188 0 36 0.0% 3.0%Rand/Ton R 4,292 R 3,889 R 4,006 R 403 R 286 10.4% 7.1% R 4,385 R 4,031 R 4,150 R 355 R 235 8.8% 5.7%

REVENUE 170,156 151,112 151,003 19,045 19,153 12.6% 12.7% 331,300 302,200 297,878 29,100 33,423 9.6% 11.2%

Cold storage facilities 2,151 2,324 2,013 -172 138 -7.4% 6.9% 4,652 4,652 4,465 0 187 0.0% 4.2%

Ripening facilities 2,652 1,585 1,772 1,067 880 67.4% 49.7% 3,172 3,172 3,468 0 -296 0.0% -8.5%

Commission 5% 140,681 123,435 123,400 17,246 17,282 14.0% 14.0% 268,415 246,715 246,566 21,700 21,848 8.8% 8.9%

Pallets 401 332 357 68 44 20.6% 12.2% 665 665 698 0 -32 0.0% -4.7%

Cash Handling fee 1,224 2,785 2,657 -1,561 -1,433 -56.0% -53.9% 5,576 5,576 3,935 0 1,640 0.0% 41.7%

Trolley Rental Deposit 86 103 90 -17 -4 -16.7% -4.6% 207 207 176 0 31 0.0% 17.6%

Electricity recovery 8,022 9,290 8,350 -1,268 -328 -13.6% -3.9% 18,699 18,699 16,578 0 2,121 0.0% 12.8%

Water recovery 1,256 1,130 975 126 281 11.1% 28.8% 2,260 2,260 1,907 0 353 0.0% 18.5%

Rental Income 8,204 9,307 7,941 -1,103 262 -11.9% 3.3% 17,114 18,614 15,681 -1,500 1,433 -8.1% 9.1%

Floor storage fees 368 216 301 152 67 70.5% 22.2% 432 432 668 0 -235 0.0% -35.2%

EPWP - Grant 3,805 0 2,351 3,805 1,454 #DIV/0! 61.9% 8,900 1,615 8,900 7,285 #DIV/0! 451.0%

Sundry revenue - other 1,305 604 795 701 509 116.0% 64.0% 1,208 1,208 2,120 0 -912 0.0% -43.0%


Full YearVariance


Actual vs Last Yr

Actual vs Budget

Actual vs Last Yr

R '000 R '000 R'000 R'000 R'000 % %

Expenses (108,893) (114,773) (106,580) 5,880 (2,313) (5.1%) 2.2%Personnel costs ( 44,143 ) ( 45,042 ) ( 41,532 ) 899 ( 2,611 ) (2.0%) 6.3%Human Resources ( 6,424 ) ( 3,230 ) ( 6,957 ) ( 3,193 ) 534 98.8% (7.7%)Marketing ( 1,625 ) ( 2,416 ) ( 2,204 ) 791 579 (32.7%) (26.3%)Repairs and Maintenance ( 9,065 ) ( 10,798 ) ( 8,056 ) 1,732 ( 1,009 ) (16.0%) 12.5%Operations ( 28,919 ) ( 30,877 ) ( 28,585 ) 1,958 ( 334 ) (6.3%) 1.2%Information Technology ( 1,946 ) ( 3,332 ) ( 3,129 ) 1,386 1,183 (41.6%) (37.8%)Finance and administration ( 8,932 ) ( 10,232 ) ( 8,811 ) 1,300 ( 121 ) (12.7%) 1.4%Depreciation ( 7,839 ) ( 8,845 ) ( 7,305 ) 1,006 ( 533 ) (11.4%) 7.3%


3.9.3. minor variances were noted for other items, which are not material.

3.10. Human resources costs for the year are R3.2 million above budget as a result of:

3.10.1. EPWP costs are over budget by R3.4 million, a budget of R5 million was allocated to Capital projects, which in fact related to operational projects. An adjustment to be effected at the revised budget process together with a request for additional grant allocation.

3.10.2. Protective clothing and uniforms of R512 thousand, budget not utilised.

3.10.3. Training exceeds budget by R562 thousand, however SETA grants of R629 thousand have been received and are reported under sundry income.


3.11. Marketing expenses for the year to date are R0.8 million below budget as a result of:.

3.11.1. Communication and advertising under spent, however acquisition plans indicate that expenditure will take place in the remaining quarters

3.11.2. minor variances were noted which are not material.

3.12. Repairs and maintenance expenditure for the year is R1.7 million below budget as a result of:

3.12.1. Scheduled preventative maintenance plans in electrical, plumbing and machinery are at quotation phase, the plans are to be rolled out at the beginning of quarter three. The result is an underspend of R1.1mill

3.12.2. Garden maintenance is under budget by R384 thousand due to cancellation of the contract. Currently City Parks EPWP members are maintaining the gardens.

3.12.3. Air conditioning maintenance is underspent by R488 thousand, the tender for the preventative maintenance was non-responsive and will need to be re-advertised in the third quarter.


3.13. Operational expenses for the year are R2.0 million under budget as a result of:

3.13.1. Electricity usage is under budget by R1.5 million and represents savings of utility usage internally and of tenants.


3.13.2. Security costs are under budget by R 416 thousand; this represents a real savings, which will be reallocated to cleaning services since the new contract awarded came in higher than budget.


3.14. Information Technology (IT) expenses for the year are R1.4 million below budget as a result of:

3.14.1. IT support repairs and software development are under budget due to Rand/Dollar exchange rate variances

3.14.2. Software licences under budget by R714 thousand due to the network support contract that is on hold for the implementation of the broadband project roll out from the City, earmarked to go live within this financial year.

3.14.3. minor variances were noted for items, which are not material.

3.15. Finance and administration expenses for the year are R1.3 million below budget as a result of:

3.15.1. Bank charges are under budget by R1.4 million due to the lower deposit fee rate from the new banker; Standard bank, deposit fee costs reduced from 33cents per R100 to 12cents per R100. The cash recoveries have also declined for the same reason.

3.15.2. Legal expenses over budget by R661 thousand but due to on-going litigation costs.

3.15.3. Saving have been realised on telephone costs of R240 thousand, and

consultants of R648 thousand.

3.15.4. Local travel was over budget by R182 thousand due to stakeholder visits and international travel was over budget by R155 thousand due to the attendance of officials at the World Union Wholesalers Market conference held in Chile.


3.16. Depreciation is R1.0 million below budget as a result of capital projects budgeted not being awarded in the second quarter.

Net Interest Paid

3.17. The net interest charge for the second quarter ending 31 December 2013 amounted to R6.6 million compared to the budget of R10.9 million. Interest year to date his is R4.3 million below budget. The saving has been realized due to the interest cost on group


loans being below budget as a result of capital expenditure funding not being fully utilized within the year. Net interest charges are offset by the increase in interest income received on the positive sweeping account held at COJ Group Treasury.

4. CASH FLOW STATEMENT

4.1. For the second quarter ended 31 December 2013:

4.2. Cash generated from operations amounted to R49.9 million and net cash absorbed from operations amounted to R52.8 million for the second quarter ending 31 December 2013. During the six months property, plant and equipment was acquired of R2.3 million. Net impact from financing activities was an outflow of R17.2 million. There was an increase in the net cash position of R33.3 million from R78.6 million to R111.9 million.


Actual ActualDec-13 Jun-13R'000 R'000

Profit before interest and tax and exceptional items 61,646 89,759Depreciation & Amortisation 7,839 14,856Net Interest received (paid) ( 6,997 ) ( 13,477 )Taxation (paid) ( 12,630 ) ( 29,264 )

Cash generated from operations 49,857 61,875

Movement in working capital 2,926 ( 39,805 )Decrease (Increase) in accounts receivable ( 214 ) ( 6,422 )Decrease (Increase) in amounts due from shareholder 8,606 ( 37,804 )Increase (Decrease) in accounts payable ( 5,285 ) 15,244Increase (Decrease) in C O J current liability ( 181 ) ( 10,822 )

Net cash generated / (absorbed) from operations 52,783 22,070

Cash impact from investing activities ( 2,309 ) ( 28,281 )Additions to fixed assets ( 2,309 ) ( 28,281 )Acquisition of business / Goodwill

Cash impact from financing activities ( 17,164 ) 16,319Increase (Decrease) in shareholder loans ( 16,835 ) 16,835Decrease in post retirement liabilities ( 177 )Increase (Decrease) in long term liabilities ( 330 ) ( 339 )

Net movement in cash position 33,309 10,108

Opening cash position 78,576 68,468

Closing net cash position 111,885 78,576

SECTION 2:

CAPITAL PROJECTS

1: The total approved capital budget for the year amounts to R70 million inclusive of the EPWP grant of R5 million. Actual capital expenditure incurred by 31 December 2013 amounted to R2.3 million which equates to 3.0%. The budgeted/projected under spending for the second quarter was attributable mainly due to the roll out of capital programmes being put on hold in order to utilize and reallocate the funds to the Market of the Future preparatory work.

The following corrective measures have been put in place to accelerate the roll out of capital expenditure projects:

- Capital Expenditure committee meets regularly to fast track projects

- New acquisition plans have now been amended accordingly and align with revised projections

- User departments have been made aware of the new acquisition plans and plans are being submitted for approvals

Capital expenditure will continue to be managed and steps taken to ensure capital expenditure levels at the end of the financial year, that JM increase their spending to the budget amount. Acquisition plans for capital projects are the early stages of the tender cycle, awarding of tenders to occur in quarter three with the bulk of expenditure occurring in quarter three and four.

2: The capital budget will be funded as follows; R50 million from self-funding, R10 million from capital loans from the shareholder and the remaining R10 million via a grant relating to the EPWP projects.

3: Attached herewith is the detail approved capital expenditure budget as well as actual expenditure incurred during the second quarter. A Capex Forum meets on a regular basis to monitor the spending within projects.



JFPM CAPEX Spend as at 31 December 2013

Actual versus budget (Acquisition of Property, Plant and Equipment)

JFPM City JFPM

Project Approved Actual

Description Budget YTD Sept 2013

R'000 R'000

Furniture Total 1,441,500 57,082

Information Technology Total 6,730,000 133,514

Land & Buildings Total 52,773,500 1,818,550

Office Equipment Total 60,000 48,703

Plant & Equipment Total 8,995,000 251,502

Total 70,000,000 2,309,351

Excluding EPWP reallocation to Opex -5,000,000

Total excluding EPWP reallocation 65,000,000 2,309,351

4%

SECTION 3:

SUPPLY CHAIN MANAGEMENT

1. SUMMARY

The report covers the 1st and 2nd quarter of the current financial period starting from 1 July 2013 to 31 December 2013. The Joburg Market executed the deviations considered during 2013/14 Financial year period in accordance with the Joburg Market SCM Policy.

2. TENDER PROCESS AS PER DIFFERENT THRESHOLD

Refer to the Tenders Award Statistics Table – over R200 000.00- Tender report attached

DESCRIPTION Q1 Q2 Q3 Q4Bids in progress 0 11 TBA TBABids Awarded 2 0 TBA TBABids on hold/cancelled 0 0 TBA TBABids for Re-advertisement 0 0 TBA TBA

Bids are re-advertised because of poor response from the external market. This includes the failure of the bidders to meet the requirements as per the tender document

2.1. Requisitions for daily operations (received) R30 000.00 to R200 000.00 and Less than R 30 000.00

DESCRIPTION Q1 Q2 Q3 Q4Over R30 000.00 31 19 TBA TBALess than R30 000.00 239 172 TBA TBA

2.2. Refer to the Contracts Management Statistics Table AttachedDESCRIPTION Q1 Q2 Q3 Q4Active Contracts 48 38 TBA TBATerminated contracts 3 10 TBA TBA

2.3. Sponsorship paid or received by Joburg Market None

2.4. BBBEE spend as a percentage of the Joburg Market’s total procurement spend on the bids awarded for more than R200 000.00


DESCRIPTION Q1 Q2 Q3 Q4

BEE as % of Operating Expenditure 0%

110% TBA TBA

BEE as % of Capital Expenditure 0% 0 TBA TBA

Total Spend on OPEX and CAPEX 0% 110% TBA TBA

2.5. Two tenders were awarded by the BAC for the 1st quarter but the appointed companies only started working in the second quarter hence the BBBEE status as reflected above.

3. DEVIATION REPORTING

3.1. The deviations report is included to reflect on all the deviations that were approved by the Chief Executive Officer during the 1st and second quarters of 2013/14.

3.2. Types of Deviations and Amount incurredDESCRIPTION Q1 Q2 Q3 Q4Sole Supplier 0 R29 982.00 TBA TBA

Extension of Contracts R1,196 724.90 0 TBA TBA

Variations of the payment 0 0 TBA TBA

Gross Deviations 0 0 TBA TBA

Total Amount R1,196 724.90 R29,982.00 TBA TBA

3.3. The reasons for the deviations are, among others as follows:

3.3.1. Historic and current long-term contracts that have been allowed to continue or be renewed without following the prescribed SCM process.

3.3.2. Contracts of a specialized nature or field that require specifications of a highly technical nature.

3.3.3. Sole suppliers whom are the only suppliers offering the services or the goods.

3.3.4. Single and/or multiple sources bidding where, after market research had been done, specific service providers were preselected due to their outstanding functionality and/or the unique nature of the services or goods.

3.3.5. Urgency and/or emergency in cases where procurement could not reasonable have been foreseen or planned for, and immediate action was required.


4. POLICY IMPLICATIONS

All SCM policies were fully adhered to.

5. LEGAL AND CONSTITUTIONAL IMPLICATIONS

5.1. This report is prepared in terms of:

5.1.1. section 3(4) of the Municipal Supply Chain Management Regulations, which state that the Accounting Officer of a municipality must in terms of sections 62(1)(f)(iv) and 99(2)(h) of the MFMA, take all reasonable steps to ensure that the municipal entity has and implements a Supply Chain Management policy as set out in regulation 2.

5.1.2. section 6(1) of the Municipal Supply Chain Management Regulations, which state that the council of a municipality and the board of directors of a municipal entity must maintain oversight over the implementation of the Supply Chain Management Policy. For the purposes of such oversight the Accounting Officer must, in the case of a municipal entity, within 20 days of the end of each financial year, submit a report on the implementation of the municipal entity’s Supply Chain Management Policy to its Board, who must then submit the report to the Accounting Officer of the Parent Municipality for submission to its Council.

5.2. Permissible deviations are set out in regulation 36(1)(a) of the Municipal Supply Chain Management Regulations and provides that the Accounting Officer may dispense with the normal procurement processes and procure the required goods or services through any convenient process, which may include direct negotiations, but only:

5.2.1. in an emergency5.2.2. if goods or services are available from single supplier5.2.3. in respect of acquisitions of special work of art5.2.4. in any other exceptional case where it is impossible or impractical to follow official

procurement processes

5.3. In terms of Regulation 36(1)(b) the Accounting Officer may ratify any minor breaches of the procurement processes by an official or a committee acting in terms of delegated power, which are of a purely technical nature.

5.4. To give effect to Regulation 36, paragraph 21 of the Joburg Market’s SCM Policy allows the Accounting Officer to deviate from the normal procurement processes under the circumstances contemplated in Regulation 36(2) provided that the Accounting Officer:5.4.1. records the reasons for any deviation5.4.2. reports the deviations to the next meeting of the Board of Directors5.4.3. includes the approved deviations as notes in the annual financial statements.


SECTION 4:

INTERNAL AUDIT AND AUDITOR GENERAL MANAGEMENT LETTER ISSUES

4.1 Audits were performed in the current quarter as per the Internal Audit plan approved by EXCO and the Audit and Risk Committee.

4.2 The report contains a list of all audits as per the audit plan and the update on audits in progress and completed up to the end of December 2013.

4.3 Ad hoc projects and requests by management up to the end of December 2013 are also included in this report.

4.4 The table below provides a summary on the audits completed until 31 December 2013 as well as the audits planned for the six months until financial year-end on 30 June 2014:

TABLE REPRESENTING AUDIT PROGRESS OF 2013/14 AUDIT PLAN:

No Audit name Current Status Completion Date

Report Risk Rating

AUDIT REPORTS TO BE TABLED AND DISCUSSED AT ARC MEETING OF 31DECEMBER 20131. Infrastructure Completed 31/10/20132. Security Management Completed 31/10/20133 IT General Controls Completed 30/08/20134. Corporate Governance In progress 31/01/20145. Business Continuity In progress 31/01/20146. Performance against Predetermined

objectives (Q1 & Q2)In progress 31/01/2014

7. Revenue In progress 31/01/20148. Market of the Future In progress 31/01/20149. Critical Financial Reporting Controls

(CFRC) (Q1 & Q2)In progress 31/01/2014

10.

BEE and Transformation Not started

11.

Supply Chain Management Not started

12 Marketing and Communication Not started13.

SHENot started


15.

Performance against Predetermined objectives (Q3 & Q4)

Not started

16 Critical Financial Reporting Controls (CFRC) (Q3 & Q4)

Not started

17.

Application Controls: Payday; JDE; SPSNot started

FOLLOW UP AUDIT FINDINGS18. Auditor General Findings 2011/12 In progress On-going19. Internal Audit Findings 2011/12 In progress On-going

Internal Audit Findings 2012/13 In progress On-goingAD -Hocs20. Review of AFS 2012/13 Completed 30/08/201321. First quarter Stock count review Completed 31/09/201322. Second quarter Stock count review In progress 31/01/2014

Below is a graphical representation of the status on audits progress:

4.5 Follow up on previous Internal Audit findings

During the quarter under review, IA performed follow up reviews for most of the audit reports issued during the previous financial year ended 30 June 2012. Below is a summary of status of follow up findings by Internal Audit

4.5.1 Follow up Internal findings 2011/12

# Name of Audit Resolved In progress

Not resolved

Total Risk Rating

1. Donations 3 2 - 62. Food bank 3 1 - 43. Petty Cash - 1 - 14. Fixed assets 1 1 25. IT General Controls Review

(GCR)20 2 0 22

6. Maintenance & Disaster Recovery of Ammonia Plant (Electricity reticulation)

7 1 8

Description Resolved In Not Total


Progress ResolvedTotal 81 8 0 89Percentage 91% 9% 0% 100%Percentage reported at the previous meeting

87% 13% 0%

Below is a graphical representation of the status of follow up audits:

4.5.2 Follow up on Internal findings 2012/13

# Name of Audit Resolved In progress

Not resolved

Total Risk Rating

1. Revenue - Commission 2 1 32. Revenue – Other Income 2 23. Performance Information (4

quarters)2 2

4. Consignment 3 3 65. QA and Laboratory 3 1 46. EPWP 07. Market of the Future 08. Cashiering 39. Property Management 2 210. SCM 3 311. Waste Management 3 312. CFRC: Fixed Assets 2 213. CFRC: Debtors 3 3 6


14. CFRC: Creditors 015. IT Applications: JDE 2 2 416. IT General Controls 3 3

Description Resolved In Progress

Not Resolved

Total

Total 17 26 0 43Percentage 39% 61% 0% 100%Percentage reported at the previous meeting

0% 0% 0%

Below is a graphical representation of the status of follow up audits:

4.6 Follow up on the Auditor general’s (AG) findings

The total management findings for 2011/12 were 22, to date 21 (96%) have addressed by Management and substantial progress has been made to address the remaining 1 (4%) findings. Below please find the table and graph:

# AUDITOR-GENERAL FINDING

PERSON & POSITION RESPONSIBLE FOR ACTION

DUE DATE STATUS

1 Long outstanding debtors Audit finding

Name: B Dhlamini Position: CFO

30 June 2014

In Progress


4.7 Capacity of the department

Internal Auditor department capacity was affected by the staff study leave and current AG audit underway.

4.8 External Audit 2012/13

The Management letter issues raised during the above auditing period are tabled below and contains action indicators and dates for resolving each matter raised.


Auditor General 2012/13 Management Letters Issues

No. Audit Finding Internal control deficiency Corrective Measures Responsibl

e

Date to be

Resolved

1 The following bank account held by the entity (JM) was not disclosed in the financial statements

Financial and performance management

All Bank accounts held by the entity will be adequately disclosed in the financial statements.

CFO 31/12/13

2 The following sampled invoices included in the accruals balance were accounted net off vat thus understating amounts owed to suppliers:

Projected misstatement: R1 500 000


Review and monitor compliance with applicable accounting framework

All accruals will be disclosed in the Financial statements VAT inclusive.

CFO 31/12/13

3 Part A

During the review of the Appropriation Statement, it was noted that management has not included any explanations for material variances between the budget and actual amounts disclosed in the annual financial statements.


Review and monitor compliance with applicable reporting framework

The Appropriation Statement in the Annual Financial Statement has been adjusted to include explanation of material variances between the budget and actual amounts.

Chief Financial Officer

30/11/13

4 Part B

Furthermore, management has not disclosed in the notes to financial statements the explanations for the adjustment in the approved budget.

Explanation for the adjustment of the approved budget has now been disclosed in the notes to the financial statements.


30/11/13

5 The following suppliers were not paid within 30 days:


Implement controls over daily and monthly processing and reconciling of transactions to ensure payments are made within agreed terms.

A register for invoices has been implemented to track invoices and ensure that it is monitored on a regular basis to make sure that overdue invoices are cleared promptly.


31/12/13

6 Municipal Supply Chain Financial and performance Management will follow up Senior 31/03/14



e

Date to be

Resolved

Management Regulation 44 states that the supply chain management policy of a municipality or a municipal entity must, irrespective of the procurement process followed, state that the municipality or a municipal entity may not make any award to a person -

a) who is in the service of the states

b) if that person is not a natural person, of which any director, manager, principal shareholder or stakeholder is a person in service of the state or

c) who is an advisor or consultant contracted with the municipality or municipality

The term “in service of state" is defined in the Municipal Supply Chain Management regulation to include persons working any state institution

During the audit of procurement and contract management, we noted that in some instances contracts were awarded to companies in which some stakeholders are persons in the service of other state institution.

management

Management did not review and monitor compliance with applicable laws and regulations

appointed service providers on the Auditor General database to ensure that they are not in the service of state.

Manager: Supply Chain

7 The entity has not implemented effective revenue collection system as the following sampled debtors accounts were in arrears for over 120 days


The entity’s working capital was not effectively managed, to ensure compliance with laws and regulations

Collection of monies due to the entity will be fast tracked to ensure that there are no long outstanding debtors.


28/02/14

Security management ensures The internal control



e

Date to be

Resolved

8that security controls are implemented to prevent unauthorised access to the network and information systems that generate the information used to prepare the financial statements

Key audit findings identified:

Network patch management was reviewed and the following weaknesses were noted:

Although patches were performed, however WSUS, does not clearly generate reports, of patches pushed through for the period under review.

Without formal testing and approval to validate that only approved patches are implemented there is a risk that unauthorised patches or upgrades are applied to the entity’s infrastructure which can adversely impact the functioning and integrity of data

deficiencies identified were categorised as (Financial and performance management: Design and implement formal controls over IT systems to ensure reliability of the systems and the availability, accuracy and protection of information) deficiency and could be ascribed to the following:

WSUS system does not provide a proper audit trail of all patches performed, due to limitation on the system.

The company will implement formalised policy for documenting the OS changes the purchase would be formally documented and testing evidence and approval be retained as part of the process.

The Senior Manager: Information Systems

31/03/14

9 User access control is the systematic process of managing the access of users to an application. The process includes the creation, review, disabling and removal of user accounts.


1) Evidence of user starter forms could not be obtained for certain users that were selected for testing on the Selling Processing system (SPS). This could result to unauthorised users being created on the system without formal process and this might increase the risk of unauthorised access.

2) There is no formal process for

The internal control deficiencies identified were categorised as (Financial and performance management: Design and implement formal controls over IT systems to ensure reliability of the systems and the availability, accuracy and protection of information) deficiency and could be ascribed to the following:

Non-adherence and implementation of new user creation control processes by system owners and user departments. IT department also

Management will ensure that the implementation of the user starter forms for SPS are adequately and effectively implemented as designed.


31/05/14



e

Date to be

Resolved

registering new users, removing access for terminated users in the system and for reviewing the activities of the system administrator for the Payday system. Inadequate user account management practices increases the risk of users with unauthorised access rights going undetected. This could result in unauthorised additions, modifications, and deletions of transactions and other data of significance to the entity.

3) Furthermore, the following password controls relating Payday system had not been defined in the system:

o Minimum password length;

o Password complexityo Number of incorrect

attempts before a user is locked out and how this is reset;

Without adequate controls on the application systems, there is a risk of unauthorised access to the Payday application systems, which may lead to unauthorised data manipulation.

responded to informal communication for user access requests for new users, this resulted in some users not completing user starter forms.

Payday has traditionally not been administered by the IT department. However full IT policies and procedures need to be followed in all systems deployed.

The Payday system is a packaged system acquired from the vendor, the challenge is that password security settings cannot be changed as the system was bought off the shelve as is (limitation on the system functionality).

Manager: Payroll Manager

10 IT service continuity is the process of managing the availability of hardware, system software, application software and data to enable an organisation to recover/re-establish information systems services in the event of a disaster. The process includes IT continuity planning, disaster recovery plans and backups.


Backup and recovery

The internal control deficiencies identified were categorised as (Financial and performance management: Design and implement formal controls over IT systems to ensure reliability of the systems and the availability, accuracy and protection of information) deficiency and could be ascribed to the following:

IT management will ensure that backup and recovery procedure document is reviewed to ensure that adequate back up processed are catered for, and outline a process of regular restoration and testing of backups.


28/02/14



e

Date to be

Resolved

procedures were in place, however they did not include the following:

o Process of initiating the backup;

o Retention period of critical application requiring backups;

o The process of re-running failed backups;

o The process of ensuring that tapes are taken offsite;

No evidence was provided for ensuring that Payday backups were tested for restoration.

Management considered the current backup processes adequate.

The systems and network administrator is also in a process of reviewing the backup and recovery procedure document.

11 On review of the service delivery agreement between City of Johannesburg and the entity, the following deficiencies were identified:

the service level agreement has not been signed by the two parties,

the service level agreement does not have key performance indicators, as a result, entity was unable to prepare and include an assessment of the entity’s performance against any measurable performance objectives (KPI’s) set in terms of the service delivery agreement between the entity and its parent municipality, as required by section 121(4) (d) of the MFMA.

The entity has been reporting on the KPIs included on the approved business plan.

Financial and Performance Management

Pertinent information is not identified and captured in a form and time frame to support performance reporting

Service Delivery agreement will be forwarded to COJ to ensure that it is properly signed, and also ensure that It has key performance indicators.

Senior Manager Strategy

31/03/14



e

Date to be

Resolved

12 We could not establish any link between the entity’s budget and the revised service delivery agreement.


Review and monitor compliance with applicable laws and regulations

The new Business plan will ensure that all KPI’s are aligned with the Budget.

Senior Manager Strategy

31/03/14

13 The following supplier was awarded a tender exceeding R 1million but did not have a VAT registration number:


Manual and automated controls where not in place to ensure that all suppliers who were awarded tenders in excess of R 1million, are registered VAT vendors

The Company will ensure that all suppliers who tender for Bids in access of R1million are registered vendors

Senior Manager: Supply Chain

30/11/13

14 Employees working for the entity who did business with other state departments

Financial and management performance

Controls are not operating effectively to ensure that all employees completely declare their interests.

The company will confirm that all appointed service providers are not working for the state.

Senior Manager: Supply Chain

31/01/14


CHAPTER SIX: SPECIAL PROJECTS

SECTION 1:

MARKET OF THE FUTURE (INCLUDING SWEATING OF THE ASSET)

6.1 Summary of Work Completed To December 2013

6.1.1 Stakeholder Consultation

The stakeholder consultation process was completed after presentations of the final proposed concept to the various stakeholders. This was the final stage following the initial meetings with the stakeholders, and the second round of consultation where options and proposals were presented. The key stakeholders in the final round included: IMASA; Mandela Market Committee; the Unity Market Committee; the Wholesalers Committee; the Watermelon agents; as well as other stakeholders. In all cases, the committees were satisfied with the outcome of the master plan exercise and noted that they could support it. However, concerns were raised by certain committees on how the implementation of the plan will impact their operations.

All consultations meetings were minuted and a set of all stakeholder-meeting notes were collated and summarized in the stakeholder consultation report.

6.2 Work Process – Concept Design

Following the finalization of the master plan and the respective market nodes, a concept design and costing was undertaken. The tasks for this plan included:

6.2.1 Confirmation of the market nodes6.2.2 Quantification of space requirements6.2.3 Investigation and assessment of specific standards of finishes and other requirements

for each building use6.2.4 Reviewing outcomes of stakeholder consultation and incorporating final comments into

concept designs6.2.5 Architectural concepts for floor layouts for flows and space relationships6.2.6 Indicative elevations and sections for buildings (where applicable)6.2.7 Inclusion of sustainability and ‘green’ design principles into concept designs6.2.8 Structural engineering assessment of concept designs6.2.9 Quantification of bulk infrastructure requirements for market nodes6.2.10 Electricity demand analysis for market nodes6.2.11 Concept for fencing and security6.2.12 Concept for improvements and rationalisation of road space6.2.13 Provision of new parking area


6.2.14 Bulk earthworks concept6.2.15 Bulk storm water concept6.2.16 Conceptual layouts for water and sewer reticulation6.2.17 Tri generation plant development concept6.2.18 Elemental cost estimate

6.3 Summary of Market Nodal Design

The market has been divided into 10 nodes surrounding the Market of the Future. All nodes are underpinned by the bulk infrastructure plans.

6.3.1 Overview of Market Nodes

The Master Plan nodes have emerged after consultation and analysis to divide the market into manageable areas with a common activity. Fig 1 below shows the layout of the nodes, whilst Table 1 gives a brief overview of the function of each node

Fig 1: Master Plan nodal layout


No. Name Description1 Market of the Future New Fruit and Vegetable Hall; new Potato and Onion Hall and

related facilities.2 Cash Market Node This node includes the Mandela Market; Unity Market and

related cash trading enterprises.3 Value Added Facilities

NodeThis node encompasses Halls 1& 2 and Hall 9. It will ultimately be a facility that supports food processing, packing and wholesale operations. The facilities will be built to a standard that enables the resident operations to be HACCP certified.

4 Market Support Node This node provides facilities to support the operation of the market. This includes a pallet pool, a waste sorting facility, a forklift repair facility, a trolley repair facility and a box recycling facility.

5 Truck Stop Node This node refers to a proposed truck facility that will provide a truck waiting area, consignment control facility, weighbridges and a canteen and driver restroom facility.

6 Sweating of the Assets Node

This node is the vacant land at the south of the Market. This land parcel will be developed in future to provide additional agro processing or other related facilities for the market.

7 Energy Centre Node This node includes a proposed tri-generation plant and allows for a potential biogas facility.

8 Administrative Centre Node

This node encompasses the existing administrative building and a proposed new office building that will include a security office, a SAPS satellite station, a wellness centre and general office space.

9 Wholesaler Facility Node

This is the existing Massmart building.

10 Core support Node This node provides facilities to the core MOTF. It includes a truck unloading area; a seasonal produce area; a battery charging facility; a laboratory; and a canteen facility.

Table 1: Master Plan Nodes

6.4 Cash Market

A detailed concept for a proposed future cash market has been prepared based on the findings of the consultations with the respective committees. An architectural concept has been worked up and presented to the market committee, who have approved the concept. The cash market includes:

Trading areas for Unity Market traders Trading area for Mandela Market traders Provision for a ‘housewives market’ for the Mandela Market Provision of dedicated stalls for the ‘cooking Mamas’ Cold room facilities Improved ablution facilities Provision for cashiers Improved parking and loading areas


Adjustment to taxi rank location

Fig 2: Artist’s impression of proposed future Cash Market

6.5 Truck Stop Facility

A concept for a truck stop and consignment control facility has been prepared. This will include space for weighbridges; consignment control office and truck driver’s facilities including a canteen, ablutions and a rest area. A concept layout of the truck stop and an architect’s impression is shown below.

Fig 3: Concept Layout of Truck Stop Facility


Fig 4: Architect’s Impression of Truck Stop Facility

6.6 Market Support Area

A concept design for the node termed the Market Support Area was prepared. This area is designated to provide support services to the market agents and traders. The following elements are included as part of the market support area:

Pallet Pool: the pallet pool is planned as an entity that can be independently operated (possibly by an emerging SMME) and will be the primary store of brown pallets at the market. It will be augmented by satellite pallet pools and pallet collection points, however the central operating, storage and maintenance facility will be houses that the Market Support Area.

Waste Sorting Facility: a facility that addresses the current market shortfalls and complies with all applicable waste legislation is proposed for this node. It will provide receiving facilities; separation of waste types; compactors and recycling areas. This facility also has the potential to be operated by an emerging SMME. Space has been provided for future expansion should the need arise.

Forklift maintenance and repair: a space for a forklift maintenance operator has been provided for in this node. It is envisaged that it will be run by a private operator and as such only, a space has been reserved.

Trolley repair: a space has been allowed for trolley storage and repair. This could be done either in house by the market of potentially run by an emerging SMME.

Truck Wash facility: a facility to wash and disinfect trucks to comply with certification standards is proposed for a location at the edge of this node.


Box recycling facility: a space for the existing box-recycling operator (Bernie’s Boxes) has been allowed for. It is located close to the waste facility.

Fig 5. Market Support Node

6.7 Value Add Facilities

The purpose of the Value Add facilities is to provide accommodation for enterprises that draw on the proximity to the MOTF to provide additional value to the produce traded at the market, thus increasing throughput of produce through the Agents and providing increased turnover to the market as a whole.

The facilities will be able to house food processing and packing operations as well as fresh produce wholesalers in an environment that will enable them to operate a compliant facility that meets the certification requirements of programs such as such as HACCP and other client specific requirements.The existing Halls 1 & 2 and Hall 9 have been identified for this purpose. The plan provides for Hall 1 & 2 to be enclosed and combined into one larger hall. Moveable partitioning will be provided to allow for a flexible arrangement of lease areas. An architect’s impression of the external areas of a Value-Add hall is shown in Fig. 6 below.


Fig 6. Value add facility – external view

6.8 Administrative Centre

The concept proposes that the existing administrative centre remain in the same location, however it is augmented by another office building located over the Cash Market. This will house the security staff; an upgrade pedestrian entrance facility; and SAPS satellite office; a wellness centre and general office space. The facility is proposed to be linked to the existing administrative building by means of an elevated walkway over the market entrance. An architect’s impression is shown in Fig. 7 below.

Fig. 7 Architect’s impression of administration centre


6.9 Wholesalers Node

The existing Massmart Wholesaler will remain in its current location. The roads and parking will be adjusted to accommodate the new Market of the Future layout. Fig. 8 below shows an architect’s impression of the Wholesalers Node.

Fig. 8 Wholesalers Node

6.10 Sweating of the Assets Node

The concept for this node focused on the provision of bulk earthworks and infrastructure to enable the development of the SotA land for complimentary uses for the market, such as wholesale of agriprocessing.

6.11 Core Market Services

The core market services node will provide facilities to support the day-to-day activities of the Market of the Future. This includes:

Electric forklift charging station Seasonal produce area (citrus and watermelon) Existing cold rooms and ripening facilities Existing canning facility Proposed canteen and food preparation (not public) Laboratory Overflow unloading area


6.12 Energy Centre

The energy centre node is proposed to be located near the truck entrance. This will house the proposed tri generation (combined electricity, heating and cooling plant) and should it be feasible, a biogas facility that will be able to produce gas from the organic waste generated from the market operations. Fig. 9 below shows a typical trigeneration plant.

Fig. 9 Typical Trigeneration plant (City of Sydney)

6.13 Bulk Infrastructure

A bulk infrastructure concept design was undertaken based on the outcome of the master plan study. This included the incorporation of the MotF road and parking layout with the existing arrangements a rationalisation of the road and parking layouts across the whole market. Additionally the electricity, water, storm water and wastewater networks were reviewed and upgrades proposed to enable the infrastructure to meet the future needs of the market. An overview of the market layout for which the infrastructure design responds to is shown in Fig. 10 below.


Fig. 10 Overview of Market layout.

6.14 Documents Delivered during Quarter 2

The table below presents a list of reports done to date.

Report Name Date IssuedStakeholder Consultation Report (Rev 1) November 2013Options Generation and Master Plan Report November 2013Concept Design Report December 2013


Table 2: Table of ReportsAppendix A - Stakeholder Consultation Schedule


1st Meeting 2nd MeetingOrganisation Contact Person Role Email Tel Cell Letter Nr Meeting date Follow-up Meeting

Joburg Market:Marius Pieters Senior Manager [email protected] 0119928127 0827711006 -Charles Park Sales Hall Manager [email protected] 0119928122 0836318021 - TBCClint Jardine Manager Consignment Control [email protected] 0119928129 0832298886 - 21 August 2013Sello Makhubela Senior Manager Infrastructure [email protected] 0119928110 0764395078 -Mqhele Mlotshwa Acting Head - Property Admin [email protected] 0119928085 -Rachel Nkwwashu Property Manager [email protected] 0119928074 - 28 May 2013Mpho Mokwebo Food Bank [email protected] 0119928100 -Madelaine van Duuren IT [email protected] -Billy Voster IT [email protected] 0119928050 -Kobus Brits Cold Storage [email protected] 0119928044 - 20 June 2013Charles Hammilton SHE [email protected] 0119928125 - 20 June 2013Graig Pillay Quality Assurance [email protected] 0119928051 - 18 July 2013Alma van Eden Archive [email protected] 0119928057 0842958057 - 21 August 2013

Mandela Market:Themba Radebe Chairperson [email protected] 0836847888 0826636630 4David Osaro Deputy Chair [email protected] 0835238451 5Theo Ebims Committee member Not available 0116136182 6Josephine Mazibuko Secretary Not available 0116136182 7

Unity Market:Samir Patel Chairperson Not available 0833773857 9Dara Wadia Secretary Not available 0785034394 10

Imasa: (Institute of Market Agents of South Africa)Helgaard Theunissen Chairman Not available 0825786250 13 21 August 2013 TBC

Market Agents:RSA Justy Range [email protected] 0726202337 29 17 July 2013Dapper Pieter Fraser [email protected] 0116134021 0825762426 30Botha Roodt Chris Roodt [email protected] 0116136981 - 21 August 2013City Deep Watermelon Steve Michaels [email protected] 0116133470 -Citi Fresh Helgaard Theunissen [email protected] 0116134344 - 21 August 2013CL de Villiers Ronel Harris [email protected] 0116133618 -Execu Fruit Carlos Dos Ramos [email protected] 0116136101 -Marco Paul Botha [email protected] 011 613 8781 -Metro Sam Nedzanani [email protected] 0116135403 -Catu Gilbert Nedzanani [email protected] 011 614 7100 -Subtropico Ben Van Zyl [email protected] 0116138611 -Egoli Danny Geral [email protected] 082 563 4562 -Wenpro Anne Marie [email protected] 0116133917 - 21 August 2013Target Reshan Reddy [email protected] 0116231293 0832663789 21 August 2013Pula Nala Christine Hendricks [email protected] 0116132215 -Support services:Delta Thomas Barker Contractor [email protected] 0832424022 - 17 July 2013National Forklift Suppliers Jan van Staden National Forklift Suppliers 0116131733 0726279497 14 01 August 2013

Gert Venter [email protected] 0112169601 0823200728 - 17 July 2013Andre Kruger [email protected] 0118424435 0824576208 - 17 July 2013

Trolley Rentals Not available

Wholesalers, exporters and dry goods:Apple Queens Dharmesh Dhanji Secretary Not available 0116231262 0824502701 11 07 June 2013Rebelo Agri Products Jose Rebelo Packaging Material [email protected] 0116137438 0827161664 15 17 July 2013King Fresh Shivesh Govind Anchor Tenant and Canners Not available 0116137001 0844444440 12 13 June 2013 21 August 2013Lala Govan Kamal Bhagvan Chairperson Not available 0116134462 0723725626 - 13 June 2013Bernies Boxes Cecilia Fernandes Second Hand Boxes Not available 0116131519 0828216103 8 13 May 2013Euro Gold Not available - 13 June 2013Trancendent Holdings Johan de Bruin [email protected] 0832715878 - 17 July 2013Rebelo Agri Jose Rebelo [email protected] 0116157438 0827161664 - 17 July 2013Farmlink James deOliveira [email protected] 0116131803 0824361420 - 17 July 2013AB Fresh Vikesh General Dealer Not available 0116136524 0828549364 17 walk throughStop Perishables Wholesalers Mr Jakes Van Niekerk General Dealer [email protected] 0116131534 0824119072 20Market Cash & Carry Shirly Titus DC Not available 0116231962 0827227331 21Morning Dew Farms David Gonsalves Packaging Material [email protected] 0116134266 16Food For Life Michael Lloyd Hooper General Dealer Not available 0116131012 18Voorspoed Seed Faan Vegetable seed merchant Not available 0116137756 0728513914 19Hew Stop & Shop Peter General Dealer Not available 0734899437 25Kingsley Soda Nelin Dinis Not available 0116222639 0824520965 - 21 August 2013BINI International (Potential wholesalers)AG Mancha [email protected] 0832505885 - 01 August 2013Suskia K Vanmalli [email protected] 116138633 0827289788 - 21 August 2013Retail and Restaurants:Curry Tarven Urvashi Sana Restaurant [email protected] 0110225830 27Cooking Mamas Themba Radebe Cooking Mamas [email protected] 0836847888 0826636630 28City Deep Meat Market Mr Maponya Butchery [email protected] 0116133334 0837539912 23Market Hall Fisheries Mr Fernandes Nicolau Fish Monger Not available 0116136244 0823720600 24Pride of India M V Juta TakeAway [email protected] 0118392192 0826386533 26Paul Supermarket Joe TakeAway Not available 0116231931 0845566233 22

Other:Land owner near engen Lauren Frame Not available - 25 July 2013

28 May 2013

13 May 2013

Chep

07 June 2013

TBC

13 May 2013 20 June 2013

CHAPTER SEVEN: OPERATIONAL ASSESSMENT

SECTION 1:

COMMISSION BUSINESS

1. Summary

1. The overall performance for most of the products has been relatively good in the second quarter. Turnover increased by 9.53%, mass decreased by 2%, while price was basically on par compared to the corresponding quarter in the previous financial year.

2. Joburg Market had a record sales month in October (R530m) and a record sales day on the 10th December (R29.7m). To put this performance in perspective, the record month is +- 50% of Durban Markets annual turnover and the record sales day is Springs Markets average monthly turnover.

3. The significant increase in turnover can be attributed to strong demand for fresh produce locally and from the SADC region. Sustainable high prices especially in potatoes, apples, pears and summer fruits (peaches, nectarines, watermelons and grapes) also contributed to this performance during the reporting period.

4. Turnover and price outperformed budget by 14.12%, and 18% respectively in the second quarter. The year–to-date (YTD) performance on turnover, mass and price was above budget.

5. The established Market Agents performed relatively well and constituted 85% of the Market’s total turnover. Most of the BEE market agents remained under pressure, however as a collective they reflected a remarkable growth in turnover and mass of 49% and 52% respectively, compared to the corresponding period in the previous financial year.

6. The turnover and mass-market share of small-scale farmers was 5% and 4.7% respectively in the second quarter.

7. The national market share of Joburg Market for the reporting period was 47.3% in turnover and 45.3% in mass of all South African fresh produce markets, excluding Cape Town. (The Cape Town Market does not disclose their figures since 2010)

8. In terms of the year-to-date performance, turnover, mass and price outperformed budget and is also above last financial year`s performance.


1. Budget Actual vs. Budget (2013/14)

PERIOD TURNOVER (R`m) MASS (`000 TONS) PRICE (R/KG)ACTUAL

BUDGET %

ACTUAL

BUDGET %

ACTUAL

BUDGET %

1st Quarter 1 294 1 221 5.9 332 306 8.5 3.90 3.99 -22nd Quarter 1 519 1 331 14.12 323 330 -2 4.70 3.98 18YTD 2 813 2 552 10.22 655 636 8 4.29 4.0 7.25

By utilising long-term trend analysis, the turnover for the 2013/14 financial year was projected at R4.934 billion. The first and second quarter outperformed this budget by 10.22%.

2. Prior year comparison Current vs. Prior YearPERIOD TURNOVER (R`M) MASS (`000 TONS) PRICE (R/KG)

2013/14

2012/13 %

2013/14 2012/13%

2013/14 2012/13%

1st Quarter 1 294 1 080 19.73 332 320 3.9 3.90 3.70 15.222nd Quarter 1 519 1 388 9.53 323 296 4.67 4.70 4.68 0.42

YTD 2 813 2 468 32.76 655 61613.85 4.29 4.00 4.14

3. Price The overall performance of the average prices against budget is depicted in the graph below. The average price was below budget from July to September due to the citrus season as the average price is generally low during this period. The average price increased significantly in October due to the summer fruit season starting and obtaining high prices.

Budget vs. Actual

4. Market Agents

4.1 The turnover of the top five market agents contributed 81% of `s total turnover. Wenpro’s and RSA`s growth can be attributed to the performance of their potato section. Marco`s decline in


turnover can be attributed to two salesmen who left and joined a BEE market agent, namely DW Fresh.

4.2 The second largest market agent, Wenpro’s market agent was sold to Subtropico market agent, the most represented market agent at National Fresh Produce Markets in South Africa.

4.3 Most of the BEE market agents remained under pressure; however, as a collective they reflected a remarkable growth in turnover and mass of 49% and 52% respectively compared to the corresponding period in the previous financial year.

Market AgentsMARKET AGENTS 2013/14 2012/13 % Growth Market ShareR S A 358 304 587 346 603 068 3.38 23.57WENPRO 349 729 032 327 977 700 6.63 23.01BOTHA & ROODT 281 665 526 264 619 383 6.44 18.53DAPPER 149 300 667 133 574 532 11.77 9.82MARCO 93 592 659 99 412 237 -5.85 6.16EXEC-U-FRUIT 83 635 959 67 080 099 24.68 5.50C L DE VILLIERS 55 819 070 43 286 204 28.95 3.67EGOLY 43 778 684 27 645 777 58.36 2.88SUBTROPICO 37 365 373 26 741 775 39.73 2.46WATERMELON PANEL 22 607 159 16 637 816 35.88 1.49DW FRESH 20 146 751 NULL NULL 1.33CITIFRESH 16 186 062 14 524 864 11.44 1.06METRO 3 877 342 5 255 190 -26.22 0.26TARGET 2 849 784 13 662 404 -79.14 0.19PULA NALA 753 725 595 217 26.63 0.05CATU FRESH 63 335 49 818 629.32 0.02

Empowerment

The performance of the small-scale farmers in terms of turnover and mass reflects negative growth. However, due to the sustainable high prices some small-scale farmers have increased to the extent that they now fall outside the category of small-scale farmers. This is positive as it brings about growth and sustainability of small-scale farmers.

Rising input costs remain a major challenge and significantly impede growth for small-scale farmers, as they do not have sufficient financial resources as large commercial farmers.

Small-scale farmers constituted 5% and 4.7% of the Market’s total turnover and mass respectively for the reporting period.

Small scale FarmersPERIOD TURNOVER (R`M) MASS (`000 TONS)

2013/14 2012/13 %%M/Share 2013/14 2012/13 % %M/Share

1st Quarter 77 74 4.05 6 17 20 -15.00 5.22


2nd Quarter 82 83-1.20 5 15 16 -6.25 4.70

YTD 159 157 1.27 5.66 32 36 -11.11 4.97

The table below on BEE market agents shows phenomenal increase in turnover and mass for the first and second quarters due to consistent performance of Egoly market agents and a new BEE market agent, DW Fresh that started trading in the second quarter.

As a result, the BEE market agent’s market share for turnover and mass in the second quarter was 4.7% and 5.5% respectively - an increase of 38% in turnover market share and an increase of 52% in mass-market share compared to the corresponding period in the previous financial year.

BEE Market AgentsPERIOD TURNOVER (R`M) MASS (`000 TONS)

2013/14

2012/13 % %M/Share 2013/14

2012/13 %

%M/Share

1st Quarter 42 28 49 3.23 11 8 34 3.522nd Quarter 72 47 52 4.72 16 10 54 5.5TOTAL 114 77 48 4.04 27 18 50 4.47

Stakeholder Relations (Assistance Programme)

The table below contains details of participation in industry related eventsPRODUCERS/EVENTS/MEETINGS AREA PURPOSE KPA VALUE

Plantation Farms, Clearwater, Costa Farms, De Freitas, Goncalves,Lijani Boerdery, Dicla Farms,Langplaas, Van Der Merwe NIC and Seuns, Echo BerryOctober 2013

Gauteng

Tarlton

Brits

To establish and maintain a sustainable relationship with commercial producers in Gauteng/Tarlton/ Brits.

Business expansion

Maintain a good relationship with commercial producers that send produce to Joburg Market. Issues that were discussed are: Industry related issues, market related issues, exports, MotF and Market Agents. The producers appreciated the visit by Joburg Market.

Emerging Producers (Sedibeng Cluster)Oct 2013

De Deur To address the market access barriers that was raised by the Emerging producers during the workshop.

Transformation – Emerging producers

Information dissemination on current operations, MOTF and recent developments e.g. new gate.Strengthened communication channels in addressing producers concerns - contact details were given.Assisted producers in meeting quality and


PRODUCERS/EVENTS/MEETINGS AREA PURPOSE KPA VALUE

packing requirements

Tzaneen Information Day12-14 Nov 2013

Marigold Farms Nov 2013

Tzaneen

Tarlton

To address the market access barriers that was raised by the Emerging producers during the Letaba Agri Show on the 08 August 2013.


Information dissemination on current operations, MOTF and recent developments e.g. new gate.Strengthened communication channels in addressing producers concerns - contact details were given.Assisted producers in meeting quality and packing requirements

Potato Industry Forum meeting27 Nov 2013

Tshwane

To provide an open, transparent and inclusive platform for all role players in the potato industry to make inputs and take consensus decisions on the strategic direction to be followed by the industry and make recommendations as to how the goals could be achieved.

Business expansionInformation sharing on industry related matters

Meeting with DAFF6 Dec 2013

Joburg Market

Discussed opportunities to collaborate on assisting emerging producers to comply with Good Agricultural Practices (GAPs).


Assist emerging producers to meet statutory and industry requirements regarding food quality and safety

9. National Fresh Produce Markets (NFPM)

NFPM - (September to November)TURNOVER (R,000) MASS (Tons,000).2013/14 .2012/13 %

GrowthMarketShare

.2013/14

.2012/13

% Growth

MarketShare

JOHANNESBURG 1 439 206

1 309 559

9.9 47.3 327 300 9.1 45.3

TSHWANE 632 161

580 624

8.9 20.8 147 142 3.9 20.5

DURBAN 281 385

267 719

5.1 9.2 69 69 -0.4 9.6

SPRINGS 93 343

83 778

11.4 3.1 25 25 2.8 3.5


PIETERMARITZBURG

80 699

75 651

6.7 2.7 21 21 -1.6 3.0

Top 5 2 526 796

2 317 333

9.0 83.1 591 558 5.9 81.9

All NFPM 3 042 106

2 795 321

721 692

Note: Cape Town figures are not included due to non-disclosure of their figures since 2010

The top five Markets constituted 83% of the total turnover and 82% of the total mass of all NFPM`s

Joburg Market (JM) outperformed all other markets in turnover and mass growth, thereby enhancing as the channel of choice for producers and buyers

High demand for fresh produce from the SADC region, Joburg Market`s proximity to the SADC region and `s large variety of produce with sufficient volumes contributed to this NFPM`s that experienced a decline in mass can be attributed to lower volumes of potatoes consigned to those markets during the reporting period.

SECTION 2

COMPLEMENTARY SERIVCES

Banana Ripening

Banana Ripening revenue for the second quarter was above budget. Utilization of the facility increased due to high volumes of bananas received, evident as banana`s turnover and mass increased by 29% and 24% respectively. The bulk of the bananas were received mostly from the Mozambique area.

Cold Storage

Revenue was 8% below budget and utilization decreased by 5%, as high volumes of apples and citrus were stored at the facility. The amount of grapes received during this quarter was minimal due to some farms being burnt down during the protests in the Cape production area. The high turnover was achieved because of the big rooms being hired out to other stakeholders.

Revenue Utilization

Budget 2013/14 Growth (%) Budget 2013/14 (%) Growth (%)

Cold Rooms 2375 2190 (8) 78 74 (5)

Banana 1850 2395 29 93 115 24

TOTAL 4225 4585 9 86 95 10

The performance of the facility was relatively good, outperforming budget by 9% and utilization by 10%.

Quality Assurance


Quality Control

For the second quarter of the financial year 2013/14, an average of 30% of products received was inspected for quality control purposes and 0.2% thereof was rejected for sale. Products were mostly rejected in storage as a result of poor shelf life, namely apples, lemons, baby gem squash, baby sweet corn cabbage, lettuce, sweet potatoes, green beans, potatoes and onions. Two consignments of grapes and two consignments of patty pans were rejected on arrival due to high percentage decay. The producers concerned were issued with rejection reports. Where viable, some of the rejected products were sorted and re-packed prior to sale while decayed products were destroyed.

As part of an ongoing monitoring programme, mass conformity checks were performed on products received to determine compliance with marking declarations. Results of findings were forwarded to the respective agents and producers to ensure compliance.

Food Safety Food safety audits were conducted at the Banana Ripening Facility, Cold Stores, Halls and Food Bank to determine food safety risks to stored products and to effect measures to eliminate or minimise such risks. Where non-conformances were identified, Corrective Action Request (CAR) reports were issued to the respective facility management to undertake remedial action. During second the quarter, the Commercial Service Halls embarked on a cleaning exercise to remove unwanted items and clean partitions, pillars and roller doors. In addition, operational staff, including some security officials attended a food safety workshop on how to enhance food safety monitoring and control of same on the market premises.

In terms of ensuring producers comply with food safety requirements, the registered with Global GAP (Global Good Agricultural Practices) and became the first fresh produce market in the country and in the world to become members. The endeavours to assist small-scale producers in implementing the “Local GAP” standard.

Laboratory

For the second quarter of the financial year 2013/14, seventy three (73) samples of fruit and vegetables were tested for pesticide residue compliance whereby one sample of table grapes exceeded the Maximum Residue Limits (MRLs). The producer was informed and the follow-on consignment was targeted for testing.

The results for most of the products tested indicate that the relevant producers are adhering to Good Agricultural Practices (GAP) during production, harvest and post-harvest chemical treatments. The Joburg Market Laboratory (L) was assessed by South African National Accreditation Systems (SANAS) as a part of its surveillance audit, whereby SANAS was satisfied with the maintenance of the ISO 17025 standard, hence accreditation was maintained. During the quarter, there were disruptions to the lab operations for the months of November and December due to infrastructure demolitions and construction of office space for Standard Bank.


SECTION 3:

INFRASTRUCTURE

1. SUMMARY

1.1. In the first and second quarter of 2013/14, most infrastructure services in the form of buildings, roads, water, sewerage systems, electrical and mechanical services were successfully rendered. The Infrastructure maintenance and investment done during the six months did not only improve infrastructures performance but also underpin services sustainability. It also contributed significantly towards business growth.

The main functions of the Infrastructure Department include maintenance of existing infrastructure, capital projects to replace old infrastructure, projects to establish new infrastructure and managing infrastructure related contracts, including cleaning, pest control, waste removal and garden services.

1.2. During the first and second quarter of the 2013/14 financial year, most repairs and maintenance schedules were successfully completed.

1.2.1.The general building works that were done on the Market in the period under review included the repairing of critical roof leaks in halls 5, 6, 7 and 8, canning factory and cold stores, replacement of damaged drain covers in the trading halls, patching of potholes in various parts of the market, restoration of ramps on the hall platforms, resurfacing of some areas of the platforms, servicing of air conditioners, attending to electrical infrastructure. Mechanical works included reparation of cold rooms and maintenance of the banana ripening facility.

1.2.2.The cleaning, pest control and waste removal activities were monitored daily and critical issues are resolved as and when they arise. Monthly meetings were held with the contractors to resolve outstanding issues. The monthly audit findings were communicated to the contracted cleaner for corrective action and improvement.

1.2.3.The Capex Forum meets bi-weekly to monitor the performance of the various user departments on the implementation of Capex projects as planned.

SECTION 4

MAINTENANCE


Preventative Maintenance Program

Mechanical

Most ripening rooms were repaired under the mechanical preventative maintenance contract. The biggest advantage of the program is that turnaround times have been improved significantly and the maintenance costs have reduced. The biggest challenge at the moment is the unavailability of parts for the equipment that is obsolete. The Otis lifts were fairly operational during this period and their performance is closely assessed and monitored.

Plumbing

The critical roof leaks in halls 5, 6, 7, 8, canning factory and cold stores have been repaired, however the roof leaks at halls 3 and 4 continues to be problematic. A guarantee has been provided by the contractor should a leak appear where repair work has been done. However, there is an urgent need to replace the roof sheeting in some areas and this will only be done as part of the Market of the Future project. The project to replace damaged drain covers inside the halls has continued; with a further fifty drain covers replaced.

All ablution facilities have been repaired and a system is in place whereby these facilities are continuously cleaned, maintained and monitored to reduce the risk of vandalism and theft. All plumbing installations were monitored on daily basis.

Civil

The potholes around the market premises were sealed between trading halls and platforms, resurfacing of platforms, re-marking of lines, restoration of ramps and painting of kerbs. Road marking and restoration of humps were done at the old entrance and at various parts of the market. Further plans are made to repair the critical civil infrastructure within the Market. All potholes identified in the market premises are also continuously addressed.

Building

Market agent’s offices, laboratory area and the new wellness centre were refurbished. Roller Shutter doors were repaired in the trading halls. Most forklifts ramps and guardrails were repaired. The project to mark new lines in the trading halls has continued and is progressing well.

Electrical

Main Distribution boards inside the trading halls were replaced and some repaired, dysfunctional light fittings in the platforms and common areas were repaired, pre-paid meters were installed and repaired in various areas and five transformers were serviced and repaired.

4.2 Expenditure

Cumulative maintenance spending was as follows: PERIOD ACTUAL (R’m) BUDGET TO DATE (R’m)Mid-year 9,065,163 10,797,500


4.2.1 As illustrated in the table above, the maintenance budget has been slightly underspent. With all preventative maintenance contracts now in place, the Joburg Market will be able to speed up maintenance expenditure quite significantly.

CAPEX

The Infrastructure Capex Projects are as follows:

OBJECTIVE OUTCOME ACTIVITIES Target Date

BUDGET EXPENDITURE TO DATE

COMMENTS

World Class Infrastructure

Upgrade of the Infrastructure

Construction of the new ablution facility between halls 8 and 9 and the upgrade of 1st floor boardroom toilets.

30 April 2014

R2.5 m R0 The tender closed and is awaiting BEC and BAC for finalisation. The project is expected to be awarded by the end of January 2014.

Rehabilitation of the road between halls 2 and 3 north

30 April 2014

R6m R60k The tender was presented at BAC and referred back to BEC for further due diligence on the recommended service provider.

Rehabilitation of the road between halls 8 and 9

30 April 2014

R5mEPWPgrant

R0 The tender was presented at BAC and referred back to BEC for further due diligence on the recommended service provider.

Foodbank sorting facility

30 April 2014

R2.5m R0 The tender closed and is awaiting BEC and BAC for finalisation. The project is expected to be awarded by the end of January 2014. .

Refurbishment of a section of Hall 2

30 June 2014

R2m R0 Electro-mechanical professional engineer have been appointed and specifications have been finalised for further engineering professionals. The BSC is expected to take place in January 2014.

Upgrade of storm water at

30 April R1.3m R0 The tender closed and is awaiting BEC




COMMENTS

the new entrance

2014 and BAC for finalisation. The project is expected to be awarded by the end of January 2014.

Install new temperature equipment at the banana ripening facility

30 April 2014

R R700k The project is 40% completed; it is expected to be 100% complete by February 2013.

Potable water to halls and wash basins

30 April 2014

R2 m R0 The RFQ to appoint the civil engineer closed and awaiting appointment.

Installation of fire doors

30 April 2014

R200kR100k was reallocated

R0 The RFQ to appoint a service provider will be advertised in January 2014

Refurbishment of the reception area

30 April 2014

R1,5 m R0 The tender closed and BEC referred it back for re-advertisement due to technical areas.

Refurbishment of the 5th floor offices

30 October 2013

R1.6m R960k The project is now 100% complete.

Installation of lights in halls 1, 2 and 9

15 May 2014

R3m R0 The tender closed and is awaiting BEC and BAC for finalisation. The project is expected to be awarded by the end of January 2014.

New standby generators

30 June 2014

R2.3 m R0 Specifications completed and the tender will be presented at BSC in January.

New Rocker bins

30 April 2013

R300k R0 Specification is completed the RFQ is ready to be issued.

Refurbishment of first floor bathrooms

31 May 2014

R500K R0 The tender closed and is awaiting BEC and BAC for finalisation. The project is expected to be awarded by the end of February 2014.




COMMENTS

Upgrade of the storm water at the back of hall 9

31 May 2014

R2.7 m R0 Specifications completed and the tender will be presented at BSC in January.

1.3. As reflected in the table above, a number of the projects are behind schedule and a huge effort is being made to recover from this to ensure that the allocated Capex is spent.

2. CONTRACT MANAGEMENT

2.1. Cleaning: The cleaning contract has expired and a new service provider has been appointed. . Monthly meetings are being held with the new service provider to assess their performance. Through the Quality Assurance Department assessment reports, the service provider is now being assessed to meet the 90% standard. The contractor will be financially penalised as per the service level agreement if the 90% threshold is not met. City Parks has now being engaged to assist with the cleaning of the Market premises.

2.2. Waste Removal: Pikitup has now been approached to assist with the removal of waste since the expiry of the previous service provider’s contracts. The challenge with the current arrangement is the spillage caused by the small bins used to collect waste; Pikitup is now looking at other alternatives to deal with this matter. As a contingency plan, JM has now placed more human resources to sweep away the spillage until such time that this matter is resolved. Other initiatives regarding bio waste handling in CoJ are considered, meetings are held with various stakeholders to consider all other available options of converting waste into a re-usable energy.

2.3. Garden Services: This service is currently being done by EPWP learners who have undergone horticulture training through the W&R SETA programme. City Parks has been requested to assist with further training for the EPWP learners and the purchasing of relevant equipment. The Joburg Market is now looking into the option of creating internship opportunities for the EPWP learners to be given one-year contracts. City Parks has is now engaged to assist with the garden.

2.4. For pest control: a new service provider was appointed and their performance is satisfactory. Monthly meetings are being held with the service provider to assess its performance. Through the Quality Assurance department assessment reports, the service provider is now to be assessed to meet the 90% standard. The contractor will be financially penalised as per the service level agreement if the 90% threshold is not met.


SECTION 5:

MARKETING

1. Introduction

The Marketing and Communications Department engages in activities aimed at promoting the Joburg Market as a world-class African Market. These include image and brand building exercises ,advertising, sponsorships, promotions, media and communications and stakeholder relations, all aimed at helping the organization to increase growth, increase brand awareness, maintain market share, improve service delivery, reputation and strengthening relations with stakeholders.

2. Executive Summary

The CEO Stakeholder engagement program with the producers was successfully completed in the quarter under review. The CEO travelled with a team to visit the producers in Gauteng, Mpumalanga, Limpopo, and Cape Town to engage with Farmers. Open to All campaign”: The number of new accounts opened in this quarter year is 1 152. The value of first time purchases from new accounts was set at 5 693 877.

In terms of communications, internal communications with staff has been improved in this quarter with a number of posters being printed to inform staff about the events, activities, interaction with CEO as well as promoting the Market of the Future.

3. Statistical Highlights

3.1. New Buyer AccountsTable 1. New buyer accounts and value of purchases as a result of the various marketing efforts

Period Number of new accounts Value of purchase

Quarter 2 1 152 5 693 877

Total 1 152 5 693 877Please note that the trends exclude the month of December 2013. Final statistics will be ready by first week of January 2014.

4. Summary Of Activities

4.1. Sponsorship

4.1.1 Momentum 94.7 Cycling Challenge


Joburg Market again sponsored the momentum 94.7 Cycling Challenge with fresh produce mainly fruit for all three categories, kiddies challenge, mountain bike, and the main race. In return for the sponsorship, the Joburg Market was afforded branding rights in all areas where was distributing the fruits. Fruits were handed out to the participants/cyclists in the above three categories.

Kiddies challenge took place on the 9 November and they were given apple, banana and naartjies. On the 10 November was the mountain bike and main race happened on the 17 November where Joburg Market was giving out the bananas to the bikers.

Momentum 94.7 Cycle challenge is the world’s second largest timed cycle race. It is held annually on the second Sunday of the month of November.

4.2. Stakeholder Relations

The 2013 CEO Stakeholder Engagement with Producers was successfully rolled out.

4.2.1 Producers-interaction with in October/NovemberThe team consisting of CEO, Operations and Marketing visited ZZ2, Montina, Mohale, Solly’s Boerdery in Limpopo, Du Toit, Core Fruit, Williams A & B, Tru-Cape in Cape Town.

The team furthermore visited the Banana Growers Association in Nelspruit, Hluhluwe Pineapples Growers Association in KZN, SATI (South African Table Grapes Industry), PPECB (Perishable Product Export Control Board) in Cape Town.

The Market also had a successful meeting attended by Board of Directors engaging with producers such as Dutoit, Plantation farm, Montina, Wildeklawer, SATI and Langplaas Boerdery.

4.3 Media and Communications

4.3.1. TV

SABC Interface Programme

The 17th of October marked the International Day for poverty eradication. SABC interface were planning to air topics on hunger, nutrition and poverty alleviation in South Africa.

Interface is a current affairs program, which looks at issues of interest such as politics and socioeconomic issues. It is broadcasted on Tuesdays at 20h30 on SABC 3.

As part of their discussion, they were highlighting food wastage from the farms to Markets and how the Fresh Produce Market distributes excess produce.

The SABC selected Joburg Market because it is the biggest Fresh Produce Market in the world by volume and it was for the past 120 years a vehicle through which small-scale farmers


could access markets and be able to sell their fresh produce and in turn making sure that fresh produce reaches the communities they serve. It is with the above in mind that they have used the as an example of how Food Security can be achieved, and to also hear from about methods that are used to make sure that minimal amount of food is wasted.

SABC News @1

The Joburg Market was approached by SABC News @ 1 to respond on allegations regarding the reorganizing of informal traders at Joburg City Centre. Mr. Justy Range (Managing Director) from RSA was present to respond to the SABC. The media enquired on how the reorganizing affected the Market Agents’ business on the sales floors.

4.3.2 Online TV

Joburg Today TV

Joburg Today’s crew were at the Market on 18 December for a Joburg Market recording and interview with CEO, Simangele Sekgobela. Joburg Today TV is an online video platform.They cover the City of Joburg extensively by featuring the lifestyle, the people, the activities and all the other trends and aspects that make the city what it is.

The show air online every weekday at 12pm. Their website address is: www.joburgtoday.tv . Their studio and office is based in Auckland Park, Mentone Media Centre building.

The interview with the CEO covered Joburg Market history, Market of the Future and volumes of fresh produce the market move annually. The crew promised to come back to bring up to date the Joburg Market’s Market of the Future project to their viewers.

4.4 Market Tours

Joburg Market conducts extensive educational tours around the market for visitors and tour groups with prior arrangements. The market tour programs include an explanation on the market operations, business opportunities and the role that markets play as ideal price setting mechanism for fresh produce. Market tours are an essential marketing tool and provide an excellent lead for business opportunities.

During the first and second quarter, the Joburg Market received various delegations interested in exploring possibilities of mutual business interest including using the Joburg Market as a supply source for fruits.

Delegations received in the last quarter include the following:

Chinese delegation visited the Market on 1 October to learn how they could exchange products with SA.

Namibian delegation was at the Market on 2 October to learn the operations system. Namibia Government has just completed their Market Structure and few companies have


http://www.joburgtoday.tv/

been identified to operate within their Market. The latter reflects the reason the delegation arrival at the Market to learn Operations.

Delegation from Botswana development Corporation (BDC) visited the Joburg Market on 3 October led by BDC Managing Director, Ms Phuthego. Since Botswana Horticultural Market is not doing well, the Government of Botswana sent the delegation to learn on how they could improve their Market.

5 Highlights of Next Projects

PROJECT ACTIVITY AND MONTH ADVANTAGES TO JOBURG MARKET

120 years Celebration

Joburg Market is celebrating 120 years of existence and a 40 years mile stone of dynamic history and heritage of operating at the current site in City Deep.

Stakeholders – past and present for their support, and continued dedication.

Branding of New TruckDeliveries/Returns

The Joburg Market has opened the New Truck Deliveries/Returns entrance.The current entrance was closed for Deliveries and Returns as of 1 July 2013. The branding of the gate will take place during the month of January 2014 by an arrangement of banner poles that come on a screen.

To increase thevisibility of New TruckDeliveries/ Returnsentrance

Replacing of the fading BananaRipening signage

The Banana Ripening signage is fading and needs to be replaced. The installation of the new signage will take place in January 2014.

To increase the visibility of Banana Ripening Facility to the Delivery/Returns trucks.

Promoting ofMarket of theFuture project

In January 2014, Marketing will start promoting the infrastructure refurbishment program currently in progress within the Market.

Creating awareness of the MotF.

SECTION 6:

TARGETED GROUPS

The entity also focused on the following project related to its targeted groups:

TARGETED GROUPS ACTIVITYAdopted Beneficiaries. identified and adopted 12 different organizations from

different wards in 4 regions to support with fresh produce donations. The organizations are shelters which house abused women and children, Hospices and OVC shelters


Food resilience Project Distributed over 12000 food parcels to indigent families in 3 regions (Region A,C,G)

Senior Citizens events Supported the annual Mayoral Gogo Khulu Christmas party with 450 Food Parcels.Supported other ward based senior citizens events held in the different regions of Joburg.

Muscular dystrophy foundation SA JM supported Muscular Dystrophy Foundation SA by donating produce for 320 disabled children

Masakhane Youth Festival Supported the annual Masakhane youth festival with fresh produce.

Healthy Lifestyle adopted the Mayoral priority programme and worked together with the Dept. of Health and Social development on the awareness campaigns around the City of Joburg. The campaign included having Jamborees around the city and it reached over 3000 people.Supported and sponsored the Bophelo Health and Fitness carnival.

Diepsloot Mayoral prayer against women and children abuse.

participated in the programme and also donated over 1000 fruit parcels for the participants.

Indigent Families Funerals Assisted 123 indigent families to bury their family members through the City’s indigent families support programme

SECTION 7:

INFORMATION TECHNOLOGY

1 Background

2.1 IS Objective 1: Consolidation and standardization of IS Infrastructure

2.1.1 CoJ Broadband project: The project aims to consolidate common systems across all Municipal Entities. The project has completed the discovery phase, where all MOE system information has been gathered for possible consolidation.

The project intended to complete the fibre optic connection to the Joburg Market during November 2013. The cable is complete up to the outside of the Market in Heidelberg Road. To get the cable into the premises requires civil works, which is envisaged for the 3rd quarter. If the project completes this phase, it should be possible to route Internet services via the Broadband Project.

2.1.2 Tenders have been prepared for Network expansion due to the movement of facilities caused by entity’s bankers occupying space in the main building. Included will the strengthening of network redundancy with the Market of the Future project in mind.


2.1.3 New PCs for the sales floors were procured and installed.

2.1.4 Tenders are being prepared for the consolidation of servers that have reached end of life. This will result in systems sharing servers that will add redundancy in the case of hardware failures.

2.2 IS Objective 2: Focus on business continuity

2.2.1 A fail-over test of the SPS trading system was done on 18 December 2013 and was successful. The live system was switched off and within 1-hour; normal trading activities could take place on an alternative system running from a different computer room.

2.2.2 New servers for the JDE Financial system were installed and a mini project for the migration together with the financial department is being planned for the 3rd quarter. This will result in the JDE system having a full, duplicate backup system in a different server room for business continuity purposes.

2.3 Unplanned interruptions on critical systems (SPS, Active Directory, JD Edwards)

2.3.1 No down time due to unplanned interruption on any critical systems was experienced.

2.3.2 On 17 December 2013 the trading system charged VAT on transactions for 2 hours. This was after an update to charge VAT on a new processed commodity (Crushed Garlic) was loaded onto the system. The problem was found and rectified within 30 minutes. All Buyers that had been charged VAT were refunded electronically.

2.3.3 On Friday 6 December a lightning strike damaged the telephone system and 12 extensions were affected. New pert cards were procured and faults rectified on the weekend following the strike.

2.4 IS Objective 3: Focus on business analysis and application development to meet changing business requirements

2.4.1 Business process re-engineering and IS user requirements for Market of the Future: The department remains an active member of the Business Process Re-engineering group for the Market of the Future. This project is ongoing, but completion of processes in detail remains a pre-requisite for system development needs.

2.4.2 Alignment of Procurement system to new Procurement processes and procedures: New electronic purchase order approvals were implemented during October / November 2013. The system is working with minor teething problems experienced with user familiarization of new procedures in SCM.

2.4.3 Upgrade of Telephone Management System: The telephone system needed to expand to accommodate new demand for extensions. This was completed during November.

2.5 IS Objective 4: Focus on formalising governance procedures


2.5.1 All the Joburg Market policies were approved by the Joburg Market Board during August 2013. The department’s focus going forward will be to ensure alignment of all internal procedures with the approved policies. This is an ongoing process driven by changes in technology.

2.5.2 The Auditor General IT audit started towards the end of August 2013, resulting in 4 findings relating to User account management. The overall impression from the Auditor General was that the department had shown improvement in relation to the previous audit.
