table of contents - namboardnamboard.co.sz/.../2019/09/namboard-annual-report-2012.pdf · 2019. 9....

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Table of Contents1.0 CHAIRMAN’S STATEMENT 5Chairman’s Statement 5Overview 5Market Performance 5Financial Performance 5Institutional Assessment 6The Year Ahead 6Acknowledgements 6

2.0 INSTITUTION OF THE NATIONAL AGRICULTURAL MARKEING BOARD (NAMBOARD) 7

3.0 VISION, MISSION AND CORE VALUES 7

4.0 GENERAL INFORMATION 84.1 Board of Directors 84.2 Secretary to the Board 84.3 Management 84.4 Attorneys 84.5 Bankers 84.6 Investment Institution 84.7 Auditors 84.8 Statutory Offices 94.9 Encabeni Fresh Produce Market (EFPM) 94.10 Finance Committee 94.11 Marketing Committee 94.12 Executive Committee 9

5.0 CEO’s REPORT FOR THE YEAR ENDED 31ST DECEMBER 2012 125.1 Operations and Principal Activities 125.2 Financial Results 125.3 Directors 125.4 Business Addresses 13 5.5 Auditors 135.6 Bankers 135.7 Investment Institution 13

6.0 CORPORATE GOVERNANCE 146.1 Board of Directors 146.2 Corporate Governance Statement 146.3 Board and Committee Meetings 146.3.1 Audit and Finance Committee 146.3.2 The Executive Committee 146.3.3 The Marketing Committee 146.4 The Board’s Remuneration 15

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7.0 OPERATIONAL REVIEW 7.1 Registration of Distributors and Import Carriers of Scheduled Agricultural Products 7.2 Imports of Scheduled Agricultural Products 7.2.1 Fruits and Vegetables Trend 7.2.2 Rice Imports 7.2.3 Wheat and Wheaten Products 7.2.4 Whole Maize Imports 7.2.5 White Maize 7.2.6 Animal Feed Imports

8.0 FARMER SUPPORT, DEVELOPMENT & MARKETING 8.1 Marketing Extension 8.1.1 Programmed Production 8.1.2 Radio Programming 8.1.3 Market Certification 8.1.4 National Vegetable Competition 8.2 Radio Program 8.3 Market Certification 8.3.1 Global Good Agricultural Practices 8.3.2 Hazard Analysis and Critical Control Points 8.4 Market Operations

9.0 FINANCIAL HIGHLIGHTS 9.1 Operating Income 9.2 Net Income/Surplus

10.0 HUMAN RESOURCES & ADMINISTRATION10.1 Staffing 10.2 Industrial Relations: Disciplinary 10.3 Industrial Relations: Transformation 10.4 Industrial Welfare 10.5 Industrial Relations Long Service Awards 10.6 Industrial Relations: Injury on Duty . 10.7 Maintenance: Damaged Property

11.0 FINANCIAL STATEMENT FOR THE YEAR ENDED 31st DECEMBER 2012.

151516181820212121

2222222223232323232323

252525

2626272727282828

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1.0 CHAIRMAN’S STATEMENT

Overview The year under review was a defining year in the operations of NAMBoard not only due to the exploits of the agricultural sector and the evident vicissitudes thereof but also due to the dynamic leadership challenges experienced. Further, the severe storms experienced in most of the local production areas which fell not only once but twice, distorted farmers’ production schedules causing significant setbacks in production flows to the Markets. To exacerbate this all the more, poor weather con-ditions led to the nursery being blown off causing a backlog in the supply of seedlings. In addition, the organisation also saw a dramatic change in its executive leadership following the demise of the Agri Business Manager and the resignation of the Chief Executive Officer which both happened in quick succession.

Market Performance As a consequence of the aforementioned and the slow recovery from the previous year’s economic downturn, the market operations remained fairly responsive on all market fronts including within local, regional and international markets. Given this, extensive time was spent responding to the above challenges and was also directed at analysing our first export package meant for overseas markets. This analysis was based on the fact that the first international export pitch done by the Board had some logistical challenges.

Financial Performance Much against the continued decline in market activity, overall market activity continued to realise a slight performance upturn. Hence, the Board realised a net surplus of E1.9million against E1.01million realised in 2011. This can all be attributed to a strong recovery of levies from the statutory division.

J Ndlangamandla

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Institutional Assessment During the course of the year under review the Ministry of Agriculture commissioned an institutional assessment of NAM-Board through the Swaziland Agricultural Development Programme. This was aimed at determining the necessary improve-ments and efficiencies required to effectively pursue our broad mandate which includes regulatory services, coordination of market development as well as ensuring market access for famers involved in the vegetable industry.

In the first instance, this assessment revealed the intricate nature of NAMBoard’s mandate and secondly, it then foregrounded the need to strengthen the legislation that guides the Board’s operations so as to ensure better compliance with regulatory services and market data capture and use. This assessment also highlighted the need for support that will strengthen NAM-Board’s market and technical capacity amongst other things. In the coming years, NAMBoard shall work alongside the Ministry to unpack the recommendations of the assessment evaluating it in terms of appropriateness and applicability to the institution as well as its sustainability.

The Year Ahead The year ahead shall see the consolidation of the initiatives to expand market access and farmer development which started in the course of the year. We shall continue with our transformation programme whose core aim is to create more efficiencies in all our services as depicted within our mandate. This includes: • Increasing market access of local farm produce to the market; • Refining market logistics and cold chain management to enhance the quality of our produce and improve shelf life; • Growing our farmer base exponentially so as to ensure extended supply of produce in a consistent and reliable manner

to all identified markets;• Growing farmer participation in our contracting programme; • Introducing baby vegetables as a niche market line for export; and• Establishing alliances with key partners in the industry as well as leveraging on their expertise to achieve increased pro-

duction and improved market access for the produce of local farmers.

AcknowledgementsI would like to thank the Ministry of Agriculture for their continued support to NAMBoard even this year. Further, I would also like to thank all our partners including our markets, professional organisations and farmers for their continued support as evidenced by their commitment to doing business with NAMBoard continuously. Finally, I extend my gratitude to the management and all employees of NAMBoard for their dedication and continued value addition to the operations of the or-ganisation this year.

J Ndlangamandla Chairman

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2.0 INSTITUTION OF THE NATIONAL AGRICULTURAL MARKETING BOARD (NAMBOARD)The National Agricultural Marketing Board (NAMBoard) is a government owned parastatal established under the National Agricultural Marketing Board Act. No.13 of 1985 which is mandated to undertake the following activities:

• Register distributors and import carriers of scheduled agricultural products.

• Regulate imports and exports of scheduled agricultural products.

• Facilitate, in such manner as it may consider appropriate, the production, processing, storage, transportation, distri-bution and sale of scheduled agricultural products.

• Where required to do so, advise Government in all matters related to the availability of and demand for scheduled agricultural products.

• Facilitate the marketing of locally produced scheduled agricultural products locally, regionally and internationally.

3.0 VISION, MISSION AND CORE VALUES.

VisionTo be a leading facilitator for sustainable agricultural development in Swaziland and beyond the SADC region.

MissionTo improve the supply and quality of scheduled agricultural products through effective regulation, development, value addition and marketing, by embracing technology and engaging key stakeholders, in order to meet national demand and achieve regional and international presence.

Core ValuesThe following are the values that guide and bind NAMBoard as it thrives to accomplish its mission and attain its long term vision:

Innovation: To be creative, develop and adopt new knowledge in pursuance of our business.Responsibility: NAMBoard is committed to discharging itself responsibly in all its interactions with all

stakeholders and to avoid harming the environment.Teamwork: To work together and build synergy from our collective efforts.Commitment: To be professional and committed to our work.Integrity: To maintain the highest standards of ethical behavior and have zero tolerance to corrup-

tion.Accountability: To be accountable to our principals, customers and/or all stake holders.

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4.0 GENERAL INFORMATION4.1 Board of Directors

Mr. Joseph Ndlangamandla ChairmanMr. George Ndlangamandla MemberMr. Enock Dlamini Member Mr. Ndumiso Mdluli MemberMs. Hlobisile Ndzimandze MemberMrs. Winile Zulu Member Chief Masuku 11 MemberPrincess Dzambile MemberPhumelela Shongwe Secretary - ResignedMr. Siphephiso Dlamini Secretary appointed 7th September 2012

4.2 Secretary to the Board

Sibusiso B. Shongwe and AssociatesLituba Avenue, opposite SPTC Business CentreEveni TownshipMbabane

4.3 Management

Mr. Siphephiso Dlamini Chief Executive OfficerMr. Petros D. Nxumalo Chief Financial OfficerMr. Lwazi Mhlongo Agri-Business ManagerMr. Sipho Nxumalo Chief InspectorMs. Gcebile Dlamini Human Resource Manager

4.4 Attorneys

Sibusiso Shongwe and Associates

4.5 Bankers

Standard Bank of (Swaziland) LimitedNedbank (Swaziland) LimitedSwazi Bank

4.6 Investment Institution

African Alliance Swaziland (Pty) Limited

4.7 Auditors

PriceWaterhouse Coopers Rhus Office Park , Karl Grant Street Mbabane, Swaziland.

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4.8 Statutory Offices

Plot No.1A, Lot 165,Corner Masalesikhundleni & Mbhabha Street,Manzini, Swaziland.

4.9 Encabeni Fresh Produce Market (EFPM)

Nokwane (Off ramp road to Dwaleni Power Station)Manzini – Mahlanya old road.Lomahasha Depot

4.10 Finance Committee

Mr. Enock Dlamini (Chairman)Mr. Ndumiso Mdluli Ms. Hlobisile NdzimandzeMr. Siphephiso DlaminiMr. Petros Nxumalo

4.11 Marketing Committee

Mr. Ndumiso MdluliMr. George NdlangamandlaMrs. Winile ZuluMr. Siphephiso DlaminiMr. Sipho NxumaloMr. Petros Nxumalo

4.12 Executive Committee

Mr. Joseph Ndlandlamandla (Chairman)Mr. George NdlangamandlaMr. Enock DlaminiMs. Hlobisile NdzimandzeMr. Siphephiso Dlamini

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Mr. Siphephiso Dlamini Chief Executive Officer

BOARD OF DIRECTORS

Mrs Winile Zulu Farmer

Mr Enock DlaminiManaging Director ACAT

Mr. Ndumiso MdluliBusinessman

Mr. Joseph NdlangamandlaChairman

Ms. Hlobsile Ndzimandze Legal Advisor Ministry of Finance

Chief Masuku IIFarmer

HRH Princess DzambileMember

Mr. George NdlangamandlaDirector of Agriculture

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Mr. Siphephiso Dlamini Chief Executive Officer

Mr.Petros NxumaloChief Financial Officer

Mr. Lwazi MhlongoAgri- Business Manager

Mr. Sipho Nxumalo Chief Inspector

Ms Gcebile Dlamini Human Resources Manager

MANAGEMENT

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5.0 CEO’S REPORT FOR THE YEAR ENDED 31ST DECEMBER 2012The Directors have pleasure in presenting their report together with the financial statements for the year ended 31st Decem-ber 2012.

5.1 OPERATIONS AND PRINCIPAL ACTIVITIESThe Board is a creative of statute having been established by the NAMBoard Act No. 13 of 1985. The primary functions of the Board are to regulate imports of scheduled Agricultural produce, register wholesale distributors and importers of scheduled produce and to facilitate the production, distribution and sale of such produce.

5.2 FINANCIAL RESULTSThe results for the year shows an improvement in performance when compared to that of the previous year . The Board overall realized a surplus of E1 946 070 compared to 1015794(2011). The fresh produce market , however incurred a deficit of E1932 666 compared to 393 911 for 2011 .

The Directors are unaware of any matter or circumstances arising since the end of the financial, not otherwise within the annual financial statements, which significantly affect the financial year position of the Board or the result of its operations.

5.3 DIRECTORSThe number of Directors who actively participated in Board business during the year were:Mr. Joseph Ndlangamandla (Chairman)Mr. George NdlangamandlaMr. Enock DlaminiMr. Ndumiso MdluliMs. Hlobisile NdzimandzeMrs. Winile ZuluPrincess DzambileChief Masuku 11 (Alton Dlamini)Mr. Phumelela Shongwe - resignedMr. Siphephiso Dlamini - appointed 7th September 2012

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5.4 BUSINESS ADDRESSES Physical Address Postal AddressNAMBoard Building P.O. Box 4261,Plot No.1 Lot 165 ManziniCorner Mbhabha & Masalesikhundleni Streets M200

5.5 AUDITORSPrice Waterhouse CoopersRhus Office Park, Karl Grant Street Mbabane

5.6 BANKERS

• Standard Bank (Swaziland) limited• Nedbank (Swaziland) Limited• Swazi Bank

5.7 INVESTMENT INSTITUTION• African Alliance Swaziland (PTY) Ltd

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6.0 CORPORATE GOVERNANCE6.1 BOARD OF DIRECTORSThe National Agricultural Marketing Board is a Category A public entity wholly owned by the Government of the Kingdom of Swaziland. In terms of its operations, the organization is directed by a Board of Directors comprising of eight (8) non-executive Board members all appointed by the Honorable Minister of Agriculture to serve for a period of three (3) years as well as the Chief Executive Officer who is an ex-officio member.

6.2 CORPORATE GOVERNANCE STATEMENTThe Board of Directors together with the Executive Management acknowledge that corporate governance forms the fabric of executive leadership. Its attendance may be through the espousal of the core principles including integrity, transparency, accountability and commitment. The process calls for the development and execution of strategies and procedures to exer-cise proper direction of guidance to company sustainable performance. As espoused the King Mswati 111 report recently released, sustainability is now embraced as one of the core philosophical aspects coupled with leadership and social respon-sibility.

The Board recognizes that Corporate Governance remains dynamic and as such the need for endeavoring to keep on devel-oping its instrument and tools to improve both leadership performance and compliance in this area so as to ensure NAM-Board remains sustainable.

6.3 BOARD AND COMMITTEE MEETINGSIn the year under review, the Board maintained the three major advisory committees namely audit and Finance committee, the Marketing Committee and the Executive Committee. All these committees remained properly constituted throughout the year.

6.3.1 Audit and Finance CommitteeThe role of the Audit and Finance Committee is to assist the Board of Directors by providing both an objective and indepen-dent view on how the company discharges its finance, accounting control mechanisms and risk. During the year being re-viewed the Committee met seven times with one of these meetings being an unscheduled meeting. The urgent meeting was occasioned by need to appoint new auditors. The Audit and Finance Committee also reviewed and considered the annual financial statements for 2012 and subsequently recommended their approval to the Board.

6.3.2 The Executive Committee The role of the Executive Committee is to advise the Board of Directors on the realignment of policies and terms of employ-ment of senior executives. Its tasks also include making recommendations to the Board on strategic issues as well as delivery and interface with the parent Ministry. In the absence of any new strategic interventions, pending proposals from the incom-ing CEO, this Committee could not facilitate any meeting in the year being reviewed.

6.3.3 The Marketing Committee The role of the Marketing Committee is to assist and guide the Board of Directors to ensure that the company’s marketing strategy is implemented to fit the overall mandate of the organization and the demands and expectations of farmers. The Committee met four times and all meetings were as per scheduled. There were no urgent and unscheduled meetings. Table 1 below indicates the total number of Board and Committee meetings that were held during the financial year 2012 and pre-ceding years since 2010. As noted, there was a decline in the number of meetings held by the Board. This rise is attributed to intensified sessions held to recruit the new CEO.

Table 1: Total Number of Board Meetings held in 2012

Type of Meeting Number of Meetings 2010 Number of Meetings 2011 Number of Meetings 2012

Main Board 11 10 7Extra Ordinary 9 0 1Executive / Remunerations 1 0 0Finance/Audit Committee 5 6 7Marketing Committee 4 4 4Total 30 20 19

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6.4 THE BOARD’S REMUNERATION Calculation of the Board’s remuneration remained guided by the Public Enterprise Circular 2 of 2009. The remuneration in-cludes a retainer fee which is paid monthly as well as a sitting allowance and a transport allowance for each meeting attended where applicable. Total remuneration paid for the year under review amounted to E270 614.00 (Two Hundred and Seventy Thousand Six hundred and Fourteen Emalangeni) which is above the previous year’s remuneration.

7.0 OPERATIONAL REVIEW 7.1 REGISTRATION OF DISTRIBUTORS AND IMPORT CARRIERS OF SCHEDULED AGRICULTURAL PRODUCTSIn terms of the NAMBoard Act. No.13 of 1985, one of the major functions of NAMBoard is the registration of distributors and import carriers of scheduled agricultural products. This function is carried out through the inspectorate division. In the year under review, a total of 421 active importers were recorded compared to 422 in the previous year. Much against the decline in the overall number of active importers recorded in the year under review, there was an increase in the number of active importers recorded in fruits and vegetables (18) poultry products (7) and mushrooms (8). The number of edible oil importers shot up to 24 following the inclusion of the product as one of the scheduled products. By contrast, there was a decline in the number of active importers of rice (16) 7 the total for turkey is (8) and animal feed (20).

TABLE 2: Showing grouping of Importers by scheduled product line

Product Group Importers 2011 2012Fruits & Vegetables 270 288Edible Oil 0 24Rice 36 20Animal Feed 36 16Mushroom 6 14Frozen Fruits & Vegetables 14 12Processed Poultry 4 8Popcorn 11 7Starch 8 7Yellow Maize 10 7Turkey 15 6Premix 8 3Wheat 2 2Whole Maize 1 1Free Range Chicken 1 1Whole Birds & Portions 0 1Gizzards 0 1Ducks 0 1Mealie Meal 0 1Crude Oil 0 1Flour 0 0

Total 422 421

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7.2 IMPORTS OF SCHEDULED AGRICULTURAL PRODUCTS

TABLE 3: Showing Volumes and Values of scheduled Products Imported in 2012

Categories Products 2011 2012 2011 2012 Variance

Volumes( mt) Volumes (mt) Value in (E) Value in (E)

Fruits and vegeta-bles Fruits & Vegetables 20758 23189 59,118,125.75 55,985,068 12

Frozen Fruits & Vege-tables 1155 970 16,225,399.03 13,017,689 -16

Mushroom 154 84 1,460,384.66 1,594,024 -45

Rice Rice 23161 22914 102,950,504.72 120,957,116 -1Maize and Maize products Whole Maize 20457 16808 39,580,897.00 50,759,862 -18

Yellow Maize 51643 60043 95,506,036.80 155,395,018 16

Starch 777 516 3,581,958.00 3,375,242 -34

Mealie Meal 0 798 0.00 3,749.780

Popcorn 716 718 2,724,537.00 4,877,734 0

Animal Feed 12830 9284 37,550,417.56 34,938,127 8-12Wheat and Wheaten products Wheat 6873 12976 46,238,731.23 48,320,308 89

Premix 2310 1950 12,451,538.57 12,451,539 -16

Flour 0 0 0.00 0.00

Poultry and Poul-try Products Turkey 410 479 5,960,059.92 7,036,795 17

Processed Poultry 1261 590 4,641,692.57 7,867,102 -53

Free Range Chicken 6 3 94,287.28 57,063.52 -50Whole Birds & Por-tions 0 85 0.00 428,064

Gizzards 0 3 0.00 75,784.88

Ducks 4 0 114,243.58 0.00 -100

Edible Oil Edible Oil 0 2104 0.00 28,534,157.05

Crude Oil 0 257 0.00 3,345,716.00

Total 142515 153771 428,198,813.67 556,616,389.00 8

As indicated in the table 3 above, scheduled products have been grouped into five major categories with these being fruits and vegetables, rice, whole maize products, wheat and wheaten products, poultry products whilst the most recent addition to the fold has been edible oils. Fruits and vegetables include fresh fruits, vegetables, mushroom and processed vegetables (frozen). Rice is a standalone whilst whole maize products include white maize, yellow maize, popcorns, starch, mealie meal and animal feed. On the other hand wheat and wheaten products include wheat, flour, and premix. Poultry products include turkey processed meat, whole birds, free range chicken, ducks and gizzards. Lastly, edible oils include processed oil and crude oil.

Overall import products record As indicated in the table above, the overall import of Scheduled Agricultural Products increased from 142 515mt to 153 771mt in the year under review, showing an increase of 11.3mt which translates to a 7.9 percentage point increase when compared to the previous year. This major increase is mainly attributed to increased vigilance in the manning of borders for imports. All eight commercial borders were fully manned in the year under review following the recruitment of additional inspectors. Unlike in the past, control at the border was also extended to run from when the border opens up until the time it closes. Further, the upturn is also attribute in part, to increased trade following the slight recovery from the 2010/11 eco-nomic challenges faced as a result of lower SACU receipts.

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In terms of value, total imports amounted to E556.6M which shows an increase of E128.4M thirty (30) percentage point in-crease) when compared to the year 2011. These values include edible oil which was registered as a new scheduled product from August 2012. A total of 2361 litres of both edible and crude oil were imported. This resulted in a two (2) percentage point increase in the total volume of imported product. The impact of the imported volume was E31.9m translating to a 7.4 percentage point increase on the value of imported produce.

The products that recorded the highest increase in volumes were wheat (89 percentage point increase) followed by turkey (17%) and yellow maize which stood at 16%. In value terms pop corn, showed the most growth in traded value with 79% increase followed by processed poultry 69%, then yellow maize with 67%. Poultry and poultry products showed the least growth especially free range chicken and ducks.

Both the importation of flour and frozen chickens remained fully restricted during the year under review due to self suffi-ciency in these development sectors. However the poultry industry showed some signs of supply constraints. These products remained in short supply during peak seasons including the festive season, the Easter period and annual traditional cele-brations like the uMhlanga ceremony. Evident is also limited capability in supplying other products like gizzards, ducks and processed poultry to meet local market demand.

7.2.1 Fruits and Vegetables trend A total of 23 189 metric tons of fruits and vegetables valued at E56m were imported into the country compared to 20 758 metric tons valued E59m in 2011. A decrease of 5% was realized on the value of imports under this commodity and surpris-ingly, this does not correlate to the increase in the volume of imported fruits and vegetables. This may be attributed to under declarations among other inefficiency factors.

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Figure 1: Graph showing fresh produce importation trends

7.2.2 Rice ImportsImported rice decreased from 23 161mt in 2011 to 22 914mt in the year under review. This translates to a 1% decrease which could be attributed to a change in consumption trends within the local market. In terms of major imports of scheduled agricultural products, rice was the second highest imported product with a net value of E120m following yellow maize with an import value of E159.8m. This translates to a 17 percentage point increase when compared to 2011 (E102, 950 505.00).

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Figure 2: Rice imports for the period 2007 - 2012

7.2.3 Wheat and Wheaten Products

Wheat and Wheaten product imports are comprised of wheat and premixed flour. Wheat is imported mainly by the two mill-ers (Ngwane Mills and Universal Milling) and other small independent local bakeries. Imported wheat and wheaten products grew to 14926mt with wheat alone growing by over 89 percentage points when compared to 2011 (6873). Premix dropped from 2310mt in 2011 to 1950mt in 2012 showing a 15 percentage point decrease.

The increase of over 89 percentage points in volumes however only translates to 9 % increase of the value of imported prod-uct. Wheat imports increased from E46.2m in 2011 to E48.3m (4.5% increase) whilst premix decreased from E12.5m in 2011 to E12.3m in 2012 (-1.6 percentage point decrease).

Figure 3 below shows the trends of imported wheat in metric for the last five years.

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7.2.4 Whole Maize Imports

The list of whole maize products that have been included in this report under scheduled products include white maize, yellow maize, animal feed, popcorn, mealie meal and starch. Popcorn and starch have been tracked since 2011 showing only margin-al growth. A total of 718 tons of popcorn were imported in the year under review with a value of E4,877,734.00 compared to 716 tons in 2011 valued at E2,724,537.00. This translates to an increase of 79 % increase which is attributed to increased consumer spending and efficiency gains from vigilant inspections A total of 804 metric tons of starch were imported in 2012 compared to only 77 metric tons in 2011.

7.2.5 White Maize

White Maize is imported by the National Maize Corporation (NMC), a public enterprise legally charged with importing white maize along with marketing the commodity in the country as per Government Gazette. NAMBoard regulates the importation of white maize in terms of the issuance of import permits. As shown in the figure in page 20 white maize imports dropped to 16808mt in the year under review compared to 20457mt in 2011, translating to a 17.8 percentage point decrease. In value terms, maize import rose from E39.6m to E50.7 showing a 28% point increase.

Figure 4 showing Maize and maize products import trends

Yellow Maize

Yellow maize is a major component in the production of Animal Feed. Yellow maize imported during the year under review accounted for 39% of total imports into the country. A record high of 60043 metric tons were imported in the year being reviewed compared to 51643 metric tons in 2011, translating to a 16 percentage point increase. In value terms, imported yellow maize surged to E159.3m compared to E95.5m in 2011, showing an increase of E63.8m.

7.2.6 Animal Feed Imports

A total of 9284 metric tons of animal feed was imported in the year under review compared to 12830 metric tons in 2011, translating to a 27.6 percentage point decrease. In value terms imported animal feed recorded E34.9m compared to E37.6m in 2011, showing a decrease of E2.7 which translate to (-7.2%) decrease.

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8.0 FARMER SUPPORT, DEVELOPMENT AND MARKETING 8.1. FRESH PRODUCE MARKETING

The second critical role assigned to NAMBoard is to stimulate the production of vegetables and fruits through farmer engage-ment and support, market facilitation and import substitution initiatives. The Farmer Support and Development Unit was essentially established to advance the above objects of the Board. They include the provision of market extension services which is more about the alignment of farmer produce to market demands so as to enable them to sell their produce more effectively. In this farmer development initiative, NAMBoard ensures products are properly transported, packaged, stored, branded and priced so that they meet consumer expectations, relieving famers of all the risks in any aspect of the value chain. Also, there continues to be challenges of low volume production from farmers that negatively distorts the business case of vegetables through lack of consistency of supply, unreliability of produce as well as lack of critical mass. This also negatively affects the cost of moving produce from the field to the market for NAMBoard. Further, this remains a critical stra-tegic intervention aligning to the changing world from a stance where farmers were used to producing without ascertaining the availability of a market to producing according to market needs and demands. Within this division, these initiatives were pursued in the year under review.

8.2 FARMER EXTENSION SERVICES

A total of 710 farm visits were carried out in the year under review compared to 728 in the previous year. The decline in the visits is attributed to several other stakeholder consultations initiated by the new CEO which included the farmers. This was in the form of quality focal groups. Farm visits concentrated on recruiting new farmers, prospecting new rates, inspecting farmer produce and coordinating sales. In total of 287 contracted farmers in the year under review, this translates to at least three visits per farmer and an average of 178 visits by each marketing officer per year. In addition to the farm visits NAM-Board also facilitated a total of (Four Hundred and Seventeen) 417 farm sessions compared to 170 held in the previous year. These farmer sessions included meetings, trainings, demonstrations and seminars directed at promoting the production of baby vegetables, training on quality standards as well as training on the packaging of produce.

8.3 RADIO PROGRAMME

NAMBoard continued using the radio as one of the major vehicles to reach famers and educate, inform and advise of new interventions as well as best practices in fruits and vegetable production for the year. A total of 33 radio sessions were staged in the year under review including the topics outlined below.

Table 4. Showing Radio Program topics in the year under review

Program title Objectives Episodes

1. Business skills in vegetable production To educate farmers on the steps of changing farming to a business. 4

2. NAVECO winner 2011 To create awareness on the opportunities that comes from producing vegetables in summer. 2

3. Safe chemical container disposal especial in summer To promote safe chemical container disposal 2

4. Contact farming Showing the benefits of contract farming 2

5. Quality standards for elite vegetables

Educating farmers on what the market demands in terms of quality specifications 4

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6. Market demand and commercialization of vegetable production

Educating famers on need to producing to consistently supply market 3

7. CEO introduction and market led strategy paradigm shift

To inform farmers on new market vision -market led programming 2

8. Prioritization of market component of value chain To indicate value chain emphasis points 3

9. Post handling of fruits and vegetables

Educate farmers and listeners on the best measures of handling produce post harvest 3

10. Priority vegetables Educate farmers of priority vegetables in terms of mar-ket demand /import substitution 2

11. Benefits of Global gap To introduce farmers to new market quality equipment 3

12. Benefits of HACCP standards To introduce farmers to new market quality equipment 3

8.4 MARKET CERTIFICATION

The market, together with the quality section have worked extremely hard to produce first hand knowledge of critical mar-keting factors including packaging, sizing, sorting, grading and quality.

8.3.1 Global Good Agricultural Practices (Global GAP)In an effort to ensure that locally produced products qualify for all markets, NAMBoard acquired Global GAP accreditation through the demonstration plots. The strategic goal for the accreditation is to make it possible for local growers to acquire such individually. During the reporting year NAMBoard practiced in depth the recommendations of the audit committee. It is hoped that with sufficient funding, the program will be rolled out to farmers in 2013.

8.3.2 Harzard Analysis and Critical Control Points (HACCP)The NAMBoard pack house is HACCP accredited making it safe to pack and process produce that will be sold to sophisticated markets. NAMBoard’s accreditation is for medium risk operations and there will be a need to consider high risk qualification as well. High risk qualification will allow NAMBoard to further cut fresh produce to ready to cook packs. It will also allow NAMBoard to take as much available produce from the field and maximize the grower’s returns. NAMBoard’s goal for 2013 is to maintain the accreditation while considering options for high risk qualification as well.

8.4 MARKET OPERATIONSThe volume of local produce entering the market declined significantly over the period under review. However the market sourced all cabbages, beetroot and most tomatoes internally. Although the production of tomatoes was almost adequate, there were incidences where imported produce was used to supplement supply. The fast moving commodities, for in-stance, potatoes, carrots and onions were predominantly sourced from South Africa (about 70% of local consumption) due to under production in Swaziland. The majority of farmers that signed contracts have not been able to supply the market according to the agreements. The market was able to receive cabbages, beetroot, tomatoes, broccoli, cauliflower, spring onion, carrots, potatoes, oranges and banana from producers. These products, except banana, oranges, tomatoes and cabbages were produced in small quantities. The supply of banana was generally low during the reporting year as tempera-tures were low. Values of local produce that were sold in the market during the reporting period are in Table 5.

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Table 5 Sales Performance (Emalangeni)

2011 2012

Imports 6,636,960 2,234,325

Local produce 6,433,869 3,728,314

Baby vegetables 271,809 185 747

Poultry 897,965 331,236

TOTAL 14,240,603 6 481 707

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9.0 FINANCIAL HIGHLIGHTS9.1 OPERATING INCOME A more than 50% increase in operating income was achieved for current year 2012 at E2.8m versus E1M in 2011, although operating expenses were higher than in the previous year. Operating expenditure increases can be attributable to growth.

Figure 5: Total operating income for the period in Emalangeni 2007 - 2012

9.2. NET LOSS/ SURPLUS NET /SURPLUS Net Surplus for the year 2012 was recorded at E1.9m compared to a E1m net surplus in 2011. This improvement can be at-tributable to the increase in operating income. it is also as a result a very favourable Gross profit of E21m compared to E17m in 2011 and to a decline in produce coming into the market compared to previous year.

Figure 6: Profitability Performance Trends for the period 2007 – 2012

26

10.0 HUMAN RESOURCES AND ADMINISTRATIONTable 6: Staff Complement as at 31 December 2012

Department PERMANENT CONTRACT TOTALCEO 1 1 2AGRI BUSINESS 6 46 52INSPECTION 4 5 9FINANCE 6 4 10HUMAN RESOURCES 5 4 9TOTAL 22 60 82

Figure 7: Staff Movement as at 31 December 2012

10.1 STAFFING The year under review recorded quite active staff movements as two resignations were recorded with one being at the exec-utive level (CEO) and another being at the level of receptionist. There were also two dismissals effected on cases bordering around dishonesty and negligence. Adding to the staff turnover was the death of the Agri-Business Manager. Both the re-ceptionist and the CEO were successfully replaced in the year under review and as part of the transformation and alignment process, another seven were recruited into the Inspectorate division.Table 7: Leave Days as at 31 December 2012

Table 7 Number of employees per department with annual leave day15 days 20 days 25 30 40 50/60 TOTAL

CEO 1 1

AGRI BUS. 14 8 7 1 2 32

INSPECTION 4 1 1 1 1 8

HR 1 2 1 1 5

FINANCE 2 2 1 5

TOTAL 19 11 11 3 4 3 51

27

The table on previous page shows the number of employees per department with annual leave days above to 60 days as at December 2012.

Figure 8

Table 8 : Training by Quarter leading up to 31 December 2012

1ST Quarter 2nd Quarter 3rd Quarter 4th Quarter

Management attended a grievance & Disciplinary Handling workshop facil-itated by FSE&CC

No training done Trustees training by SRIC

• Peer Educator’s training sponsored by SWABCHA

• ACPAC training for Fi-nance

• PackMaster-Packhouse• Pelmas-Inspectorate

10.2 INDUSTRIAL RELATIONS: DISCIPLINARYOver the first quarter, three employees were dismissed for misconduct involving fraud, corruption, negligence and dishones-ty. The employees were from the Inspectorate, Development and Finance departments respectively. An Inspector who was charged for damaging company property was found ‘not guilty’ of the act after disciplinary action was taken. A legal case erupted between a former Procurement Officer and NAMBoard regarding failure to settle a housing loan with his pension pay out. The HR Manager was also charged for negligence with regards to the Procurement Officer’s pension pay out which resulted in a written warning. The Union Executive was suspended for a week from work for business operations’ disruptions at Encabeni but they were recalled and served with caution letters.

10.3 INDUSTRIAL RELATIONS: TRANSFORMATION As at the 1st quarter, the union was informed in a meeting that the Board of Directors approved the transformation exercise and that operational issues are Management’s responsibility and not the Board. The Union met with the Board in a meeting held at Encabeni in the 2nd quarter but nothing was reported from that meeting to date.

10.4 INDUSTRIAL RELATIONS: WELFARE LMD Security Services were terminated in the 2nd quarter and Crime Stop Security was hired as a replacement. Meetings were held with SRIC officials on solutions in the issuance of pension claims to avoid discrepancies. Trustees met to discuss Zakhele Dlamini’s pension pay out where his housing loan from NEDBANK was not deducted.

28

Table 9: Showing awarded employees and their years of service

Below are the number of employees awarded the awards and their years of service

10 years 3

15 years 4

20 years 1

25 years 3

TOTAL HONOREES 11

10.6 INDUSTRIAL RELATIONS: INJURY ON DUTYTwo employees were involved in a kombi accident on their way home from work. One suffered minor injuries whilst the other (Busisiwe Matsenjwa) is still undergoing shoulder fracture treatment. Matsenjwa was away from work between April and September. She has not fully recovered hence she has been assigned light duty work. The company is awaiting the Doctor’s final report.

10.7 MAINTENANCE: DAMAGED PROPERTY Due to the heavy storm on the 16th October 2012, company property was damaged and property damaged included the nurs-ery structure valued at approximately E130, 000.00 and the carport valued at E8, 000.00. The aforementioned damages were reported to the company’s insurer, AON.

FINANCIAL STATEMENTSfor the year ended 31 December 2012

30

Contents PageDirectors’ responsibility statement Independent auditors’ report

Directors’ report Income statement

Statement of financial position Statement of changes in funds and reserves Cash flow statement

Notes to the financial statements

Other information not covered by the audit opinion:- Detailed income statement

31

32

33

35

36

37

38

39

63

31NATIONAL AGRICULTURAL MARKETING BOARD

STATEMENT OF DIRECTORS’ RESPONSIBILITYfor the year ended 31 December 2012

The directors are responsible for the preparation, integrity and fair presentation of the financial statements of the National Agri-cultural Marketing Board (NAMBoard). The financial statements presented on pages 5 to 36 have been prepared in accordance with International Financial Reporting Standards, in the manner required by the National Agricultural Marketing Board Act, 1985, and include amounts based on judgements and estimates made by management. The directors also prepared the other information included in the annual report and are responsible for both its accuracy and its consistency with the financial statements.

The directors are also responsible for the board’s system of internal financial control. These are designed to provide reasonable, but not absolute assurance as to the reliability of the financial statements, and to adequately safeguard, verify and maintain ac-countability of the assets, and to prevent and detect misstatement and loss. Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and system has occurred during the year under review.

The going concern basis has been adopted in preparing the financial statements. The directors have no reason to believe that the board will not be a going concern in the foreseeable future based on forecasts and available cash resources. These financial statements support the viability of the board.

The financial statements have been audited by the independent auditors PricewaterhouseCoopers, who were given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders and the Board of Directors. The directors believe that all representations made to the independent auditors during their audit are valid and appropriate. PricewaterhouseCoopers’ audit report is presented on page 3 and 4.

The financial statements which appear on pages 5 to 36 have been approved by the Board of Directors and are signed on its behalf by:

Chairman Chief Executive Officer

20/09/2014 20/09/2014 Date Date

32

Independent auditors’ report

To the Board of National Agricultural Marketing Board

We have audited the financial statements of National Agricultural Marketing Board (NAMBoard), which comprise the direc-tors’ report, the Statement of financial position as at 31 December 2012, the Statement of comprehensive income, the statement of changes in equity, the cash flow statement for the period then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 5 to 36.

Directors’ Responsibility for the Financial StatementsThe board’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and in the manner required by the National Agricultural Marketing Board Act, 1985. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accor-dance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial state-ments. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstate-ment of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of NAMBoard as at 31 December 2012, and its financial performance and its cash flows for the year then ended in accordance with International Fi-nancial Reporting Standards and the requirements of the National Agricultural Marketing Board Act, 1985.

Other matterThe supplementary information set out on pages 37 and 38 does not form part of the annual financial statements and is pre-sented as additional information. We have not audited these schedules and accordingly we do not express an opinion on them.

PricewaterhouseCoopersPartner: Mvuselelo Fakudze Chartered Accountant (Swaziland)MbabaneDate:

33

DIRECTORS’ REPORTfor the year ended 31 December 2012

The Directors have pleasure in submitting their annual report which forms part of the financial statements for the year ended 31 December 2012.

1. Operations and principal activities

The Board was established in 1985 in Swaziland and operates as regulator of imports of scheduled agricultural produce. The functions of the board are to register wholesale distributors, importers and exporters of scheduled products and to fa-cilitate the production, distribution and sale of such products.

2. Financial results

The results for the year show an improvement in performance when compared to that of the previous year. The Board overall realised a surplus of E1 946 070 (2011: E1 015 794).

Full details of the financial results are set out on pages 7 to 36.

3. Directors

The directors during the year were:

Mr Joseph Ndlangamandla (Chairman)Mr Enock DlaminiMr George NdlangamandlaMs Hlobisile NdzimandzeMrs Buhle Winile ZuluMr Ndumiso MdluliMr Phumelela Shongwe (Secretary) resigned 26 April 2011HRH Princess Dzambile Chief Prince Masuku II Mr Siphephiso Dlamini appointed 7th September 2012

4. Addresses

The physical and postal addresses of the Board are shown below

Business addresses Postal address

NAMBoard Building P O Box 4261Cnr Mbhabha and Masalesikhundleni Street ManziniManzini M200

6. Auditors

The Board is audited by PricewaterhouseCoopers.

Business Address Postal Address

RHUS Office Park P O Box 569Kal Grant Street MbabaneMbabane SwazilandSwaziland H100

34

DIRECTORS’ REPORT (continued)for the year ended 31 December 2012

7. Attorneys

The Board’s attorney is:

Sibusiso B. Shongwe and AssociatesLituba Avenue, opposite SPTC Business CentreEveni TownshipMbabane

8. Bankers and Investment institutions

Bankers Investment institutions

Standard Bank (Swaziland) Limited African Alliance (Swaziland) (Proprietary) LimitedSwaziland Development and Savings Bank 2nd Floor nedbank Corporate building

nedbank (Swaziland) limited mbabane

9. Events subsequent to the Statement of financial position

The directors are not aware of any matter or circumstance arising since the end of the financial period, not otherwise dealt with in the financial statements, which significantly affects the financial position of the company or the results of its opera-tions.

35

STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 31 December 2012

Note 2012 2011E E

Revenue 3 29 016 541 28 332 478Cost of sales 4 (7 592 594) (10 503 038)

_________ _________

Gross profit from trading 21 423 947 17 829 440Other operating income 5 1 117 880 1 054 890

_________ _________

22 541 827 18 884 330Administration and other operating costs 6 (19 663 451) (17 806 064)

_________ _________

Operating surplus for the year 2 878 376 1 078 266

Interest received 7 657 973 516 508Interest paid 7 (66 478) (145 916)

_________ _________

Operating surplus before taxation 3 469 871 1 448 858

Income tax expense 8 (1 523 801) (433 064)_________ _________

Surplus for the year 1 946 070 1 015 794_________ _________

36

STATEMENT OF FINANCIAL POSITIONat 31 December 2012

Note 2012 2011 2010

E E E

ASSETS

Non-current assets

Property, plant and equipment 12 15 561 289 6 275 072 6 822 218

Equity investment 13.2 5 000 5 000 5 000

Other investments 13.1 - 182 617 26 089

Deferred Tax Asset 10 580 732 219 491 406 317_________ _________ _________

Total non-current assets 16 147 021 6 682 180 7 259 624_________ _________ _________

Current assets

Trade and other receivables 14 2 541 134 4 337 954 1 815 494

Inventories 15 545 853 414 902 378 288

Cash and cash equivalents 16 17 882 143 9 952 922 10 976 846_________ _________ _________

Total current assets 20 969 130 14 705 778 13 170 628_________ _________ _________

Total assets 37 116 151 21 387 958 20 430 252

========== ========== ==========

FUNDS AND LIABILITIES

Funds and reserves

Revaluation reserve 17 12 309 918 1 480 364 1 480 364

Accumulated funds 15 372 790 13 426 720 12 410 926_________ _________ _________

27 682 708 14 907 084 13 891 290_________ _________ _________

Non-current liabilities

Provisions for employee benefits 20 1 480 602 1 304 345 722 683

Borrowings 18 238 956 518 432 1 091 088_________ _________ _________

Total non-current liabilities 1 719 558 1 822 777 1 813 771_________ _________ _________

Current liabilities

Trade and other payables 19 3 490 303 1 434 607 1 524 220

Borrowings 18 292 541 563 817 711 938

Bank overdraft 21 - 613 674 689 272

Current income tax liabilities 3 931 041 2 045 999 1 799 761_________ _________ _________

Total current liabilities 7 713 885 4 658 097 4 725 191_________ _________ _________

Total liabilities 9 433 443 6 480 874 6 538 962_________ _________ _________

Total funds and liabilities 37 116 151 21 387 958 20 430 252_________ _________ _________

37

STATEMENT OF CHANGES IN FUNDS AND RESERVESfor the year ended 31 December 2012

Revaluation AccumulatedReserve funds Total

E E E

Balance at 31 December 2011 1 480 364 13 426 720 14 907 084

Net surplus for the yearRevaluation gains

-10 829 554

1 946 070-

1 946 07010 829 554

_________ _________ _________

Balance at 31 December 2012 12 309 918 15 372 790 27 682 708========== ========== =========

Balance at 1 January 2011 1 480 364 13 804 370 15 284 734

Adjustment for current and deferred income taxation to ap-propriate measurement basis and recognition as required by IFRS and the income tax order of 1975, as amended

28 - (1 393 444) (1 393 444)_________ _________ _________

Balance as at 01 January 2011 as restated1 480 364 12 410 926 13 891 290

Net surplus for the year as restated 28 - 1 015 794 1 015 794_________ _________ _________

Balance at 31 December 2011 1 480 364 13 426 720 14 907 084========== ========== =========

38

STATEMENT OF CASH FLOWSfor the year ended 31 December 2012

Note 2012 2011

E E

Cash flow from operating activities

Cash generated/(utilised) by operations 24.1 8 570 808 (81 694)Interest received 657 973 516 508

Interest paid (66 478) (145 916)_________ _________

Net cash generated by operating activities 9 162 303 288 898_________ _________

Cash flows from investing activities

Net proceeds from Investments 182 617 (156 528)

Additions to property, plant and equipment (260 956) (359 919)_________ _________

Net cash outflows from investing activities (78 339) (516 447)_________ _________

Cash flows from financing activities

Repayments towards long-term loan (541 069) (720 777)_________ _________

Net cash outflows from financing activities (541 069) (720 777)_________ _________

Movement in cash and cash equivalents 8 542 895 (948 326)

Cash and cash equivalents at the beginning of the year 24.2 9 339 248 10 287 574_________ _________

Cash and cash equivalents at the end of the year 24.2 17 882 143 9 339 248========= =========

39

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2012

1 General information

National Agricultural Marketing Board is an organisation domiciled in the Kingdom of Swaziland. The Board operates as a regulator of imports of scheduled agricultural produce.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these annual financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Statement of compliance and basis of preparation

The annual financial statements of National Agricultural Marketing Board have been prepared in accordance with Internation-al Financial Reporting Standards, and IFRIC Interpretations. The financial statements have been prepared under the historical cost convention, and financial assets and financial liabilities (including derivative instruments recognised at fair value through profit or loss) are recognised at fair value on initial recognition.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the annual financial statements are disclosed in note 2.13.

2.1.1 Going–concern basis

The entity meets its day-to-day working capital requirements through the use of its cash reserves and bank facilities. The enti-ty’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the company should be able to operate within the level of its current resources and facilities. After making enquiries, the directors have a reasonable expectation that the entity has adequate resources to continue in operational existence for the foreseeable future. The entity therefore continues to adopt the going concern basis in preparing its annual financial statements.

40

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 December 2012

2.1.2 Changes in accounting policy and disclosures

A number of new standards and amendments to standards and interpretations are effective for the first time for the financial year beginning 1 January 2012 (and beyond) as outlined below:

International Financial Reporting Standards and amendments effective for the first time for 31 December 2012 year-end

Number Effective date Executive summaryAmendments to IFRS 1, ‘First time adoption’ on hyperinflation and fixed dates

1 July 2011 The first amendment replaces references to a fixed date of ‘1 January 2004’ with ‘the date of transition to IFRSs’, thus eliminating the need for companies adopting IFRSs for the first time to restate derecognition transactions that occurred before the date of transition to IFRSs. The second amendment provides guidance on how an entity should resume presenting financial statements in accor-dance with IFRSs after a period when the entity was un-able to comply with IFRSs because its functional curren-cy was subject to severe hyperinflation. The international financial standard is not applicable to NAMBoard.

Amendment to IFRS 7 Financial Instru-ments: Disclosures – Transfer of financial assets

1 July 2011 The amendments are intended to address concerns raised during the financial crisis by the G20, among others, that financial statements did not allow users to understand the on-going risks the entity faced due to derecognised re-ceivables and other financial assets. The international fi-nancial standard amendment is applicable to NAMBoard.

Amendment to IAS 12,’Income taxes’ on deferred tax

1 January 2012 Currently IAS 12, ‘Income taxes’, requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40 Investment Property. Hence this amendment introduces an exception to the existing principle for the measurement of deferred tax assets or liabilities arising on investment property measured at fair value. As a result of the amendments, SIC 21, ‘Income taxes- recovery of re-valued non-depreciable assets’, would no longer apply to investment properties carried at fair value. The amendments also incorporate into IAS 12 the remaining guidance previously contained in SIC 21, which is accordingly withdrawn. The international fi-nancial standard amendment is applicable to NAMBoard.

41


2.1.2 Changes in accounting policy and disclosures (continued)

A number of new standards and amendments to standards and interpretations are effective to NAMBoard financial year begin-ning 1 January 2013 (and beyond), and have not been early adopted. None of these are expected to have a significant effect on the financial statements of the company:”

International Financial Reporting Standards and amendments issued but not effective for 31 December 2012 year-end

Number Effective date Executive summaryAmendment to IFRS 1, ‘First time adop-tion’ on government loans

1 January 2013 This amendment addresses how a first-time adopter would account for a government loan with a below-market rate of interest when transitioning to IFRS. It also adds an exception to the retrospective application of IFRS, which provides the same relief to first-time adopters granted to existing preparers of IFRS financial statements when the requirement was incor-porated into IAS 20 in 2008. NAMBoard has not early adopted this international financial reporting standard.

Amendment to IFRS 7 Financial Instru-ments: Disclosures – Asset and Liability offsetting

1 January 2013 The IASB has published an amendment to IFRS 7, ‘Financial instruments: Disclosures’, reflecting the joint requirements with the FASB to enhance current offsetting disclosures. These new disclosures are intended to facilitate comparison between those entities that prepare IFRS financial statements to those that prepare financial statements in accordance with US GAAP. NAMBoard has not early adopted this international financial reporting standard.

Amendments to IAS 1, ‘Presentation of Financial Statements’, on presentation of items of OCI

1 July 2012 The IASB has issued an amendment to IAS 1, ‘Presentation of financial statements’. The main change resulting from these amendments is a requirement for entities to group items pre-sented in other comprehensive income (OCI) on the basis of whether they are potentially re-classifiable to profit or loss subsequently (reclassification adjustments). The amendments do not address which items are presented in OCI. NAMBoard has not early adopted this international financial reporting standard.

IAS 19, “Employee benefits” 1 January 2013 The IASB has issued an amendment to IAS 19, ‘Employee benefits’, which makes significant changes to the recogni-tion and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. NAMBoard has not early adopted this international financial reporting standard.

IFRS 9 – Financial Instruments (2009) 1 January 2013 This IFRS is part of the IASB’s project to replace IAS 39. IFRS 9 addresses classification and measurement of financial assets and replaces the multiple classification and measure-ment models in IAS 39 with a single model that has only two classification categories: amortised cost and fair value. NAM-Board has not early adopted this international financial report-ing standard.

42



International Financial Reporting Standards and amendments issued but not effective for 31 December 2012 year-end

IFRS 9 – Financial Instruments (2010) 1 January 2013 The IASB has updated IFRS 9, ‘Financial instruments’ to in-clude guidance on financial liabilities and derecognition offinancial instruments. The accounting and presentation for fi-nancial liabilities and for derecognising financial instruments has been relocated from IAS 39, ‘Financial instruments: Rec-ognition and measurement’, without change, except for finan-cial liabilities that are designated at fair value through profit or loss. NAMBoard has not early adopted this international financial reporting standard.

Amendments to IFRS 9 – Financial Instruments (2011)

1 January 2015 The IASB has published an amendment to IFRS 9, ‘Financial instruments that delays the effective date to annual periods be-ginning on or after 1 January 2015. The original effective date was for annual periods beginning on or after from 1 January 2013. This amendment is a result of the board extending its timeline for completing the remaining phases of its project to replace IAS 39 (for example, impairment and hedge account-ing) beyond June 2011, as well as the delay in the insurance project. The amendment confirms the importance of allowing entities to apply the requirements of all the phases of the proj-ect to replace IAS 39 at the same time. The requirement to restate comparatives and the disclosures required on transition have also been modified. NAMBoard has not early adopted this international financial reporting standard.

IFRS 10 – Consolidated financial state-ments

1 January 2013 This standard builds on existing principles by identifying the concept of control as the determining factor in whether an en-tity should be included within the consolidated financial state-ments. The standard provides additional guidance to assist in determining control where this is difficult to assess. This new standard might impact the entities that a group consolidates as its subsidiaries. This international financial reporting standard is not applicable to NAMBoard.

IFRS 11 – Joint arrangements 1 January 2013 This standard provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form. There are two types of joint arrangements: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence equity accounts for its in-terest. Proportional consolidation of joint ventures is no longer allowed. This international financial reporting standard is not applicable to NAMBoard.

43



International Financial Reporting Standards and amendments issued but not effective for 31 March 2013 year-end

IFRS 12 – Disclosures of interests in other entities

1 January 2013 This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, as-sociates, special purpose vehicles and other off balance sheet vehicles. NAMBoard has not early adopted this international financial reporting standard.

IFRS 13 – Fair value measurement 1 January 2013 This standard aims to improve consistency and reduce com-plexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure re-quirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permit-ted by other standards within IFRSs or US GAAP. NAMBoard has not early adopted this international financial reporting standard.

IAS 27 (revised 2011) – Separate financial statements

1 January 2013 This standard includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10. This international fi-nancial reporting standard is not applicable to NAMBoard.

IAS 28 (revised 2011) – Associates and joint ventures

1 January 2013 This standard includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11. This international financial reporting standard is not applicable to NAMBoard.

Amendments to IAS 32 – Financial Instruments: Presentation

1 January 2014 The IASB has issued amendments to the application guidance in IAS 32, ‘Financial instruments: Presentation’, that clarify some of the requirements for offsetting financial assets and fi-nancial liabilities on the balance sheet. However, the clarified offsetting requirements for amounts presented in the statement of financial position continue to be different from US GAAP. NAMBoard has not early adopted this international account-ing standard.

Amendment to the transition requirements in IFRS 10, ‘Consol-idated financial statements’, IFRS 11, ‘Joint Arrangements’, and IFRS 12, ‘Disclosure of interests in other entities’

1 January 2013 The amendment clarifies that the date of initial application is the first day of the annual period in which IFRS 10 is adopted − for example, 1 January 2013 for a calendar-year entity that adopts IFRS 10 in 2013. Entities adopting IFRS 10 should as-sess control at the date of initial application; the treatment of comparative figures depends on this assessment.The amendment also requires certain comparative disclosures under IFRS 12 upon transition.

This international financial reporting standard is not applicable to NAMBoard.

44



Annual Improvements issued May 2012

Improvements to IFRSs (Issued May 2012) was issued by the IASB as part the ‘annual improvements process’ resulting in the following amendments to standards issued, but not yet effective for 31 December 2012 year-ends and the company has not early adopted any of the international financial reporting standards:

IFRS Effective Date Subject of amendmentAmendments to IFRS 1, ‘First time adoption of IFRS’

1 January 2013

The amendment clarifies that an entity may apply IFRS 1 more than once under certain circumstances.The amendment clarifies that an entity can choose to adopt IAS 23, ‘Borrowing costs’, either from its date of transition or from an earlier date.The consequential amendment (as a result of the amendment to IAS 1 discussed below) clarifies that a first-time adopter should provide the supporting notes for all statements presented.

Amendment to IAS 1, ‘Presentation of financial statements’

1 January2013

The amendment clarifies the disclosure requirements for com-parative information when an entity provides a third balance sheet either: as required by IAS 8, ‘Accounting policies, chang-es in accounting estimates and errors’; or voluntarily.

Amendment to IAS 16, ‘Property, plant and equipment’

1 January2013

The amendment clarifies that spare parts and servicing equip-ment are classified as property, plant and equipment rather than inventory when they meet the definition of property, plant and equipment.

Amendment to IAS 32, ‘Financial instruments: Presentation’

1 January2013

The amendment clarifies the treatment of income tax relating to distributions and transaction costs. The amendment clarifies that the treatment is in accordance with IAS 12. So, income tax related to distributions is recognised in the income statement, and income tax related to the costs of equity transactions is rec-ognised in equity.

Amendment to IAS 34, ‘Interim finan-cial reporting’

1 January 2013 The amendment brings IAS 34 into line with the requirements of IFRS 8, ‘Operating segments’. A measure of total assets and liabilities is required for an operating segment in interim finan-cial statements if such information is regularly provided to the CODM and there has been a material change in those measures since the last annual financial statements.

2.2 Functional and presentation currency

These financial statements are presented in Swaziland Emalangeni, which is the Board’s functional currency. All finan-cial information presented in Emalangeni has been rounded to the nearest one.

2.3 Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

45


2.4 Financial instruments

Financial instruments carried in the statement of financial position include cash and bank balances, receivables and trade accounts payable. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

2.5 Property, plant and equipment and depreciation

Land is not depreciated. Depreciation is provided on other items of property, plant and equipment using the reducing bal-ance. The annual rates used for this purpose are:

Buildings 5%Furniture and fittings 10%Computer equipment 33 1/3%Motor vehicles 25%Office equipment 10%Equipment, cold-room and freezer 10%

2.6 Leased assets

Items of property, plant and equipment acquired under finance lease agreements are capitalised at their cash cost equivalent and a corresponding liability to the lessor is raised. Lease payments are allocated between the lease finance cost and the capital repayment using the effective interest rate method. The items of property, plant and equipment are depreciated on the same basis as other assets owned by NAMBoard.

Operating lease payments are charged against income as they are incurred.

2.7 Revenue recognition

Sales are recognised upon delivery of products net of discounts and sales tax. Levies, registration and permit fees are rec-ognised on a cash received basis. Interest income is recognised as it accrues unless collectibility is in doubt.

2.8 Investments

NAMBoard classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date.

a) Financial assets at fair value through profit or loss

This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the statement of financial position date.

46


b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. They arise when the Board provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the statement of financial position date. These are classified as non-current assets. Loans and receivables are included in trade and other receivables in the statement of financial position.

c) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed matur-ities that the Board’s management has the positive intention and ability to hold to maturity.

2.8 Investments (continued)

d) Available-for-sale financial assets

Available-for-sale financial assets are non-derivate financial assets that are either designated in this category or not clas-sified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the statement of financial position date.

Purchases and sales of investments are recognised on trade-date, the date on which the Board commits to purchase or sell the assets. Investments are initially recognised at fair value plus transaction costs for all financial assets not car-ried at a fair value through profit or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Board’s has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair vale through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the ef-fective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities.

2.9 Inventories

Inventories are stated at the lower of the cost or net realisable value. Cost is determined by the unit cost method. The cost of inventories comprises farm inputs. Net realisable value is the estimate of the selling price in the ordinary course of business.

2.10 Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective ev-idence that the Board will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in profit or loss.

2.11 Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held with banks, other short term high liquid investments with original maturities of three months or less, and bank overdrafts.

Bank overdrafts are included within borrowings in current liabilities on the statement of financial position.

47


2.12 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from sup-pliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.13 Provisions

Provisions are recognised when the Board has a present legal or constructive obligation as a result of past events, and it is prob-able that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a realisable estimate of the amount of the obligation can be made with absolute certainty.

2.14 Pension and other retirement benefits

The policy of the Board is to provide retirement benefits to all its employees. Current contributions to pension funds operated for employees are charged against income as incurred. The Board’s obligation under the pension scheme is limited to the employer’s contribution; hence, no obligation is recognised on the statement of financial position. The Board recognises a severance obliga-tion in accordance with statutory requirements on terminal benefits.

2.15 Impairment

The carrying amount of the Board’s assets other than inventories are reviewed at each statement of financial position date to de-termine whether there is any indication of impairment, if any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of the asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.

2.16 Borrowings

Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the re-demption value is recognised in the income statement over the period of the borrowings.

2.17 Taxation

The tax exemption in terms of Section 12 of the Income Tax Order of 1975, as amended was rescinded effective 1 July 2001. As a result NAMBoard effectively became a corporate tax paying entity for the first time for the year ended 31 December 2001.

2.18 Deferred income taxes

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the annual financial statements. Currently enacted tax rates are used in the determination of deferred income tax.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax liabilities and deferred tax assets are recognised for all temporary differ-ence arising from the following differences:

48


i) The excess of book values of fixed assets over their written down values for tax purposes;i) Income and expenditure in the annual financial statements of the current year dealt with in other years for tax purposes.

ii) A deferred tax asset will also arise from tax losses to the extent to which the Board expects to utilise the tax losses against future taxable profits.

iii) The entity also recognises deferred tax from temporary differences arising from provisions, and prepayments.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same tax-ation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.19 Current Tax

The charge for the current tax is the amount of income taxes payable in respect of the taxable profits for the current period. It is calculated using tax rate that have been enacted or substantially enacted by the statement of financial position date.

• Taxation is recognised in profit or loss except to the extent that it relates to items recognised in Other Comprehensive Income.

• Taxation is calculated based on tax laws enacted at financial reporting date.

• The policy in respect of the offsetting of deferred tax assets and liabilities

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation, and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

2.20 Borrowings

Borrowings are initially recognised at fair value, which is usually evidenced by the fair value of the consideration re-ceived, net of transaction costs incurred, when they become party to the contractual provisions. Borrowings are subsequent-ly stated at amortised cost using the effective interest rate method; any difference between the proceeds (net of transaction value) and the redemption value is recognised in profit or loss over the period of the borrowings.

Borrowings are derecognised when they are extinguished, that is when the obligation is discharged, cancelled or expires.

2.21 Employee benefits

a) Short-term employee benefits

The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service. The provision for employee entitlements to salaries and annual leave represent the amount that the Board has a present obliga-tion to pay, as a result of employees’ services provided up to the statement of financial position date. The provision has been calculated at undiscounted amounts based on current salary rates.

b) Termination benefits

Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Board recognises termination bene-fits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after statement of financial position date are discounted to present value.

49


2.22 Comparatives

Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.

2012 2011E E

3 Revenue

3.1 The analysis of revenue per the different categories is as follows:

Sales- Fruits and vegetables 6 481 707 11 550 405- Packaging materials, farming inputs, seedlings 2 151 656 2 255 897

Fees- Import levies 20 383 178 14 526 176

Edible Oil levies 4 711 558 - Fruit and vegetables levies 5 461 970 4 963 460 Rice and Maize levies Wheat and Wheat products levies

4 527 0133 290 621

3 816 0323 841 586

Poultry and Poultry products levies 2 392 016 1 905 098

29 016 541 28 332 478========= =========

4 Cost of sales

Cost of sales consists of farming inputs materials and purchases of agricultural produce from famers as follows:

Poultry and poultry products purchases 316 224 991 569Fruits and vegetables purchases 5 114 246 8 180 039Purchases of farming inputs (fertilisers, seedlings, packaging materials etc.)

2 162 124 1 331 430________ ________

7 592 594 10 503 038========= =========

5 Other incomeBanana ripening fee 495 612 343 778Rental income 117 868 84 246Permit fees 346 968 377 070Penalty fees 144 657 92 550Other income ( transport income, sale of fixed assets etc) 12 775 157 246

________ ________

1 117 880 1 054 890========= =========

50


6 Administration and other operating costs

2012E

2011E

Employee benefits expenses 7 832 390 8 033 757Motor Vehicle Expenses (fuel, repairs and maintenance) 349 156 612 185Depreciation 1 767 580 907 064Insurance 275 358 439 965Income tax penalty 1 500 000 -Other (Utilities, consultancy, cleaning etc.) 7 938 967 7 813 093

_________ ________

19 663 451 17 806 064========== =========

7 Net Finance Income

Finance IncomeInterest income from short term investments

Finance Costs

657 973 516 508

Finance charges on finance leases and bank overdraft (66 478) (145 916)_________ _________

Net Finance Income 591 495 370 592========= =========

8 Income tax expense

The statutory tax rate of 30% was used to calculate the current income tax and a statutory rate of 27.5% was used for deferred tax liabilities calculation.- Current tax - Swaziland normal taxation (Note 9) 1 885 042 246 238- Deferred tax (Note 10) (361 241) 186 826

_________ _________

Income tax expense 1 523 801 433 064 ========== ==========

The tax on the entity’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applica-ble to the entity’s profit as follows:

Profit before tax 3 469 871 1 448 858_________ _________

Tax calculated at corporate tax rate 1 040 961 434 657Tax effects of: Legal fees - 15 391Tax penalty 450 000 -Prior year error 32 840 (16 984)

_________ _________

Tax charge 1 523 801 433 064========== ==========

51


2012 2011E E

9 Current income tax

Taxation paid is reconciled to the amounts shown in the cash flow as follows:

Opening balance outstanding 2 045 999 1 799 761Charges for the year (note 8) 1 885 042 246 238Closing balance outstanding (3 931 041) (2 045 999)

_________ _________

Taxation paid - -_________ _________

10 Deferred income tax

Deferred income taxes are calculated in full on temporary differences under the liability method using a principal rate of 27.5%.The movement on the deferred income tax account is as follows:

At the beginning of year 219 491 406 317Statement of comprehensive income charge/(credit) (Note 8) 361 241 (186 826)

_______ _______

At the end of year 580 732 219 491_______ _______

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The following amounts determined

after appropriate offsetting are shown in the consolidated statement of financial position.Deferred income tax liability - (83 987)Deferred income tax asset 580 732 303 478

_______ _______

Net deferred asset 580 732 219 491_______ _______

Deferred income tax asset:Capital allowances on plant and equipment 149 525 -Provision 431 207 303 478

_______ _______

580 732 303 478_______ _______

Deferred income tax liability:Capital allowances on plant and equipment - 82 106Prepayments - 1 881

_______ _______

- 83 987_______ _______

Net deferred income tax asset 580 732 219 491_______ _______

52


2012 2011

E E11. Surplus for the year

Surplus for the year is stated after charging the following:

Auditors remuneration

Audit fees 135 840 130 108Depreciation 1 713 275 907 065Directors’ fees 270 615 251 128Loss on disposal of property plant and equipment 77 734 -

_________ _________

12 Property Plant and Equipment

2012

Freeholdland Buildings

MotorVehicles

OfficeEquipment

WorkshopEquipment

Furnitureand fittings

Computer equipment Total

E E E E E E EOpening carrying amount 586 000 885 710 1 682 637 585 924 2 310 128 224 673 6 275 072Revaluation Surplus 243 322 9 375 029 - - 1 211 203 - 10 829 554Additions - - - 63 555 67 933 129 468 260 956Disposals (83 000) - - - (8 018) - (91 018)Depreciation - (1 111 396) (422 543) (28 418) (54 750) (96 168) (1 713 274)Closing carrying amount 746 322 (9 149 343) 1 260 094 621 061 3 526 496 257 973 15 561 289

Cost 829 322 11 039 259 5 135 586 1 472 238 5 816 507 1 013 345 25 223 256Acc. Depreciation (83 000) (1 889 916) (3 875 492) (851 177) (2 290 011) (755 372) (9 661 967)Closing carrying amount 746 322 9 149 343 1 260 094 621 061 3 526 496 257 973 15 561 289

2011Opening carrying amount 586 000 932 325 2 243 509 582 442 2 232 698 245 244 6 822 218Additions - - - 69 133 212 416 78 370 359 919Depreciation - (46 615) (560 872) (65 651) (134 986) (98 941) (907 065)Closing carrying amount 586 000 885 710 1 682 637 585 924 2 310 128 224 673 6 275 072

Cost 586 000 1 664 230 5 135 586 1 408 683 4 537 371 883 877 14 215 747Acc. Depreciation - (778 520) (3 452 949) (822 759) (2 227 243) (659 204) (7 940 675)Closing carrying amount 586 000 885 710 1 682 637 585 924 2 310 128 224 673 6 275 072

53


12.1 Leased Motor Vehicles

2012 2011E E

Opening balance 1 520 264 2 027 019Additions - -Depreciation (307 513) (506 755)

_________ _________

Closing balance 1 212 751 1 520 264_________ _________

Freehold land and buildings comprise Lot No 760 in Extension 8 and Farm No 1294 (Government Grant No. 69/95) situated in the Manzini district.Items of plant and equipment encumbered are as set out in note 18.

13. Investments

13.1 Other InvestmentsSwaziland Royal Insurance Corporation – Gratuity - 182 618

========= ==========

13.2 Equity Investments

At directors valuationUnlisted - National Maize Corporation 5 000 5 000

========= ==========

The National Maize Corporation’s shares are stated at cost. The Board is of the opinion that the cost of these shares is a fair approximation of their fair value.

14. Trade and other receivables

Trade receivables 3 751 249 4 426 682

Less impairment (2 090 701) (1 471 408)_________ _________

1 660 548 2 955 274

Other receivables 880 586 1 375 840

Prepayments - 6 840_________ _________

2 541 134 4 337 954

========== ==========

54


2012 2011E E

15. Inventories

Chemicals and fertilisers 54 519 36 795Packaging Material 127 273 106 112 Seeds and seedlings 196 148 175 958Meat products 10 687 19 394Vegetables stock 157 226 76 643

_________ _________

545 853 414 902========== ==========

16. Cash and cash equivalents

Cash at bank 7 672 214 1 413 138Short-term bank deposits-African Alliance 10 203 961 8 533 817Petty cash 5 968 5 967

_________ _________

17 882 143 9 952 922=========== ==========

Cash, cash equivalents and bank overdrafts include the follow-ing for the purposes of the cash flow statement:

Cash and cash equivalents 17 882 143 9 952 922Bank overdrafts (Note 21) - (613 674)

_________ _________

17 882 143 9 339 248=========== ==========

Available cash is invested in the interest bearing bank accounts.

17. Revaluation reserve1 480 364 1 480 364

Opening balance 10 829 554 -Revaluation gains for the year (Note 12)

__________ _________

Closing balance 12 309 918 1 480 364=========== ==========

The revaluations gains are arising from valuation by Goldstone Property Consultants.

55


2012 2011E E

18. Borrowings

Finance lease due within a year 292 541 563 817Finance lease due after 1 year 238 956 518 432

_________ _________

531 497 1 082 249========== ==========

Liabilities under finance lease agreements with Standard Bank (Swaziland) Limited are payable in monthly instalments and bear interest at prime plus three percent.

Items of plant and equipment with a net book value of E 914 871(2011: E 1 520 265) are encumbered as set out in note 12.

19. Trade and other payables

Trade creditors 3 194 220 845 501Other trade creditors 296 083 589 106

_________ _________

3 490 303 1 434 607========== ==========

20. Provisions for employee benefits

Leave pay provision (20.1) 422 584 230 030Gratuity provision (20.2) 214 405 182 617Severance provision (20.3) 843 613 891 698

_________ _________

1 480 602 1 304 345_________ _________

20.1 Leave pay provision

The leave pay provision relates to vested leave pay to which employees are entitled. The provision arises as employees render services that increase their entitlement to future compensated leave. The provision is utilised when employees, who are entitled to leave pay, leave the employment of the Board or when accrued entitlement is utilised, by taking day(s) off.

Opening balance 230 030 57 517Provisions used (309 394) (232 045)Current year provision 501 948 404 558

_________ _________

Closing balance 422 584 230 030_________ _________

56


20. Provisions for employee bene-fits (continued)

20.2 Gratuity provisionProvision is made for payments in accordance with an Executive and Senior Management employee contracts for the year ended 31 December 2012. The gratuity provision is determined by reference to the contractual agreements and is calculated at 20% to 25% of annual basic pay and is payable at the end of the employment contract.

2012 2011E E

Opening balance 182 617 26 089Provisions used (124 743) -Current year provi-

sion156 531 156 528

_________ _________

Closing balance 214 405 182 617_________ _________

20.3 Severance provisionManagement recognised the severance pay provision for employees employed by the Board. The severance pay liability exists in respect of severance allowance payable in terms of section 34 to 36K of the Employment Act, 1980, as amended, in the event of present employees continuing in employment with the company until their retirement.

2012 2011E E

Opening balance 891 698 809 926Provisions used (210 655) (48 284)Current year provision 162 570 130 056

_________ _________

Closing balance 843 613 891 698_________ _________

21. Bank overdraftStandard Bank Swaziland Limited - 286 491Nedbank (Swaziland) Limited - 327 183

_________ _________

- 613 674========== ==========

The overdraft facility granted by Standard Bank Swaziland Limited is secured by the funds in the call accounts. The overdraft facilities granted by Nedbank (Swaziland) Limited are secured by a lien over funds on call deposit with Nedbank (Swaziland) Limited. Guarantees have been entered in favour of Khulanathi Investments (Pty) Ltd, of the call deposit in Nedbank (Swazi-land) Limited.

22. ContingenciesThere are pending claims with probable loss of E804 937 whereby the Board has been sued either as defendant or respondent. The Board is currently defending claims against it in court. The directors believe that the Board will successfully defend the claims.

57


23. Financial instruments23.1 Credit risk

Financial assets which potentially subject the Board to concentrations of credit risk consist principally of cash, short term deposits and trade receivables. The Board’s cash equivalents and short-term de-posits are placed with high credit quality financial institutions. Trade receivables are presented net of doubtful receivables. Credit risk with respect to trade receivables is limited due to the large number of customers comprising the Board’s customer base. Accordingly, the Board has no significant concen-trations of credit risk.

The aging of trade receivablesGross Impairment Net

2012 2011 2012 2011 2012 2011

E E E E E E

Current 1 271 586 1 971 011 - - 1 271 586 1 971 011Past current to 30 days 98 655 179 504 - - 98 655 179 504Past due 30 days to 120 days 2 381 008 2 276 167 (2 090 701) (1 471 408) 290 307 804 759

________ _________ _________ _________ _________ _________

3 751 249 4 426 682 (2 090 701) (1 471 408) 1 660 548 2 955 274

========= ========== ========== ========== ========== ===========

2012 2011

E E

Impairment lossesOpening balance 1 471 408 578 147Impairment loss recognised 619 293 893 261

_________ _________

Closing Balance 2 090 701 1 471 408========= =========

23. Financial instruments (continued)

23.2 Fair values

The following are the contractual maturities of financial liabilities, including estimated interest pay-ments and excluding the impact of netting agreements:

58


23.3 Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest pay-ments and excluding the impact of netting agreements:

Carrying Contractual 0 – 12 2 – 5 Overamount cash flows months years 5 years

E E E E E2012

Non derivative financial liabilities

Finance lease liabilities 531 497 531 497 292 541 238 956 -Trade and other payables 3 490 304 3 490 304 3 490 304 - -

_________ _________ _________ _________ ________

4 021 801 4 021 801 3 782 845 238 956 -========== ========== ========== ========== ========

2011

Non derivative financial liabilities

Finance lease liabilities 1 082 249 1 082 249 563 817 330 555 187 877Trade and other payables 1 434 607 1 434 607 1 434 607 - -

Bank overdraft 613 674 613 674 613 674 - -_________ _________ _________ _________ _________

3 130 530 3 130 530 2 612 098 330 555 187 877========= ========= ========= ========= =========

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

59


2012 2011E E

24. Notes to the cashflow statement

24.1 Cash /generated by operations

Operating surplus for the year 3 469 871 1 448 858

Adjustment for:

Depreciation of property, plant and equipment 1 713 275 907 065Interest paid 66 478 145 916Interest received (657 973) (516 508)Surplus on disposal of property, plant and equipment 77 734 -

_________ _________

Cash generated before working capital changes 4 669 385 1 985 331

Increase in inventories (127 351) (36 614)Decrease/(increase) in trade and other receivables 1 796 820 (2 522 460)(Decrease)/increase in trade and other payables 2 055 697 (89 613)Increase in terminal benefits 176 257 581 662

_________ _________

8 570 808 (81 694)========== =========

24.2 Cash and cash equivalents

Cash and cash equivalents included in the cashflow statement com-prise the following statement of financial position amounts

Cash on deposit and at bank 17 876 175 8 730 541Cash on hand 5 968 5 967Bank overdraft - (613 674)

_________ _________

17 882 143 9 338 248========== ==========

25. Related parties

Directors

Details of remuneration paid to the Boards directors are set out in note 11.

26. Employees and employment cost

During the year the Board had an average of 78 employees (2011: 76) and incurred employment costs of E7 832 390 (2011: E8 033 757).

60


2012E’000

2011E’000

27. Summary segment report

27.1 Revenue

Revenue between divisional segments:Encabeni Branch 6 336 829 11 496 842Statutory Branch 22 679 712 16 835 636

_________ _________

Total revenue 29 016 541 28 332 478========== ==========

27.2 Cost of sales

Cost of sales between divisional segments:Encabeni Branch 5 430 470 8 677 151Statutory Branch 2 162 124 1 825 887

_________ _________

Total cost of sales 7 592 594 10 503 038========== ==========

27.3 Operating expenses

Expenses between divisional segments:Encabeni Branch 2 505 368 3 266 566Statutory Branch 15 658 083 14 539 498

_________ _________

Total operating expenses 18 163 451 17 806 064========== ==========

27.4 Total assets

Total assets between geographical segments:Encabeni Branch 1 484 978 3 619 762Statutory Branch 35 050 441 17 548 705

_________ _________

Total assets 36 535 419 21 168 467========== ==========

28.5 Total liabilities

Total liabilities between geographical segments:Encabeni Branch 2 205 467 1 047 607Statutory Branch 1 788 859 3 387 268

_________ _________

Total liabilities 3 994 326 4 434 875========== ==========

61


28. Prior year adjustments

28.1 Adjustment of current and deferred tax to appropriate measurement basis and recognition

According to section 12 (1) (v) of the income tax order of 1975, as amended “There shall be exempt from normal tax the receipts and accruals of the Swaziland Railway Board, the Swaziland Electricity Board, the Industrial Hous-ing Company Limited, or any other parastatal or statutory corporation which the minister may exempt by notice of Gazette”.

As an amendment to the income tax order the section above was deleted in June 2000 as a result all parastatals in-cluding NAMBoard became liable to corporate tax in accordance with the income tax order of 1975, as amended.

During the current year, the Board recognised adjustments to implement the above accounting treatment which is in terms of International Financial Reporting Standards and to comply with the income tax order of 1975, as amended. The Board has recognised these adjustments retrospectively. The effects of the adjustments are tabulated below:

2012 2011

E EEffects on years presented (2012 and 2011);

Statement of financial position

Increase in income tax liability 1 885 042 246 238_________ _________

Increase in deferred income tax asset 174 415 (295 637)_________ _________

Statement of comprehensive incomeRecognition of current income tax charge 1 523 801 59 412

_________ _________

(Decrease)/increase in profit for the year (1 523 810) (59 412)_________ _________

Effects on years prior to 2011:


Increase in income tax liability 1 799 761Increase in deferred income tax liability (186 826)

_________

Increase in retained earnings 1 612 935_________

62


28. Prior year adjustments (continued)

2011E

Statement of comprehensive income

Net profit before the change in accounting treatment 1 484 858Adjustments for income current tax and deferred tax charges (433 064)

_________

Net profit after change in accounting treatment 1 015 794_________


Net income tax liability before change as at 1 January 2010 -Current income tax charge recognized in statement of financial position in the year ended 31 December 2011 (restated) 246 238Total cumulative effects from prior years (31 December 2010) 1 799 761

_________

Net current tax liability after the change as at 31 December 2011 2 045 999

_________


Net deferred tax asset before change as at 1 January 2010 -Deferred income tax charge recognized in statement of financialposition in the year ended 31 December 2011 (restated) (186 826)Total cumulative effects from prior years (31 December 2010) 406 317

_________

Net deferred tax asset after the change as at 31 December 2011 219 491

_________

63

DETAILED INCOME STATEMENTfor the year ended 31 December 2012

Encabeni Statutory Total Encabeni Statutory Total

branch Branch branch Branch

2012 2012 2012 2011 2011 2011

E E E E E E

Sales 6 279 055 2 354 307 8 633 362 11 496 842 2 309 459 13 806 301Costs of Sales 5 532 763 2 059 831 7 592 594 8 663 190 1 839 848 10 503 038

Opening inventory 84 685 333 817 418 502 30 510 347 778 378 288Purchases 5 615 991 2 103 955 7 719 946 8 717 365 1 825 887 10 543 252Closing inventory (167 913) (377 941) (545 854) (84 685) (333 817) (418 502)Gross profit from trading operations

_________

746 292

_________

294 476

_________

1 040 768

_________

2 833 652

_________

469 611

_________

3 303 263_________ _________ _________ _________ _________ _________

Import levies - 20 383 179 20 383 179 - 14 526 177 14 526 177

Other income

Transport income 8 298 - 8 298 27 193 3 150 30 343Banana ripening fee - 495 612 495 612 - 343 777 343 777Handling fees - 160 214 160 214 - 185 638 185 638Rent receivable - 117 868 117 868 - 84 245 84 245Penalties - 144 657 144 657 - 92 550 92 550Permit fees - 186 753 186 753 - 191 496 191 496Sundry income 311 3 275 3 586 3 721 123 120 126 841Profit on disposal of prop-erty, plant and equipment - 892 892 - - -

_________ _________ _________ _________ _________ _________

754 901 21 786 926 22 541 827 2 864 566 16 019 764 18 884 330

========= ========== ========== ========= ========== ==========Expenditure

Audit fee - 135 840 135 840 - 130 108 130 108Advertising - 276 916 276 916 - 288 065 288 065Bad debts 352 145 267 148 619 293 290 951 602 341 893 292Bank charges 127 663 252 221 379 884 132 759 142 538 275 297Board fees expenses - 270 615 270 615 - 251 128 251 128Cleaning expenses 37 705 134 218 171 923 41 035 99 553 140 588Consultancy - 181 025 181 025 - 43 202 43 202Contingencies - 17 018 17 018 - 10 608 10 608Depreciation - 1 716 995 1 716 995 - 907 064 907 064Development project - 123 044 123 044 - 93 888 93 888Rent, rates, electricity and water

223 430 506 251 729 681 259 995 488 606 748 601

64Meeting and refreshments 1 825 116 278 118 103 5 202 62 831 68 033Export packaging material - 58 175 58 175 - 148 062 148 062Fuel 268 683 1 117 219 1 385 902 277 617 1 131 301 1 408 918Insurance - 445 532 445 532 - 439 965 439 965Legal fees - 109 699 109 699 - 51 302 51 302Lease charges - 20 103 20 103 - 90 169 90 169

_________ _________ _________ _________ _________ _________

Balance carried forward 1 011 451 5 748 297 6 759 748 1 007 559 4 980 731 5 988 290

========= ========= ========= ========= ========= =========

Balance brought forward 1 011 451 5 748 297 6 759 748 1 007 559 4 980 731 5 988 290Maintenance and repairs 37 234 194 328 231 562 130 065 274 998 405 063Motor vehicle repairs and maintenance 80 473 477 166 557 639 88 078 567 352 655 430Permit fees 65 715 - 65 715 179 713 - 179 713Penalties - taxation - 1 500 000 1 500 000 - - -Pension 84 783 370 246 455 029 83 568 331 960 415 528Printing and stationery 5 175 320 694 325 869 34 585 238 697 273 282Protective clothing 34 518 127 634 162 152 - 55 763 55 763PEU guarantee fund - 221 681 221 681 - 221 661 221 661Salaries and wages 1 109 347 6 648 589 7 757 936 1 437 928 6 642 803 8 080 731Security expenses 62 812 273 582 336 394 76 214 263 574 339 788Severance and gratuity - 202 817 202 817 - 465 607 465 607Sundry expenses - 4 219 4 219 250 15 065 15 315Telephone expenses 58 581 372 867 431 448 62 998 231 847 294 845Transport costs - 5 300 5 300 - - -Training - 25 440 25 440 - 15 760 15 760Travelling and subsis-tence allowance 135 357 96 922 232 279 165 608 72 576 238 184System support - 315 463 315 463 - 112 619 112 619National provident fund 12 000 60 760 72 760 - 48 485 48 485

_________ _________ _________ _________ _________ _________

Total expenditure 2 697 446 16 966 005 19 663 451 3 266 566 14 539 498 17 806 064_________ _________ _________ _________ _________ _________

Net interest income 9 879 581 616 591 495 8 089 362 503 370 592Interest income 9 879 648 094 657 973 8 089 508 419 516 508Interest expense - (66 478) (66 478) - (145 916) (145 916)

Operating (deficit)/sur-plus for the year (1 932 666) 5 402 537 3 469 871 (393 911) 1 842 769 1 448 858

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