OVERVIEW: Ncera Farms (Pty) Ltd is a public entity of the Department of Agriculture in terms of the Public Finance Management Act, 1999 (Act I of 1999) with the settlement of farmers as the aim.

The Land managed by Ncera Farms forms the residual portion of the land on which the Imidushane Clan were settled.

The land in question is approximately 3 100 hectares in extent and is 8 separate title deeds of varying extent in size.

The farms are earmarked for farmer settlement within the framework of the Land Redistribution Program for Agricultural Development.

The Company Shareholding is owned entirely by the Department of Agriculture and the Directors of the Company throughout the year and at the date of this report were:

Mr. M.M. Mbongwa Chairperson

Mr. M.M. Msizi Director

Ms. N. Mionzi Director

Mr. T. Marais Director

The Company employs 47 permanent workers and in addition seasonal workers are employed as and when required.

The Company makes use of both external and internal auditors.

1. AGRICULTURE

Following a Board decision during the previous year to terminate crop production, the management activities were concentrated on the maintenance of existing crops. Livestock, beef production and dairy were the main activities.

From the existing crops, which were pineapples in the final cycle of production, there was an income of R 43 000.00

Livestock (Beef Production) animals comprise of mainly Nguni type and consist of

Female adult animals 143

Pregnant heifers 72

Heifer Calves 99

Mature Bulls 7

Steers and bull calves 62

Dairy Production is derived from a total of 171 daily cattle, which comprise of the following animals:

Mature milk cows 129

Heifer calves 29

Bulls and bull calves 13

On an average 80 cows were in production at any given time. During the period in question the dairy production yielded an income of R 795153.00 for the financial year.

Extremely dry weather conditions had an adverse effect on both the beef and dairy production and management resorted to making silage from pineapple plants and other available suitable plant material. It was also necessary to purchase additional feed in order to sustain the animals. This inevitably added to the cost of production but fortunately prevented serious livestock losses.

The Company, through its management agents, undertakes training of rural people, giving courses and training in various skills. Details of these courses were submitted to the Portfolio Committee at the Briefing on the 4~ June 2004.

A copy of the certificates awarded to successful candidates is attached for your information. Since the last briefing in June the demand for these courses has increased tremendously and the classes are now at maximum capacity. In order to assist in this regard Department of Agriculture has donated an additional 2 desk top computers and an East London Firm of Insurance Brokers have donated a further two and have indicated that they may donate additional computers at a later date.

We are pleased to report that many of the persons trained by Ncera Farms have managed to get employment, which they previously would not have qualified for. The number of students who have passed the required standard set and who have been awarded certificates since our previous report are as follows: 30 persons the courses as described on the certificates, 4 persons who previously graduated with outstanding results were given a course to enable them to train others, 5 persons who had previously attained a certificate returned and requested that they be given further training courses on Entrepreneurship, and a more advanced course has been initiated.

The Company continues to render other services to the community, as previously reported, and in fact recently the requests for assistance with applications to financial institutions, business plans etc. by previously disadvantaged farmers has increased considerably.

LABOUR RELATIONS The Company enjoys an excellent relationship with the Labour Union (SAAPAWU) as well as the Company workers. The Union has shown a keen interest in our training programs.

QUALIFICATIONS " The Company is financed by the Department of Agriculture and they are unable to determine if financing will continue in the medium or long term.

The Department has committed to finance the company for the next financial year but has not made a decision to continue supporting the Company in future years. Without such ongoing financial support there is significant uncertainty that the Company will be able to continue as a going concern."

This qualification by the auditors will no longer be applicable under the new proposals.

FINANCING

During this financial year the Department has provided the Company with operating capital amounting to R 1 585 000.00 after which the Company has ended with a nett loss for the year of R 326 397.00.

The main expenditure has been for livestock feeds and stock licks, labor costs, management fees, mechanization costs and audit fees, insurance, public liability cover etc.

ASSETS

The assets reflect a nett book value of R 476112.00. These assets are movable assets such as, tractors and other farming equipment whose ages vary from 20 years (1984) to 10 years (1990) an exception in this case is a desktop computer purchased during 2004.

Stocks are made up as follows: -

Commercial livestock R 407 950.00

Dairy Livestock R 156 780.00

Consumables (oils and fuels) R 18 801.00

ACCOUNTS RECEIVABLE

R 9 006.00 which is mainly guarantees and deposits for electricity supplies.

BANK ACCOUNT R. 250923.00

CURRENT LIABILITIES R. 83 931.00 made up as follows:

Trade creditors and auditors R. 70 598.00

Provision for leave and bonuses R. 13 333.00

The main aim of the Company is to facilitate and expedite the disposal of Ncera land to Farmer Settlement and to provide a support mechanism for the farmers to be established.

With this in mind, and as reported at the previous briefing. Consultants were appointed to submit recommendations, and management was requested to investigate the possibility of establishing a service center to render post settlement support for farmers. A valuator was appointed to give an in depth report on the real values and agricultural potential of the farms. The Division of Farmer Settlement was requested to submit a copy of this report to the Committee.

During October of 2004 the Director General of the Department of Agriculture, Ms. Bongiwe Njobe, accompanied by a member of the Board of Directors paid a visit to Ncera Farms and met with management in order to discuss the proposal for the creation of a service center, which will provide the post settlement support to farmers and continue with training.

It was also agreed that a Community Public Private Partnership be entered into with the Imidushane Clan, the local Municipal Councils, Local Government, and other stake holders participate.

A new Board representative of all the role players will in due course be appointed. An exit strategy for the Department ( Government) over the long term must be compiled in order that there be an orderly handover to the involved communities.

The proposal has been approved the Board of Directors as well as the Director General of The Department Of Agriculture and the final approval by the Minister of Agriculture and Land Affairs is awaited.