NCERA FARMS (PTY) LTD ANNUAL REPORT2005/06

 

MANAGEMENT REPORT

For the year ended 31 MARCH 2006

 

Report by the Board of Directors to the Executive Authority and Parliament of the Republic of South Africa

 

1.                  General review of the state of financial affairs

 

            1.1        Services rendered by the Company         

                        During the time that the Company has administered the farm, through its management agent Ncera Agricultural Development Corporation (Pty) Ltd (NADC), a number of services were and still are provided to the neighbouring communities: 

 

·                     Postal services: The mail for all the villages is delivered via the Company’s postal boxes, sorted and distributed to 9 villages.

 

·                     Legal advice: Assistance with notarization of documents, affidavits, applications for pension, identity documents, correspondence with Government, Provincial and Municipal Offices, the Land Bank and more. 

 

·                     Assistance with the preparation of business plans and other similar documents.

 

·                     Contract ploughing and land preparation, advice on soil conservation, suitable crops for the area and pests and diseases, repairs to agricultural machinery and equipment. About 70 ha of land was ploughed, disked, sprayed, and planted at Village 8 and bush cutting was done for various schools and churches at a cost recovery basis.  

 

·                     Training was and still is given on topics such as store keeping, tractor maintenance, welding, computer literacy, animal husbandry and more. During the year under revue 21 students were trained in computer literacy, communication, budgeting, banking and entrepreneurship and 6 students returned for refresher courses. 

 

1.2             The way forward

 

·                     The Minister of Agriculture, as the Executive Authority of the Entity, approved the creation of a service centre on 26 October 2004.

·                     With the service centre in place, the following services will be available to the farmers that will be settled on Ncera land as well as to the neighbouring communities: 

            Agricultural extension services

            Land preparation, layout and contract ploughing

            Training and advice on fresh produce production and marketing

                                                                                                                                                       /-2-

 

- 2 -

 

NCERA FARMS (PTY) LTD

 

MANAGEMENT REPORT

for the year ended 31 MARCH 2006

 

                                    Preparation of business plans and financial record keeping

                                    Cost effective repairs to and maintenance of agricultural machinery and equipment

                                    Postal services

                                    Legal services

                                    Land valuation

                                    Animal husbandry

                                    Animal improvement schemes

                                    Other services (as and when required)

 

·         The infrastructure necessary for the creation of the Service Centre is as follows:

 

                                    Security fence

                                    Building an administration and training centre

                                    Erection of a workshop

                                    Water sources

                                    Shade house/nursery

                                    Livestock handling facilities

                                    Tunnels

                                    Security system

                                    Upgrading of certain existing structures

 

                        The erection of the security fence as well as the workshop will be completed by end April 2006 at a cost of R260 456 and R641 102 respectively. The building of the administration and training centre at a cost of R916 682 is well in progress and will be finished by June/July 2006.  The Department of Agriculture allocated a further amount of R500 000 during 2006/07 to complete the project during that financial year.    

 

1.3        Board of Directors

 

                        The Board of Directors of the Company currently consists of: 

 

                                 Mr T Marais          :  Chairperson

                                 Mr M Msizi           :  Member

                                 Mr S Malatji          :  Member

                                 Mr J B Venter       :  Member        

 

 

 

       /-3-

                                   - 3 -

NCERA FARMS (PTY) LTD

 

MANAGEMENT REPORT

for the year ended 31 MARCH 2006

 

 

 

1.4        Budget allocation for 2005/06

R’000

R’000

                

                Transfer from the Department of Agriculture

 

 

2 372

                          Plus: Own revenue*

 

1 355

                          Total amount available

 

3 727

                          Less: Actual expenditure

 

2 427

                          Surplus

 

1 300

                         * Estimated own revenue of R815 000 plus fair value gained on inventory

                           amounting to R540 000.          

 

 

 

 

 

1.5        Actual expenditure for 2005/06

 

 

·       In terms of input cost:

 

 

                         Personnel expenditure

361

 

                         Administrative expenditure

217

 

                         Management fees

1 069

 

                         Veterinary and medicine cost

14

 

                         Fodder and licks

451

 

                         Maintenance of roads, buildings and equipment

38

 

                         Transport cost

36

 

                         Consumables

5

 

                         Water and electricity

73

 

       Security services

163

2 427

 

 

 

·      In terms of cost centres:

 

 

                         Administration

520

 

                         Livestock                                

43

 

                         Dairy                          

795

 

                         Management fees                    

1 069

2 427

                                               

 

 

 

2005/06

2004/05

 1.6       Spending trends

 

 

·       In terms of input cost as a percentage of total actual

    expenditure:

 

 

                         Personnel expenditure

14,9%

19,9%

                         Administrative expenditure

8,9%

10,8%

                         Management fees

44,0%

36,0%

                         Veterinary and medicine cost

0,6%

1,4%

                         Fodder and licks

18,6%

17,4%

                         Maintenance of roads, buildings and equipment

1,6%

1,2%

                         Transport cost

1,5%

1,5%

                         Consumables

0,2%

0,2%

                         Water and electricity

3,0%

0,3%

         Wages Security services

6,7%

6,7%

 

/-4-

                           - 4 -

NCERA FARMS (PTY) LTD

 

MANAGEMENT REPORT

for the year ended 31 MARCH 2006

                    

·       In terms of cost centres as a percentage of total

         actual expenditure:

 

 

2005/06

 

 

2004/05

 

                             Administration

21.4%

29,6%

                             Livestock                             

1,8%

7,8%

                             Diary                                               

32,8%

26,6%

                              Management fees

44,0%

36,0%

                            

 

 

·        In terms of total actual spending as a percentage of the total appropriated amount:

 

 

 

76,2%

 

·         If specific services rendered by the Company are analyzed in terms of actual spending, the following spending trends under the various cost centers come to the fore:

 

Administrative expenses amounted to R520 000 or 21,4% of total expenditure.  Within this cost centre expenditure for security services amounted to R163 000 or 31,3%, workshop expenses amounted to R59 000 or 11,3%, traveling and subsistence to R13 000 or 2,5%, depreciation to           R15 000 or 2,9%, audit fees to R35 000 or 6,7%, bank charges to R14 000 or 2,7%, water and electricity to R51 000 or 9,8%, insurance to R43 000 or 8,3%, wages to R36 000 or 6,9%, communication to R19 000 or 3,7%, transport to R10 000 or 1,9%, maintenance to R12 000 or 2,3% and sundry expenses to R37 000 or 7,1%.  Compare to the 2004/05 financial year there was a decrease in spending amounting to R317 000 mainly due to reduction in operations.   

 

Livestock expenses amounted to R43 000 or 1,8% of total expenditure.  The biggest spending was on wages which amounted to R24 000 or 55,8%, veterinary medicine and dipping cost at R15 000 or 34,9%, sundries to R 4 000 or 9,3%.  The Company’s total livestock herd is 96 head of cattle, consisting out of 45 cows, 12 heifers, 16 heifer calves, 3 bulls, 7 young bulls and 13 bull calves.  The profit for the year amounted to R144 215 mainly due to the revaluation of the herd. 

 

Dairy expenses amounted to R795 000 or 32,8% of total expenditure. The biggest spending was on fodder and licks at R446 000 or 56,1%, labour cost at R249 000 or 31,3%, repairs and maintenance R25 000 or 3,1%, transport cost R25 000 or 3,1%, water and electricity R22 000 or 2,8%.  Also included are veterinary medicine expenses and consumables at R28 000 or 3,5%.  The dairy yielded an income of R647 000 but resulted in a net profit of R349 481

 

   /-5-

                                                                                                            

                                                    - 5 -

 

 

NCERA FARMS (PTY) LTD

 

MANAGEMENT REPORT

for the year ended 31 MARCH 2006

 

 

      for the year under review. This can mainly be attributed to the drought during the middle of the reporting year resulting in a drop in income coupled with an increase in labour, transport cost as well as the revaluation of the herd.

 

Management fees amounted to R1 069 000 or 44,0% of total cost. Fees increased by R49 000 or 4,8% over the 2004/05 financial year.

 

1.7              Funds not spent

                

                              Of the total amount available for the 2005/06 financial year, an amount of                                 R481 000 on capital and R279 000 of operational funds were not spent.  The underspending on capital can be attributed to certain planned capital projects not being finalised in time and thus rolled over to the 2006/07 financial year.

 

            2.                   Services rendered                                       

 

                     Please refer to paragraph 1.1 above.

 

            3.  Tariff policy

 

            Full cost recovery is applicable whenever services are rendered.  Training and advice is, however, free of charge.

 

            4.                   Business address (Physical and postal address)                                             

                

            Welcome Home Farm

            P O Box 5

            Kidds Beach

            5264

 

5.                   Corporate governance

 

            The Entity is too small and can not afford to appoint an internal auditor.  The Internal Audit Unit of the national Department of Agriculture is therefore utilized for this purpose.  The Audit Committee consists of persons that are not part of the Entity or its Board.  The above process is in place since the implementation of the Public Finance Management Act, 1999 (Act 1 of 1999).

 

 

 

/-6-

                                - 6 -

 

 

NCERA FARMS (PTY) LTD

 

MANAGEMENT REPORT

for the year ended 31 MARCH 2006

 

 

 

6.         Approval

 

      The Annual Financial Statements set out on pages 7 to 15 have been approved by the Chairperson of the Board of Directors.

 

 

 

 

 

 

 

 

T Marais

Chairperson of the Board of Directors

31 May 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/-7-

 

 

                   - 7 -

 

 

 

STATEMENT OF DIRECTORS’ RESPONSIBILITY

for the year ended 31 March 2006

 

 

 

1.             The directors are responsible for the maintenance of adequate accounting records and the preparation and integrity of the financial statements and related information.  The auditors are responsible to report on the fair presentation of the financial statements.  The financial statements have been prepared in accordance with South African Statement of Generally Accepted Accounting Practice and in the manner required by the Companies Act in South Africa.

 

2.             The directors are also responsible for the company’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 accountability of 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 systems has occurred during the year under review.

 

3.             The financial statements have been prepared on the going concern basis, since the directors have every reason to believe that the company has adequate resources in place to continue in operation for the foreseeable future.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-8-              

- 8 -

 

 

REPORT OF THE INDEPENDENT AUDITORS

TO THE MEMBERS OF NCERA FARMS (PROPRIETARY) LIMITED

 

We have audited the annual financial statements of Ncera Farms (Proprietary) Limited set out on pages 9 to 19 for the year ended 31 March 2006.  These financial statements are the responsibility of the company’s directors.  Our responsibility is to express an opinion on these financial statements based on our audit.

 

Scope

We conducted our audit in accordance with International Standards on Auditing.  Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement.  An audit includes:

 

·               examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;

·               assessing the accounting principles used and significant estimates made by management;  and

·               evaluating the overall financial statement presentation

 

We believe that our audit provides a reasonable basis for our presentation.

 

Audit opinion

In our opinion, the financial statements fairly present, in all material respects, the financial position of the company at 31 March 2006 and the results of its operations and cash flows for the year then ended in accordance with South African Statements of Generally Accepted Accounting Practice and in the manner required by the Companies Act in South Africa.

 

Supplementary information

The detailed income statements set out on pages 20 to 23 do not form part of the annual financial statements and is presented as additional information.  We have not audited these schedules and accordingly do not express an opinion thereon.

 

 

PricewaterhouseCoopers Inc

Chartered Accountants (SA)

Registered Accountants and Auditors

 

EAST LONDON

31 May 2006

 

 

 

/-9-

- 9 -

 

  NCERA FARMS (PTY) LTD

 

               ANNUAL FINANCIAL STATEMENTS

               for the year ended 31 March 2006 

 

BALANCE SHEET at 31 March 2006 

 

 

 

 

Notes

 

2005/06

R

2004/05

R

 

ASSETS

 

 

 

 

Non-current assets

 

 

 

Plant and equipment

5

          1 502 496

459 831

 

 

 

 
Current assets

 

 

 

Inventories

6

811 153

224 182

Receivables and prepayments

7

               67 965

118 471

Bank and cash

 

             657 085

   924 572

 

 

 1 536 203

1 267 225

Total assets

 

          3 038 699

1 727 056

 

 

 

 

 

 

 

 
EQUITY AND LIABILITIES

 

 

 
Capital and reserves

 

 

 

Share capital

8

               1 000

1 000

Non-distributable reserves

 

      27 886 976

25 514 976

Accumulated deficit

 

      (24 924 825)

      (23 853 234)

 

 

2 963 151

1 662 742

Current liabilities

 

 

 

Trade and other payables

9

              65 499

52 156

Provisions for liabilities

10

              10 049

     12 158

 

 

              75 548

     64 314

Total equity and liabilities

 

         3 038 699

1 727 056

 

 

 

 

 

 

 

  /-10-

 

 

 

 

 

 

 

                                    - 10 -

 

                                  NCERA FARMS (PTY) LTD

 

                                      ANNUAL FINANCIAL STATEMENTS

                                        for the year ended 31 March 2006 

 

INCOME STATEMENT

 

 

 

 
 
Notes

 

 

2005/06

R

 

 

2004/05

R

 

Revenue

 

              647 604

                1 366 380

 

Cost of sales

 

             (403 500)

  (1 762 388)

 

Gross loss

 

               244 106

(396 008)

 

Other operating income

 

                82 394

                    29 576

 

Government grant

 

           2 372 000

               2 240 000

 

Administrative expenses

 

(1 483 151)

(1 478 216)

 

Operating profit/(loss)

 

           1 215 348

                  395 352

 

Finance income

3

                85 061     

                    29 749

 

Profit/(loss) before taxation

 

           1 300 409

                  425 101

 

Taxation

4

                         -     

                             -

 
Net profit/(loss) for the year

 

           1 300 409   

                  425 101

 

 

 

STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 
 
SHARE CAPITAL

                   

 

R

 
NON-DISTRIBUTABLE RESERVE

                    

R

 

ACCUMULATED LOSS

              R

 

TOTAL

              

 

R

 

Balance at 31 March 2004

1 000

23 274 976

(22 038 335)

1 237 641

Net loss for the year

-

-

            425 101

425 101

Transfer to non-distributable reserve

 

-

 

2 240 000

 

(2 240 000)

 

-

Balance at 31 March 2005

1 000

25 514 976

(23 853 234)

1 662 742

Net profit for the year

                   -

-

        1 300 409

1 300 409

Transfer to non-distributable reserve

 

                           -

 

   2 372 000

 

  (2 372 000)

 

               -

Balance at 31 March 2006

1 000

 27 886 976

(24 924 825)

2 963 151

 

 

 

 

 

 

/-11-

 

                                 - 11 -

 

                                   NCERA FARMS (PTY) LTD

 

                                     ANNUAL FINANCIAL STATEMENTS

                                      for the year ended 31 March 2006 

 

CASH FLOW SATEMENT

 

 

 

 

 

 
 
Notes

 

 

2005/06

R

 

 

2004/05

R

 

Cash flows from operating activities

 

 

 

Cash receipts from customers

 

          648 323

(1 344 380)

Cash paid to suppliers and employees

 

   (2 291 060)

   (230 500)

Cash utilized in operating activities

 

(1 642 737)

(1 574 880)

Interest received

 

            85 061

              29 749

Net cash utilized in operating activities

 

(1 557 676)

(1 545 131)

 

 

 

 

Cash flows from investing activities

 

 

 

Movement in establishment costs

 

    -

-

Purchase of property, plant and equipment

 

     (1 081 811)

(44 220)

Proceeds on disposal of property, plant and equipment

 

                     -

               21 000

Net cash generated by investing activities

 

     (1 081 811)

(23 220)

 

 

 

 

Cash flows from financing activities

 

 

 

Finance provided by Department of Agriculture

 

      2 372 000

          2 240 000

Net cash generated by financing activities

 

      2 372 000

          2 240 000

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

 

        (267 487)

 

             671 649

Cash and cash equivalents at beginning of year

 

         924 572

             252 923

Cash and cash equivalents at end of year

 

         657 085

             924 572

 

 

 

 

 

 

 

 

 

 

 

/-12-

 

 

 

 

 

                            - 12 -

 

                              NCERA FARMS (PTY) LTD

 

                               ANNUAL FINANCIAL STATEMENTS

                               for the year ended 31 March 2006 

 

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

 

 

1.              Accounting policies

 

The financial statements have been prepared on the historical cost basis suitably amended for fair values.  The following are the principal accounting policies used by the company, which are consistent with those of the previous years and comply with South African Statements of Generally Accepted Accounting Practice.

 

1.1    Plant and equipment

 

Fixed assets are disclosed at cost less accumulated depreciation.  Depreciation at various rates is calculated to write off the cost of fixed assets on a straight-line basis, over their expected useful lives.  Motor vehicles and tractors are depreciated on a usage basis of kilometers driven and hours used respectively; with maximum units imposed based on expected useful lives.

 

1.2     Impairment of assets

 

Property, plant and equipment are reviewed for impairment losses whenever events indicate that the carrying amount may not be recoverable.  An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset’s net selling price and value in use.  An impairment loss or a reversal of an impairment loss is recognized as an expense/income in the income statements as incurred.

 

1.3    Inventories

 

Inventories are valued as follows:

a)     Livestock is valued at fair value with unrealized profits charged to the income statement.

b)     Consumable stores are valued at lower of cost or net realizable value on the basis of first in, first out.

 

1.4    Trade receivables

 

Trade receivables are carried at anticipated realizable value.

 

 

 

/-13-

                             - 13 -

 

                            NCERA FARMS (PTY) LTD

 

                              ANNUAL FINANCIAL STATEMENTS

                               for the year ended 31 March 2006

 

1.5    Cash and cash equivalents

 

For the purposes of the cash flow statement, cash and cash equivalent comprise cash on hand, net of bank overdrafts.

 

1.6    Provisions

 

Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

 

1.7    Revenue recognition

 

Sales are recorded in the financial statements at the date goods are delivered to customers or services provided.

 

1.8    Financial instruments

 

Investments in financial assets are initially recognised at cost.  Subsequently financial assets are re-measured at fair value, except fixed maturity investments such as debt and loans.  Financial liabilities are recognised at the original debt less principal repayments and amortizations, except for trade creditors, which are re-measured at fair value.

 

1.9    Comparatives

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/-14 -

 

                                - 14 -

 

                            NCERA FARMS (PTY) LTD

 

                              ANNUAL FINANCIAL STATEMENTS

                               for the year ended 31 March 2006

 

 

 

 

 

2005/06

R

2004/05

R

2.       Operating profit/ (loss)

 

The following items have been charged/(credited) in arriving at operating profit/(loss):

 

 

 

Auditors' remuneration

 

 

Audit fees – current year

23 400

26 600

Under provision : previous year

6 600

1 550

Other services

  5 217

  3 000

 

35 217

31 150

 

 

 

Depreciation on plant and equipment

39 146

14 267

 

 

 

Impairment charge

         -

34 551

 

 

 

Profit on disposal of plant and equipment

         -

15 892

 

 

 

Management fee

     Ncera Agriculture Development Corporation (Proprietary)

     Limited

 

 

1 068 960

 

 

1 020 000

 

 

 

Repairs and maintenance

     82 288

     36 978

 

 

 

Staff costs

   502 926

   877 709

 

 

 

Average number of persons employed

                   33

                  44

 

 

 

Fair value gain on inventory

          540 745

 

 

 

 

 

 

 

 

 

 

 

/-15-

 

                          - 15 -

 

                              NCERA FARMS (PTY) LTD

 

                               ANNUAL FINANCIAL STATEMENTS

                               for the year ended 31 March 2006

 

 

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

 

 

 

2005/06

R

2004/05

R

 

3.              Finance income

Interest received

85 061

29 749

 

4.              Taxation

 

No provision for taxation has been made as the company has an estimated assessed loss of

R8 257 759 (2005: R9 025 397).

 

 

5.              Plant and equipment

 

 

Construc-tion in progress

Plant & machinery

 

 

R

Motor vehicles & tractors

R

Office furniture & equipment

 

R

Total

R

 

 

Year ended 31 March 2006

 

Opening carrying amount

 

           40 526

         409 539

          9 766

      459 831

Additions

956 028

           13 693

         112 080

               10

   1 081 811

Disposal

 

-

-

-

-

-

Depreciation charge

 

(7 213)

(28 032)

(3 901)

    (39 146)

Closing carrying amount

956 028

           47 006

         493 587

          5 875

   1 502 496

 

At 31 March 2006

 

Cost

956 028   

         783 655

      2 149 013

        84 439

   4 073 135

Accumulated depreciation and impairment

 

 

(736 469)      

 

(1 655 426)

 

(178 564)

 

(2 570 639)

Carrying amount

956 028    

           47 006

         493 587

          5 875

   1 502 496

 

 

 

 

 

/-16-

 

 

                          - 16 -

 

                             NCERA FARMS (PTY) LTD

 

                           ANNUAL FINANCIAL STATEMENTS

                           for the year ended 31 March 2006

 

 

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

 

 

Year ended 31 March 2005

 

 

 

Plant & Machinery

R

Motor vehicles & tractors

R

Office furniture & equipment

R

Total

R

Opening carrying amount

 

             7 710

        463 464

          4 938

        476 112

Additions

 

 

           37 539

-

          6 681

          44 221

Disposals           

 

-

(5 108)

-

(5 108)

Depreciation charge

                                                         

Impairment charges                    

 

(4 723)

 

          -

(14 267)

 

 (34 550)

(1 853)

 

         -

(20 843)

 

 (34 550)

Closing carrying amount

 

           40 526

        409 539

          9 766

        459 831

 

At 31 March 2005

 

Cost

 

          769 962

     2 036 933

      184 429

     2 991 324

Accumulated depreciation and impairment

 

 

       (729 436)

 

(1 627 394)

 

(174 663)

 

(2 531 493)

Carrying amount

 

           40 526

        409 539

          9 766

        459 831

 

 

 

 

2005/06

R

2004/05

R

6.              Inventories

 

The amounts attributable to the different categories are as

follows:

 

 

Commercial livestock

244 500

           59 950

Dairy livestock

536 000

         144 485

Consumables

  30 653

           19 747

 

811 153

         224 182

 

7.              Receivables and prepayments

 

Trade receivables

-

                265

Other receivables

67 965

           21 715

Prepayments

          -

           96 491

Receivables and prepayments

67 965

         118 471

 

/-17-

                              - 17 -

 

                   NCERA FARMS (PTY) LTD

 

                     ANNUAL FINANCIAL STATEMENTS

                      for the year ended 31 March 2006

 

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

 

8.              Share capital

 

 

2005/06

2004/05

Authorised and issued

 

 

1 000 ordinary shares of R1 each

1 000

1 000

 

9.              Trade and other payables

 

Provision for audit fees

23 400

26 600
Trade payables

42 099

25 556
 

           65 499

52 156

 

 

 

Bonus

R

Leave pay

R

Total

R

10.          Provisions for liabilities

 

At 31 March 2005

             5 246

                    6 912

        12 158
Utilised during the year

(5 246)

          ( 6 912)

        (12 158)
Additional provisions

             5 475

                    4 574

        10 049
At 31 March 2006

             5 475

                    4 574

        10 049

 

Bonus

 

 

 

The provisions for bonuses related to year end employees bonus.  The bonus is calculated on the number of months worked during the calendar year.
 

 

 

 
Leave pay

 

 

 

The company provides for leave pay due to employees.  A provision of R4 574 (2005 : R6 912) for wage and salary employees has been recognised at year end based on the number of outstanding leave days due to employees at year end.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/-18-

 

                           - 18 -

 

                          NCERA FARMS (PTY) LTD

 

                          ANNUAL FINANCIAL STATEMENTS

                           for the year ended 31 March 2006

 

 

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

 

 

 

 

2005/06

R

2004/05

R

11.          Cash utilised in operations

 

Reconciliation of profit/(loss) before tax to cash utilised in operations:

 

 

 

 

 

Operating profit/(loss)

            1 300 409

               425 101

Adjusted for:

 

 

            Government grant

          (2 372 000)

(2 240 000)

            Net interest income

(85 061)

(29 749)

            Depreciation

                39 146

                20 843

            Impairment charge

                         -  

                 34 550

            Profit on disposal of plant and equipment

                         -

(15 892)

Changes in working capital:

 

 

            Inventories

             (586 971)

              359 349

            Crops on land

                         -

          -

            Receivables and prepayments

                50 506

(109 465)

            Trade and other payables

               13 343

(18 442)

            Provisions for liabilities

                 (2 109)

       (1 175)

Cash outflows from operating activities

          (1 642 737)

(1 574 880)

 

12.          Financial instruments

 

Credit risk

Financial assets which potentially subject the company to concentrations of credit risk consist principally of cash, short term deposits and trade receivables.  The company’s cash equivalents and short term deposits are placed with high credit quality financial institutions. Credit risk relating to trade receivables is minimal due to repayment by debtors within normal credit terms.

 

Interest rate risk

The company is not exposed to interest rate risk.

 

Fair values

At 31 March 2006 the carrying amounts of cash and short term deposits, accounts receivables and accounts payable approximated their fair values due to the short term maturities of these assets and liabilities.

 

/-19-

 

                       - 19 -

 

                      NCERA FARMS (PTY) LTD

 

                      ANNUAL FINANCIAL STATEMENTS

                       for the year ended 31 March 2006

 

 

 

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

 

 

 

2005/06

R

2004/05

R

13.         Related party transactions

 

Controlling entity

The immediate holding entity is the Department of Agriculture, a department incorporated in the Republic of South Africa.

 

 

Grant received from Department of Agriculture

(2 372 000)

(2 240 000)

 

 

 

 

14.         Capital commitments

 

Approved but not contracted for

    -

782 500

Contracted for

874 922

  94 500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/-20-

                          - 20 -

 

                            NCERA FARMS (PTY) LTD

 

                              ANNUAL FINANCIAL STATEMENTS

                              for the year ended 31 March 2006

 

DETAILED INCOME STATEMENTS

 

 

2005/06

R

2004/05

R

Operating loss after direct costs

 

 

Crops – See attached schedule A

                       ( 5 352)

                                -

Livestock – See attached schedule B

                      493 696

                      (16 934)

 

                  488 344                  

                 (16 934)

 

 

 

Indirect costs – See attached schedule C

               ( 244 238)                 

                (379 075)

 

                244 106       

                (396 008)

 

 

 

Other income

 

 

Interest received

                       85 061

                  29 749

Government grant

                  2 372 000

                  2 240 000

Profit on disposal of fixed assets

                       -          

                  15 892

Rental received

                       -                  

                    4 500

Sundry income

                  13 935                 

                    9 184

Workshop

     68 460

               -

 

             2 539 455

                  2 299 325

 

                  2 783 560

                  1 903 317

 

 

 

 

                     174 356

                  1 903 317

Other expenses

 

 

Audit fees

                      (35 217)

                      (31 150)

Bank charges

                      (13 520)

                      (15 754)

Communication costs

                      (19 097)

                      (21 260)

Consumables

                              -

                           (101)

Depreciation

                      (15 163)

                      (20 843)

Impairment charge

                              -

                      (34 551)

Entertainment

                       ( 1 142)

                        (1 706)

First aid

                               -

                              -

Licenses

                        (1 335)

                        (4 569)

Management fees

                 (1 068 960)

                 (1 020 000)

Printing and stationery

                        (7 290)  

                        (7 943)

Recoveries

                              -

                         5 615

Refreshments

                        (1 012)

                           (948)

Rent paid

                        (5 843)

                        (5 289)

RSC levies

                        (2 133)

                        (3 547)

Security

                        (6 949)

                        (6 812)

Subscriptions

                        (4 028)

                        (5 238)

Travel and subsistence

                      (12 710)

                      (34 486)

Wages – Security Guards

                    (162 746)

                    (188 781)

Workshop costs

                    (126 007)

                      (80 853)

Net profit/(loss) for the year

                  1 300 409

                     425 101

 

 This statement does not form part of the financial statements and is unaudited.

/-21-

 

                                     - 21 -

 

                                         NCERA FARMS (PTY) LTD

 

                                      ANNUAL FINANCIAL STATEMENTS

                                      for the year ended 31 March 2006

 

PRODUCTION SCHEDULE A - PASTURES

 

 

2005/06

Total

R

2004/05

Total

R

 

 

 

 

 

Sales

-

 

-

 

 

 

 

Less : Marketing costs

          -

 

          -

 

 

 

 

Net sales

-

 

-

 

 

 

 

Less:      Direct production costs

 

 

 

              Labour costs

-

 

-

              Fertilizer

(5 352)

 

-

              Chemical weed control

-

 

-

              Tractor costs

          -

 

-

              Crop establishment

          -

 

          -

 

 (5 352)

 

          -

Operating loss after direct costs

 (5 352)

 

          -

 This statement does not form part of the financial statements and is unaudited.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/-22-

 

                              -22 -

 

                                 NCERA FARMS (PTY) LTD

 

                                ANNUAL FINANCIAL STATEMENTS

                               for the year ended 31 March 2006

 

 

PRODUCTION SCHEDULE B - LIVESTOCK

 

 

 

Livestock

 

R

Dairy

 

R

2005/06

Total

R

2004/05

Total

R

 

 

 

 

 

 

Sales

-

(647 604)

(647 604)

1 366 380

 

 

 

 

 

Less : Marketing costs

            -

               239

        239

    (48 717)

 

 

 

 

 

Net sales

-

(647 365)

(647 365)

      1 317 663

 

 

 

 

 

Cost of sales

 

 

 

 

              Opening stock

           59 950

         144 485

         204 435

         564 730

              Closing stock

(244 500)

(536 000)

(780 500)

(204 435)

 

(184 550)

(391 515)

(576 065)

         360 295

 

 

 

 

 

Gross profit

(184 550)

(1 038 881)

(1 223 431)

         957 368

 

 

 

 

 

Less :     Direct production costs

 

 

 

 

              Labour costs

           24 007

         203 475

         227 482

         420 763

              Dips and dosage

             6 535

             4 985

           11 520

           18 263

              Identification

-

                109

                109

             1 141

              Maintenance of assets

-

           25 046

           25 046

           12 209

              Members fee

             1 485

-

             1 485

671

              Tractor costs

-

-

-

                222

              Vets and medicines

             8 308

             5 558

           13 866

           21 951

              Feeds and licks

-

         445 476

         445 476

         493 230

              Consumables

             -

             4 750

             4 750

             5 852

 

           40 335

         689 399

         729 734

         974 302

Operating loss after direct costs

(144 215)

     (349 481)

(493 696)

 (16 934)

  This statement does not form part of the financial statements and is unaudited.

 

 

 

/-23-

                         - 23 -

 

 

                       NCERA FARMS (PTY) LTD

 

                         ANNUAL FINANCIAL STATEMENTS

                          for the year ended 31 March 2006

 

 

TOTAL INDIRECT COSTS - SCHEDULE C

 

 

 

Admin

 

 

R

Livestock

 

 

R

2005/06

Total

R

2004/05

Total

R

 

 

 

 

 

 

Labour costs

34 013

45 079

79 091

142 338

Maintenance costs

12 129

              364

12 493

20 200

Insurance

42 425

-

42 425

36 194

Consumables

23

516

539

784

Transport

9 424

26 999

36 423

42 968

Water and electricity

49 037

16 432

65 469

116 796

Water supply

    1 968

  5 830

    7 798

  19 794

 

149 019

95 220

244 238

379 074

This statement does not form part of the financial statements and is unaudited.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/-24-

 

- 24 -

 

 

 

Report of the Audit Committee for the year ended 31 March 2006

 

 

The Committee was constituted in terms of the Public Finance Management Act, 1999 (Act 1 of 1999).  The Committee consists of a Chairperson and two members who are officials from the Department.

 

A review of the internal controls in place to safeguard the assets of the entity and the recovery of revenue and expenditure were done by the Internal Auditor.  The audit revealed that:

 

·               The financial systems in place are adequate and operational;

·               revenue and expenditure are accounted for;

·               wages are paid according to the prescribed scales;  and

·               that the asset register is up to date.

 

From the report of independent auditor it was also noted that no matter of non compliance to the policies and procedures have been reported.  The Committee can therefore report that the system of internal control for the 2005/06 financial year was effective and efficient.

 

The Committee concurs and accept the independent auditors conclusions on the financial statements and is of the opinion that the statements and audit report be accepted.

 

 

 

 

 

 

 

 

 

D K Henrico

Chairperson

31 May 2006