1298 PPECB Annual Report - Amazon Web...
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annual report2009-2010
PPECB | annual report | 2009 - 2010 01
This annual report presents PPECB’s operating and
financial performance for the year 1 April 2009 to
31 March 2010. It integrates sustainability outcomes
of interest to PPECB stakeholders.
about this report
PPECB | annual report | 2009 - 201002
To build competitive capacity in our people
and systems in Industries we serve in order
to inst i l l world-wide confidence in South
African Perishable Products
our mission
A Partner in Global Competitiveness of South
African Perishable Products
our vision
contents
PPECB | annual report | 2009 - 2010 03
Highlights
Business Overview
Executive Overview
Sustainability Report
Operational Report
Corporate Governance
Financial Statements
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PPECB | annual report | 2009 - 201004
highlightsfinancial highlights
Net working capital improved from R61 million to R82 million.
Current ratio improved from 3,5 in 2009 to 4,3 in 2010.
Trade receivables collection period improved from an average of 38 days in 2009 to 36 days in 2010.
Bad debt as % of total revenue improved from 0,2% in 2009 to 0,1% in 2010.
Goods and services of R20,1 million were procured from BEE recognized suppliers of which 29% was from Black-owned
Entities and 42% from Qualifying Small Enterprises and Exempted Micro Enterprises.
Financial Management
PPECB | annual report | 2009 - 2010 05
Significant projects:
New systems:
operational highlights
A new business strategy, incorporating Value Added Services and
balancing objectives of short term productivity and longer
term growth strategies was defined and accepted by the Board.
PPECB entered into a number of significant business partnerships:
Improved stakeholder relations:
JFPM for training and small scale farmer development.
University of Stellenbosch for synergies in Cold Chain
R&D, including technology transfer.
NAMC for capacity building in the emerging
horticultural sector.
SAAGA local market campaign preventing immature
avocados on South African local markets.
Partnership formed with DAFF on inland Citrus Black
Spot inspections.
Networks established with 17 African countries leading
from the International Harmonization Workshop.
Improved relations with international organizations such
as the United Nations Economic Commission (UNECE),
Organization for Economic Development (OECD).
Improved relationships with leading inspectorates
around the globe, i.e KCB in Holland, HMI in the UK,
BLE in Germany, etc.
Continuation of sector specific stakeholder
management increased service delivery levels to the
various industries.
International Harmonization Workshop on Commercial
Quality Standards of Fresh Fruit and Vegetables for
Countries of Africa. (Africa Products Standards
Workshop.)
Alternative sampling methodology project.
EDI.
Employee Wellness Programme.
The PPECB laboratory in Pretoria added to its capability
by introducing Gas Chromatography to complement
its already successful validated analysis using HPLC
techniques. The GC capability allows us to identify and
quantify the amount of individual fatty acids present in
an oil sample. It is the method of choice for these
analyses because of convenience and sensitivity.
The Harmonization Programme increased its consistency
measures to include pome and stone fruit as well as
the Cold Chain. The programme was further enhanced
by increasing the number of consistency measures
which ties in with the programme’s strategic theme.
As part of the capacity building trajectory of the
organization, the Harmonization Programme increased
its scope for accelerated skills transfer to include pome
and stone fruit, and developed a new programme for
accelerated skills transfer on grain and grain products.
PPECB | annual report | 2009 - 201006
The PPECB Cold Chain monitoring function, coupled
with the integrated partnership management of cargo
temperature between PPECB, Exporters and Lines has
lead to a unique value added en route monitoring
service, one of a kind in the world of shipping.
Alternative sampling methodology project – work
continued on risk-based model.
Support to innovation was provided within the ambit
of our responsibilities. Due to successful trials we now
find that new standards and the creation of certain
shipping processes, like continuous 24 hour shipments
to Japan and controlled ambient citrus loads in
containers, have become the norm.
External capacity building saw the introduction of
capacity building initiatives at packhouse level on
product standards quality, with emerging farmers as
the main target market. Sessions were held in the
Eastern Cape, Western Cape, Mpumalanga, Limpopo
Province, Kwazulu Natal and in neighbouring country
Swaziland.
Target Country and Target Region Codes were
introduced in the deciduous and citrus industries
at intake level to ensure correct application of
phyto and quality standards, as well as improved
accuracy of inspection statistics. These codes are also
building blocks for the EDI project and will be rolled
out in 2010 and 2011.
Accreditations:
ISO 22000 is a food safety management system
standard that offers specific requirements whereby an
organization in the food chain needs to demonstrate
its ability to control food safety hazards in order to
ensure that the food is safe at the time of human
consumption. Thus addressing food safety aspects
throughout the food chain. PPECB completed 2
ISO 22000 audits in preparation for accreditation from
SANAS during 2010 and another 3 audits have been
confirmed. Full accreditation is expected in November
2010.
PPECB | annual report | 2009 - 2010 07
PPECB | annual report | 2009 - 201008
businessoverview
Historic Timeline
Strategic Intent
Mandate
Business Model
Services
Operational Reach
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contents
PPECB | annual report | 2009 - 2010 09
PPECB | annual report | 2009 - 201010
Historic Timeline1926 - 2010
1926
1927
1928
1929
1930
1932
1935
1937
193919411947
1951
1955
1957
19591962
1968
1970
1971197219731974
1975
1977
The Perishable Products Export Control Board
is founded.
Almost 4 million fruit trees are planted in commercial
orchards.
The number of citrus trees in South Africa reaches
3 million.
The PPECB enters into a shipping contract with the
Union Castle Shipping Company.
The 2 million mark for the export of Deciduous
Fruit Exchange appoints Mr Martin Dykes as its
overseas representative.
Direct shipping to Sweden is introduced – now our
most important market after U.K.
All South African citrus are exported under the
name “Outspan”.
Dr A.J.M. Smith is appointed as the technical advisor
of the PPECB.
The development of pre-cooling tunnels.
Export terminated due to World War II.
Mr J.A. Gibson is appointed as Chairperson of
the PPECB.
First direct export to West Germany.
The conference, Government officials and the PPECB
sign a new Ocean Freight Agreement in Pretoria.
Mr Danie Joubert is appointed as Chairperson of
the PPECB.
All boxboard is obtained locally for the first time.
The PPECB appoints a planning committee, tasked
to determine how the industry must deal with
the large amount of perishable produce available
for export.
The container terminal at Southampton comes into
operation.
The use of woodwool in grape packing is
discontinued.
Gross fruit exports total R59 million.
The PPECB introduces mandatory banker’s guarantees.
Safmarine takes over the South African Line.
The deciduous fruit industry’s plant improvement
organisation (SAPO) is founded.
A fire ravishes 15 pre-cooling tunnels at the Port
Elizabeth harbour.
Official opening of the Conference Line’s container
service on 1 July.
PPECB | annual report | 2009 - 2010 11
19781979
1981198219831986
1988
1989
19901991
1994
1997
1998
20002001
Cartons replace wooden boxes for grape exports.
A composite carton for peaches and nectarines is
introduced.
A label for export grape bunches is introduced.
Exports reach 24 million cases.
The PPECB commercialises.
PPECB advises the South African Defence Force on
the transportation of their food.
Late harvest grapes exported for the first time
and several new local grape varieties are also
commercially exported.
Official opening of the PPECB’s new Head Office
building in Plattekloof, near Cape Town.
All Cape fruit is subjected to quality evaluation.
Government rules that the PPECB must take over
the quality inspection function from the Directorate
of the Agricultural Product Standards.
PPECB obtains a building in Grabouw, and after
renovation turns it into a Regional Office and training
centre.
Deregulation of the fruit industry causes chaos in
the export market.
A meeting is held between PPECB and the
Conference Lines at Lanzerac Wine Estate in
Stellenbosch, where the SAECS contract is rescinded
with immediate effect.
A new PPECB Board is appointed.
PPECB achieves ISO 9001: 2000 certification and
becomes the first SA service provider to receive
preliminary EUREPGAP accreditation. PPECB
celebrates 75 years of service to South Africa’s
Perishable Products Export Industries.
2002
2003
2004
2005
2006
20072008
2009
2010
DAFF appointed PPECB as the assignee, to inspect
dried fruit.
The EU 1148 accreditation for PPECB inspection
systems was received.
Sector Programme Management was introduced,
the aim being to get closer to the stakeholder
needs. The Official Food Safety Mandate was
received from DAFF.
A successful donor-funded project, South African
Pesticide Initiative Programme (SAPIP I), was hosted
within PPECB for a period of 3 years.
A differentiated Levy Structure was introduced for
main products.
PPECB was successfully audited by The Food
and Veterinary Office (FVO) on pesticide residues
in food stuffs.
The new PPECB Board is appointed.
New CEO, Mr Luvuyo Mabombo, was appointed.
PPECB enters into the first agreement with the
National Agricultural Marketing Council (NAMC)
to assist low income farmers to access local and
international markets.
The Harmonization Programme, focusing on
consistency in the execution of mandated functional
activities, was approved by the PPECB Board.
PPECB, together with UNECE and DAFF hosted an
International Harmonization Workshop on
commercial quality standards for fresh fruit and
vegetables for African countries. A total of 109
delegates from 18 African countries were in
attendance.
PPECB entered into an agreement with The Egyptian
Horticultural Export Improvement Association (HEIA)
and the Industrial Modernisation Centre (IMC), to
assist HEIA in establishing a premium brand for the
export of Egyptian Horticultural produce.
PPECB | annual report | 2009 - 201012
strategic intent
PPECB is committed to building confidence in South African produce and establishing the country as a globally recognised
competitor in the perishable industry. PPECB gives meaning to its strategic intent through the implementation of the initiatives
in its approved strategic plan.
mandate
PPECB
Ministry
LEGISLATIONAgricultural
Products StandardsAct 119 of 1990
Quality
MRL
Food Safety Traceability
Exportcertificate
LEGISLATION
LEGISLATION
Perishable ProductsExport ControlAct 9 of 1983
Temperature and Coldtreatment management
Equipment certification
Temperature Instruction
Letter
Agricultural PestsAct 36 of 1983
Phytosanitaryrequirements
Bilateral agreements
Phytocertificate
business model
Governance
Statutory Operations Value Added Services HR ITFinance
Operations Corporate Services
PPECB | annual report | 2009 - 2010 13
operational reachPPECB Offices
services
Product and Equipment Certification.
Private Standard Certification.
Cold Chain Management.
Statistical Information.
Food Safety Auditing.
Advisory Services.
Training.
PPECB | annual report | 2009 - 201014
executiveoverview
Board of Directors
Chairperson’s Report
Executive Committee
Chief Executive Officer’s Report
Annual Performance Report
Chief Financial Officer’s Report
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contents
PPECB | annual report | 2009 - 2010 15
Elaine Alexander
chairperson
Charles AtkinsMaxwell HawesLouis VorsterChristina Engelbrecht
Anton RabeCynthia Sixolo
Molefe Mokoene
vice chairperson
Manie Booysen
observer
Makgoro Mannya
observer
board of directors2009 / 2010
PPECB | annual report | 2009 - 201016
The current Board’s term has not been without its highlights
and certainly not without the lows. However, I believe that
when critically reviewed the Board has discharged its duties
with due diligence, remaining at all times cognisant of the
responsibilities delegated by the Minister of Agriculture,
Forestry and Fisheries and expected of it by both clients and
stakeholders in regards the regulation of South African
exports of perishable produce.
BackgroundInitially the Board was appointed for a period of only 1 year
with its main task being the much needed review of the
PPEC Act. Subsequent to the completion of the 1 year
term the previous Minister of Agriculture extended the
Board’s term for another 2 years allowing the Board to
fulfill the mandated 3 year term, as per the Act.
In that time the Board has had 2 Chairpersons, the first
resigning to take up a position in the Department of
Agriculture. It also appointed a new Chief Executive Officer.
The Board, in these 3 years, has also achieved 2 significant
firsts for the company, which I believe they should be
commended for; 1. The appointment of the first women
Chairperson and 2. The appointment of the first person of
colour as the CEO in its history.
Review of the ActThe Board has reviewed the PPEC Act and recommendations
and proposals were forwarded to the Department of
Agriculture, Forestry and Fisheries (DAFF). At this stage, there
chairpersonElaine Alexander
report by the
has been no significant feedback from the Department nor
has there been movement toward finalisation of the reviewed
Act. I believe that it will be important for the incoming Board
to relook the recommendations as they may no longer be
as relevant, as it is now clear that the new administration
has a greater role for the Board to play.
StrategyA 5 year strategy has been developed, the period will be
completed in 2013. This strategy has been presented to both
DAFF and to the Portfolio Committee, where it has been
well accepted. It has also been shared with clients and
stakeholders who have, in the majority, supported the new
direction.
The main intent of the strategy is for the PPECB to provide
services which support the ongoing development of the
export competitiveness of South African perishable products
all the while remaining cognisant of the role of a Public Entity
in the developmental state. This strategy has brought the
company into a position where, at times, it has been considered
to be operating outside of its mandate under the PPEC Act.
Hence the need for the incoming new Board to ensure that,
going forward, the PPEC Act revision is fully completed and
promulgated. I must state categorically that the current Board
has spent many hours debating the merits of the strategy
and its possible consequences and has identified the fact
that the current Act is drafted broadly enough to allow the
Board the scope to respond to the ever changing and
increasing demand from South Africa’s export markets.
PPECB | annual report | 2009 - 2010 17
In this area, a major breakthrough was achieved when this
Board was finally able to conclude a long term debate
involving the provision of Value Added Services, requested
time and again by our clients and an area which we believe
is critical to PPECB’s strategic objectives. This debate was
current at the commencement of our term and my
understanding was that it had been constantly debated
throughout the term of a number of previous Boards.
I believe, in respect to the implementation of the strategy,
that the PPECB’s Executive has worked extremely hard to
ensure that all annual objectives are being achieved.
Unfortunately, there is the fact that often their efforts are
hampered because of blockages experienced by non-delivery
of other critical stakeholders.
Corporate GovernanceA key issue for the Board is corporate governance, and is
especially difficult given the nature and makeup of the PPECB
Board as mandated under the Act, i.e. the fact that Board
appointees are nominated from the client base despite being
appointed by the Minister. Under the King III recommendations
on corporate governance, the question of whether or not
there are enough independent Directors is questionable.
However, until the Act is reviewed and this issue given serious
objective consideration, it may continue to be an issue.
In this context, I am pleased to report that I believe that this
Board has taken giant leaps forward to bring maturity to the
discharging of its duties in respect to the member’s obligations
to the company and shareholder, whilst being directly linked
to the client base of the company.
The Board has introduced an independent annual review
both as a team as well as individuals and has spent time
in ensuring that the members of the Board have a full
understanding of governance issues. It has also reviewed its
charters for the Board, the Audit and the HR Committees
to ensure compliance to corporate governance within the
King III report.
FinanceThis area will be covered in more depth by the report of the
Audit Committee Chairperson, however, I wish to commend
the Chair on his leadership as well as the CEO and the CFO
for attaining unqualified audits for the past few years.
Human ResourcesThis area will also be covered in more depth by the HR
Executive’s report and, as previous, I wish to thank the
Chairperson of the HR Committee for his leadership in an
area which needed a great deal of change from the
commencement of the Board’s term. As PPECB’s services are
delivered by its people, who are of a higher skills level than
in many other companies, it is critical that this function is
given the same consideration as that of the finance function.
I am pleased to report that there have now been a proliferation
of well thought out initiatives in this area, which I believe
will ensure that the company has, as is reasonably possible,
a satisfied work force. A special mention and thanks must
be given to the HR Executive who has tirelessly pursued the
well-being of our employees.
Employment Equity has been a particular challenge but the
Executives have made great strides in this area. The process
has, of course, not been without its casualties but these are
being managed and the demographic profile of the company
has changed significantly over the past 2 years.
ConclusionReflecting on the past 3 years, being a member and
Chairperson of the PPECB Board has been a personally
satisfying experience. It has often been extremely challenging
and much hard work but I would not have missed it.
On behalf of my Board, I want to thank the Minister of
Agriculture, Forestry and Fisheries for her confidence in
extending our term and allowing us to continue whilst the
appointment of the new Board was finalised. I also want to
thank my fellow Board members for their confidence in
appointing me as Chairperson and giving me the privilege
of guiding an entity critical to the export competitiveness of
South Africa’s perishable produce.
Finally, on behalf of the PPECB Board, I would like to thank
the PPECB Executives for their continued commitment to
the implementation of the company’s strategy and for a job
well done. I would like to mention and recognise the PPECB
employees and their commitment to servicing our clients in
often difficult circumstances and far flung locations for,
without them, we would not have been able to have achieved
much of what we did.
Elaine Alexander
Chairperson
PPECB | annual report | 2009 - 201018
Luvuyo Mabombo
chief executive officer
executive committee2009 / 2010
Johan Schwiebus
chief financial officer
Adela Fortune
head: legal services and
company secretary
Dean Martin
executive:
value added services
Zakhe Makhaye
executive:
human resources
Nokulunga Maswana
executive:
statutory operations
chief executive officerLuvuyo Mabombo
report by the
“IN PURSUIT OF SUPERIOR PERFORMANCEIN A COMPETITIVE WORLD”
Making judgement on the suitability of a client’s perishable
export consignment, the appropriateness of Cold Chain
paraphernalia and the carrying temperature regime for fresh
produce and other perishables is a critical responsibility the
Perishable Product Export Control Board. We do all of this
work mindful of our task to facilitate order and efficiency in
the perishable products export chain. We equally do this
work focused on supporting South Africa’s competitiveness
in the global trade in fresh produce. As a regulator for the
quality of fresh produce exported from our country, we
influence the day-to-day South African fresh produce
consumption decisions of the overseas consumers as well as
the decisions of the local producers of fresh fruit and vegetables.
This is the ultimate impact our day-to-day work has.
The 2009/10 Financial Year was yet another historic year at
the PPECB, with the business having posted positive financial
results in the midst of a challenging global recession. We
have done this through careful management of our costs,
whilst working on increasing efficiency of our resources, in
particular our people, who are the most important resource
that this organisation has. We continue to strive for brand
visibility in corners where the brand has not been seen before.
PPECB also continues to play a significant role in the country’s
“Food Control System” for regulated agricultural products
destined for exports; all in pursuit of being “a Partner in
Global Competitiveness of South African Perishable Products”.
STRATEGY HIGHLIGHTSOur Strategic Plan 2009-13 formed the basis for all service
delivery achievements that the business obtained. In line
with our strategic objectives, we successfully hosted an
inaugural International Harmonization Workshop on
Commercial Quality Standards for Fresh Fruit and Vegetables
for Countries of Africa in partnership with the UNECE. The
success of this workshop has opened opportunities for the
PPECB to assist in capacitating other African countries on
quality standards for fresh fruit and vegetables, which are
key for global trade in fresh produce.
Full roll-out of our Harmonization Program for the
competency of our inspectors. This program will go a
long way in supporting our ISO 17020 accreditation
as an Inspection Body.
Consolidate and fast-track the Electronic Data
Interchange project.
Initiate a PPECB Training Academy.
Assist Government in benchmarking a South African
Food Safety System against globally recognised good
agricultural practice.
Some of the year’s highlights include:
We have realised these successes only because of our
unwavering commitment in reversing some of the mindset
we had in the past, that of following a strategic direction
dictated to us by the outside world.
OPERATING PERFORMANCEBased on performance targets the business had set itself,
we have more than achieved our own expectations.
Achievement would have been more than what is reported
had our legislative enabling environment allowed the business
to. Detail of the financial results equally reflects a positive
outcome for an organisation exposed to challenges of
international trading trends and global recession. The business
will ensure that, in future, it utilises its accumulated reserves
to invest in sustaining the business well into the future.
Management of the PPECB, yet again commits itself to
building a world class organisation, worthy of the South
African brand it represents around the world. With
professionalism, our integrity will stand the test of times.
Luvuyo Mabombo
Chief Executive Officer
PPECB | annual report | 2009 - 201020
PPECB | annual report | 2009 - 2010 21
annual performance report
StrategicObjective
KeyPerformance
Indicators
2009/10 Financial Year
Year 1: 2009/2010
Target Action Plan/Activities
PerformanceProgress
1.Enhance thecredibility of
the SouthAfricanExport
Certificate.
Align deliverycapability with
globallyrecognized
methodologies.
Investigatewith DAFFalternative
sampling plansand systemdesigns to
build up a riskdatabank.
Present riskprofile and
benchmarkedQA
methodologyto DAFF.
The PPECB concluded the data gathering for the“Alternative Sampling Methodology Project” usingits Business Intelligence tools. Risk profiling howeverremains ongoing. A joint Project Team of the PPECB andDepartment of Agriculture Forestry and Fisheries (DAFF)was set-up. The PPECB completed and signed off aProject Definition Report. The remaining activities include:- Documentation of a scientific justification for deviation
from current 2% sampling procedure.- Developing quality assurance methods for a risk based
system.
Emerging Issues / Challenges: Scientific justification fordeviation from 2% sample as requested by DAFF.Current phytosanitary risks with regard to Citrus Black Spotand False Codling Moth are capable of having impact onprogress.
Continueddata gathering
to enhancerisk database.
The PPECB concluded a risk profiling exercise detailed perinspection point, incorporating product and processesrisk.
Documentprocesses,proceduresand resultsand obtainsign-off ofcompleted
work.
This activity is ongoing, delayed due to DAFF non-committal participation in the project. Conclusion of thedata-sanitising exercise also impacted on the sign-off.
Impact analysison existingBP’s andfinances.
Investigation into functionality of Navision ERP systemcompleted. Latest release of Navision assessed to bealmost 99% of ERP required for PPECB. Activity ongoingas long as the decision has not yet been made onimplementation of the latest Navision Version.
Emerging Issues / Challenges: Re-engineeringcustomised modules is possibly going to be a challengeduring the implementation of the new Release and mightrequire huge BPR and Change Management intervention.
Increasedeffectivenessof our current
statutoryresponsibilities.
Increasedcompliance to
food safetystandards.
Inputs torevised foodsafety andstandards
requirements.
The PPECB actively participated in the Technical WorkingGroup of the Food Safety Forum (FSF) to develop thestandards and requirements for the food safety standard.
The PPECB participated in developing response to externalRapid Alert System for Food and Feed (RASFF). Theoperational audit by DAFF to confirm the implementationof suggested corrective actions on external RASFF audit isstill outstanding.
Emerging Issues / Challenges: Decrease in available SAFood Safety Audits due to policy changes.
PPECB | annual report | 2009 - 201022
StrategicObjective
KeyPerformance
Indicators
2009/10 Financial Year
Year 1: 2009/2010
Target Action Plan/Activities
PerformanceProgress
Increasedeffectivenessof our current
statutoryresponsibilities.
PPECB participated in setting up an implementation planfor Regulation R707 : ”Standards regarding thehygiene and food safety of regulated agriculturalproducts of plant origin destined for export”. Thedocument was forwarded to the Food Safety Forum fordiscussion and endorsement. The aim of the document isto inform the revision of Regulation R707 and thedrafting of a Food Safety Regulation by DAFF. StandardOperating Procedures for Microbiological Testing of Teawere also developed. Implementation is yet to beconfirmed by FSQA.
Increasedcompliance to
food safetystandards.
Drafting ofregulation incollaborationwith DAFF.
Enhancerequirementsto support thecredibility ofthe ExportCertificate.
The PPECB actively participated in the SteeringCommittee convened by DAFF for the development of theFBO Database. The FBO Database is scheduled to beconcluded during 2010.
Conclusion ofFBO Database
Project.
FBO Service Level Agreement between PPECB and DAFFwas finalised within the Steering Committee and PPECBManagement, currently with DAFF Management for finalsign-off.
Signed SLAwith DAFF.
Following an increasing number of aflatoxin interceptionson groundnuts, new measures for control of mycotoxinsat export level were proposed to the DAFF. These controlsincluded 2 pilots initiated during the 2009 groundnutseason, one being the Critical Control Point (CCP) atprocedure stacks before the actual processing and thesecond CCP at the point of export in Durban. DAFFincluded these measures as part of the decision toindefinitely suspend Official Food Safety Audits (R707standard) on groundnut farms.
Guidelines on the responsible management of mycotoxinswere also drafted by PPECB. The PPECB gave the first setof feedback to stakeholders in October at the GroundnutForum on the first phase of pilot. DAFF indications arethat the Mycotoxin SOP would continue to functionseparately from the applicable Standards andRequirements.
Engage DAFFto transform
StandardOperatingProcedures(SOP) for
mycotoxinsinto
Standards andRequirements.
PPECB completed SOP for mycotoxin sampling andtesting but were not considered by DAFF in an officialregulation format.
Collaborationwith DAFF ondrafting new
Standards andRequirements
formycotoxins.
The PPECB continues to evaluate ways in which it couldhelp enhance efficiency in the administration of MRL SOP.Plans are in place to make firm proposals to DAFF during2010.
Implementationof MRL
resource andupdating MRL
Database.
A study was done on the new imposed requirements(decree) from Indonesia. An implementation plan in thisregard was drafted and proposed to the DAFF forimplementation.
Implementationof actionsdecided atFood Safety
RiskWorkshops.
PPECB | annual report | 2009 - 2010 23
StrategicObjective
KeyPerformance
Indicators
2009/10 Financial Year
Year 1: 2009/2010
Target Action Plan/Activities
PerformanceProgress
This work is integral to the EDI Project and its completionis linked to the EDI Project.
Engage DAFFon electronicverification ofinformation
onaddendumsand UniquePallet ID’s.
The PPECB completed Phase 1 of the EDI Project whichincluded the standardisation of codes, development ofbusiness rules and business process review for exportcertification process. Phase 2, which includes piloting theUnique Pallet ID, to ensure that the inspection volumesmatches the export volumes was completed withassistance from SATGI and 2 “big” table grape exporters.The test combined issuance of a mock export certificate.Other business rules were also tested or validated beforea mock certificate could be issued.
Pilot use ofUnique Pallet
ID during2009 citrusseason withidentifiedclients.
Pilot for the Stone Fruit deferred to full EDIimplementation.
Pilot palletID’s and
ElectronicExport
Certificationfor Stone Fruit
This activity was completed, however a response fromDAFF is awaited on the way forward.
Handover ofdraft
regulationsand standards
andrequirements
to DAFF.
ReviewedPolicy on food
safety andproductquality.
Concludeinputs to the
review ofregulationsgoverningCold Chainactivities.
Engagement with stakeholders could not be initiated dueto no response from DAFF on Submitter Regulations andS&Rs.
Engagestakeholders.
The PPECB partnered with the Cool Chain Association, toconduct a series of trials to identify GAPS in the ColdChain. Initial results indicated certain GAPS that require tobe addressed through regulation. The evaluationincluded:- Analysis of cold stores on Own Check Systems,
electronic temperature reporting capabilities, status of trained or dedicated supervisors.
- Compiling training syllabus and checklist capabilities.- Observing loading points (Eastern Cape) to launch audit
method in April 2010 in SLA format.
DetermineGAPS
betweencurrent Cold
Chaininspection
methodologyand CCQI.
Evaluate anaudit
approachwithin theCold Chain
environment.
Local evaluation completed and documented. Identifiedpilot loading points (Eastern Cape) on course to launchaudit method in April 2010 in SLA format.
Evaluation ofCCQI
principles inlocal and
overseas leg.
PPECB | annual report | 2009 - 201024
StrategicObjective
KeyPerformance
Indicators
2009/10 Financial Year
Year 1: 2009/2010
Target Action Plan/Activities
PerformanceProgress
Internalcapacity
building, forknowledgeand skillstransfer.
The PPECB implemented Regional Training Programmesby assigning Chief Inspectors the overall responsibility toensure adequately trained technical staff. Updating ofindividual profiles continue. Permanent HarmonizationSpecialists (Subject Matter Experts) and trainedfacilitators were appointed. Certificates are awaitedfrom AgriSeta. Harmonization Program hosted 3accelerated skills transfer interventions during thereview period; these are on pome fruit, stone fruitand table grapes.
Establish anin-servicetraining
programmeas a feederprogram to
limit riskexposure and
reduce thereliance on
contract staffby 50%.
Ensureadequatenumber ofqualifiedtraining
facilitators perregion.
The PPECB trained all Harmonization Specialists asqualified facilitators. Training roles were clarified amongstSpecialists. Performance contracts reflecting specifictraining roles on internal central training (acceleratedskills transfer) and support towards external training(PPECB Training Academy) was aligned. HarmonizationSpecialists were included in accelerated skills transferintervention for ensuring consistency in the depth andlevel of training applicable.
Emerging Issues / Challenges: New internationalinspector competency norms.
Definetraining roles,
assignresponsibilityand updateperformancecontracts ofdesignated
trainers.
The PPECB published articles through Indaba CorporateNewsletter and conducted a number of presentations tocllients individually or through Client and StakeholderForums. These include 3 articles published during thereview period, 1 on Port Auditing and 2 on PPECBpackhouse demonstrations aimed at setting standards.The PPECB approved a corporate communicationsstrategy to guide communication of the HarmonizationProgramme both internally and externally.
Communicationplan to launch
theHarmonizationProgramme
withinindustrymedia.
HarmonizationProgramme to
ensureconsistent
application ofstandards.
Review andupdate
Harmonizationdeliverableswith new
strategies andemergingissues inmacro
environment.
Management meetings were used as communicationplatforms. Presentation of the Harmonization strategywas made at the Technical Expert Seminar (TES)facilitating understanding of the strategy amongst seniortechnical personnel. Regional visits were also conductedto facilitate understanding of strategic objectives amongstall operational personnel.
Communicationstrategy toinform andenhance
understandingthroughout
PPECB.
Roles and responsibilities were assigned to all members ofthe Harmonization Programme as planned.
Assign rolesand
responsibilities.
Introductionof PortActivity
Auditing.
Activity successful as per report in “Port Auditing” reportabove.
Establish andimplementfeedback
loop.
Started as planned and ongoing programme.Link commun-ication and
process flowto inland
activities forimprovement.Inject measuresfor consistencyinto internal
audit.
PPECB | annual report | 2009 - 2010 25
StrategicObjective
KeyPerformance
Indicators
2009/10 Financial Year
Year 1: 2009/2010
Target Action Plan/Activities
PerformanceProgress
Port Auditing was implemented in the port of Durban andsurrounding cold stores handling citrus products during themonth of May 2009, with huge success. Feedback toinspection operations was established and quality reportswere found to be invaluable by technical inland staff.130 Consignments were “spot checked” in Durban duringthis period. The process was also introduced in PortElizabeth, albeit sporadically. A troubleshooting concept wastested further, with a complete new model to be introducedduring the table grape export season. All these efforts wereaimed at consistency. Specialists’ findings in port werereported to line structures on an ongoing basis including, inmany instances, risks identified for correction. Structurecreated for specialists’ findings were incorporated in regionaloperational risk registers. Consistency measures weresmooth, databank supportive and evident of these activitieson citrus and grapes. The activity was rolled out to stone andpome fruit during the third and fourth quarters respectively.Cold Chain Harmonization activities also took off during theperiod under review, on 5 of the 14 elements of Cold Chaindisciplines at this stage. New competency frameworkdeveloped for 6 Cold Chain disciplines.
Introducequality controlauditing in all
ports.
A conceptual framework for the workshop wascompleted and a project plan approved by ExecutiveCommittee. The conceptual was broadened to include allcountries in Africa trading in fresh fruit and vegetables.Agreement was reached to collaborate with UNECE as apartner. MOU with UNECE was agreed to and signed.
Develop aconceptualframework
for aworkshop forHarmonisationof Standards
for SADCCountries.
Harmonizationof product
qualitystandards in
Africa.
PPECB attended the International HarmonizationMeeting, hosted by the United Nations EconomicCommission for Europe (UNECE) in Kenya, wherecontacts were made with Kenyan Plant HealthInspectorate Service (KEPHIS). Contacts were also madewith representatives from Morocco during attendance ofthe 27th International Meeting for Inspectorates in Bonn,Germany.
Identify andbuild
relationshipswith other
Africaninspectoratesand relevantdestinationcountries.
The PPECB investigated and developed a web-basedonline debtor registration system. Development of thissystem was split into 2 phases, with Phase 1 consisting ofregistration and migration of data and Phase 2 consistingof accessing of account information for new and existingcustomers via the website. Phase 1 was completed duringthe period under review whilst Phase 2 is scheduled to becompleted in 2010/11.
Create anonline debtors
registrationsystem.
Debtorsregistrationsystem withonline credit
controlfacilities.
Effective andefficient
debtors webdriven
managementsystem.
This work is ongoing but is linked to the now completedonline debtors’ registration system.
Link onlineregistration to
creditinformation.
This work was completed. Electronic statements andinvoices are being sent to clients.
Electronicstatements
and invoicescreated via
the BI portal.
PPECB | annual report | 2009 - 201026
StrategicObjective
KeyPerformance
Indicators
2009/10 Financial Year
Year 1: 2009/2010
Target Action Plan/Activities
PerformanceProgress
Confidence inbusiness and
financialsystems of the
PPECB.
Cross Functional Audits, including BMS audits, wereconducted in various areas covering both Inspection andCold Chain services in regions Worcester, Paarl, Durban,Citrusdal, Port Elizabeth, Tzaneen, Grabouw andGauteng. Internal Audit and BMS audit plans wereintegrated into a 3 year risk-based audit plan.The audit plan was approved by EXCO and the AuditCommittee. 95% of the 2009/10 internal audits plan wascompleted within the agreed plan.
Emerging Issues / Challenges: Need for continuousreview of business processes is a necessity.
Integratefinancial
audits withBMS audits.
ConductCross
Functional.
DAFF conducted an independent audit and all findingswere closed out by the end of December 2009. As aresult of this, Standardised Checklists based on all thePPECB SOPs, Procedures and Work Instructions weredeveloped before the beginning of the first cycle of auditsand scoring is based on the severity of findings. A qualityreview on internal audit was also completed by KPMG inJune 2009. No significant findings were raised with only 3observations noted. Recommendations for improvementwere implemented in July 2009.
Independentquality review
on auditscompleted.
An internal audit scorecard to monitor performance wasimplemented in October 2009.
Develop andimplement a
auditscorecard.
EXCO approved the CCQI project plan. First trials wereconducted on soft citrus and the first report completed.Trials were repeated during the table grapes season.
Emerging Issues / Challenges: Lack of investigativeresults on the overseas leg of the trials in order to confirmend-to-end implications of CCQI.
Design, planand
implementCCQI project,
whichidentifies and
closes thecool chain
GAPS throughan audit-
basedapproach.
Improve thecool chain
qualitythrough
identifyingand bridgingthe GAPS in
the coolchain.
IncreaseInvestment inR&D initiatives
within ColdChain.
2.Support the
exportcompetitive-
ness ofSouth
Africa’sPerishables
ProductsIndustries.
The PPECB resolved that the HAF technology hasbeen completely developed, refined, and in use byindustries like stone fruits and some vegetablestakeholders. It has been proven to be functionaltechnology and no more trials were necessary.Results had been comprehensively documentedand further trials would be done on request.
Research trialson differentcommoditiesto continue.
Improvecontainerairflow.
Research on improved packaging on-going in partnershipwith industry players including exploring new or otheruseful engineering techniques.
Engage withthe various
stakeholdersto establishpotentialGAPS and
opportunitiesfor R&Dactivities.
Improvepackagingdesigning.
PPECB | annual report | 2009 - 2010 27
StrategicObjective
KeyPerformance
Indicators
2009/10 Financial Year
Year 1: 2009/2010
Target Action Plan/Activities
PerformanceProgress
New plastic pallet concept introduced to evaluate properairflow, tested for strength and durability. Comparativetrials carried out between a 7, 9, and 11 slat pallet basesand 1 plastic pallet base. Evaluation still ongoing.
Improvestandards for
pallets.
Draftstandard
specificationsfor fruitpallet.
Increasepartnerships
initiatives with“donor”
developmentinstitutions.
Activity proving difficult to achieve. Memorandum ofUnderstanding entered into with NAMC resulting intraining conducted in Vhembe GlobalGAP. 67 trained,9 audited, 4 certified.
Conduct atleast 2
“donor”development
fundedprojects in theSADC region.
Growdevelopmentinitiatives of
PPECB.
Roll out thePPECB
TrainingAcademy.
PPECB Training Academy established, steered by aSteering Committee. 4 Categories of training agreed toconstitute the offering during start-up. Course materialdevelopment in the progress. 16 Candidates from theJohannesburg Fresh Produce Market (JFPM) trained in linewith the MOU of the 2 institutions as a pilot project forTraining Academy.
Emerging Issues / Challenges: Training materialsdevelopment capacity demands.
Ensureaccreditation
of coursematerials.
Externalcapacity
building, forknowledgeand skillstransfer.
Minimal activity undertaken.Marketing ofconcept to
stakeholdersto continue.
Minimal activity undertaken.Complianceto trainingcalendar.
Minimal activity undertaken.Introduce theAcademy to
relevantindustries.
Minimal activity undertaken. Progress limited to work atJFPM.
Conductaccreditedcourses inareas offocus.
Minimal activity undertaken.AppointProject
Coordinator.
- PPECB Certifications maintained accreditation toISO 17021 and ISO guide 65 after SANAS completed their audit.
- The PPECB Laboratory maintained its ISO 17025 accreditation.
- HACCP Witness Audit was also completed.
Emerging Issues / Challenges: SANAS capacity to doWitness Audits. Draft Organic Standard under APS Actmight not be accepted by SANAS for accreditation.
Increase thescope of
accreditationsto enter other
markets.
Maintainaccreditations.
Increaseservices in
support of thecompetitive-
ness of the SAPerishableIndustries.
PPECB | annual report | 2009 - 201028
StrategicObjective
KeyPerformance
Indicators
2009/10 Financial Year
Year 1: 2009/2010
Target Action Plan/Activities
PerformanceProgress
The PPECB completed the first unaccredited ISO 22 000audits Namibia. Stage 1 ISO 22000 certification wascompleted for Lakeland foods.
Achieve ISO22000 and
organiccertification.
Increase thescope of
accreditationsto enter other
markets.
Increaseservices in
support of thecompetitive-
ness of the SAPerishableIndustries.
Customer feedback has maintained a 90% positivefeedback. Key issues being pricing, audit timing andtechnical interpretation.
PPECB maintained a 100% positive customer feedback atthe PPECB Laboratory, indicating that the analyticallaboratory service quality as either excellent or good.
New laboratory customers added in the commercialbusiness segment, have increased the total laboratorycustomer numbers by 5%.
Maintaincustomerloyalty.
- 6 Staff members from Certification Services completed the GlobalGAP “Train the Trainer” Workshop.
- 6 Auditors passed the GlobalGAP online exam.- 1 Auditor was approved for BRC version 5.- The Scheme Manager attended the GlobalGAP Scheme
Managers Workshop in Amsterdam.- 1 Certifications staff member completed a Btech Degree
in Food Technology.- PPECB LAB successfully completed monthly laboratory
internal audits, as per ISO 17025 quality manual protocols. The LAB also updated the mycotoxin equipment software protocols and technical procedures,to maximize analytical efficiency. Updated methods and trained analysts on additional laboratory HPLC mycotoxin analytical methods for complex food and feed samples were completed.
Build capacityand
competencyof skilled
personnel.
GC equipment purchased and installation partiallycompleted.
Developing ofGC
techniquesand partial
implementation.
Concept note developed during 2008/09 reporting periodalready but feedback from DAFF still awaited. Newengagement with National Agricultural Marketing Councilaims to revive SA GAP vs. International GAPbenchmarking initiative during 2010.
Engage DAFFon the policy
and themotivation forbenchmarking
of SA GAPinternationally.
Benchmarkingof SA GAP
againstinternationalgood practice
on GAP.
BenchmarkedSA GAPagainst
internationalrecognised
goodpractices on
GAP.
An ISO 17020 multidisciplinary project team wasestablished with the first meeting held in April 2009.Standard training was provided to the project team inJuly 2009, and Chief Inspector (signatory) training wasdone during October 2009.
Establish aproject team.
Evaluate Org.capacity to beISO accredited
InspectionsInstitution inorder to instill
worldwideconfidence inSouth African
perishableproducts.
InstitutionalisePPECB’sinternal
processesthrough ISOaccreditation
as SouthAfrica’sCertified
InspectionBody.
Quality Manual completed and presented to SANAS atthe end of March 2010. First assessment planned towardsthe end of October 2010. Compilation of manual forCold Chain on track and in progress.
Compilationof QualityManual.
PPECB | annual report | 2009 - 2010 29
StrategicObjective
KeyPerformance
Indicators
2009/10 Financial Year
Year 1: 2009/2010
Target Action Plan/Activities
PerformanceProgress
Activity completed.ConductChief
Inspector,Service
Manager andCoordinatortraining onstandard.
Pre-assessment by SANAS during July 2010 to beinvestigated with SANAS.
First SANASassessment.
Management accounts with specific information were inthe process of being finalised for implementation forDevelopment Services. Training Projects Company was setup in Navision and invoiced its first training billing to theJohannesburg Market. Application approved by NationalTreasury for an additional bank account for the PPECBTraining Academy. Business Plan for VAS to be based onclear measurements for performance for developmentinitiatives.
Develop andimplementsystems,
proceduresand
measurementsfor
developmentinitiatives.
Effectivemanagement
andaccounting
fordevelopment
initiatives.
Invoicing system of Certifications was looked at in orderto report back on service types. Measurement indicatorsrequired by Certification Services were identified andimplemented in Navision. Financial performance efficiencycan now be determined via Management Accounts. MAP:Measurement indicators required by MAP have beenidentified and defined. Implementation in Navisiontogether with effective financial performance efficiencyreporting will be in place by 1 April 2010.
Measurefinancial
performanceof
certificationsper servicetype and
client.
Work to rebrand the website, intranet and the web-portalwas started and will be completed by 2011. The PPECBdeveloped and improved tools to ensure that it deliversaccurate information and meets its Service LevelAgreements. Several measurements were developed tomonitor and control the capturing process in order toensure that SLA agreement targets are achieved. Theseincluded a measurement scorecard and proceduresimplemented to ensure accurate reporting of information.These procedures and measurements were also used toreport discrepancies in information when it happens. BIassessment analysis was completed to find the correcttool required to ensure accurate information. The datawarehouse is now automatically updated by PPECB’scaptured and the information service provider’selectronically received information after necessaryverifications, completeness checks and validations.
Implementtools,
proceduresand a
measurementscorecard to
ensureaccurate
reporting ofinformation.
Deliverinformationthat meetaccuracy
requirementsas definedwithin the
SLA’s.
Achievingaccurate SLAbusiness and
statisticsinformation.
3.Strengthen
PPECB’scapacity as a
crediblesource ofstrategic
informationfor servingindustries
andstakeholders.
The PPECB Business Information Portal was completedand launched as per targeted date. Business ContinuousImprovements Initiatives also in progress to find betterways to use current infrastructure to achieve greaterresults as well as to develop efficiencies in the datawarehouse system.
Emerging Issues / Challenges: Skills shortages withinBusiness Intelligence environment.
Create PPECBInformationWeb-Portal.
PPECB | annual report | 2009 - 201030
StrategicObjective
KeyPerformance
Indicators
2009/10 Financial Year
Year 1: 2009/2010
Target Action Plan/Activities
PerformanceProgress
DAFF Policyon “FoodSafety and
ProductQuality”.
The PPECB participated in pome and stone fruit industryquality standards setting for the local markets. Cold Chainservices are investigating all relevant Acts and BestOperating Practices with a view to have them analysedand to table a report by March 2010. The main goal is toidentify GAPS and/or opportunities. However, Policydetermination on Food Safety for local market and therole of PPECB is still awaited from Government.
Emerging Issues / Challenges: Promulgation of theConsumer Protection Act.
Review of theDAFF “FoodSafety and
ProductQuality”Policy.
Contribute inthe review
and/ordevelopment
of country“Food Safetyand Product
Quality”Policy.
4.Support
Governmentin ensuringconfidencein qualityassuranceand food
safetysystems for
localperishables
productsmarkets.
Engagement with DAFF on policy development isongoing. The PPECB started a process to evaluatehandling process and transport requirements on localscene including investigating local procedures and liaisingwith local companies. Capacity building at JohannesburgMarket was also intended to contribute towardscapacitating stakeholders on the local market. StatutoryOps planned to preliminary conduct data-gathering abouthandling process and transport requirements on localmarket.
Developmentof Minimum
CountryCapacity to
monitor localperishables
market.
Contribute inthe
assessmentand
establishmentof
“minimum”capacity to
monitor localperishables
market.
DAFF Policyon “FoodSafety and
ProductQuality”.
The PPECB’s engagement with DAFF on Policydevelopment is ongoing. Cold Chain services continuedto investigate relevant Acts and Best Operating Practiceswith a view to have them analysed and table a report byMarch 2010. The main goal is to identify GAPS and/oropportunities. Policy determination on Food Safety forand the role of PPECB is however still awaited fromGovernment.
Emerging Issues / Challenges: Promulgation of theConsumer Protection Act.
Review of theDAFF “FoodSafety and
ProductQuality”Policy.
Contribute inthe review
and/ordevelopment
of DAFF“Food Safetyand Product
Quality”Policy.
5.Support
Governmentin buildingsystems to
ensurecompliancewith South
Africanquality andfood-safetystandards
for importedperishablesproducts.
PPECB | annual report | 2009 - 2010 31
PPECB | annual report | 2009 - 201032
This year's results are characterised by good volumes exported,
strong income growth and positive cash generation.
The key results are:
Financial PerformancePPECB’s income for the 2010 Financial Year increased by
6.9% to R152,6 million (2009: R142,7 million). The increase
was achieved despite the adverse impact of the global
economic downturn experienced in South Africa’s exports.
The PPECB’s primary sources of income are the fees and
levies received for statutory services rendered to the perishable
product industries. A total of R130,5 million (2008: R121,2
million) has been raised from this source compared to the
budget of R120,1 million. The increase of R9,3 million (7%)
can be attributed to the annual inflationary adjustment in
fees and levies as exported volumes have moved sideways
for most products.
Income received from delivering value added services to our
clients totalled to R11,7 million (2008: R10,7 million), which
is an improvement of R1,9 million on the budget of
R9,8 million. These services include certifications and
laboratory analysis. Other income includes income received
for delivering training and development of R1,9 million
(2009: R1,6 million) and interest received of R5,3 million
(2009: R6,2 million).
The uncertain economic environment required the PPECB to
be dynamically managed with the business focusing on
operational efficiencies and cash flow management in order
to maintain financial stability. A robust cost awareness and
management intervention at the onset of the economic
crisis resulted in a reduction of R11,8 million (9%) in
total expenditure compared to budgeted expenditure,
notwithstanding high increases in activity costs such as fuel,
accommodation and technical equipment. Consequently
operating expenditure before depreciation increased by 5%
to R131 million.
Depreciation and amortisation of assets for the year increased
from R836 thousand to R1,9 million. The increase is due to
the replacement of critical information technology equipment
in 2009.
No provision for taxation has been made as the Board is not
subject to normal tax.
The increase in revenue of R7,7 million together with the
reduction in expenditure of R11,8 million against budget
resulted in a retained surplus for the year of R19,5 million.
This surplus is transferred to the General Reserve Account
in terms of the PPECB Act.
Financial PositionThe balance sheet reflects a strong financial position in that:
The value of PPECB’s total assets is R121,9 million. This is
represented by non-current assets of R15,7 million and
current assets of R106,2 million. This is an increase of
R12,9 million if compared against the previous year.
Non-current assets decreased by R1 million to R15,7 million
which is mainly due to assets being written down to their
residual values.
chief financial officerJohan Schwiebus
report by the
Income increased by 6,9% on budget to reach
R152,6 million.
Expenses increased by 6,1% on budget.
Surplus is R19,5 million.
Cash equivalents and investments held to maturity
improved by R15,1 million.
Cash reserves amount to R23,2 million
(2009 : R25,1 million).
Accounts receivable amount to R19,6 million
(2009 : R20,8 million).
Current liabilities to R24,4 million (2009 : R31 million).
Current and liquidity ratios - 4 times (2009 : 3 times).
PPECB | annual report | 2009 - 2010 33
Financial assets, cash and equivalents increase by R15,1
million to R86,7 million. The PPECB has adequate cash
reserves to meet its future commitments. PPECB holds
deposits at banks with Fitch ratings of AA and higher.
Accounts receivables of R19,6 million decreased by R1,3
million (6%) on last year’s R20,8 million. This reduction was
achieved through a focused attention on outstanding debt.
The total amount outstanding for longer than 60 days
decreased from R585 207 in 2009 to R46 833 in 2010. A
provision of R218 466, or 1% of total debtors, has been
made for irrecoverable debt.
Trade payables of R23,3 million are R1,7 million higher than
the previous year. The increase is largely due to accrued
expenses on the replacement of field and laboratory
equipment at the end of the financial year.
The realised surplus increased the reserve funds by R19,5
million to R95,5 million that meets PPECB’s reserve plan.
These reserves are accumulated to fund shortfalls during
times of economic and seasonal downturns, realisation of
uninsured risks as well as to provide for future capital outlays
in replacing laboratory, technical and information technology
equipment.
Cash FlowsCash and equivalents decreased by R2,1 million to R23,1
million, mainly due to increased investments. Operating
activities generated cash of R16 million as compared to
R21 million in the previous year. Significant focus on the
collection of outstanding debt resulted in an inflow of an
additional R1,2 million.
Capital expenditure for the year amounted to R1,1 million
(2009: R4,1 million). Last year significant investments were
made to replace critical information technology and laboratory
equipment. The decrease in capital expenditure compared
to the prior year can be attributed to the reprioritisation of
capital projects due to the possible impact of the recession
on exports and PPECB’s cash flow. Capital investments are
planned for replacing and expanding critical information
technology as well as laboratory equipment. The capital
replacement and investment plan is aimed at supporting
PPECB’s strategic plan.
Surplus cash of R17,2 million has been invested in interest-
bearing investments held to maturity.
Credit Risk on DebtorsAlthough there is an increased risk of default by trade debtors
in the current economic climate, to date we have not
experienced any adverse consequences in this regard. In
order to manage this risk as effectively as possible, we have
tightened our credit criteria, particularly in those areas where
we experience default in payments.
Debtor balances will continue to be closely monitored and
managed going forward, both from the perspective of
minimising the risk of bad debts and maximising collections.
ConclusionThere have been no events after the reporting period data
that would have a material impact on reported results.
We expect that the global and local markets will continue
to show signs of slow recovery. Consequently, it is forecasted
a somewhat strengthened demand for South African
perishable products.
PPECB will continue to explore opportunities to add public
value to its stakeholders but balance it with prudent and
conservative measures to maintain financial stability.
We would like to thank all of the financial and administrative
staff in PPECB for their sterling efforts in the last year and,
in particular, for all their hard work in delivering these financial
results and this annual report. Their commitment and ongoing
support has enabled us to consistently deliver quality financial
information to our stakeholders.
PPECB | annual report | 2009 - 201034
sustainabilityreport
Ethics and Values
The PPECB Brand
Accountability and Governance
Measurement Framework
The Green Uhambo Project
Overview of Human Resources
Technology
Crime and Related Activities
Caring for the Communities
35
36
36
37
37
39
42
43
43
contents
PPECB | annual report | 2009 - 2010 35
PPECB is committed to compliance with good corporate governance practices and strives for improvement in its practices in
order to build on the organisation’s long term sustainability.
PPECB’s performance is inextricably linked to its corporate governance practice and it accounts to its stakeholders for sustainable
decision making processes, which integrate principles of economic, prosperity, social equity and environmental quality.
We are driving a culture of sustainability by integrating sustainable management into our business strategies, accounting,
performance management and reporting processes.
ethics and values
EthicsThe PPECB has taken a stance and reaffirmed its commitment
to good corporate governance. In a bid to promote ethical
behaviour, which is the bedrock of trust, we recently launched
a campaign aimed at raising awareness of the Fraud and
Ethics Hotline. PPECB appeals to all stakeholders to utilise the
Ethics Hotline to report any incidents of fraud, corruption or
unethical practices. Silent observers erode the values we wish
to uphold.
The PPECB constantly encourages all employees to behave
in a manner consistent with what is right or moral.
ValuesValues form the foundation for everything that happens
within the PPECB. The PPECB has a set of values which it
subscribes to, with the expectation that the leaders within
the organization will model these values and employees will
buy into the value system prescribed.
The PPECB values are a vehicle for achieving on the mission
and vision of the company. The PPECB strives to hiring people
who share the organization’s values.
The value proposition is based around the idea of
strengthening market access and to developing confidence
in South African products, South African systems and South
African people.
PPECB subscribes to the following values:
Professionalism
It is the duty of the PPECB to perform to the highest
standards of professionalism. We are determined to
deliver outstanding quality so that we have long
lasting relationships with our clients.
Accountability
We are obliged to bear the consequences for failure
to perform as expected.
Passion
We are dedicated and have the willingness to take
on challenges and embrace them. We have a “can
do” attitude and believe in making possibility a reality.
Integrity
We are committed to integrity in all that we do,
always, everywhere - behaving in a consistent manner
towards our stakeholders.
Confidence
The PPECB strives in ensuring that it instills world-
wide confidence in South African perishable products
and its people.
PPECB | annual report | 2009 - 201036
PPECB acts as an independent service provider of quality
certification and Cold Chain management services for
producers and exporters of perishable food products. Its
services therefore reduce risk for the producers and exporters
of these products.
Certification ServicesPPECB’s certification service is accredited by the South African
National Accreditation System (SANAS). The service delivers
HACCP, food and packaging and GlobalG.A.P. certifications.
The certification body also delivers TN (Tesco Nurture), LEAF,
360 Quality Audits and second party audits to clients in the
fresh produce environment as well as the general food and
packaging sector.
PPECB provides compliance certificates (third party sampling
services) for the export general food sector.
the ppecb brand
accountability and governance
Board GovernanceExecuting the fiduciary duties of the Board of Directors in
directing PPECB business in the pursuit of its strategic
objectives and mandates.
Executive ManagementExecuting and managing the implementation of the strategic
objectives and mandates in a proper and lawful way.
Risk ManagementDisclosing and regularly updating the risk management
framework which informs the risk management process and
execution.
Legal and Compliance ManagementPPECB acknowledges the laws, rules and mandate governing
PPECB and discloses its compliance to its stakeholders.
Assurance ManagementGiving assurance through disclosure of its internal and
external control environment.
Business IntelligenceSharing information on PPECB’s business processes in a
credible and consistent way to assist in collecting and analysing
business information, being mindful of the legal parameters
and framework within which the business operates.
Ethical CultureConducting the business by applying the values and code
of ethical conduct in everything we do.
SustainabilityDeveloping a sustainable framework and reporting on PPECB’s
approach in such a way that sustainability issues are integrated
into business operations.
Communication and ReportingPPECB’s business performance is reported in a clear and
transparent way on a monthly, quarterly and annual basis.
Stakeholder EngagementPPECB acknowledges its stakeholders and discloses all relevant
information to seek mutual and beneficial relationships.
TransformationHighlighting the actions required to optimally deliver on its
strategic initiatives.
PPECB | annual report | 2009 - 2010 37
These strategic themes were carefully selected and provide the outline for sustainable reporting, as well as strategic initiatives.
measurement framework
1. Enhance the credibility
of South African Export
Certificate.
2. Support the export
competitiveness of South
Africa’s Perishable Products
Industries.
3. Strengthen PPECB’s
capacity as a credible
source of Strategic
information for serving
Industries and
Stakeholders.4. Support
Government in
ensuring confidence in
quality assurance and
food safety systems for
local perishable products
markets.
5. Support Government
in building systems to
ensure compliance with
South African quality and
food safety standards for
imported perishable
products.
the green uhambo project
Team members are to investigate and report on saving
initiatives of their departments.
PPECB solutions are to be communicated to HQ and
the Regions as a directive.
The project should form part of the sustainability report
in the annual report.
An external audit of our carbon footprint.
An awareness campaign on improving our green
contribution.
Fact finding (Km, electricity, miles flown and paper
usage).
Identify the baseline on 2009 statistics.
Design of the template forms, on which Regions must
report.
Planned: Regular audits – as part of BMS system.
Identify external body – should we decide to donate
money on green project of choice, and in doing so
contribute towards our carbon footprint.
ObjectivesTo contribute to greening, limiting PPECB’s carbon footprint and in doing so support actions to enhance the environment and
to be seen as a partner in food security in this long term journey (UHAMBO) that lies ahead.
The following actions were undertaken:Actions
PPECB | annual report | 2009 - 201038
PPECB | annual report | 2009 - 2010 39
human resourcesoverview of
We Value our PeopleAt PPECB we believe that the success in the implementation
of our business strategy lies in the hands of our employees.
We have revised our People Strategy to support business
priorities. Key in the strategy is empowering our people
through training and development, and measured through
our intensive performance management system.
Investment in People DevelopmentDespite tough economic climate, spend on people
development was in the region of R3 322 316 which
constitutes 3, 45 % of the salary bill.
Focus has been on an integrated approach to human capital
development based on our adopted organisational
development framework which advocates delivery on 3 main
streams namely; professional development, skills and
capacity building and organisational effectiveness.
Leadership Development
Leadership development has remained a main focus for
creating people capacity with 6 technical employees being
enrolled for the New Managers Development Programme
with the Stellenbosch Business School.
A formal assessment of management competencies for
specific middle management levels was initiated. This process
will assure the organisation a targeted and needs-driven
management development intervention tailored to individual
competency level. The effect of this talent management
and development approach will be measured as the roll out
milestones are reached.
Assisted Study Scheme
In recognition of the role played by further education in skills
development as its contribution towards the success and
sustainability of the business and in order to assist staff to
achieve their current and future personal development goals,
we have continued providing employees with study assistance.
It covers all National Qualifications Framework aligned
training and development that results in recognized formal
qualifications in the following categories:
Adult Basic Education and Training.
General Education and Training.
Further Education and Training.
Higher Education and Training.
One of the beneficiaries of this programme is an employee
involved in PhD studies in the agri-science.
Skills and Capacity Building
Job specific development need, aimed at addressing skills,
knowledge and attributes has received equal attention by
alignment of these to the Workplace Skills Plan. This has
had positive spin-offs on capacity building and skills
development. This has positioned us better for SETA grants
which will be ploughed back in people development initiatives.
PPECB | annual report | 2009 - 201040
Agri-Export Technologist Programme
PPECB still remains committed, with its distinctly strong
position and depth of technical knowledge and experience,
to providing previously disadvantaged learners who have a
3 year National Diploma in an Agricultural Field, opportunity
to develop skills in the agri-export industry through the
collaborative arrangement with DAFF.
101 Learners have been enrolled on the programme since
its inception. 78, 21 % have been employed in the agricultural
sector. PPECB is committed to this programme for the ensuing
period.
Creating an Enabling EnvironmentStaff Engagement
In order to keep employees fully engaged, structures and
processes have been enhanced by the formalisation of
these through staff engagement framework. As a new
initiative the framework prioritises communication between
PPECB stakeholders by constituting the Development and
Transformation Committee, briefs from the office of the
CEO, Technical Experts BI, Annual Symposium and Talk to
the CEO Email Facility with 48 hour turnaround time.
Company-wide Dialogue Sessions were initiated. These
facilitated focus group sessions culminated in a report of
issues that needed addressing being presented to the
executive. Proper responses were provided. This process not
only helped clear the air but assisted in gauging the mood
within the organisation thus providing scientific pointers.
This will be followed by the perception survey in the ensuing
reporting period.
Transformation
We have not taken our eyes off building a diverse workforce
representative of the South African society, this being the
key driver for our Employment Equity Plan. Progress has been
recorded in the reporting period. While keeping an eye on
the numeric goals, organisational effectiveness relating to
transformation and inclusion, culture, climate and embedding
values will occupy our organisational development future
space.
PPECB | annual report | 2009 - 2010 41
Entrenching Employee WellnessBig strides have been made in entrenching employee wellness with the implementation of the Occupational Health and Safety
Policy and the Employee Wellness Policy. The epitome has been the appointment of a professional service provider
to oversee our Employee Wellness Programme.
Supporting Business Strategy Through Application of Best People PracticesOur Human Resources policies are being review continuously to address business needs and keep abreast of the latest
developments. Through a reputable independent Remuneration Consultant, we benchmark ourselves against the market and
ensure that the Board is apprised of the market movements and latest thinking in best human resources practices.
Our staff profile expressed as percentage of our permanent employees over a 3 year period is as follows:
PPECB | annual report | 2009 - 201042
Technology enables the PPECB to perform its core activities
as stipulated in the Agricultural Product Standards Act
(No. 119 of 1990), PPEC Act as well as the provision of
statistical information to the agricultural industry.
The IST Strategic Plan addresses the following objectives:
technology
Provide the necessary infrastructure with respect to,
technology stability, bandwidth speed, internet and
data security and availability at an optimal cost.
Maintain architecture solutions that are adaptable and
interoperable to achieve PPECB strategic objectives.
Leverage information technology investments to benefit
internal and external users.
Ensure the security of PPECB’s networks, data, portal
and IT equipment.
Monitor, measure, and manage the technology output
with respect to key performance indicators through
the new performance management systems.
Empower the IST staff members with necessary training
to enable them to be more effective and efficient.
This requires the ongoing provision of stable computing
platforms, ICT architectures, infrastructures and solutions.
In performing its duties of facilitating the enhancement of
ICT capabilities, PPECB continuously exploits the opportunities
and benefits offered by new and emerging technologies.
The environmental factors that impacts ICT in general include
moving towards environmentally sustainable computing IT
equipment. This will improve the environment by encouraging
the reduction in use of hazardous materials, will maximize
energy efficiency during the lifetime of the IT product, and
will promote the recyclability ad biodegradability of defunct
IT products and IT factory waste.
In terms of IT Governance the department’s objectives are
as follows:
Ensure delivery of effective information that is relevant
to the business as well as being delivered in a timely,
correct, consistent and usable manner.
Ensure efficient provision of information through
optimal, productive and economical use of resources
by ensuring optimal investment in, and the proper
management of critical IT resources such as applications,
information, infrastructure and people.
Ensure confidentiality and integrity by protecting
sensitive information from unauthorized disclosure.
Ensure availability and reliability by providing
appropriate information to management to operate
the organization and to exercise their fiduciary and
governance responsibilities, as well as ensuring
information is available when required by business
now and in the future.
Focus on ensuring the linkage of business and IT plans
and on aligning IT operations with enterprise operations.
Tracks and monitors strategy implementation of
IT initiatives, project completion, resource usage,
process performance and service delivery to achieve
business goals.
The following projects are focus areas for the nextFinancial Year:
Electronic Export Certification Project.
Microsoft Navision Upgrade.
Storage Area Networks and Virtualization Project.
Office Mobile Implementation Project.
PPECB | annual report | 2009 - 2010 43
PPECB reports a single case of fraud for the year under
review. The total value is less than R20 000 and involves a
single employee who has been disciplined and subsequently
dismissed from our employment.
We have maintained our stance of zero tolerance to crime
and adopted a proactive crime prevention approach. At
the start of 2010, the Fraud and Ethics Hotline awareness
crime and related activities
campaign was rolled out aimed at creating awareness amongst
all stakeholders and reinforcing our stance on crime.
The Hotline provides an anonymous source for employees,
service providers and the general public to report instances
of fraud, corruption and unethical behaviour. The line is
externally managed by KPMG and all reports flow to
the Board via the Risk Management Committee.
As a Corporate Citizen, the PPECB has the obligation to
invest in disadvantaged communities that it operates from.
The primary aim of PPECB’s Corporate Social Investment is
premised on addressing the developmental imperatives of
South Africa as a developing country.
Our contribution to civil society is evident in the support we
have offered to Babble and Krabble, a day care facility
running in one of the areas we operate in, in the Western
Cape. This is the beginning of many initiatives we will roll
out in the near future.
The PPECB is passionate about giving back to the communities
in which we operate.
caring forthe communities
PPECB | annual report | 2009 - 201044
operationalreport
Statutory Operations Overview
Value Added Services
46
52
contents
PPECB | annual report | 2009 - 2010 45
PPECB | annual report | 2009 - 201046
The focus of Statutory Operations for the period under review
was on business processes for efficacy, risk management
and consistency in execution. For this reason, optimisation
of operational processes, a review of current business
processes in lieu of ISO 17020 accreditation, as well as
harmonization were priorities of the Statutory Operations
strategic deliverables.
Focus was subsequently placed on the Harmonization
Programme supportive to the aforementioned objectives
and providing the mechanism for consistency, thereby
enhancing the credibility of the South African export
certification process recognized under the EU 1580
accreditation for third country exports to the EU. Key business
process engineering projects included inter alia the
“Alternative Sampling Methodology Project” which gained
some momentum with DAFF acknowledging the risk-based
sampling approach on quality inspections. Pilots are currently
underway to explore different sampling systems in 4 main
production regions to gather sufficient data for addressing
concerns around phytosanitary risk-based sampling.
Statutory Operations has strengthened the engagement with
DAFF and key partners in managing South Africa’s risks in
the export value chain. For this reason, international
interceptions for phytosanitary risks like Citrus Black Spot
(CBS) have placed a renewed focus on local controls and
the PPECB’s support towards influencing policy in this regard.
Following the adoption of a new CBS risk management
system mid citrus season in 2009, Statutory Operations staff
and supportive programmes should be applauded for the
manner in which they responded to this challenge.
Preventative measures inherent within the PPECB Cold Chain
delivery system, continued to support risk management
practices, prior or during shipments, thereby contributing
towards significant savings for logistical companies and
shipping lines. These measures involving the monitoring of
refrigeration and temperature management en route over
long distances contributed towards South African export
perishables reaching established and new markets in optimum
quality. The PPECB Cold Chain monitoring function, coupled
with the integrated management of cargo temperature
between PPECB, exporters and lines has lead to a unique
value added service, one of a kind in the world of shipping.
Concerning the financial results of this R116 million business
unit, cost recovery was favourable across all service types
however cost management practices posed continued
challenges bearing in mind a steady increase in inland
containerisation and door-to-door containerised shipping.
Despite these challenges, Statutory Operations managed to
post positive year-end financials and maintained our
contribution towards company overheads.
Programme: HarmonizationThe Harmonization Programme, with its key objective of
ensuring uniform interpretation and application of product
quality standards and Cold Chain protocols and processes
countrywide, finds itself within its second year since formal
adoption within the organization in 2008. The internationally
benchmarked harmonization system is now operational
within the main commodity products handled by the PPECB
at inspection level, and emerged in several disciplines of the
PPECB Cold Chain system during the review period. With
the objective of consistency and uniformity at the forefront,
a considerable effort is put into developing the skills and
knowledge of new technical personnel as a baseline for
ensuring consistency over time. The Harmonization
Programme therefore committed to no less than 4 internal
training interventions based on an accelerated skills transfer
programme charter uniquely developed for PPECB inspections.
statutory operations overview
The Harmonization Programme continued to develop its
systems on consistency with the introduction of Port Auditing
and Troubleshooting sporadically pursued at critical control
areas of the PPECB inspection system. In an endeavour to
alleviate risks associated with South African exports, this
component of the programme is aligned to the inspection
delivery stream and provided some prolific results in combating
non-compliance and possible inconsistency in the process.
The annual review of standards and intense discussions
amongst specialists, coupled with practical sessions for
standardising specialists, formed the basis of uniform
interpretation and application of technical instructions
internally. The 2009/10 year also marked the very first
harmonization session between PPECB and container depots,
thereby harmonizing the inspections of key defects eminent
on refer containers. The Harmonization Programme, with
its continued philosophy of learning and innovation, has
introduced no less than 8 PPECB packhouse demonstrations
in various table grape areas attempting to harmonize the
interpretation of quality standards applied at packhouse level
at the PPECB.
Concerning International Standards development, the PPECB
has attended at 3 international meetings on product quality
standards. These meetings included both workgroup and
plenary meetings of the OECD in Paris, the UNECE Specialised
Section for Fresh Fruit and Vegetables in Geneva, Switzerland
and the bi-annual attendance of the UK Harmonization
Meeting in Reading, London. The PPECB’s contribution
towards these meetings have been paramount considering
the deregulation of standards within the EU mid 2009,
re-affirming the importance of standards benchmarking
critical for market access. The attendance of these meetings
allowed also for sustaining networks with international policy
makers and import authorities in lieu of the EC 1580
accreditation for the South African inspection system
recognized within the EU.
The year under review highlighted the hosting of the inaugural
International Harmonization Workshop on Commercial
Quality Standards for African Countries. Partnering with the
UNECE and DAFF on this initiative, the PPECB delivered a
well organised event of international quality; at the forefront
of this workshop being the objectives of capacity building
of the emerging region within Southern Africa and the rest
of the continent, including capacitating the South African
small scale sector; a venture supported by the NAMC. This
workshop saw the attendance of 18 countries within the
continent of Africa as well as 22 small scale farmers within
various parts of the country across different product types.
To continue building on the objectives of this workshop, the
Harmonization Programme pursued further capacity building
initiatives amongst the same constituencies, involving the
same farmers during its first PPECB packhouse demonstrations
on citrus fruit product quality standards during 2010.
Programme: Inspection ServicesDuring the 2009/10 Financial Year, the certification desk
around the country processed 60 427 certificates, a significant
increase of 12,7% recorded on the previous fiscal. For the
duration of this period 2 780 certificates had errors and
reissued and 5 326 were cancelled due to various reasons.
These certificates represent just short of 200 million cartons
and in excess of 235 million kg’s of vegetables, flowers,
maize, red tea and other products.
PPECB has assisted DAFF in the drawing of audit samples to
determine the minimum residue levels on all export products
prior to export. During this period 10 121 samples were
analysed in the Pretoria and Stellenbosch laboratories of
DAFF. Corrective actions were applied where exceeding
occurred.
The PPECB inspection services managed to respond positively
to all activity points with the aid of the national resource
planning office. This office ensured that all activity points
were manned and that mandated functions were executed
successfully.
The Agricultural Export Technologist Programme (AETP)
proved hugely beneficial to the agricultural industry as well
as PPECB. PPECB has successfully recruited new inspectors
from this programme into permanent posts all around the
country. New inspector training and development continued
once employed permanently as per the recruitment of our
internal competency framework. Of the 22 students trained
in 2009/10, 8 were successfully employed within.
Programme: Cold Chain ServicesThe Cold Chain value stream members were primarily
involved with physical inspection of equipment, as well as
PPECB | annual report | 2009 - 201048
the monitoring of product temperatures and overseeing
stowage conditions in all modes and the supplying of export
data according to predetermined requirements. These
requirements were designed to conform to both Board’s
and accepted international standards and meeting local
conditions during storage and shipments.
Container loading supervision over vast distances, as part of
the so called door-to-door concepts, where PPECB had to
ensure that all criteria was met. This also includes the very
strict special shipment container programmes in and around
port areas to 17 different sterile destinations.
Reefer Vessel loading supervision in all ports included Maputo,
where Cold Chain services ensured that inspected products
were loaded according to strict guidelines into correctly
allocated decks. This also includes the highly specialised
shipments to Japan and the USA, whereby PPECB participated
and contributed to the successful arrivals to these very
stringent destinations.
Container inspections executed at all 23 depots nationally
resulted in 148 139 containers inspected with a rejection
rate of 7,51%.
A total of 487 cold stores were inspected in all PPECB regions
of which 3,9% did not conform to the standards and
requirements as published. PPECB also surveyed 188 vessels
before the loading of South African perishable products. Of
these vessels surveyed a notable 11,2% were found to be
unsuitable to carry SA perishable products. All activities
successfully mitigated risks in the supply chain for our clients,
shipping lines, cold store operators and South African fruit
in general.
For the duration of the 2009 season a total of 88 276
containers were exported on 1 858 vessels with 1,4%
unsuitable containers identified prior to loading and 0,68%
identified and rejected while in Transnet Terminal stacks.
The supervision of specialised Reefer Vessels loading took
place in all 4 ports. A total of 365 119 pallets were exported
on 201 shipments.
During the period under review a total of 2 577 manifests
were audited which equates to 88 812 containers. We
recorded an 8,7% rejection rate emanating from erroneous
documentation in this regard. This includes the checks and
audits prior sailing in all Ports of all reefer manifests for
various container shipments.
The auditing of temperature and ventilation settings of
80 951 containers on 1 035 en-route vessels from the Cape
Town port office for predetermined products resulted in
corrective actions on 822 containers.
All activities successfully mitigated risks in the supply chain
for our clients, shipping lines, cold store operators and South
African fruit in general.
Programme: Food SafetyFood Safety is, and will remain, a critical aspect of perishable
products intended for export and will remain a top priority
within PPECB. Continuous collaboration with the Department
of Agriculture, Forestry and Fisheries (DAFF), the industry
and PPECB exists to enhance the current South African
system ensuring its compliance to international and national
legislation. The Official Food Safety Standard is continuously
reviewed to ensure that changes and adaptations triggered
by the audits are incorporated into the standard.
For the year under review PPECB remained vigilant in its
application of the Official Food Safety Standards by conducting
261 new audits and 116 surveillance audits. All FBO’s
remained committed to the standard by clearing out findings
in the allocated time, thus no FBO’s where prohibited from
exporting their produce. The decline in surveillance audits
is conducive to an ever changing environment. During
2009/10 Fiscal Year we experienced those food business
operators that were in compliance with the official food
safety system opted for a commercial certification, as this
opened more markets for them to service. In contrast, the
decline can also attributed to an unsteady economic
environment forcing food business operators not to export.
PPECB remains active in awareness creation regarding food
safety within the industry by means of published articles in
magazines, on the internet as well as radio talks. Building
strong partnerships within the industry ensures that the issue
regarding food safety does not become dormant and that
it remains a top priority within the agricultural sector.
Programme: CitrusWhile the 2007 and 2008 citrus seasons proved to be record
breaking seasons the 2009 season saw a drop in export
volumes which can be attributed to a number of reasons
but difficult marketing conditions in especially Europe and
the strengthening of the Rand were the main contributors.
As if the application of the normal Citrus Black Spot (CBS)
strike system was not complicated enough, PPECB inspectors
also had to deal with a new CBS risk management system
aimed at the European markets. The new system was rolled
out in August 2009 after the Valencia season had already
commenced and our staff as well as the Harmonization
Programme should be congratulated for the manner in which
they responded to the challenge. One aspect that will continue
PPECB | annual report | 2009 - 2010 49
to receive attention through the Harmonization Programme
is the correct identification of CBS lesions. This aspect is non-
negotiable as there are dire consequences for producers
whose fruit were intercepted with CBS.
A total of 100,2 million actual cartons were budgeted for
but at the end of March 2010 only 91,9 million cartons were
inspected and this was mainly due to the decline in demand.
In terms of quality rejections increased overall from 2,01%
in 2008 to 2,48% in 2009. This can be attributed to the
zero tolerance approached followed this season with regard
to decay as well as False Codling Moth (FCM) infestation.
On a national basis the main rejection reasons were FCM
on grapefruit and oranges, decay on soft citrus and blemishes
on lemons.
All citrus types except for grapefruit were down when
measured against the 2008 season. The biggest decline was
experienced on the Valencia types. When looking at the
markets the European markets took less fruit while the
Russian Federation, the Middle East and the Far East were
the star performers.
A total of 1 231 720 pallets were exported in 2009 and
whilst there were calls for Maputo to be utilised optimally,
more than half of the citrus crop were still exported through
Durban. Volumes through Cape Town port declined further
whilst Maputo and Port Elizabeth remained stable. Much
effort was put into opening Port Elizabeth up for exports to
Japan for the first time and it is hoped that producers will
take full advantage of this opportunity as it will benefit the
region immensely. It will also take some truckloads off the
road as the need for road transport to Durban will be reduced.
Programme: Pome and Stone FruitThe impact on the volumes for the 2009/10 season were
more than a million cartons downward, largely due to
damage caused by adverse weather conditions (hail, rain,
wind and heat waves) during the first months of production.
Compared to the previous season the biggest impact was
experienced on the 2 main plum cultivars Laetitia (-18 %)
and Songold (-11%). A record nectarine crop of 2, 5 million
(+29%) equivalent cartons were exported during the period
under review. Amidst threatening economic forces faced by
stone fruit marketers and nature’s challenges, the industry
managed to export 11, 6 million cartons (1% down on
budget for the fiscal) for export. The lighter crop, the global
economic crisis, the strong Rand and the adverse weather
conditions in the EU continent combined made it a challenging
2009/10 season. The production of plums in the Southern
Hemisphere was 17% down (SA -12% and Chile -21% after
the earth quake). Although the demand was very strong
during the latter part of the season due to the shortage of
plums, the income of producers was under threat due to a
fairly strong Rand.
The 2009 pome fruit season was a normal season and the
pome crop was 1% lower than last season. The total apple
crop was 6% (1,5 million cartons) lower compared to last
year. Forelle pear volumes were 6% higher than last year
mainly due to new hectares that were coming into production.
The total pear crop was also 9% (1,28 million cartons) higher
compare to last year.
Notwithstanding the apple crop in the Southern Hemisphere
at 10,5 million cartons lower than last year, the apple stock
in the EU Continent was 24,8 million cartons (62%) higher
than last year, a record for the last 4 years. This illustrates
the difficult season end for apples due to the world-
wide recession and oversupply of apples. On the whole the
pome season were fairly moderate and volumes were 7%
(2 582 915 cartons) above budget due to the positive
exchange rate during 2009.
DAFF recently lifted the ban on importing apples from the
USA and apples were imported during December 2009 for
the first time from the USA. These apples were imported at
R200 per carton.
PPECB | annual report | 2009 - 201050
Active stakeholder engagement resulted in PPECB contributing
intensely towards actively managing the Cold Chain
requirements for the plum variety Songold; providing a
value added weekly Statement of Fact for plum exports to
the industry, assistance with the development of local
standards and requirements for stone and pome fruit and
the effective execution of the 8 weeks storage period for
Forelle pears. PPECB continued its partnership with the stone
and pome industry in supplying accurate and timely
information.
Programme: Table GrapesFavourable local market conditions and initial inclement
(rainy) weather conditions in the Northern Regions were the
cause for a 2 week late start to the 2009/10 table grape
season. Furthermore poor weather conditions also attributed
to the outbreak of Downy Mildew in Paarl and neighbouring
areas. Preventative actions were unsuccessful with continuous
downfall of rain every second day with high humidity
conditions. Downy Mildew contributed to an estimated
overall loss of 1,4 million (4,5 kg) cartons of table grapes in
the Western Cape.
Despite these negative conditions, the overall condition and
quality of table grapes were very good in the high volume
areas of the Orange River and the Hex River Valley. Producers,
as in the previous season, yet again managed to show
excellent discipline regarding harvesting grapes with an
optimum internal quality.
Market conditions during November, December and the
beginning of January were favourable due to the lack of
supply of competing countries in the Southern Hemisphere.
Market conditions became negative during mid January
with Chile becoming more active in the market and the
strengthening of the Rand during mid January. Good quality
and grapes with good condition were supplied up to the
end of season ensuring sustainability.
Notwithstanding the drop in volume caused due to Downy
Mildew, a total of 52 243 653 cartons were packed.
The 1% below the budgeted volume of 52 972 818 cartons
for 2009/10 budget period was restricted mainly because
of good quality and higher volumes obtained during the
months of February and March.
The review period again saw PPECB continue its partnership
with the grape industry in support of their competitiveness
by providing accurate and timely information that enabled
effective marketing decisions.
PPECB | annual report | 2009 - 2010 51
Programme: Subtropical and Other ProductsThe 2009 avocado season reached an average export volume
of 9,7 million cartons, well below the record crop in excess
of 12,5 million cartons experienced during the previous season.
The lower volumes were due to unfavourable climatic conditions
and Cercospera in certain areas. Export markets however
remained favourable throughout the season due to the higher
demand and well coordinated volumes during peak delivery
periods. The industry also had to contend with a local market
which continued to absorb large quantities of avocados at
fresh produce markets, retail outlets and the informal sector.
Mango exports continued to decline as has been the trend
for the last few years, and litchi crops saw a 8% below
budgeted figure; reasons which could be ascribed to increased
demand for mangoes on the local market including the
informal sector, and due to high quantities attracted for
processing. Lower onion and other vegetable volumes were
exported due to lower demand and prices overseas resulting
from the global credit crunch.
The groundnut sector experienced a crop of just below
20 000 metric tons recorded for export during the fiscal year
which has been characterised by an additional effort from
the PPECB to reduce aflatoxin risks at the point of export.
Other noteworthy movements were red tea showing an
upward trend.
Due to the volatility of volumes, cost containment within
this program demands a “hands on” approach during
management of key activity drivers.
Further highlights of the programme involve the PPECB’s
contribution to the management of maturity testing on
avocados as part of a SAAGA local market campaign.
The 2009/10 year also saw the commencement of a product
training service for the Johannesburg Market, the biggest
fresh produce market in Africa. QC personnel and floor
inspectors have been trained in at least 6 product modules
in Johannesburg Market’s endeavour to revolutionise its
“market of the future” programme based on food safety and
quality. The PPECB committed to capacity building programmes
with individuals acquiring a basic understanding of the principles
and requirements involved with the inspections of fresh quality
produce commonly traded at the market. This venture is the
beginning of the first phase of capacity building of this strategic
partner with the programme destined to reach the premises
of Johannesburg Market suppliers as well as strategic alliances
within the SADC region over time.
PPECB | annual report | 2009 - 201052
PPECB’s Value Added Services division experienced some
significant staff movements during the year in review. These
staff movements were largely confined to managerial positions
leaving core service delivery capability intact and continuity
unaffected. Notwithstanding these changes, the division also
managed to maintain a clear focus on its strategic direction
as contained in the 5 year corporate strategic plan.
The year in review again saw the organisation’s accreditations
been subjected to scrutiny by the South African National
Accreditation System (SANAS). In this regard management
can very proudly boast that all accreditations including
ISO 17021, ISO guide 65 and ISO 17025 were reconfirmed
which supports our efforts in expanding our service offerings
under these accreditations.
Pursuant to its goal of acquiring the coveted ISO 17020
accreditation for competent inspection bodies, PPECB
recommissioned a project in this regard and together with
its sister Harmonization Programme, which measures
consistent interpretation and application of product quality
standards, have made huge inroads as to the inspectorate’s
state of readiness and eventual accreditation.
PPECB’s Mycotoxin Analytical Laboratory, situated in Pretoria,
posted good financial results on the back of a very good
groundnut export season. Holding the industry benchmark
for turnaround times and volume capacity for mycotoxin
analysis, the lab continues to be one of the biggest mycotoxin
laboratories in the world, with service excellence second to
none. The laboratory is poised to expand its service offerings
to include additional analysis using existing GC and HPLC
techniques mainly due a significant increase in demand for
these services by our current client base.
Our Cold Chain Research and Development Unit took the
opportunity to review its strategy going forward. A completely
revamped R&D strategy has been approved and some of the
plans have already been actioned in the period under review.
The importance of continued Cold Chain research and
development has been reconfirmed by PPECB’s Board of Directors
representing industries and understood by important
stakeholders, such as Government, thereby laying the foundation
for repositioning the unit’s output to further support the export
competitiveness of the industries that PPECB serves.
Further momentum was gained in terms of PPECB’s efforts
to contribute to the overall development of the horticultural
sector in South Africa during the reporting period. PPECB
has partnered with the National Agricultural Marketing
Council and the Johannesburg Fresh Produce Market in
identifying needs in the small scale farmer sector and to
deliver skill transfer programmes and compliance training
and awareness.
PPECB Analytical LaboratoryThe laboratory has excelled in technically optimising its
accuracy and efficiencies of existing and new analytical
methods of mycotoxin analyses. The laboratory utilises
sensitive, ISO 17025 accredited analytical systems for the
testing of mycotoxins. The efficiency of the methods employed
enables the testing facility to expand to the point where it
value added services
PPECB | annual report | 2009 - 2010 53
can analyse up to 200 samples per day. The laboratory has
also continued to focus on expanding into dried fruit, tree
nuts, spices and consumer food product market segments,
generating income from mycotoxin analyses of these matrices.
Expanding into a fats analytical programme, the laboratory
has seen an increased demand for analyses of food
commodities for fat content (trans fats, unsaturated vs.
saturated fatty acids) and rancidity.
CertificationsThe certifications unit showed positive client growth despite
the economic down turn. This correlated well with a continued
improvement in turnaround times, service delivery and the
national accessibility of our service countrywide. Although
HACCP certifications have showed a distinct upturn,
GlobalGAP certifications remained the major income generator
for the unit in the period under review. The greatly anticipated
publication of the Consumer Protection Act has sparked
renewed vigour and demand in the certification space which
prompted management to track developments and impacts
on the industry closely throughout the review period. During
the reporting period, the certifications unit added ISO 22000
to its service offering which further includes GlobalGAP;
BRC; HACCP; LEAF; 360 Quality; Tesco Nurture and Retail
Supplier audits.
Cold Chain R&DEmanating from its approved 3 year strategy, the R&D
programme has identified and commissioned various applied
research projects during the period under review: Conducting
successive research trials to review and update the current
post harvest recommendations within the Cold Chain, for
all major perishable products destined for export. 2 Further
co-funded projects to record the “Post-harvest Biology and
Technology of Leucadendron and Leucospermum under Cold
Storage” and the “Development of Post-harvest and Shipping
Protocols for South African Pomegranate – An emerging
Export Crop” have already produced initial results in the
reporting period. A further project will look into investigating
the non-destructive monitoring and prediction of rind quality
in citrus fruit in an attempt to use alternative post harvest
methodologies.
Training and DevelopmentThe delivery of training services were limited during the
review period mainly due to the ramp up phase associated
with properly constructed outcomes based training material
that attracted the focus of many subject matter experts at
PPECB. In addition, training was also limited to needs
contained in partnership agreements where predetermined
skills transfer programmes were driving delivery. Once a fully
constituted training services menu has been finalised, the
services will become available to the broader spectrum of
the market.
Our development efforts with small scale farmers has
produced a further 9 farmers certified to globally recognised
good agricultural practices. Furthermore, a total of
8 small scale farmers received good agricultural practice
pre-audits to determine their compliance GAPS. These farmers
will be further assisted to close out all findings to become
compliant.
PPECB | annual report | 2009 - 201054
corporategovernance
Risk ManagementTop 5 Risks
Structure
Materiality Framework
Controls
Looking Ahead
Administration
Audit Committee Statement of Responsibility
5556
58
61
62
62
62
63
contents
PPECB | annual report | 2009 - 2010 55
PPECB is committed to the principles and values of good
corporate governance and a fundamental part of this is
effective risk management. In compliance with the provisions
of the PFMA, risk management is not a compliance issue
but a business imperative. We remain committed to
developing and growing the business of PPECB within our
Board-determined risk appetite.
The Board, through the Risk Management Committee, is
ultimately responsible for risk management process and
controls. The Risk Management Committee assists the Board
in fulfilling its oversight role. The Board approves risk
management policies and its strategy and ensures that
management has adequately discharged their responsibility
of designing appropriate structures, systems and controls to
integrate risk management into day-to-day activities.
The Risk Management Committee advises the Board on the
identification and management of the main risks within
PPECB. Annual risk assessments are conducted to ensure
the effectiveness of the risk management policy and
strategies. The Risk Management Committee itself is annually
assessed to ensure its value, effectiveness and to make
recommendations on improvements.
The Risk Management Committee strategy is that risks, by
their very nature, are not static, hence the vigilant approach
to risk management. PPECB mitigating strategies are
constantly being monitored and adapted. Regular feedbacks
and reports are provided to the Risk Management Committee
en route to the Board.
PPECB is committed to increasing value and growing the
business but seek to do this in a controlled environment.
Despite a tough economic environment in 2009, Executive
Management and the Board has remained closely involved
with risk management initiatives and risk management strategies
have proven effective throughout the year under review.
Responsibility and accountability for risk management reside
at all levels within the organisation. Every business unit is
represented on the Risk Management Committee. PPECB
uses the 3 line of defence model: the business unit manager
who is responsible for day-to-day risk management activities;
the Risk Management Committee responsible for the risk
management framework and policy, oversight and
independent reporting; and finally the internal audit function
which provides an independent assessment of the adequacy
and effectiveness of the risk management framework and
risk governance structures.
The Year under ReviewOur focus for the year was aimed at reinforcing the building
blocks that have been established in the previous years. One
of the key focus areas was to strengthen the risk maturity
in the organisation through developing a risk management
culture. During the year under review, PPECB provided risk
management training to all its key business managers. Risk
management strategies are deployed throughout our
organisation in the form of operational strategies, measurable
action plans and projects. This is rigorously monitored by
the responsible project leader.
The Risk Management Committee has refined its risk
management framework, strategies and policies to align
these with best practice.
The main threats to PPECB are emanating from the HR and
IT areas. Capacity and retention of skill remain an area of
concern for PPECB. There is continued focus on employing
and retaining high-quality people. It is essential for PPECB
to remain technologically relevant to be able to deliver on
its objective to be a credible source of information. The Board
has recognised that PPECB needs to invest significantly in IT
infrastructure and capacity.
During the year under review, the annual risk assessment
was attended by members of the Board, Executive
Management and the Risk Management Committee and
was externally facilitated. The purpose was to ensure that
there is a uniform understanding of the risks facing PPECB
and application of risk management strategies.
There has been significant improvement in the risk maturity
of the organisation. To support and grow the culture of risk
awareness in the business, training programmes and systems
will be implemented and will serve to reduce risk exposure
and increase day-to-day accountability within PPECB.
risk management
PPECB | annual report | 2009 - 201056
Top 5 RisksPPECB Discloses its Top 5 Risks:
Operational
RiskNo.
Risk Cause ResponseRisk
Category
ResidualRisk
Exposure
1 Motivatedemployees toensure delivery onoperational andstrategic objectives.
56%- Poor relations with staff.- Non-recognised performance
management system.- Lack in support systems to
staff.
- Employee Wellness Policy implemented.
- Performance Management System that coaches, evaluates and rewards employees for goodperformance implemented.
- Preparing the environment for the Employee Satisfaction Survey will be conducted in 2010 and then every 2 years.
- Dialogue completed and submission made to Exco.
- Development and Transformation Committee approved in May 2010.
- Review the services of the Administrator to the Fund.
- Review the services of the Consultant to the Fund.
- Benchmark the current Fund structure with other similar Funds simultaneously bench-marking the Administration andConsultant services and costs.
- Annual Newsletter, Bi-annual Roadshow, Monthly Index, Intranet (member guide and information guide).
Strategic2 Cost escalation inproviding services.
56%- Current inspection methodologies are expensiveand does not consider risk.
- Escalating inland loading points.
- The impact of quality management systems on the risk of non-complianceneeds to be considered.
- Inspection systems create resource constraints.
- Client perceptions that costsare too high.
- Actively pursuing risk base approach for inspection methodology.
- Investigate and evaluate alternative methodologies for container loading for certain agriculture products.
- Project definition report and Joint Steering Committee formedbetween PPECB and DAFF for strategic projects e.g. alternativesampling methodology.
- Monitor expenses and test budget against a zero base.
- Re-engineer processes to improve process efficiencies and reduce lead times.
Operational3 PPECB’soperational modelis designed toensure theeffective andefficient delivery ofcore functions.
56%- Misaligned processes may lead to reputational damage,claims, loss of clients and notdelivering on PPECB's mandate.
- High demand for timely management information tosupport decision-making in operations and management.
- Inefficiencies of current processes.
- Insufficient skills and capacityto perform business analysis.
- Project team focuses on aligning and integrating export certification processes, both manual and flow of informationprocesses.
- Value Added Services ensure compliance to SANAS accreditation requirements.
- Introduce internal audit on regulatory processes.
- The SLA's between PPECB and customers on deliverables to manage expectations, within reason.
Risk 3 Causes continued on page 57. Risk 3 Responses continued on page 57.
PPECB | annual report | 2009 - 2010 57
RiskNo.
Risk Cause ResponseRisk
Category
ResidualRisk
Exposure
Sustainability4 Impact of externalinfluences /environment onfinancial results ofPPECB.
56%- Changes in volumes could lead to costs not recovered,financial losses.
- Climatic influence on volumes resulting in loss of business.
- Global warming.- Carbon footprint.- Climatic conditions.- Floods, rain, drought, hail
storms, etc.- Worldwide recession.- Land claims on commercial
farm land may result in reduced production and export.
- Water quality.- Political Influence.- Water footprint.- Illegal exports.
- Continuous environmental scanas part of the strategic management process.
- Volumes are re-estimated on a bi-annual basis.
- Reserves are maintained to sustain operations in case of financial distress.
- Monthly Debtors Management Meeting.
- Operations monitor volumes and performance of activity points and compare results to previous years.
- Established an Academy to provide training in GAP to emerging farmers.
- Carbon footprint project has started. A committee dealing with the reduction of PPECB's carbon footprint has been formed.
- Conducting an analysis of the impact of land claims on our business.
- PPECB reported illegal exports to DAFF and have an interim arrangements in place.
Strategic5 The SA perishableproduct industryhas sufficientcapacity and skillsavailable toimprove SA'sglobalcompetitiveness.
28%- PPECB's second objective is to support the export competitiveness of the SA perishable products industrieswithin its mandate.
- PPECB is unable to fulfill therole due to lack in resourcesand funding.
- Insufficient plans to identifyopportunities.
- Insufficient external skills.
- Project team needs to determinefocus areas, priorities, resource needs and implementation actions.
- Programme needs to be harmonized with ISO 17020 and the AETP programme.
- Source funding opportunities.- New R&D strategy in development.- Establish a Training Academy
to transfer skills.- Capacity building initiative
implemented with JohannesburgMarket.
- MOU development for medium to long term synergies which include broader capacity building.
- Capacity building initiative with Egypt under development.
Operational3 PPECB’soperational modelis designed toensure theeffective andefficient delivery ofcore functions.
56%- All critical business processeshave not been published in policies and procedures.
- National resource planning ensures effective and efficient delivery of core business.
- Evaluation by Harmonization Programme (SOP) support effective and efficient delivery of services (Including specific CBS training interventions).
- ISO17020 certification in process.The document review for the process will be implemented.
- Operational roll out of update procedures (in alignment with ISO 17020)
- Harmonization implemented on all main products excluding sub-tropical products. Partial implement-ation in Cold Chain Services.
This corporate governance statement sets out the governance
framework adopted by the PPECB Board and highlights the
key activities for the year under review.
The Board’s approach to governance is based on the
understanding that sound governance practices are
fundamental to earning the trust of our stakeholders. Our
stakeholders include Government, industries we serve, our
employees, our clients, our service providers and the
communities which we serve.
The governance framework enables the Board to fulfil its
role of providing oversight and strategic counsel in balance
with its responsibility to ensure conformance with legislative
and regulatory requirements and risk tolerance. It also provides
the parameters for delegating its authority.
Compliance with applicable legislation, and in particular
PPECB’s enabling legislation: the PPEC Act 9 of 1983; the
APS Act 119 of 1990 and the Public Finance Management
Act 1 of 1999, as well as regulations, standard, protocols
and codes is an essential characteristic of the PPECB culture.
PPECB welcomes the publication of King III and has invested
wisely in training management and the Board on the
recommendations of the report. Management is analysing
the requirements to ensure implementation in the coming
months.
Board of DirectorsThe PPECB Board is structured in accordance with the PPEC
Act, with the Board members appointed by, and accountable
to, the Minister of Agriculture, Forestry and Fisheries. The
Board is comprised of non-executive Directors, representing
industries in which PPECB operates.
Details of members of the Board are disclosed in the Director’s
report. The roles and responsibilities of the Board are defined
in the PPEC Act.
The Board meets at least 4 times in a year with special or
additional meetings convened as circumstances dictate.
The Board serves under a written and approved Board Charter.
Attendance at Board meetings for the year 1 April 2009 to
31 March 2010 is set out below:
The ChairpersonThe Chairperson of the Board is Mrs Elaine Alexander. She
is responsible for the effective functioning of the Board, with
her primary duties being to:
The Chairperson’s term of service ends on 31 March 2010
and is extended until 30 June 2010. Vice Chairperson is Mr
Molefe Mokoene and he serves the same term of office.
structure
Preside over meetings of the Board of Directors to
ensure their smooth functioning.
Serve as the main informal link between the Board
and the Executive Management to provide support
and advice while respecting executive responsibility.;
Serve as the main link between the Board and the
Minister for Agriculture, Forestry and Fisheries.
Ensure that regular and objective appraisals of
individual directors, as well as of the Board itself and
its committees, are completed to assess the Board’s
effectiveness.
Assist with the formulation of the annual work plan for
PPECB Board and ensure that it is strictly adhered to.
Lead and direct the proceedings, deliberations and
decisions of the Board.
Member 21/5/09 27/8/09 21/11/09 11/3/10
E AlexanderChairperson
CA Atkins
HP Booysen
CH Engelbrecht
AM Hawes
M Mannya
M MokoeneVice Chairperson
A Rabe
C Sixolo
L Vorster
Present Absent with apology
PPECB | annual report | 2009 - 2010 59
The Executive CommitteeThe PPEC Act provides for the certain powers of the Board to
be delegated and the Board has consequently delegated its
powers pertaining to the day-to-day operations of the business
to the Chief Executive Officer. The Executive Committee assists
the Chief Executive Officer in executing these duties.
The Executive Committee meets formally every 2 weeks and
additional formal and informal meetings are scheduled on
an ad hoc basis.
All Executives, including the Chief Financial Officer,
report to the Board through the Chief Executive Officer.
Recommendations and decisions are taken in accordance
with the delegation of authority.
Mr Luvuyo Mabombo is the Chief Executive Officer.
The Board CommitteesIn order to discharge its duties more effectively, the Board has
approved and delegated authority for specific matters to
various committees. These committees have been established
to ensure that operational performance and risk management
are monitored. These committees serve under written and
approved charters, which are reviewed and updated annually.
The minutes of all Board committee meetings are presented
to the Board for information.
Specific responsibilities are delegated to the following
committees to support the functioning of the Board:
Audit Committee
Human Resource Committee
Risk Management Committee
The Audit CommitteeThe Role of the Committee
The Composition of the Committee
The Audit Committee comprises of 3 non-executive Directors.
Members of management, external and internal audit attend
meetings by invitation. Members of the external and internal
audit have unrestricted access to members of the Audit
Committee and its chairman, thereby maintaining
uncompromised independence.
Members of the committee and their attendance record are
set out below:
The Human Resource CommitteeThe Role of the Committee
Members of the committee and their attendance record are
set out below:
Acts in accordance with the requirements set out in
the Public Finance Management Act and Treasury
Regulations.
Reports to the Board and has the authority to make
recommendations.
Met 3 times this year.
Member 20/5/09 26/8/09 5/3/10
A RabeChairperson
CA Atkins
L Vorster
Present Absent with apology
Reviews all aspects relating to human resources.
Monitors compliance with the relevant employment
and labour legislation.
Met 4 times this year.
Member 20/5/09 26/8/09 26/11/09 10/3/10
HP BooysenChairperson
E Alexander
A Rabe
Present Absent with apology
PPECB | annual report | 2009 - 201060
The Risk Management CommitteeThe Role of the Committee
Members of the committee and their attendance record are set out below:
Advises the Board on risk management processes.
Develops risk strategies and policies.
Met 4 times this year.
Member 15/4/09 3/6/09 2/10/09 16/11/10
A FortuneChairperson
L Groenewald
N Mbokane
Z Makhaye
J Schwiebus
S van Wyk
W van Zyl
R Robinson
C. Farrell(Internal Audit)
4/3/10
-
Corporate SecretariatPPECB employs a Company Secretary, Ms Adela Fortune, who in addition to
performing statutory functions, also supports the Executives and Directors alike
ensuring the effective functioning of the Board and its committees.
Board members receive annual and ongoing training on corporate governance
by reputable service providers. Board members also have access to appropriate
information and to the advice and services of the Company Secretary.
Present Absent with apology By invitation Resigned-
PPECB | annual report | 2009 - 2010 61
The framework of acceptable levels of materiality and significance applied during 2009/10, for the purpose of interpretation
of, and compliance with, the PFMA (as amended) is the following:
materiality framework
Section 50 / Fiduciary duties of accounting authoritiesThe accounting authority for a public entity must -on request, disclose to the executive authority responsiblefor that public entity or the legislature to which the publicentity or the legislature to which the public entity isaccountable, all material facts, including those reasonablydiscoverable, which in any way may influence the decisionsor actions of the executive authority or that legislature.
PFMA Section Quantitative (Amount) Qualitative (Nature)
Any fact discovered of whichthe amount exceeds themateriality figure of R625 000after consultation with the AuditCommittee for the year underreview.
- Any item or event of which specific disclosure is requiredby legislation, King III Reportor GRAP.
- Any fact discovered of whichits omission or misstatement,in the Board's opinion, could influence the decisions or actions of the executiveauthority or legislature.
Section 54 / Information to be submitted by accountingauthoritiesBefore a public entity concludes any of the followingtransactions, the accounting authority for the public entitymust promptly and in writing inform the relevant treasuryof the transaction and submit relevant particulars of thetransaction to its executive authority for approval of thetransaction:- participation in a significant partnership, trust,
unincorporated joint venture or similar arrangement.- acquisition or disposal of a significant shareholding in
a company.- acquisition or disposal of a significant asset.- commencement or cessation of a significant business
activity.
Acquisition or disposal of asignificant asset;- Acquisition: Market value
greater than Materiality figure- Disposal: Market value greater
than 50% of Materiality figure.
- Any participation outside of the approved strategic plan and budget.
- Any acquisition or disposal ofany asset that would increaseor decrease the overall operational functions of the Board, outside of the approvedstrategic plan and budget.
- Disposal of the major part of the assets of the Board.
- Any business activity that would increase or decrease theoverall operational functions of the Board, outside of the approved strategic plan and budget.
Section 55 / Annual Report and financial statementsThe annual report and financial statements referred toin subsection (1)(d) must-- fairly present the state of affairs of the public entity, its
business, its financial results, its performance against predetermined objectives and its financial position as at the end of the financial year concerned.
- include particulars of-- any material losses through criminal conduct and any
irregular expenditure and fruitless and wasteful expenditure that occurred during the Financial Year.
- any criminal or disciplinary steps taken as a consequence of such losses or irregular expenditureor fruitless and wasteful expenditure.
- any losses recovered or written off.- any financial assistance received from the state and
commitments made by the state on its behalf.- any other matters that may be prescribed.
- Losses through criminal conduct.- any loss identified.
- Losses through any expenditure.- if the combined total
exceeds the planning materiality figure after consultation with the AuditCommittee for the year under review.
- Any irregular, fruitless and wasteful expenditure as defined by the PFMA will bereported.
Any identified loss throughcriminal, reckless or negligentconduct.
Section 66 (1) / Restrictions on borrowing, guaranteesand other commitments
Rnil This Public entity may notborrow money, nor issue aguarantee, indemnity orsecurity, nor enter into any othertransaction that binds or maybind the institution to any futurefinancial commitment unlessacting through the relevantExecutive Authority. (PFMAsection 66(3)(c)).
(1)(c)
(2)
(b)
(c)
(d)
(2)
(a)
(b)(i)
(ii)
(iii)(iv)
(v)
PPECB | annual report | 2009 - 201062
Internal ControlInternal control is a process designed to provide reasonable
assurance on the achievement of organisational objectives.
The Board has ultimate responsibility for internal control.
The Executive Management, as mandated by the Board, has
established a system of control to manage significant risks.
Ongoing monitoring and reporting processes by the Risk
Management Committee provide for high-level assessment
on the status of internal controls. The Board also receive
assurances from the Audit Committee, which derives some
of the information from regular internal and external reports.
AuditInternal audit is outsourced to KPMG. Internal audit provides the
Audit Committee and Management with reasonable assurance
that the objectives are achieved in the following areas:
Effectiveness and efficiency of operations.
Reliability of financial reporting.
Compliance with laws and regulations.
This is achieved through an independent objective appraisal
and evaluation of the risk management processes, internal
controls and governance processes as well as by identifying
corrective actions and suggested enhancements to the
controls
controls and processes. The risk-based audit plan focuses on
the major risks emanating from the organisation’s internal
risk assessment process.
Internal audit is fully supported by the Board and the Audit
Committee and has unrestricted access to all organisational
activities, records, property and personnel.
The external auditors are, as per statutory requirement,
responsible for independently auditing and reporting on the
financial statements in conformity with International Standards
of Auditing.
The external auditors are PriceWaterhouseCoopers.
Business ConductPPECB has adopted a Code of Ethical Conduct which is
approved by the Board. Compliance to this code is closely
monitored by Executive Management and the Risk
Management Committee and awareness of ethical behaviour
is encouraged by regular communications with employees
and an externally monitored Fraud and Ethics Hotline. PPECB
accepts its duty to address matters of significant interest and
concern to all stakeholders, taking into account greater
demand for accountability.
External Auditors: PriceWaterhouseCoopers
Internal Auditors: KPMG
Business Address: 45 Silverboom Ave, Plattekloof, 7500
Postal Address: PO Box 15289, Panorama, 7506
Telephone: +27 21 930 1134
Facsimile: +27 21 939 6868
Website: www.ppecb.com
administration
The Board is preparing the organisation for implementation of King III requirements. PPECB continues to review and
monitor legislative and regulatory developments to ensure the business is prepared to respond appropriately. Of
significant interest to PPECB is the implementation of new or amended legislation relating to competition, privacy
of information and consumer protection. Finally, the internal governance structures are being assessed to ensure
new requirements are being met.
looking ahead
PPECB | annual report | 2009 - 2010 63
The Audit Committee reports that it has complied with its responsibilities arising from Section 38(1)(a) of
the Public Finance Management Act 1 of 1999 and Treasury Regulations 3.1.13. The Audit Committee
also reports that it has updated and adopted appropriate formal terms of reference as its Audit Committee
Charter, and have executed its affairs in compliance with this charter and has discharged all its responsibilities
as contained therein.
All weaknesses in internal control reported by the internal and external auditors to the Audit Committee
have been considered for their significance and potential for financial losses and, based on these reports,
the Audit Committee is of the opinion that whilst there are some control issues that have been reported
and are receiving attention, generally the effectiveness of the internal controls are adequate.
The Audit Committee reviews the performance of the external auditors and the level of audit service
provided and has recommended to the Board of Directors the continued appointment of
PriceWaterhouseCoopers for the Financial Year. In the period under review the Committee has reviewed
the scope of the interim review and year end audit including the Materiality level. Auditor independence
is discussed and confirmed at each meeting.
Evaluation of Financial Statements
The Audit Committee has:
Reviewed and discussed the audited annual financial statements to be included in the Annual Report
with the external auditors.
Reviewed the external audit management letter and management’s responses thereto.
Considered matters such as consistency of accounting policies and practices.
Reviewed compliance with legal and regulatory provisions.
We concur with and accept the annual financial statements, and are of the opinion that the audited
financial statements should be accepted and read together with the report of the external auditors.
The Audit Committee has therefore recommended the adoption of the annual financial statements by the
Board of Directors at their meeting held on 19 May 2010.
A Rabe Date
Chairperson of the Audit Committee
statement of responsibilityaudit committee
29 / 07 / 2010
PPECB | annual report | 2009 - 201064
financialannual
statements31 March 2010
Statement of Responsibility by the Board of PPECB
Independent Auditor’s Report
Directors’ Report
Statement of Changes in Net Assets
Statement of Financial Position
Statement of Financial Performance
Cash Flow Statement
Notes to the Financial Statements
Detailed Statement of Financial Performance - unaudited
65
66
68
70
71
72
72
73
89
contents
PPECB | annual report | 2009 - 2010 65
The Directors are required by the Public Finance Management Act, to maintain adequate accounting records and are responsible
for the content and integrity of the financial statements and related financial information included in this report. It is their
responsibility to ensure that the financial statements fairly present the state of affairs of the entity as at the end of the financial
period and the results of its operations and cash flows for the period then ended, in conformity with the Standards of General
Recognised Accounting Practice (GRAP) of South Africa and in the manner required by the Public Finance Management Act,
1999 (PFMA). The external auditors are engaged to express an independent opinion on the financial statements.
The financial statements are prepared in accordance with GRAP and in the manner required by the PFMA and are based upon
appropriate accounting policies consistently applied and supported by reasonable and prudent judgement and estimates.
The Directors acknowledge that they are ultimately responsible for the system of internal financial control established by the
entity and place high importance on maintaining a strong control environment. To enable the Directors to meet these
responsibilities, the Directors set standards for internal control aimed at reducing the risk of error or loss in a cost effective
manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting
procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout
the entity and all employees are required to maintain the highest ethical standards in ensuring the entity’s business is conducted
in a manner that in all reasonable circumstances is above reproach.
The Directors are of the opinion, based on the information and explanations given by management, that the system of internal
control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements.
However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material
misstatement or loss.
The going concern basis has been adopted in preparing the financial statements. The Directors have no reason to believe that
the entity 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 entity.
The external auditors are responsible for independently reviewing and reporting on the entity's financial statements.
The financial statements have been examined by the entity's external auditors and their report is presented on pages 66 to 67.
The financial statements set out on pages 68 to 88 were approved by the Board of PPECB on 20 May 2010 and are signed
on their behalf by:
E Alexander S E Mokoene
Chairperson of the Board Vice Chairperson
statement of responsibilityby the board of PPECB
PPECB | annual report | 2009 - 201066
INDEPENDENT AUDITOR’S REPORT TO PARLIAMENT AND THE MEMBERS OF THE BOARD OF THEPERISHABLE PRODUCTS EXPORT CONTROL BOARD FOR THE YEAR ENDED 31 MARCH 2010
REPORT ON THE FINANCIAL STATEMENTS
IntroductionWe have audited the accompanying financial statements of the Perishable Products Export Control Board, which comprise
the statement of financial position as at 31 March 2010, and the statement of financial performance, statement of changes
in net assets and cash flow statement for the year then ended, and a summary of significant accounting policies and other
explanatory information, and the accounting authority’s report, as set out on pages 68 to 88.
Accounting Authority’s responsibility for the Financial StatementsThe accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with
South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and in the manner required by
the Public Finance Management Act of South Africa. 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
accordance 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 misstatements.
An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors judgement, including the assessment of the risk of material misstatement
of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the Board'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 Board'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 audit opinion.
OpinionIn our opinion, these financial statements present fairly, in all material respects, the financial position of the Perishable Products
Export Control Board as at 31 March 2010, and its financial performance and its cash flows for the year then ended in
accordance with the Standards of GRAP and in the manner required by the Public Finance Management Act of South Africa.
independent auditor’s report
PPECB | annual report | 2009 - 2010 67
Other MattersWithout qualifying our opinion, we draw attention to the fact that supplementary information set out on page 89 does not
form part of the annual financial statements and is presented as additional information. We have not audited this schedule
and, accordingly, we do not express an opinion thereon.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In terms of the Public Audit Act of South Africa and General notice 1570 of 2009, issued in Government Gazette No. 32758
of 27 November 2009 we include below our findings on the report on predetermined objectives, compliance with the PFMA
and financial management (internal control).
FindingsPredetermined objectives
There are no significant findings to report.
Compliance with laws and regulations
No material issues were noted relating to legal compliance during the audit.
INTERNAL CONTROL
We considered internal control relevant to our audit of the financial statements and the report on predetermined objectives
and compliance with the PFMA, but not for the purposes of expressing an opinion on the effectiveness of internal control.
No material deficiencies were identified relating to internal control during the audit.
PriceWaterhouseCoopers Inc
Director: JM Calitz
Registered Auditor
Cape Town
28 May 2010
PPECB | annual report | 2009 - 201068
IntroductionThe Board of Directors has pleasure in presenting its report
and the audited financial statements of the Perishable
Products Export Control Board (The Board) for the year ended
31 March 2010.
OwnershipThe Perishable Products Export Control Board is a statutory
entity and is listed as a Schedule 3A, national public entity
in South Africa. It is accountable to the Minister of Agriculture,
Forestry and Fisheries.
Principle ActivitiesThe Board conducts its business by bringing about the orderly
and efficient export of perishable products from the Republic
of South Africa, in terms of the Perishable Products Export
Control Act 9 of 1983. It also operates as an assignee for
the Department of Agriculture, Forestry and Fisheries under
the requirements of the Agricultural Product Standards Act
119 of 1990. PPECB was established in 1926.
PPECB BoardThe present members of the PPECB Board are:
Mrs E Alexander Deciduous Industry Representative
(Chairperson)
Mr S E Mokoene Organised Agriculture Representative
(Vice Chairperson)
Mr CA Atkins Fishing Industry Representative
Mr HP Booysen Observer
Ms MC Sixolo Vegetable Industry Representative
Ms CH Engelbrecht Citrus Industry Representative
Mr AM Hawes Ministerial Representative
Mr A Rabe Deciduous Industry Representative
Mr L Vorster Subtropical Industry Representative
Ms BM Mannya Observer
Financial ResultsThe financial results of the Board are set out in the attached
financial statements.
Going ConcernThe financial statements have been prepared on the basis
of accounting policies applicable to a going concern as the
entity had a reserve fund of R77,914,814. This basis presumes
that funds will be available to finance future operations and
that the realisation of assets and settlement of liabilities,
contingent obligations and commitments will occur in the
ordinary course of business
Events Subsequent to Balance Sheet DateNo matter which is material to the financial affairs of the
Board has occurred between the balance sheet date and the
date of approval of the financial statements.
Compliance with LegislationThe Department of Agriculture is in the process of reviewing
the Perishable Products Export Control Act 9 of 1983 and
Agriculture Products Standard Act 119 of 1990.
Sections 51 and 55 of the PFMA impose certain obligations
on the Board and these relate to the prevention, identification
and reporting of all fruitless, wasteful and irregular expenditure
and collection of all revenue. In order to comply with these
obligations, the Board of Directors has prepared a materiality
framework.
The Directors believe that the Board has, during the year,
complied, in all material respects, with all legislation and
regulations applicable to it, including without limitation, the
Public Finance Management Act, 1 of 1999, the Treasury
Regulations and the Income Tax Act, 58 of 1962.
AuditorsAt a Board meeting held on 21 May 2009, PriceWaterhouse-
Coopers were reappointed as external auditors of the Board.
The Board's internal audit is outsourced to KPMG.
Company SecretaryThe Board's Secretary is Ms Adela Fortune.
directors’ report
PPECB | annual report | 2009 - 2010 69
Remuneration Report
Board of Directors
The Directors of the Board are appointed by the Minister of Agriculture, Forestry and Fisheries for a 3 year term. Fees paid to
the Directors vary based on their appointments to the various committees of the Board. Fees paid to the Directors serving
on the Board of Directors as at 31 March 2010 are:
Executive Management Members
All senior executives of the Board are employed on a full-time basis. Remuneration paid to Executives in service of the Board
on 31 March 2010 are:
A performance bonus was paid to the employees of PPECB according to the principles as approved by the Board of Directors
in March 2010. This bonus payment related to the 2010 financial year. The amount that was allocated to the Executive
Management members totalled to R379,372. The bonus payment is not included in the amounts above.
20092010Other
Payments
Mrs E AlexanderChairperson
145,976145,42438,677106,747
Mr SE MokoeneVice Chairperson
60,02266,6304,22762,403
Mr CA Atkins 121,239109,95935,77274,187
Mr HP Booysen 84,08684,438-84,438
Ms MC Sixolo 50,15844,8782,88041,998
Ms CH Engelbrecht 57,33647,10812,94834,160
Mr AM Hawes 8,131---
Mr A Rabe 110,873121,6633,065118,598
Mr LL Vorster 124,21098,78030,46068,320
44,579Ms BM Mannya 49,1677,16941,998
806,610768,047135,198632,849
Fees
2009Salary
RetirementBenefit FundContribution
AllowancePaid
OtherPayments 2010
Mr L Mabombo 1,745,2571,325,729 223,908130,000 - 1,679,637
Mr D Martin 1,018,610458,572 51,189420,000 28,791 958,552
Dr G Bruwer 1,776,493- -- - -
Mr JA Schwiebus 1,221,604886,638 164,95680,000 20,637 1,152,231
Mr Z Makhaye 571,086709,643 79,21612,000 35,721 836,580
Ms A Fortune 767,050515,166 57,507250,000 339 823,012
7,100,1003,895,748 576,776892,000 85,488 5,450,012
PPECB | annual report | 2009 - 201070
statement of changes in net assets
2009RNotes
2010R
At beginning of year --
Surplus for the year 17,358,32719,540,448
Transfer to self-insurance reserve (530,000)(530,000)
Transfer from / (to) asset replacement fund (1,122,958)-
Transfer of reserve realised on disposal of property --
Transfer from revaluation reserve on revaluation of property --
Transfer to reserve fund (15,705,369)(19,010,448)
At end of year --
Surplus levy for disposal in terms ofSection 18(8) and (9) of Act No 9 of 1983
At beginning of year 43,198,99758,904,366
Transfer from surplus levy for disposal in termsof Section 18(8) and (9) of Act No of 1983
15,705,36919,010,448
At end of year 58,904,36677,914,814
Reserve fund
At beginning of year 3,160,0003,690,000
Excess paid on insurance claim --
Transfer from surplus levy for disposal in termsof Section 18(8) and (9) of Act No of 1983
530,000530,000
At end of year 3,690,0004,220,000
Self-insurance reserve 2
At beginning of year 4,459,1135,582,071
Transfer from surplus levy for disposal in termsof Section 18(8) and (9) of Act No of 1983
1,122,958-
At end of year 3,690,0004,220,000
Asset replacement fund 2
At beginning of year 9,791,2639,791,263
Revaluation of property --
Transfer to suplus levy on revaluation of property --
Realised on disposal of property --
At end of year 9,791,2639,791,263
Revaluation reserve 2
The Board applied to the Minister of Agriculture, Forestry and Fisheries on 16 January 2009 for approval to increase the reserve
fund level to R75,000,000 with effect from 31 March 2008 and to be adjusted annually thereafter by the annual CPIX as
announced by SA Statistics. Based on above, the reserve level at 31 March 2010 will be R85,305,150. The current level of
reserve fund, which was approved by the minister in October 2004, is R46,306,834.
Net Assets
PPECB | annual report | 2009 - 2010 71
2009RAssets
Non-Current assets
Property, plant and equipment 16,640,086
16,640,086
Current assets
Financial assets - Held to maturity 46,369,940
Trade and other receivables 20,803,416
Cash and cash equivalents 25,182,127
Notes
5
6
7
8
92,355,483
Total assets 108,995,569
2010R
15,661,750
15,661,750
63,550,366
19,596,690
23,127,096
106,274,152
121,935,902
2009RLiabilities Notes
2010R
Current liabilities
Trade and other payables 21,656,66523,319,3239
Receiver of Revenue 912,984991,667
Provisions 8,458,220116,76410
31,027,86924,427,754
Total equity and liabilities 108,995,569121,935,902
2009RNet Assets Notes
2010R
Reserves
Reserve fund 58,904,36677,914,814
Self - insurance reserve 3,690,0004,220,000
Asset replacement fund 5,582,0715,582,071
Revaluation reserve 9,791,2639,791,263
77,967,70097,508,148Net assets
statement of financial position
PPECB | annual report | 2009 - 201072
2009RNotes
2010R
Cash flow from Operating Activities 21,145,99316,008,389
Cash and Equivalents at End of Year 25,182,12723,127,0968
Net cash generated by operations 14,923,44910,715,34517
Interest received 6,239,1425,311,586
Interest paid (16,598)(18,542)
Cash Flow from Investment Activities (22,235,923)(18,063,420)
Financing activities --
Increase in Cash and Equivalents (1,089,930)(2,055,031)
Cash and Equivalents at Beginning of Year 26,272,05725,182,127
Purchase of property, vehicles and equipment (4,057,474(1,069,654)
Proceeds on disposal of property, vehicles and equipment 1,517186,660
Increase in investments held to maturity (18,179,966)(17,180,426)
cash flow statement
2009RNotes
2010R
Finance cost (16,598)14 (18,542)
Revenue 134,880,02511 145,405,530
Other income 7,843,81012 7,195,291
Employee compensation and benefits (89,884,988)13, 18 (93,226,892)
Operating expenses (35,463,922)13 (39,814,939)
17,374,92519,558,990Operating surplus
Surplus for the year 17,358,32719,540,448
statement of financial performance
PPECB | annual report | 2009 - 2010 73
1 General InformationPPECB (The Board) is a statutory organisation which conducts
its business in terms of the Perishable Products Export Control
Act 9 of 1983. The Board also operates as an assignee for
the Department of Agriculture, Forestry and Fisheries under
the requirements of the Agricultural Product Standards Act
119 of 1990.
PPECB is a Section 3A Public Entity in terms of the Public
Finance Management Act of 1999. The registered office is
45 Silverboom Avenue, Plattekloof, Cape Town.
2 Summary of Significant Accounting PoliciesThe principal accounting policies applied in the preparation
of these financial statements are set out below. These policies
have been consistently applied to all the years presented,
unless otherwise stated.
2.1 Basis of Preparation
The financial statements have been prepared in accordance
with the effective South African Standards of Generally
Recognised Accounting Practices (GRAP) issued by the
Accounting Standards Board.
The financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
land and buildings, financial assets and financial liabilities
held at fair value.
The preparation of financial statements in conformity with
South African Standards of Generally Recognised Accounting
Practices (GRAP) requires the use of certain critical accounting
estimates. It also requires management to exercise its
judgement in the process applying its accounting policies.
The areas requiring a higher degree of judgement
or complexity or areas where assumptions and estimates
are significant to the financial statements are set out in
note 4.
a) Standards, amendments and interpretations effective in 2010.
GRAP 09, Revenue from exchange transactions
GRAP 13, Leases
GRAP 14, Events after the reporting date
GRAP 17, Property, plant and equipment
GRAP 19, Provisions, Contingent Liabilities and
Contingent Assets
IAS 32 (AC125), Financial instruments: Presentation -
amended
b) Standards, amendments and interpretations effective in
2010 but not relevant.
Certain new accounting standards, interpretations and
amendments have been published that are mandatory for
accounting periods beginning on or after 1 April 2009 or later
periods but which the Board has not adopted. None of these
new standards, interpretations and amendments, as set out
below, are deemed relevant to the Board's operations.
GRAP 04, The Effects of changes in Foreign Exchange Rates
GRAP 05, Borrowing costs
GRAP 06, Consolidated financial statements
GRAP 07, Investment in associates
GRAP 08, Interest in joint ventures
GRAP 10, Financial Reporting in Hyperinflationary Economies
GRAP 11, Construction Contracts
GRAP 12, Inventories
GRAP 16, Investment property
GRAP 100, Non-current assets held for sale and
discontinued operations
GRAP 101, Agriculture
GRAP 102, Intangible Assets
IFRIC 13, Customer Loyalty Programmes
IFRS 3, Business combinations - revised
IFRS 6, Exploration for and Evaluation of Mineral Resources
IAS 12 (AC 102), Income Taxes
notes to the financial statements
PPECB | annual report | 2009 - 201074
c) Standards, interpretations and amendments to published
standards that are not yet effective.
Certain new standards, amendments and interpretations to
existing standards have been published that are mandatory
for the Board’s accounting periods beginning on or after 1
April 2010 or later periods but which the Board has not early
adopted, as follows:
GRAP 18, Segment reporting
GRAP 21, Impairment of non-cash-generating assets
GRAP 23, Revenue form non exchange transactions
GRAP 24, Budget information
GRAP 25, Employee benefits
GRAP 26, Impairment of cash generating assets
GRAP 104, Financial instruments
IAS 17 (AC 105), Leases
IAS 27 (AC 132) Revised, Consolidated and Separate
Financial Statements ( effective July 2009)
IFRS 3 Revised, Business Combinations
(effective July 2009)
IFRIC 17 (AC 446), Distribution of non cash assets to owners
IFRIC 18 (AC 451), Transfer of assets from customers
Management have considered the above and concluded that
it will not have a material effect on the Board's results. This
will be reassessed in the future.
2.2 Property, Equipment and Vehicles
Land and building comprise mainly office buildings. Freehold
land and buildings are shown at fair value, based on valuations
by external independent valuers every three years, less
subsequent depreciation for buildings. Any accumulated
depreciation at the date of revaluation is eliminated against
the gross carrying amount of the asset, and the net amount
is restated to the revalued amount of the asset. All other
property and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Board and the cost of the item can
be measured reliably. All other repairs and maintenance are
charged to the statement of financial performance during
the financial period in which they are incurred.
Increases in carrying value arising on revaluation are credited
directly to revaluation reserve. Decreases that offset previous
increases of the same asset are charged against revaluation
reserve directly in equity; all other decreases are charged to
the statement of financial performance.
Land is not depreciated. Depreciation on other assets is
calculated using the straight-line method to allocate their
cost or revalued amounts to their residual values over their
estimated useful lives. The useful lives are approximately:
Buildings 50 years
Furniture and equipment 3 - 10 years
Technical equipment 3 - 8 years
Motor vehicles 5 years
Computer equipment 3 - 7 years
Costs associated with developing or maintaining computer
software programmes are recognised as an expense as
incurred. Minor assets of R5 000 or less are charged to the
statement of financial performance in full as an expenditure
in the year purchased.
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date. An asset’s
carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in the
statement of financial performance. When revalued assets
are sold, the amounts included in revaluation reserve are
transferred to reserve funds.
2.3 Impairment of Non-financial Assets
Assets that have an indefinite useful life, such as land, are
not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value may not be
recoverable. An impairment loss is recognised for the amount
by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of the
asset's fair value less costs to sell and value in use. For the
purpose of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash
flows. Non-financial assets that suffered an impairment are
reviewed for possible reversal of the impairment at each
reporting date.
PPECB | annual report | 2009 - 2010 75
2.4 Financial Instruments
Financial instruments carried on the balance sheet include
investments, cash and bank balances, receivables, trade
creditors and borrowings. The particular recognition methods
adopted are disclosed in the individual policy statements
associated with each item. The directors are of the opinion
that the carrying value of financial instruments approximates
fair value.
2.5 Financial Assets
The Board classifies its financial assets as held to maturity.
Management determines the classification of financial assets
at initial recognition.
This applies to investments where there are fixed or
determinable payments and fixed maturity dates and the
Board has the positive intent and ability to keep the
investments until maturity. These investments are measured
and recognised at amortised costs with interest-income
recognised in the statement of financial performance.
Assets in this category are classified as current assets if they
are expected to be realised within 12 months of the balance
sheet date.
The Board assesses at each balance sheet date whether there
is objective evidence that a financial asset or a group of
financial assets is impaired. If any such evidence exists for
available-for-sale financial assets, the cumulative loss – measured
as the difference between the acquisition cost and the current
fair value, less any impairment loss on that financial asset
previously recognised in profit or loss – is removed from equity
and recognised in the statement of financial performance.
2.6 Trade and Other 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 evidence that the Board will not be able to collect
all amounts due according to the original terms of receivables.
Significant financial difficulties of the debtor, probability that
the debtor will enter bankruptcy or financial reorganisation,
and default or delinquency in payments are considered
indicators that the trade receivable is impaired. 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 original effective interest rate.
The carrying amount of the asset is reduced through the use
of an allowance account and the amount of the loss is
recognised in the statement of financial performance. When
a trade receivable is uncollectible, it is written off against
the allowance account for trade receivables. Subsequent
recoveries of the amounts previously written off are credited
in the statement of financial performance.
2.7 Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand and deposits
held at call with banks and bank overdrafts. Bank overdrafts
are shown within borrowings in current liabilities on the
balance sheet.
2.8 Trade Payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
2.9 Provisions
A provision is recognised in the balance sheet when the
Board has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation.
If the effect is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value
of money and, where appropriate, the risks specific to the
liability. Provisions are reviewed at each balance sheet date
and adjusted to reflect the current best estimate.
2.10 Reserves
i) Self-insurance reserve:
A self-insurance fund was established to manage the
uninsured risks of the Board.
ii) Asset replacement fund:
This reserve was established to provide for the replacement
of computer and technical equipment.
iii) Revaluation reserve:
This reserve was established due to surpluses that were
generated on the revaluation of land and buildings.
2.11 Revenue Recognition
Revenue comprises the fair value of the consideration received
or receivable for the sale of services in the ordinary course
PPECB | annual report | 2009 - 201076
of the Board's activities. Revenue is recognised in the
accounting period in which the services are rendered, net
of Value Added Tax.
Revenue is recognised when the amount of revenue can be
reliably measured and it is probable that future economic
benefits will flow to the Board. The amount of revenue is
not considered to be reliably measurable until all contingencies
relating to the delivery of service have been resolved. The
Board bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction
and the specifics of each arrangement.
Interest income is recognised on a time proportion basis
using the effective interest method. When a receivable is
impaired the Board reduces the carrying amount to its
recoverable amount being the future estimated cash flow
discounted at the original effective interest rate of the
instrument. Interest income on impaired loans is recognised
using the original effective interest rate.
2.12 Offsetting
If the Board undertakes, in the course of its ordinary activities,
transactions that do not generate revenue but are incidental
to its main revenue-generating activities, the results of such
transactions are presented by netting any income with related
expenses arising on the same transaction, when this presentation
reflects the substance of the transaction or other event.
2.13 Leases
Leases of assets in which a significant portion of the risks
and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating
leases are charged to the statement of financial performance
on a straight-line basis over the period of the lease.
2.14 Retirement Benefits
The Board’s contributions to the defined contribution plans
are charged to the statement of financial performance in
the year to which they relate.
3 Financial Risk Management3.1 Financial Risk Factors
The Board's activities expose it to a variety of financial risks:
market risk (including currency risk, fair value interest rate
risk, cash flow interest rate risk and price risk), credit risk
and liquidity risk.
The Board acknowledges its responsibility for establishing
and communicating appropriate risk and control policies and
ensuring that adequate risk management processes are in
place. The Audit Committee is in place to assist the Board
in discharging its risk management obligations.
The principal objectives of risk management are to:
The Board's risk management processes, of which the systems
of internal, financial and operating controls are an integral
part, are designed to control and monitor risk throughout
the Board. For effectiveness, these processes rely on regular
communication, sound judgement and a thorough knowledge
of statutory and operational activities. Management is tasked
with integrating the management of risk into the day-to-
day activities of the Board.
Market Risk
(i) Foreign currency risk
Foreign exchange risk arises when future commercial
transactions or recognised assets or liabilities are denominated
in a currency that is not the entity’s functional currency.
Foreign currency risk is created due to the influence of
exchange rate fluctuations.
The Board has a policy not to take out cover on outstanding
foreign currency transactions due to the fact that these take
place on an ad hoc basis.
At balance sheet date, the Board had no financial assets
held in foreign denominated currencies.
ii) Cash flow and fair value interest rate risk
The Board's interest rate risk arises from investments held
Review the Board's risk philosophy, strategy, policies
and processes recommended by senior management;
Review compliance with risk policies and with the
overall risk profile of the Board;
Review and assess the integrity of the process and
procedures for identifying, assessing, recording and
monitoring of risk;
Review the adequacy and effectiveness of the Board's
risk management function and its implementation by
management;
Ensure that material risks have been identified, assessed
and receive attention.
PPECB | annual report | 2009 - 2010 77
to maturity as well as from cash and equivalents. The Board's
policy is to maintain its investments across a range of high-
credit-quality financial institutions. Interest rate exposure
and investment allocations are evaluated by management
on a regular basis.
This risk is managed by maintaining an appropriate mix of
investments with registered financial institutions. Interest
bearing investments are held with reputable financial
institutions in order to minimise exposure.
The sensitivity of the Board's cash flow to a change of 100
basis points in interest rates for variable rate instruments at
the reporting date would have impacted net results by R0,87
million (2009: R0,72 million). This analysis assumes that all
other variables remain constant.
Credit Risk
Credit risk is managed on an entity's basis. Credit risk arises
from cash and cash equivalents and deposits with banks and
financial institutions, as well as credit exposures to customers,
including outstanding receivables and committed transactions.
The Board only banks with major financial institutions of
high credit standing.
The table below shows the credit ratings and balances of
the financial institutions in which the Board held deposits at
balance sheet date:
Measures taken by the Board to limit credit risk to acceptable
levels include, inter alia, assesses the credit quality of the
customer taking into account its financial position, past
experience and other factors, the application of standard
credit acceptance procedures to assess potential clients, daily
monitoring of collectible balances at both branch and head
office level and the suspension of services to accounts which
exceed the Board's payment terms.
The table below shows the balances of the major counter-
parties at the balance sheet date:
Standard Bank
Rand Merchant Bank
Nedbank
ABSA
Financial Institutions2010
R2009
RFitch
Credit Rating
AA
AA+
AA
AAA
23,127,096
19,744,517
28,093,406
15,712,443
25,182,127
14,066,931
22,103,516
10,199,493
86,677,463 71,552,067
Account holders with amounts above R500 000 at balance sheet date:
Customer A
Customer B
Customer C
Customer D
2010R
2009R
CreditLimit
3,000,000
2,500,000
1,550,000
650,000
834,788
1,206,158
474,791
540,449
894,683
561,055
1,534,423
374,962
3,056,186 2,990,1617,700,000
The carrying amounts of financial assets included in the balance sheet represent the Board's exposure to credit risk in relation
to these assets. Management does not expect any losses from non-performance by these counterparties.
PPECB | annual report | 2009 - 201078
The Board's exposure to concentrated credit risk is low due
to the large number of customers and their dispersion across
different geographical areas and product sectors. The
dispersion of our income per product sector from statutory
levies is:
Citrus fruit
Grapes
Pome fruit
Stone fruit
Subtropical fruit
Vegetables
Flowers and bulbs
Canned products
Other products
2010 2009
39%
20%
19%
5%
2%
1%
1%
1%
12%
41%
20%
19%
5%
3%
1%
1%
1%
9%
100% 100%
Liquidity Risk
Prudent liquidity risk management implies maintaining
sufficient cash reserves. Due to the dynamic nature of
operational activities, the Board aims to be conservative in
funding by keeping committed cash reserves available.
The table below analyses the Board's financial liabilities into
relevant maturity groupings based on the remaining period
at the balance sheet to the contractual maturity date. The
amounts disclosed in the table are the contractual
undiscounted cash flow. Balances due within 12 months
equal their carrying balances as the impact of discounting
is not significant.
1 Year
2 to 5 Years
Over 5 Years
2010R
2009R
23,319,323
-
-
21,656,665
-
-
23,319,323 21,656,665
Trade andOther Payables
Closing balance
for period
3.2 Capital Risk Management
Capital is regarded as total reserves which is a result of
accumulated surpluses. The Board strive to maintain a
sufficient reserve as to sustain it's statutory obligations. The
level of the reserves are dependant on the approval of the
Minister of the Department of Agriculture, Forestry and
Fisheries as mentioned in the Statement of Changes in Net
Assets on page 70.
3.3 Fair Value Estimation
The carrying value less impairment provision of trade
receivables and payables are assumed to approximate their
fair values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is available
to the Board for similar financial instruments.
The Directors are of the opinion that the carrying value of
financial instruments approximates fair value.
4 Critical Accounting Estimates and JudgementsEstimates and judgements are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be
reasonable under the circumstances.
The Board makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities
within the next financial year. These estimates relate to the
provision for bad debts.
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques.
The Board uses its judgment to select a variety of methods
and make assumptions that are mainly based on market
conditions existing at each balance sheet date. The asset
replacement reserve balance estimate has been adjusted by
the difference in the dollar foreign exchange and the
production price index for the year ended March 2009 for
imported appliances and instruments for measuring, checking
and testing activities.
5 Property, Equipment and Vehicles5.1 Land and Buildings
Book value as at 1 April
Cost
Accumulated surpluses on revaluation of land and buildings
Accumulated depreciation
Additions in the year
Revaluation of land and buildings
Cost
Accumulated depreciation
2010R
2009R
9,518,981
2,000,679
7,644,321
(126,019)
-
-
-
-
9,608,788
2,000,679
7,644,321
(36,212)
-
-
-
-
15,661,750 16,640,086Property, equipment and vehicles
12,219,634 12,356,475Land and buildings
9,429,174 9,518,981Cape Town - Erf 19927, Parow
with office building thereon
Cost
Accumulated surpluses on revaluation of land and buildings
Accumulated depreciation
Depreciation for the year
Book value as at 31 March
(89,807) (89,807)
9,429,174 9,518,981
2,000,679
7,644,321
(215,826)
2,000,679
7,644,321
(126,019)
The property was revalued by BM Hofmeyr, a registered valuer as at 31 December 2007. Valuations were made on the basis
of recent market transactions, rentals of similar properties in the area and an insurance valuation of the property.
PPECB | annual report | 2009 - 201080
The property was revalued by C Hearn, a registered valuer as at 1 January 2008. Valuations were made on the basis of recent
market transactions, rentals of similar properties in the area and an insurance valuation of the property.
Book value as at 1 April
Cost
Accumulated surpluses on revaluation of land and buildings
Accumulated depreciation
Additions in the year
Revaluation of land and buildings
Cost
Accumulated depreciation
2010R
2009R
2,837,494
753,058
2,146,942
(62,506)
-
-
-
-
2,884,528
753,058
2,146,942
(15,472)
-
-
-
-
2,790,460 2,837,494Durban - Portion 1 of Erf 1736, Wentworth
with office building thereon
Cost
Accumulated surpluses on revaluation of land and buildings
Accumulated depreciation
Depreciation for the year
Book value as at 31 March
(47,034) (47,034)
753,058
2,146,942
(109,540)
753,058
2,146,942
(62,506)
2,790,460 2,837,494
5.2 Motor Vehicles
Book value as at 1 April
Cost
Less: Accumulated depreciation
Disposal in the year
Cost
Less: Accumulated depreciation
2010R
2009R
326
103,454
(103,128)
-
(1,754)
1,754
24,310
103,454
(79,144)
-
-
-
- 326Motor vehicles
Cost
Less: Accumulated depreciation
Depreciation for the year
Book value as at 31 March
(326) (23,984)
- 326
101,700
(101,700)
103,454
(103,128)
PPECB | annual report | 2009 - 2010 81
5.3 Furniture and Equipment
Book value as at 1 April
Cost
Less: Accumulated depreciation
Additions in the year
Disposal in the year
Cost
Less: Accumulated depreciation
2010R
2009R
595,071
2,696,484
(2,101,413)
442,022
(8,716)
(88,672)
79,956
437,051
2,370,014
(1,932,963)
326,470
-
-
-
692,893 595,071Furniture and equipment
Cost
Less: Accumulated depreciation
Depreciation for the year
Book value as at 31 March
(335,484) (168,450)
3,049,834
(2,356,941)
2,696,484
(2,101,413)
692,893 595,071
5.4 Technical Equipment
Book value as at 1 April
Cost
Less: Accumulated depreciation
Additions in the year
Disposal in the year
Cost
Less: Accumulated depreciation
2010R
2009R
3,688,214
14,560,806
(10,872,592)
627,632
(160,199)
(6,302,274)
6,142,075
464,446
10,829,811
(10,365,365)
3,731,004
(8)
(8)
-
2,749,222 3,688,214Technical equipment
Cost
Less: Accumulated depreciation
Depreciation for the year
Book value as at 31 March
(1,406,424) (507,228)
8,886,164
(6,136,941)
14,560,806
(10,872,592)
2,749,222 3,688,214
PPECB | annual report | 2009 - 201082
5.5 Temporary Idle Assets and Assets held for Disposal
Land and buildings
Motor vehicles
Furniture and equipment
Technical equipment
2010R
2009R
-
-
-
-
-
-
-
-
- -
5.6 Cost of Assets with Zero Book Value
Land and buildings
Motor vehicles
Furniture and equipment
Technical equipment
2010R
2009R
-
101,700
390,587
4,094,538
-
1,754
479,288
10,127,643
4,586,825 10,608,685
6 Financial Assets Held to Maturity
Rand Merchant Bank
Nedbank
ABSA
2010R
2009R
19,744,517
28,093,406
15,712,443
14,066,931
22,103,516
10,199,493
63,550,366 46,369,940
7 Trade and Other Receivables
Trade debtors
Provision for impairment of receivables
Sundry debtors
Provision for loss on amounts receivable
2010R
2009R
19,578,370
(218,466)
19,359,904
430,570
(193,784)
20,864,888
(302,592)
20,562,296
434,904
(193,784)
19,596,690 20,803,416
PPECB | annual report | 2009 - 2010 83
As of 31 March 2010, trade receivables of R16,8 million (2009: R19,4 million) were fully performing.
Trade receivables that are less than 30 days past due are not considered impaired. As of 31 March 2010, trade receivables of
R483 663 (2009: R877,392) were past due but not impaired. These relate to a number of independent customers for whom
there is no recent history of default. The ageing analysis of these trade receivables is as follows:
Less than one year
Between one and three years
Greater than three years
2010R
2009R
183,487
34,060
919
158,143
114,015
30,434
218,466 302,592At 31 March
Between 30 and 60 days after statement
Greater than 60 days after statement
2010R
2009R
436,830
46,833
292,185
585,207
483,663 877,392
As of 31 March 2010, trade receivables of R218,466 (2009: R302,592) were impaired and provided for. The individually
impaired receivables mainly relate to producers and exporters, who are in unexpectedly difficult economic situations.
The ageing of these receivables is as follows:
Movements on the provision for impairment of trade receivables are as follows:
At 1 April
Provision for receivable impairment
Bad debt written off
Unused amounts reversed
2010R
2009R
302,592
218,466
(208,945)
(93,647)
213,663
302,592
-
(213,663)
218,466 302,592At 31 March
PPECB | annual report | 2009 - 201084
Cash at bank and in hand
SA PIP - Current and Call Account (Note 9)
2010R
2009R
18,374,499
4,752,597
21,250,122
3,932,005
23,127,096 25,182,127
8 Cash and Cash Equivalents
The SA PIP balance above is not available for use by the PPECB as it relates to a bank account held by PPECB on behalf of
SA PIP. PPECB is not permitted to use the funds for their own purpose.
For the purpose of the cash flow statement, the cash and cash equivalents comprise the following;
Cash and cash equivalents
2010R
2009R
23,127,096 25,182,127
23,127,096 25,182,127
The effective interest rate is between 0,1% and 7,55%.
Accrued expenses
SA PIP Project Funds (note 8)
External Audit Fees
Internal Audit Fees
Agricultural product samples
Workmen's compensation
Debtor deposits
2010R
2009R
14,315,027
4,752,597
307,237
158,875
122,101
349,996
3,313,490
13,979,226
3,932,005
314,890
187,517
82,410
291,811
2,868,806
23,319,323 21,656,665
9 Trade and Other Payables
PPECB | annual report | 2009 - 2010 85
10 Provisions
At 1 April
Provision for performance bonus
Used during the year
Provision for performance bonus reversed
Provision for performance bonus utilised
2010R
2009R
8,458,220
116,764
(8,458,220)
3,389,811
5,068,409
1,188,244
8,458,220
(1,188,244)
-
(1,188,244)
The provision
At 31 March
Provision for performance bonus
116,764 8,458,220
- -
116,764 8,458,220
The performance bonus payout is subject to approval by the Board. For the 2010 financial year, the Board approved the
performance bonus, prior to year end. The performance bonus was paid in March 2010. The provision above relates to the
CEO's performance bonus which was paid subsequent to the financial year end.
Agricultural product standards levies
Perishable products export levies
Container inspections
Ancillary services
Other services
2010R
2009R
94,103,830
33,672,528
2,725,006
11,665,989
3,238,177
89,299,614
29,215,435
2,686,094
10,729,810
2,949,072
145,405,530 134,880,025
11 Revenue
Interest received
Training and development
Profit on disposal of fixed assets
2010R
2009R
5,311,586
1,865,960
17,745
6,239,142
1,603,159
1,509
7,195,291 7,843,810
12 Other Income
PPECB | annual report | 2009 - 201086
Employee expenses
Operational activity expenses
Computer expenses
Office occupancy expenses
Administrative expenses
Depreciation
Corporate identity and stakeholder communication
Rental and lease expenses
External audit fees
Current year
Prior year under provision
Other services
Legal fees
2010R
2009R
93,226,892
23,958,961
4,008,140
3,461,613
1,966,240
1,879,075
1,663,266
2,428,992
366,060
352,260
23
13,777
82,592
89,884,988
21,286,870
4,246,023
3,002,762
2,123,887
836,503
1,153,442
2,188,766
396,590
314,890
27,400
54,300
229,079
133,041,831 125,348,910
13 Expenses by Nature
Finance charge
2010R
2009R
18,542 15,598
14 Finance Costs
15 TaxNo provision for tax has been made as the Board is not subject to normal income tax. Refer Income Tax Act (Act 58 of 1962),
Chapter 2, Part 1, Section 10,(1) ,(cA), (i),(bb)
16 CommitmentsCapital Commitments
No contractual commitments for future capital expenditure were made.
Operating Lease Commitments
The future minimum lease payments under non-cancellable operating leases are as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
2010R
2009R
1,704,254
2,045,667
-
2,027,252
880,363
614,144
3,749,921 3,521,759
PPECB | annual report | 2009 - 2010 87
17 Reconciliation of Surplus for the Year
Net surplus for the year
Adjusted for:
Depreciation
Interest received
Interest paid
Loss / (Profit) on disposal of fixed assets
Cash inflow before changes in working capital
Changes in working capital
Decrease in accounts receivable
Increase in accounts payable and provisions
2010R
2009R
19,540,448
1,879,075
(5,311,586)
18,542
(17,745)
16,108,734
(5,393,389)
1,206,726
(6,600,115)
17,358,327
836,503
(6,239,142)
16,598
(1,509)
11,970,777
2,952,672
(5,019,848)
7,972,520
10,715,345 14,923,449Net cash generated by operations
Salaries and wages
Defined contribution costs - retirement fund
2010R
2009R
84,909,656
8,317,236
82,469,772
7,415,216
93,226,892 89,884,988
18 Employee Compensation and Benefits
19 Related Party TransactionRelated party transactions are for services rendered and outstanding balances arising from these services.
Some of the directors of PPECB serve on the boards of companies that have statutory arms length transactions with PPECB
of R2,513,925 (2009: R3,986,767) and are outstanding debtors of R245,927 (2009: R212,809) within the normal terms.
Directors' emoluments
Chairperson of the Board
Board members
Travelling reimbursements
2010R
2009R
768,047
106,747
526,102
135,198
806,610
114,536
541,809
150,265
6,218,059 7,906,710
Key management compensation
Salaries
Defined contribution towards retirement fund
5,450,012
4,873,236
576,776
7,100,100
6,529,851
570,249
PPECB | annual report | 2009 - 201088
Revenue and other income is R7,677,038 above budget. The budget was mainly based on volume estimates received from
the various industry bodies at budget time. Actual volumes inspected and exported during the year however exceeded industry
estimates resulting in higher than budgeted income.
Expenditure is R11,863,408 below budget due to the following main reasons:
Employee expenditure show a saving on budget due to higher than anticipated vacancies during the year.
Training expenditure show a saving on budget due to certain external training initiatives that were not implemented.
Operational expenditure show a saving on budget due to improved planning and efficiencies on staff placement resulting
in savings on travel, accommodation and S&T costs.
Computer expenses show a saving on budget due to the cancellation of certain license fees coupled to improved
efficiencies on network costs.
Depreciation cost is R789,335 over budget due to the majority of CAPEX purchases made early in the year as well as
an under provision in the budget.
20 Actual Income and Expenditure compared to Budgeted Income and ExpenditureThe budget for 2010 was approved by the Board of the PPECB on 5 March 2009.
Revenue and other income
2010 BudgetR
DifferenceR
144,923,783 7,677,038
2 19,540,446
144,923,781
96,605,528
8,746,366
24,851,540
5,232,441
3,303,087
2,913,030
1,089,740
2,083,049
99,000
-
(11,863,408)
(3,378,636)
(5,518,050)
(1,380,953)
(1,224,301)
(205,703)
(527,451)
789,335
(419,783)
(16,408)
18,542
2010 ActualR
152,600,821
Expenditure
Employee expenses
Training
Operational activity expenses
Computer expenses
Office rental and maintenance
Administrative expenses
Depreciation
Corporate identity and stakeholder
communication
Legal fees
Finance charge
133,060,373
93,226,892
3,228,316
23,470,587
4,008,140
3,097,384
2,385,579
1,879,075
1,663,266
82,592
18,542
19,540,448Surplus for the year
PPECB | annual report | 2009 - 2010 89
Revenue and other income
Agricultural product standards levies
Perishable products export levies
Container inspections
Value added services
Other services
Training and development
Interest on investments
Profit on disposal of fixed assets
2010 BudgetR
2009R
2010R
152,600,821
94,103,830
33,672,528
2,725,006
11,665,989
3,238,177
1,865,960
5,311,586
17,745
144,923,783
89,670,906
28,201,761
2,270,481
9,843,112
2,321,854
6,723,810
5,891,859
-
142,723,835
89,299,614
29,215,435
2,686,094
10,729,810
2,949,072
1,603,159
6,239,142
1,509
2 17,358,327
Expenditure
Administration expenses
Auditors remuneration
Computer expenditure
Consultation fees
Corporate identity and communication
Depreciation on historic cost
Directors' emoluments
Employee cost
Finance charges
Insurance
Laboratory expenses
Legal fees
License and affiliation fees
Movement in provision for bad debt
Office rental and maintenance
Overseas travelling
Publications and membership fees
Replacement of field equipment and consumables
Stationery
Telephone, fax and postage
Training
Travelling and subsistence
Water, electricity, rates and taxes
133,060,373
419,339
366,060
4,008,140
518,198
1,663,266
1,879,075
768,047
93,226,892
18,542
313,935
284,633
82,592
574,834
124,819
3,097,384
472,596
79,876
2,119,801
561,063
2,096,572
3,228,316
16,792,164
364,229
144,923,781
403,750
280,000
5,232,441
735,280
2,083,049
1,089,740
1,104,000
96,605,528
-
390,000
-
99,000
973,733
40,000
3,303,087
585,395
159,787
1,491,567
453,735
2,298,750
8,746,366
18,528,825
319,748
125,365,508
548,387
396,590
4,246,023
619,527
1,153,442
836,503
806,610
89,884,988
16,598
301,160
-
229,079
917,374
94,730
2,698,994
648,392
128,349
2,531,072
581,535
1,776,928
2,157,262
14,488,197
303,768
Surplus for the year 19,540,448
detailed statement of financial performance
unaudited
PPECB | annual report | 2009 - 201090
world cup tickets expenditure schedule
Tickets Acquired
2009 / 2010R’000
2008 / 2009R’000
2009 / 2010Quantity
- - -
- -
Distribution of Tickets
Clients/Stakeholders
Accounting Authority
Executive
Non-executive
Accounting Officer
Senior Management
Other employees
Family members of officials
Other Government entities
Audit Committee members
Other
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total - - -
Travel Costs
Clients/Stakeholders
Accounting Authority
Executive
Non-executive
Accounting Officer
Senior Management
Other employees
Family members of officials
Other Government entities
Audit Committee members
Other
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
unaudited
PPECB | annual report | 2009 - 2010 91
2009 / 2010R’000
2008 / 2009R’000
2009 / 2010Quantity
Purchase of Other World Cup Apparel
Corporate and world cup branded shirts 450 56 -
Total world cup expenditure 450 56 -
Tickets Acquired after Year End (30 June 2010)
2010Quantity
2010R’000
- -
Distribution of Tickets acquired after year end
Clients/Stakeholders
Accounting Authority
Executive
Non-executive
Accounting Officer
Senior Management
Other employees
Family members of officials
Other Government entities
Audit Committee members
Other
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total - -
PPECB | annual report | 2009 - 201092
Corporate Head Office:45 Silverboom Ave, Plattekloof, 7500
021 930 1134 | [email protected]
www.ppecb.com
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w.
.co.
za