3. PPECB Annual Report 2009-2010

our visionA Partner in Global Competitiveness of SouthAfrican Perishable Productsour missionTo build competitive capacity in our peopleand systems in Industries we serve in orderto instill world-wide confidence in SouthAfrican Perishable Products02PPECB | annual report | 2009 - 2010

contentsHighlights04Business Overview08Executive Overview14Sustainability Report34Operational Report44Corporate Governance54Financial Statements64PPECB | annual report | 2009 - 2010 03

highlightsfinancial highlightsFinancial ManagementNet 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-ownedEntities and 42% from Qualifying Small Enterprises and Exempted Micro Enterprises.04PPECB | annual report | 2009 - 2010

operational highlightsA new business strategy, incorporating Value Added Services andbalancing objectives of short term productivity and longerterm growth strategies was defined and accepted by the Board.PPECB entered into a number of significant business partnerships:JFPM for training and small scale farmer development.University of Stellenbosch for synergies in Cold ChainR&D, including technology transfer.NAMC for capacity building in the emerginghorticultural sector.SAAGA local market campaign preventing immatureavocados on South African local markets.Partnership formed with DAFF on inland Citrus BlackSpot inspections.Improved stakeholder relations:Networks established with 17 African countries leadingfrom the International Harmonization Workshop.Improved relations with international organizations suchas the United Nations Economic Commission (UNECE),Organization for Economic Development (OECD).Improved relationships with leading inspectoratesaround the globe, i.e KCB in Holland, HMI in the UK,BLE in Germany, etc.Continuation of sector specific stakeholdermanagement increased service delivery levels to thevarious industries.Significant projects:International Harmonization Workshop on CommercialQuality Standards of Fresh Fruit and Vegetables forCountries of Africa. (Africa Products StandardsWorkshop.)Alternative sampling methodology project.EDI.Employee Wellness Programme.New systems:The PPECB laboratory in Pretoria added to its capabilityby introducing Gas Chromatography to complementits already successful validated analysis using HPLCtechniques. The GC capability allows us to identify andquantify the amount of individual fatty acids present inan oil sample. It is the method of choice for theseanalyses because of convenience and sensitivity.The Harmonization Programme increased its consistencymeasures to include pome and stone fruit as well asthe Cold Chain. The programme was further enhancedby increasing the number of consistency measureswhich ties in with the programme’s strategic theme.As part of the capacity building trajectory of theorganization, the Harmonization Programme increasedits scope for accelerated skills transfer to include pomeand stone fruit, and developed a new programme foraccelerated skills transfer on grain and grain products.PPECB | annual report | 2009 - 2010 05

The PPECB Cold Chain monitoring function, coupledwith the integrated partnership management of cargotemperature between PPECB, Exporters and Lines haslead to a unique value added en route monitoringservice, one of a kind in the world of shipping.Alternative sampling methodology project – workcontinued on risk-based model.Support to innovation was provided within the ambitof our responsibilities. Due to successful trials we nowfind that new standards and the creation of certainshipping processes, like continuous 24 hour shipmentsto Japan and controlled ambient citrus loads incontainers, have become the norm.External capacity building saw the introduction ofcapacity building initiatives at packhouse level onproduct standards quality, with emerging farmers asthe main target market. Sessions were held in theEastern Cape, Western Cape, Mpumalanga, LimpopoProvince, Kwazulu Natal and in neighbouring countrySwaziland.Target Country and Target Region Codes wereintroduced in the deciduous and citrus industriesat intake level to ensure correct application ofphyto and quality standards, as well as improvedaccuracy of inspection statistics. These codes are alsobuilding blocks for the EDI project and will be rolledout in 2010 and 2011.Accreditations:ISO 22000 is a food safety management systemstandard that offers specific requirements whereby anorganization in the food chain needs to demonstrateits ability to control food safety hazards in order toensure that the food is safe at the time of humanconsumption. Thus addressing food safety aspectsthroughout the food chain. PPECB completed 2ISO 22000 audits in preparation for accreditation fromSANAS during 2010 and another 3 audits have beenconfirmed. Full accreditation is expected in November2010.06PPECB | annual report | 2009 - 2010

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usinessoverviewcontentsHistoric Timeline10Strategic Intent12Mandate12Business Model12Services13Operational Reach1308PPECB | annual report | 2009 - 2010

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Historic Timeline1926 - 2010192619271928192919301932193519371939194119471951The Perishable Products Export Control Boardis founded.Almost 4 million fruit trees are planted in commercialorchards.The number of citrus trees in South Africa reaches3 million.The PPECB enters into a shipping contract with theUnion Castle Shipping Company.The 2 million mark for the export of DeciduousFruit Exchange appoints Mr Martin Dykes as itsoverseas representative.Direct shipping to Sweden is introduced – now ourmost important market after U.K.All South African citrus are exported under thename “Outspan”.Dr A.J.M. Smith is appointed as the technical advisorof the PPECB.The development of pre-cooling tunnels.Export terminated due to World War II.Mr J.A. Gibson is appointed as Chairperson ofthe PPECB.First direct export to West Germany.195519571959196219681970197119721973197419751977The conference, Government officials and the PPECBsign a new Ocean Freight Agreement in Pretoria.Mr Danie Joubert is appointed as Chairperson ofthe PPECB.All boxboard is obtained locally for the first time.The PPECB appoints a planning committee, taskedto determine how the industry must deal withthe large amount of perishable produce availablefor export.The container terminal at Southampton comes intooperation.The use of woodwool in grape packing isdiscontinued.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 improvementorganisation (SAPO) is founded.A fire ravishes 15 pre-cooling tunnels at the PortElizabeth harbour.Official opening of the Conference Line’s containerservice on 1 July.10PPECB | annual report | 2009 - 2010

197819791981198219831986198819891990199119941997199820002001Cartons replace wooden boxes for grape exports.A composite carton for peaches and nectarines isintroduced.A label for export grape bunches is introduced.Exports reach 24 million cases.The PPECB commercialises.PPECB advises the South African Defence Force onthe transportation of their food.Late harvest grapes exported for the first timeand several new local grape varieties are alsocommercially exported.Official opening of the PPECB’s new Head Officebuilding in Plattekloof, near Cape Town.All Cape fruit is subjected to quality evaluation.Government rules that the PPECB must take overthe quality inspection function from the Directorateof the Agricultural Product Standards.PPECB obtains a building in Grabouw, and afterrenovation turns it into a Regional Office and trainingcentre.Deregulation of the fruit industry causes chaos inthe export market.A meeting is held between PPECB and theConference Lines at Lanzerac Wine Estate inStellenbosch, where the SAECS contract is rescindedwith immediate effect.A new PPECB Board is appointed.PPECB achieves ISO 9001: 2000 certification andbecomes the first SA service provider to receivepreliminary EUREPGAP accreditation. PPECBcelebrates 75 years of service to South Africa’sPerishable Products Export Industries.200220032004200520062007200820092010DAFF appointed PPECB as the assignee, to inspectdried fruit.The EU 1148 accreditation for PPECB inspectionsystems was received.Sector Programme Management was introduced,the aim being to get closer to the stakeholderneeds. The Official Food Safety Mandate wasreceived from DAFF.A successful donor-funded project, South AfricanPesticide Initiative Programme (SAPIP I), was hostedwithin PPECB for a period of 3 years.A differentiated Levy Structure was introduced formain products.PPECB was successfully audited by The Foodand Veterinary Office (FVO) on pesticide residuesin food stuffs.The new PPECB Board is appointed.New CEO, Mr Luvuyo Mabombo, was appointed.PPECB enters into the first agreement with theNational Agricultural Marketing Council (NAMC)to assist low income farmers to access local andinternational markets.The Harmonization Programme, focusing onconsistency in the execution of mandated functionalactivities, was approved by the PPECB Board.PPECB, together with UNECE and DAFF hosted anInternational Harmonization Workshop oncommercial quality standards for fresh fruit andvegetables for African countries. A total of 109delegates from 18 African countries were inattendance.PPECB entered into an agreement with The EgyptianHorticultural Export Improvement Association (HEIA)and the Industrial Modernisation Centre (IMC), toassist HEIA in establishing a premium brand for theexport of Egyptian Horticultural produce.PPECB | annual report | 2009 - 2010 11

strategic intentPPECB is committed to building confidence in South African produce and establishing the country as a globally recognisedcompetitor in the perishable industry. PPECB gives meaning to its strategic intent through the implementation of the initiativesin its approved strategic plan.mandateLEGISLATIONAgriculturalProducts StandardsAct 119 of 1990QualityMRLFood Safety TraceabilityExportcertificatePPECBLEGISLATIONPerishable ProductsExport ControlAct 9 of 1983Temperature and Coldtreatment managementEquipment certificationTemperatureInstructionLetterLEGISLATIONAgricultural PestsAct 36 of 1983PhytosanitaryrequirementsBilateral agreementsPhytocertificateMinistrybusiness modelGovernanceOperationsCorporate ServicesStatutory Operations Value Added Services HR Finance IT12PPECB | annual report | 2009 - 2010

servicesProduct and Equipment Certification.Private Standard Certification.Cold Chain Management.Statistical Information.Food Safety Auditing.Advisory Services.Training.operational reachPPECB OfficesPPECB | annual report | 2009 - 2010 13

executiveoverviewcontentsBoard of Directors15Chairperson’s Report16Executive Committee18Chief Executive Officer’s Report19Annual Performance Report21Chief Financial Officer’s Report3214PPECB | annual report | 2009 - 2010

oard of directors2009 / 2010Elaine AlexanderchairpersonMolefe Mokoenevice chairpersonChristina EngelbrechtLouis VorsterMaxwell HawesCharles AtkinsCynthia SixoloAnton RabeManie BooysenobserverMakgoro MannyaobserverPPECB | annual report | 2009 - 2010 15

eport by thechairpersonElaine AlexanderThe current Board’s term has not been without its highlightsand certainly not without the lows. However, I believe thatwhen critically reviewed the Board has discharged its dutieswith due diligence, remaining at all times cognisant of theresponsibilities delegated by the Minister of Agriculture,Forestry and Fisheries and expected of it by both clients andstakeholders in regards the regulation of South Africanexports of perishable produce.BackgroundInitially the Board was appointed for a period of only 1 yearwith its main task being the much needed review of thePPEC Act. Subsequent to the completion of the 1 yearterm the previous Minister of Agriculture extended theBoard’s term for another 2 years allowing the Board tofulfill the mandated 3 year term, as per the Act.In that time the Board has had 2 Chairpersons, the firstresigning to take up a position in the Department ofAgriculture. It also appointed a new Chief Executive Officer.The Board, in these 3 years, has also achieved 2 significantfirsts for the company, which I believe they should becommended for; 1. The appointment of the first womenChairperson and 2. The appointment of the first person ofcolour as the CEO in its history.Review of the ActThe Board has reviewed the PPEC Act and recommendationsand proposals were forwarded to the Department ofAgriculture, Forestry and Fisheries (DAFF). At this stage, therehas been no significant feedback from the Department norhas there been movement toward finalisation of the reviewedAct. I believe that it will be important for the incoming Boardto relook the recommendations as they may no longer beas relevant, as it is now clear that the new administrationhas a greater role for the Board to play.StrategyA 5 year strategy has been developed, the period will becompleted in 2013. This strategy has been presented to bothDAFF and to the Portfolio Committee, where it has beenwell accepted. It has also been shared with clients andstakeholders who have, in the majority, supported the newdirection.The main intent of the strategy is for the PPECB to provideservices which support the ongoing development of theexport competitiveness of South African perishable productsall the while remaining cognisant of the role of a Public Entityin the developmental state. This strategy has brought thecompany into a position where, at times, it has been consideredto 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 andpromulgated. I must state categorically that the current Boardhas spent many hours debating the merits of the strategyand its possible consequences and has identified the factthat the current Act is drafted broadly enough to allow theBoard the scope to respond to the ever changing andincreasing demand from South Africa’s export markets.16PPECB | annual report | 2009 - 2010

In this area, a major breakthrough was achieved when thisBoard was finally able to conclude a long term debateinvolving the provision of Value Added Services, requestedtime and again by our clients and an area which we believeis critical to PPECB’s strategic objectives. This debate wascurrent at the commencement of our term and myunderstanding was that it had been constantly debatedthroughout 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 toensure that all annual objectives are being achieved.Unfortunately, there is the fact that often their efforts arehampered because of blockages experienced by non-deliveryof other critical stakeholders.Corporate GovernanceA key issue for the Board is corporate governance, and isespecially difficult given the nature and makeup of the PPECBBoard as mandated under the Act, i.e. the fact that Boardappointees are nominated from the client base despite beingappointed by the Minister. Under the King III recommendationson corporate governance, the question of whether or notthere are enough independent Directors is questionable.However, until the Act is reviewed and this issue given seriousobjective consideration, it may continue to be an issue.In this context, I am pleased to report that I believe that thisBoard has taken giant leaps forward to bring maturity to thedischarging of its duties in respect to the member’s obligationsto the company and shareholder, whilst being directly linkedto the client base of the company.The Board has introduced an independent annual reviewboth as a team as well as individuals and has spent timein ensuring that the members of the Board have a fullunderstanding of governance issues. It has also reviewed itscharters for the Board, the Audit and the HR Committeesto ensure compliance to corporate governance within theKing III report.FinanceThis area will be covered in more depth by the report of theAudit Committee Chairperson, however, I wish to commendthe Chair on his leadership as well as the CEO and the CFOfor attaining unqualified audits for the past few years.Human ResourcesThis area will also be covered in more depth by the HRExecutive’s report and, as previous, I wish to thank theChairperson of the HR Committee for his leadership in anarea which needed a great deal of change from thecommencement of the Board’s term. As PPECB’s services aredelivered by its people, who are of a higher skills level thanin many other companies, it is critical that this function isgiven the same consideration as that of the finance function.I am pleased to report that there have now been a proliferationof well thought out initiatives in this area, which I believewill ensure that the company has, as is reasonably possible,a satisfied work force. A special mention and thanks mustbe given to the HR Executive who has tirelessly pursued thewell-being of our employees.Employment Equity has been a particular challenge but theExecutives have made great strides in this area. The processhas, of course, not been without its casualties but these arebeing managed and the demographic profile of the companyhas changed significantly over the past 2 years.ConclusionReflecting on the past 3 years, being a member andChairperson of the PPECB Board has been a personallysatisfying experience. It has often been extremely challengingand much hard work but I would not have missed it.On behalf of my Board, I want to thank the Minister ofAgriculture, Forestry and Fisheries for her confidence inextending our term and allowing us to continue whilst theappointment of the new Board was finalised. I also want tothank my fellow Board members for their confidence inappointing me as Chairperson and giving me the privilegeof guiding an entity critical to the export competitiveness ofSouth Africa’s perishable produce.Finally, on behalf of the PPECB Board, I would like to thankthe PPECB Executives for their continued commitment tothe implementation of the company’s strategy and for a jobwell done. I would like to mention and recognise the PPECBemployees and their commitment to servicing our clients inoften difficult circumstances and far flung locations for,without them, we would not have been able to have achievedmuch of what we did.Elaine AlexanderChairpersonPPECB | annual report | 2009 - 2010 17

executive committee2009 / 2010Luvuyo Mabombochief executive officerJohan Schwiebuschief financial officerAdela Fortunehead: legal services andcompany secretaryDean Martinexecutive:value added servicesZakhe Makhayeexecutive:human resourcesNokulunga Maswanaexecutive:statutory operations18PPECB | annual report | 2009 - 2010

eport by thechief executive officerLuvuyo Mabombo“IN PURSUIT OF SUPERIOR PERFORMANCEIN A COMPETITIVE WORLD”Making judgement on the suitability of a client’s perishableexport consignment, the appropriateness of Cold Chainparaphernalia and the carrying temperature regime for freshproduce and other perishables is a critical responsibility thePerishable Product Export Control Board. We do all of thiswork mindful of our task to facilitate order and efficiency inthe perishable products export chain. We equally do thiswork focused on supporting South Africa’s competitivenessin the global trade in fresh produce. As a regulator for thequality of fresh produce exported from our country, weinfluence the day-to-day South African fresh produceconsumption decisions of the overseas consumers as well asthe 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 atthe PPECB, with the business having posted positive financialresults in the midst of a challenging global recession. Wehave done this through careful management of our costs,whilst working on increasing efficiency of our resources, inparticular our people, who are the most important resourcethat this organisation has. We continue to strive for brandvisibility 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 productsdestined for exports; all in pursuit of being “a Partner inGlobal Competitiveness of South African Perishable Products”.STRATEGY HIGHLIGHTSOur Strategic Plan 2009-13 formed the basis for all servicedelivery achievements that the business obtained. In linewith our strategic objectives, we successfully hosted aninaugural International Harmonization Workshop onCommercial Quality Standards for Fresh Fruit and Vegetablesfor Countries of Africa in partnership with the UNECE. Thesuccess of this workshop has opened opportunities for thePPECB to assist in capacitating other African countries onquality standards for fresh fruit and vegetables, which arekey for global trade in fresh produce.Some of the year’s highlights include:Full roll-out of our Harmonization Program for thecompetency of our inspectors. This program will go along way in supporting our ISO 17020 accreditationas an Inspection Body.Consolidate and fast-track the Electronic DataInterchange project.Initiate a PPECB Training Academy.Assist Government in benchmarking a South AfricanFood Safety System against globally recognised goodagricultural practice.We have realised these successes only because of ourunwavering commitment in reversing some of the mindsetwe had in the past, that of following a strategic directiondictated 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 reportedhad our legislative enabling environment allowed the businessto. Detail of the financial results equally reflects a positiveoutcome for an organisation exposed to challenges ofinternational trading trends and global recession. The businesswill ensure that, in future, it utilises its accumulated reservesto invest in sustaining the business well into the future.Management of the PPECB, yet again commits itself tobuilding a world class organisation, worthy of the SouthAfrican brand it represents around the world. Withprofessionalism, our integrity will stand the test of times.Luvuyo MabomboChief Executive Officer

20PPECB | annual report | 2009 - 2010

annual performance reportStrategicObjectiveKeyPerformanceIndicatorsYear 1: 2009/2010TargetAction Plan/Activities2009/10 Financial YearPerformanceProgress1.Enhance thecredibility ofthe SouthAfricanExportCertificate.Align deliverycapability withgloballyrecognizedmethodologies.Investigatewith DAFFalternativesampling plansand systemdesigns tobuild up a riskdatabank.Present riskprofile andbenchmarkedQAmethodologyto 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 deviationfrom current 2% sampling procedure.- Developing quality assurance methods for a risk basedsystem.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 gatheringto enhancerisk database.The PPECB concluded a risk profiling exercise detailed perinspection point, incorporating product and processesrisk.Documentprocesses,proceduresand resultsand obtainsign-off ofcompletedwork.This activity is ongoing, delayed due to DAFF noncommittalparticipation 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 currentstatutoryresponsibilities.Increasedcompliance tofood safetystandards.Inputs torevised foodsafety andstandardsrequirements.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 - 2010 21

StrategicObjectiveKeyPerformanceIndicatorsYear 1: 2009/2010TargetAction Plan/Activities2009/10 Financial YearPerformanceProgressIncreasedeffectivenessof our currentstatutoryresponsibilities.Increasedcompliance tofood safetystandards.Drafting ofregulation incollaborationwith DAFF.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.Enhancerequirementsto support thecredibility ofthe ExportCertificate.Conclusion ofFBO DatabaseProject.Signed SLAwith DAFF.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.FBO Service Level Agreement between PPECB and DAFFwas finalised within the Steering Committee and PPECBManagement, currently with DAFF Management for finalsign-off.Engage DAFFto transformStandardOperatingProcedures(SOP) formycotoxinsintoStandards andRequirements.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.Collaborationwith DAFF ondrafting newStandards andRequirementsformycotoxins.PPECB completed SOP for mycotoxin sampling andtesting but were not considered by DAFF in an officialregulation format.Implementationof MRLresource andupdating MRLDatabase.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 actionsdecided atFood SafetyRiskWorkshops.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.22PPECB | annual report | 2009 - 2010

StrategicObjectiveKeyPerformanceIndicatorsYear 1: 2009/2010TargetAction Plan/Activities2009/10 Financial YearPerformanceProgressEngage DAFFon electronicverification ofinformationonaddendumsand UniquePallet ID’s.This work is integral to the EDI Project and its completionis linked to the EDI Project.Pilot use ofUnique PalletID during2009 citrusseason withidentifiedclients.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 palletID’s andElectronicExportCertificationfor Stone FruitPilot for the Stone Fruit deferred to full EDIimplementation.ReviewedPolicy on foodsafety andproductquality.Concludeinputs to thereview ofregulationsgoverningCold Chainactivities.Handover ofdraftregulationsand standardsandrequirementsto DAFF.This activity was completed, however a response fromDAFF is awaited on the way forward.Engagestakeholders.Engagement with stakeholders could not be initiated dueto no response from DAFF on Submitter Regulations andS&Rs.Evaluate anauditapproachwithin theCold Chainenvironment.DetermineGAPSbetweencurrent ColdChaininspectionmethodologyand CCQI.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 oftrained or dedicated supervisors.- Compiling training syllabus and checklist capabilities.- Observing loading points (Eastern Cape) to launch auditmethod in April 2010 in SLA format.Evaluation ofCCQIprinciples inlocal andoverseas leg.Local evaluation completed and documented. Identifiedpilot loading points (Eastern Cape) on course to launchaudit method in April 2010 in SLA format.PPECB | annual report | 2009 - 2010 23

StrategicObjectiveKeyPerformanceIndicatorsYear 1: 2009/2010TargetAction Plan/Activities2009/10 Financial YearPerformanceProgressInternalcapacitybuilding, forknowledgeand skillstransfer.Establish anin-servicetrainingprogrammeas a feederprogram tolimit riskexposure andreduce thereliance oncontract staffby 50%.Ensureadequatenumber ofqualifiedtrainingfacilitators perregion.Definetraining roles,assignresponsibilityand updateperformancecontracts ofdesignatedtrainers.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.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.HarmonizationProgramme toensureconsistentapplication ofstandards.Review andupdateHarmonizationdeliverableswith newstrategies andemergingissues inmacroenvironment.Communicationplan to launchtheHarmonizationProgrammewithinindustrymedia.Communicationstrategy toinform andenhanceunderstandingthroughoutPPECB.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.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.Introductionof PortActivityAuditing.Assign rolesandresponsibilities.Establish andimplementfeedbackloop.Roles and responsibilities were assigned to all members ofthe Harmonization Programme as planned.Activity successful as per report in “Port Auditing” reportabove.Link communicationandprocess flowto inlandactivities forimprovement.Inject measuresfor consistencyinto internalaudit.Started as planned and ongoing programme.24PPECB | annual report | 2009 - 2010

StrategicObjectiveKeyPerformanceIndicatorsYear 1: 2009/2010TargetAction Plan/Activities2009/10 Financial YearPerformanceProgressIntroducequality controlauditing in allports.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.Harmonizationof productqualitystandards inAfrica.Develop aconceptualframeworkfor aworkshop forHarmonisationof Standardsfor SADCCountries.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.Identify andbuildrelationshipswith otherAfricaninspectoratesand relevantdestinationcountries.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.Effective andefficientdebtors webdrivenmanagementsystem.Debtorsregistrationsystem withonline creditcontrolfacilities.Create anonline debtorsregistrationsystem.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.Link onlineregistration tocreditinformation.This work is ongoing but is linked to the now completedonline debtors’ registration system.Electronicstatementsand invoicescreated viathe BI portal.This work was completed. Electronic statements andinvoices are being sent to clients.PPECB | annual report | 2009 - 2010 25

StrategicObjectiveKeyPerformanceIndicatorsYear 1: 2009/2010TargetAction Plan/Activities2009/10 Financial YearPerformanceProgressConfidence inbusiness andfinancialsystems of thePPECB.Integratefinancialaudits withBMS audits.ConductCrossFunctional.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.Independentquality reviewon auditscompleted.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.Develop andimplement aauditscorecard.An internal audit scorecard to monitor performance wasimplemented in October 2009.2.Support theexportcompetitivenessofSouthAfrica’sPerishablesProductsIndustries.IncreaseInvestment inR&D initiativeswithin ColdChain.Improve thecool chainqualitythroughidentifyingand bridgingthe GAPS inthe coolchain.Design, planandimplementCCQI project,whichidentifies andcloses thecool chainGAPS throughan auditbasedapproach.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.Improvecontainerairflow.Research trialson differentcommoditiesto continue.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.Improvepackagingdesigning.Engage withthe variousstakeholdersto establishpotentialGAPS andopportunitiesfor R&Dactivities.Research on improved packaging on-going in partnershipwith industry players including exploring new or otheruseful engineering techniques.26PPECB | annual report | 2009 - 2010

StrategicObjectiveKeyPerformanceIndicatorsYear 1: 2009/2010TargetAction Plan/Activities2009/10 Financial YearPerformanceProgressImprovestandards forpallets.Draftstandardspecificationsfor fruitpallet.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.Growdevelopmentinitiatives ofPPECB.Increasepartnershipsinitiatives with“donor”developmentinstitutions.Conduct atleast 2“donor”developmentfundedprojects in theSADC region.Activity proving difficult to achieve. Memorandum ofUnderstanding entered into with NAMC resulting intraining conducted in Vhembe GlobalGAP. 67 trained,9 audited, 4 certified.Externalcapacitybuilding, forknowledgeand skillstransfer.Roll out thePPECBTrainingAcademy.Ensureaccreditationof coursematerials.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.Marketing ofconcept tostakeholdersto continue.Minimal activity undertaken.Complianceto trainingcalendar.Minimal activity undertaken.Introduce theAcademy torelevantindustries.Minimal activity undertaken.Conductaccreditedcourses inareas offocus.Minimal activity undertaken. Progress limited to work atJFPM.AppointProjectCoordinator.Minimal activity undertaken.Increaseservices insupport of thecompetitivenessof the SAPerishableIndustries.Increase thescope ofaccreditationsto enter othermarkets.Maintainaccreditations.- PPECB Certifications maintained accreditation toISO 17021 and ISO guide 65 after SANAS completedtheir audit.- The PPECB Laboratory maintained its ISO 17025accreditation.- 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.PPECB | annual report | 2009 - 2010 27

StrategicObjectiveKeyPerformanceIndicatorsYear 1: 2009/2010TargetAction Plan/Activities2009/10 Financial YearPerformanceProgressIncreaseservices insupport of thecompetitivenessof the SAPerishableIndustries.Increase thescope ofaccreditationsto enter othermarkets.Achieve ISO22000 andorganiccertification.Maintaincustomerloyalty.The PPECB completed the first unaccredited ISO 22 000audits Namibia. Stage 1 ISO 22000 certification wascompleted for Lakeland foods.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%.Build capacityandcompetencyof skilledpersonnel.- 6 Staff members from Certification Services completedthe 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 SchemeManagers Workshop in Amsterdam.- 1 Certifications staff member completed a Btech Degreein Food Technology.- PPECB LAB successfully completed monthly laboratoryinternal audits, as per ISO 17025 quality manualprotocols. The LAB also updated the mycotoxinequipment software protocols and technical procedures,to maximize analytical efficiency. Updated methods andtrained analysts on additional laboratory HPLCmycotoxin analytical methods for complex food andfeed samples were completed.Developing ofGCtechniquesand partialimplementation.GC equipment purchased and installation partiallycompleted.BenchmarkedSA GAPagainstinternationalrecognisedgoodpractices onGAP.Benchmarkingof SA GAPagainstinternationalgood practiceon GAP.Engage DAFFon the policyand themotivation forbenchmarkingof SA GAPinternationally.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.InstitutionalisePPECB’sinternalprocessesthrough ISOaccreditationas SouthAfrica’sCertifiedInspectionBody.Evaluate Org.capacity to beISO accreditedInspectionsInstitution inorder to instillworldwideconfidence inSouth Africanperishableproducts.Establish aproject team.Compilationof QualityManual.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.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.28PPECB | annual report | 2009 - 2010

StrategicObjectiveKeyPerformanceIndicatorsYear 1: 2009/2010TargetAction Plan/Activities2009/10 Financial YearPerformanceProgressConductChiefInspector,ServiceManager andCoordinatortraining onstandard.Activity completed.First SANASassessment.Pre-assessment by SANAS during July 2010 to beinvestigated with SANAS.Effectivemanagementandaccountingfordevelopmentinitiatives.Develop andimplementsystems,proceduresandmeasurementsfordevelopmentinitiatives.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.Measurefinancialperformanceofcertificationsper servicetype andclient.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 2010.3.StrengthenPPECB’scapacity as acrediblesource ofstrategicinformationfor servingindustriesandstakeholders.Achievingaccurate SLAbusiness andstatisticsinformation.Deliverinformationthat meetaccuracyrequirementsas definedwithin theSLA’s.Implementtools,proceduresand ameasurementscorecard toensureaccuratereporting ofinformation.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.Create PPECBInformationWeb-Portal.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.PPECB | annual report | 2009 - 2010 29

StrategicObjectiveKeyPerformanceIndicatorsYear 1: 2009/2010TargetAction Plan/Activities2009/10 Financial YearPerformanceProgress4.SupportGovernmentin ensuringconfidencein qualityassuranceand foodsafetysystems forlocalperishablesproductsmarkets.DAFF Policyon “FoodSafety andProductQuality”.Review of theDAFF “FoodSafety andProductQuality”Policy.Developmentof MinimumCountryCapacity tomonitor localperishablesmarket.Contribute inthe reviewand/ordevelopmentof country“Food Safetyand ProductQuality”Policy.Contribute intheassessmentandestablishmentof“minimum”capacity tomonitor localperishablesmarket.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.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.5.SupportGovernmentin buildingsystems toensurecompliancewith SouthAfricanquality andfood-safetystandardsfor importedperishablesproducts.DAFF Policyon “FoodSafety andProductQuality”.Review of theDAFF “FoodSafety andProductQuality”Policy.Contribute inthe reviewand/ordevelopmentof DAFF“Food Safetyand ProductQuality”Policy.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.30PPECB | annual report | 2009 - 2010

PPECB | annual report | 2009 - 2010 31

eport by thechief financial officerJohan SchwiebusThis year's results are characterised by good volumes exported,strong income growth and positive cash generation.The key results are:Income increased by 6,9% on budget to reachR152,6 million.Expenses increased by 6,1% on budget.Surplus is R19,5 million.Cash equivalents and investments held to maturityimproved by R15,1 million.Financial PerformancePPECB’s income for the 2010 Financial Year increased by6.9% to R152,6 million (2009: R142,7 million). The increasewas achieved despite the adverse impact of the globaleconomic downturn experienced in South Africa’s exports.The PPECB’s primary sources of income are the fees andlevies received for statutory services rendered to the perishableproduct industries. A total of R130,5 million (2008: R121,2million) has been raised from this source compared to thebudget of R120,1 million. The increase of R9,3 million (7%)can be attributed to the annual inflationary adjustment infees and levies as exported volumes have moved sidewaysfor most products.Income received from delivering value added services to ourclients totalled to R11,7 million (2008: R10,7 million), whichis an improvement of R1,9 million on the budget ofR9,8 million. These services include certifications andlaboratory analysis. Other income includes income receivedfor 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 tobe dynamically managed with the business focusing onoperational efficiencies and cash flow management in orderto maintain financial stability. A robust cost awareness andmanagement intervention at the onset of the economiccrisis resulted in a reduction of R11,8 million (9%) intotal expenditure compared to budgeted expenditure,notwithstanding high increases in activity costs such as fuel,accommodation and technical equipment. Consequentlyoperating expenditure before depreciation increased by 5%to R131 million.Depreciation and amortisation of assets for the year increasedfrom R836 thousand to R1,9 million. The increase is due tothe replacement of critical information technology equipmentin 2009.No provision for taxation has been made as the Board is notsubject to normal tax.The increase in revenue of R7,7 million together with thereduction in expenditure of R11,8 million against budgetresulted in a retained surplus for the year of R19,5 million.This surplus is transferred to the General Reserve Accountin terms of the PPECB Act.Financial PositionThe balance sheet reflects a strong financial position in that: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).The value of PPECB’s total assets is R121,9 million. This isrepresented by non-current assets of R15,7 million andcurrent assets of R106,2 million. This is an increase ofR12,9 million if compared against the previous year.Non-current assets decreased by R1 million to R15,7 millionwhich is mainly due to assets being written down to theirresidual values.32PPECB | annual report | 2009 - 2010

Financial assets, cash and equivalents increase by R15,1million to R86,7 million. The PPECB has adequate cashreserves to meet its future commitments. PPECB holdsdeposits at banks with Fitch ratings of AA and higher.Accounts receivables of R19,6 million decreased by R1,3million (6%) on last year’s R20,8 million. This reduction wasachieved through a focused attention on outstanding debt.The total amount outstanding for longer than 60 daysdecreased from R585 207 in 2009 to R46 833 in 2010. Aprovision of R218 466, or 1% of total debtors, has beenmade for irrecoverable debt.Trade payables of R23,3 million are R1,7 million higher thanthe previous year. The increase is largely due to accruedexpenses on the replacement of field and laboratoryequipment at the end of the financial year.The realised surplus increased the reserve funds by R19,5million to R95,5 million that meets PPECB’s reserve plan.These reserves are accumulated to fund shortfalls duringtimes of economic and seasonal downturns, realisation ofuninsured risks as well as to provide for future capital outlaysin replacing laboratory, technical and information technologyequipment.Cash FlowsCash and equivalents decreased by R2,1 million to R23,1million, mainly due to increased investments. Operatingactivities generated cash of R16 million as compared toR21 million in the previous year. Significant focus on thecollection of outstanding debt resulted in an inflow of anadditional R1,2 million.Capital expenditure for the year amounted to R1,1 million(2009: R4,1 million). Last year significant investments weremade to replace critical information technology and laboratoryequipment. The decrease in capital expenditure comparedto the prior year can be attributed to the reprioritisation ofcapital projects due to the possible impact of the recessionon exports and PPECB’s cash flow. Capital investments areplanned for replacing and expanding critical informationtechnology as well as laboratory equipment. The capitalreplacement and investment plan is aimed at supportingPPECB’s strategic plan.Surplus cash of R17,2 million has been invested in interestbearinginvestments held to maturity.Credit Risk on DebtorsAlthough there is an increased risk of default by trade debtorsin the current economic climate, to date we have notexperienced any adverse consequences in this regard. Inorder to manage this risk as effectively as possible, we havetightened our credit criteria, particularly in those areas wherewe experience default in payments.Debtor balances will continue to be closely monitored andmanaged going forward, both from the perspective ofminimising the risk of bad debts and maximising collections.ConclusionThere have been no events after the reporting period datathat would have a material impact on reported results.We expect that the global and local markets will continueto show signs of slow recovery. Consequently, it is forecasteda somewhat strengthened demand for South Africanperishable products.PPECB will continue to explore opportunities to add publicvalue to its stakeholders but balance it with prudent andconservative measures to maintain financial stability.We would like to thank all of the financial and administrativestaff in PPECB for their sterling efforts in the last year and,in particular, for all their hard work in delivering these financialresults and this annual report. Their commitment and ongoingsupport has enabled us to consistently deliver quality financialinformation to our stakeholders.PPECB | annual report | 2009 - 2010 33

sustainabilityreportcontentsEthics and Values35The PPECB Brand36Accountability and Governance36Measurement Framework37The Green Uhambo Project37Overview of Human Resources39Technology42Crime and Related Activities43Caring for the Communities4334PPECB | annual report | 2009 - 2010

PPECB is committed to compliance with good corporate governance practices and strives for improvement in its practices inorder 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 sustainabledecision 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 valuesEthicsThe PPECB has taken a stance and reaffirmed its commitmentto good corporate governance. In a bid to promote ethicalbehaviour, which is the bedrock of trust, we recently launcheda campaign aimed at raising awareness of the Fraud andEthics Hotline. PPECB appeals to all stakeholders to utilise theEthics Hotline to report any incidents of fraud, corruption orunethical practices. Silent observers erode the values we wishto uphold.The PPECB constantly encourages all employees to behavein a manner consistent with what is right or moral.ValuesValues form the foundation for everything that happenswithin the PPECB. The PPECB has a set of values which itsubscribes to, with the expectation that the leaders withinthe organization will model these values and employees willbuy into the value system prescribed.The PPECB values are a vehicle for achieving on the missionand vision of the company. The PPECB strives to hiring peoplewho share the organization’s values.ProfessionalismIt is the duty of the PPECB to perform to the higheststandards of professionalism. We are determined todeliver outstanding quality so that we have longlasting relationships with our clients.AccountabilityWe are obliged to bear the consequences for failureto perform as expected.PassionWe are dedicated and have the willingness to takeon challenges and embrace them. We have a “cando” attitude and believe in making possibility a reality.IntegrityWe are committed to integrity in all that we do,always, everywhere - behaving in a consistent mannertowards our stakeholders.The value proposition is based around the idea ofstrengthening market access and to developing confidencein South African products, South African systems and SouthAfrican people.PPECB subscribes to the following values:ConfidenceThe PPECB strives in ensuring that it instills worldwideconfidence in South African perishable productsand its people.PPECB | annual report | 2009 - 2010 35

the ppecb brandPPECB acts as an independent service provider of qualitycertification and Cold Chain management services forproducers and exporters of perishable food products. Itsservices therefore reduce risk for the producers and exportersof these products.Certification ServicesPPECB’s certification service is accredited by the South AfricanNational Accreditation System (SANAS). The service deliversHACCP, 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 thefresh produce environment as well as the general food andpackaging sector.PPECB provides compliance certificates (third party samplingservices) for the export general food sector.accountability and governanceBoard GovernanceExecuting the fiduciary duties of the Board of Directors indirecting PPECB business in the pursuit of its strategicobjectives and mandates.Executive ManagementExecuting and managing the implementation of the strategicobjectives and mandates in a proper and lawful way.Risk ManagementDisclosing and regularly updating the risk managementframework which informs the risk management process andexecution.Legal and Compliance ManagementPPECB acknowledges the laws, rules and mandate governingPPECB and discloses its compliance to its stakeholders.Assurance ManagementGiving assurance through disclosure of its internal andexternal control environment.Business IntelligenceSharing information on PPECB’s business processes in acredible and consistent way to assist in collecting and analysingbusiness information, being mindful of the legal parametersand framework within which the business operates.Ethical CultureConducting the business by applying the values and codeof ethical conduct in everything we do.SustainabilityDeveloping a sustainable framework and reporting on PPECB’sapproach in such a way that sustainability issues are integratedinto business operations.Communication and ReportingPPECB’s business performance is reported in a clear andtransparent way on a monthly, quarterly and annual basis.Stakeholder EngagementPPECB acknowledges its stakeholders and discloses all relevantinformation to seek mutual and beneficial relationships.TransformationHighlighting the actions required to optimally deliver on itsstrategic initiatives.36PPECB | annual report | 2009 - 2010

measurement frameworkThese strategic themes were carefully selected and provide the outline for sustainable reporting, as well as strategic initiatives.1. Enhance the credibilityof South African ExportCertificate.2. Support the exportcompetitiveness of SouthAfrica’s Perishable ProductsIndustries.5. Support Governmentin building systems toensure compliance withSouth African quality andfood safety standards forimported perishableproducts.4. SupportGovernment inensuring confidence inquality assurance andfood safety systems forlocal perishable productsmarkets.3. Strengthen PPECB’scapacity as a crediblesource of Strategicinformation for servingIndustries andStakeholders.the green uhambo projectObjectivesTo contribute to greening, limiting PPECB’s carbon footprint and in doing so support actions to enhance the environment andto be seen as a partner in food security in this long term journey (UHAMBO) that lies ahead.ActionsThe following actions were undertaken:Team members are to investigate and report on savinginitiatives of their departments.PPECB solutions are to be communicated to HQ andthe Regions as a directive.The project should form part of the sustainability reportin the annual report.An external audit of our carbon footprint.An awareness campaign on improving our greencontribution.Fact finding (Km, electricity, miles flown and paperusage).Identify the baseline on 2009 statistics.Design of the template forms, on which Regions mustreport.Planned: Regular audits – as part of BMS system.Identify external body – should we decide to donatemoney on green project of choice, and in doing socontribute towards our carbon footprint.PPECB | annual report | 2009 - 2010 37

38PPECB | annual report | 2009 - 2010

overview ofhuman resourcesWe Value our PeopleAt PPECB we believe that the success in the implementationof our business strategy lies in the hands of our employees.We have revised our People Strategy to support businesspriorities. Key in the strategy is empowering our peoplethrough training and development, and measured throughour intensive performance management system.Investment in People DevelopmentDespite tough economic climate, spend on peopledevelopment was in the region of R3 322 316 whichconstitutes 3, 45 % of the salary bill.Focus has been on an integrated approach to human capitaldevelopment based on our adopted organisationaldevelopment framework which advocates delivery on 3 mainstreams namely; professional development, skills andcapacity building and organisational effectiveness.Leadership DevelopmentLeadership development has remained a main focus forcreating people capacity with 6 technical employees beingenrolled for the New Managers Development Programmewith the Stellenbosch Business School.A formal assessment of management competencies forspecific middle management levels was initiated. This processwill assure the organisation a targeted and needs-drivenmanagement development intervention tailored to individualcompetency level. The effect of this talent managementand development approach will be measured as the roll outmilestones are reached.Assisted Study SchemeIn recognition of the role played by further education in skillsdevelopment as its contribution towards the success andsustainability of the business and in order to assist staff toachieve their current and future personal development goals,we have continued providing employees with study assistance.It covers all National Qualifications Framework alignedtraining and development that results in recognized formalqualifications 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 employeeinvolved in PhD studies in the agri-science.Skills and Capacity BuildingJob specific development need, aimed at addressing skills,knowledge and attributes has received equal attention byalignment of these to the Workplace Skills Plan. This hashad positive spin-offs on capacity building and skillsdevelopment. This has positioned us better for SETA grantswhich will be ploughed back in people development initiatives.PPECB | annual report | 2009 - 2010 39

Agri-Export Technologist ProgrammePPECB still remains committed, with its distinctly strongposition and depth of technical knowledge and experience,to providing previously disadvantaged learners who have a3 year National Diploma in an Agricultural Field, opportunityto develop skills in the agri-export industry through thecollaborative arrangement with DAFF.101 Learners have been enrolled on the programme sinceits inception. 78, 21 % have been employed in the agriculturalsector. PPECB is committed to this programme for the ensuingperiod.Creating an Enabling EnvironmentStaff EngagementIn order to keep employees fully engaged, structures andprocesses have been enhanced by the formalisation ofthese through staff engagement framework. As a newinitiative the framework prioritises communication betweenPPECB stakeholders by constituting the Development andTransformation Committee, briefs from the office of theCEO, Technical Experts BI, Annual Symposium and Talk tothe CEO Email Facility with 48 hour turnaround time.Company-wide Dialogue Sessions were initiated. Thesefacilitated focus group sessions culminated in a report ofissues that needed addressing being presented to theexecutive. Proper responses were provided. This process notonly helped clear the air but assisted in gauging the moodwithin the organisation thus providing scientific pointers.This will be followed by the perception survey in the ensuingreporting period.TransformationWe have not taken our eyes off building a diverse workforcerepresentative of the South African society, this being thekey driver for our Employment Equity Plan. Progress has beenrecorded in the reporting period. While keeping an eye onthe numeric goals, organisational effectiveness relating totransformation and inclusion, culture, climate and embeddingvalues will occupy our organisational development futurespace.40PPECB | annual report | 2009 - 2010

Our staff profile expressed as percentage of our permanent employees over a 3 year period is as follows:Entrenching Employee WellnessBig strides have been made in entrenching employee wellness with the implementation of the Occupational Health and SafetyPolicy and the Employee Wellness Policy. The epitome has been the appointment of a professional service providerto 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 latestdevelopments. Through a reputable independent Remuneration Consultant, we benchmark ourselves against the market andensure that the Board is apprised of the market movements and latest thinking in best human resources practices.PPECB | annual report | 2009 - 2010 41

technologyTechnology enables the PPECB to perform its core activitiesas stipulated in the Agricultural Product Standards Act(No. 119 of 1990), PPEC Act as well as the provision ofstatistical information to the agricultural industry.The IST Strategic Plan addresses the following objectives:Provide the necessary infrastructure with respect to,technology stability, bandwidth speed, internet anddata security and availability at an optimal cost.Maintain architecture solutions that are adaptable andinteroperable to achieve PPECB strategic objectives.Leverage information technology investments to benefitinternal and external users.Ensure the security of PPECB’s networks, data, portaland IT equipment.Monitor, measure, and manage the technology outputwith respect to key performance indicators throughthe new performance management systems.Empower the IST staff members with necessary trainingto enable them to be more effective and efficient.This requires the ongoing provision of stable computingplatforms, ICT architectures, infrastructures and solutions.In performing its duties of facilitating the enhancement ofICT capabilities, PPECB continuously exploits the opportunitiesand benefits offered by new and emerging technologies.The environmental factors that impacts ICT in general includemoving towards environmentally sustainable computing ITequipment. This will improve the environment by encouragingthe reduction in use of hazardous materials, will maximizeenergy efficiency during the lifetime of the IT product, andwill promote the recyclability ad biodegradability of defunctIT products and IT factory waste.In terms of IT Governance the department’s objectives areas follows:Ensure delivery of effective information that is relevantto the business as well as being delivered in a timely,correct, consistent and usable manner.Ensure efficient provision of information throughoptimal, productive and economical use of resourcesby ensuring optimal investment in, and the propermanagement of critical IT resources such as applications,information, infrastructure and people.Ensure confidentiality and integrity by protectingsensitive information from unauthorized disclosure.Ensure availability and reliability by providingappropriate information to management to operatethe organization and to exercise their fiduciary andgovernance responsibilities, as well as ensuringinformation is available when required by businessnow and in the future.Focus on ensuring the linkage of business and IT plansand on aligning IT operations with enterprise operations.Tracks and monitors strategy implementation ofIT initiatives, project completion, resource usage,process performance and service delivery to achievebusiness 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.42PPECB | annual report | 2009 - 2010

crime and related activitiesPPECB reports a single case of fraud for the year underreview. The total value is less than R20 000 and involves asingle employee who has been disciplined and subsequentlydismissed from our employment.We have maintained our stance of zero tolerance to crimeand adopted a proactive crime prevention approach. Atthe start of 2010, the Fraud and Ethics Hotline awarenesscampaign was rolled out aimed at creating awareness amongstall stakeholders and reinforcing our stance on crime.The Hotline provides an anonymous source for employees,service providers and the general public to report instancesof fraud, corruption and unethical behaviour. The line isexternally managed by KPMG and all reports flow tothe Board via the Risk Management Committee.caring forthe communitiesAs a Corporate Citizen, the PPECB has the obligation toinvest in disadvantaged communities that it operates from.The primary aim of PPECB’s Corporate Social Investment ispremised on addressing the developmental imperatives ofSouth Africa as a developing country.Our contribution to civil society is evident in the support wehave offered to Babble and Krabble, a day care facilityrunning in one of the areas we operate in, in the WesternCape. This is the beginning of many initiatives we will rollout in the near future.The PPECB is passionate about giving back to the communitiesin which we operate.PPECB | annual report | 2009 - 2010 43

operationalreportcontentsStatutory Operations Overview46Value Added Services5244PPECB | annual report | 2009 - 2010

PPECB | annual report | 2009 - 2010 45

statutory operations overviewThe focus of Statutory Operations for the period under reviewwas on business processes for efficacy, risk managementand consistency in execution. For this reason, optimisationof operational processes, a review of current businessprocesses in lieu of ISO 17020 accreditation, as well asharmonization were priorities of the Statutory Operationsstrategic deliverables.Focus was subsequently placed on the HarmonizationProgramme supportive to the aforementioned objectivesand providing the mechanism for consistency, therebyenhancing the credibility of the South African exportcertification process recognized under the EU 1580accreditation for third country exports to the EU. Key businessprocess engineering projects included inter alia the“Alternative Sampling Methodology Project” which gainedsome momentum with DAFF acknowledging the risk-basedsampling approach on quality inspections. Pilots are currentlyunderway to explore different sampling systems in 4 mainproduction regions to gather sufficient data for addressingconcerns around phytosanitary risk-based sampling.Statutory Operations has strengthened the engagement withDAFF and key partners in managing South Africa’s risks inthe export value chain. For this reason, internationalinterceptions for phytosanitary risks like Citrus Black Spot(CBS) have placed a renewed focus on local controls andthe PPECB’s support towards influencing policy in this regard.Following the adoption of a new CBS risk managementsystem mid citrus season in 2009, Statutory Operations staffand supportive programmes should be applauded for themanner in which they responded to this challenge.Preventative measures inherent within the PPECB Cold Chaindelivery system, continued to support risk managementpractices, prior or during shipments, thereby contributingtowards significant savings for logistical companies andshipping lines. These measures involving the monitoring ofrefrigeration and temperature management en route overlong distances contributed towards South African exportperishables reaching established and new markets in optimumquality. The PPECB Cold Chain monitoring function, coupledwith the integrated management of cargo temperaturebetween PPECB, exporters and lines has lead to a uniquevalue added service, one of a kind in the world of shipping.Concerning the financial results of this R116 million businessunit, cost recovery was favourable across all service typeshowever cost management practices posed continuedchallenges bearing in mind a steady increase in inlandcontainerisation and door-to-door containerised shipping.Despite these challenges, Statutory Operations managed topost positive year-end financials and maintained ourcontribution towards company overheads.Programme: HarmonizationThe Harmonization Programme, with its key objective ofensuring uniform interpretation and application of productquality standards and Cold Chain protocols and processescountrywide, finds itself within its second year since formaladoption within the organization in 2008. The internationallybenchmarked harmonization system is now operationalwithin the main commodity products handled by the PPECBat inspection level, and emerged in several disciplines of thePPECB Cold Chain system during the review period. Withthe objective of consistency and uniformity at the forefront,a considerable effort is put into developing the skills andknowledge of new technical personnel as a baseline forensuring consistency over time. The HarmonizationProgramme therefore committed to no less than 4 internaltraining interventions based on an accelerated skills transferprogramme charter uniquely developed for PPECB inspections.46PPECB | annual report | 2009 - 2010

The Harmonization Programme continued to develop itssystems on consistency with the introduction of Port Auditingand Troubleshooting sporadically pursued at critical controlareas of the PPECB inspection system. In an endeavour toalleviate risks associated with South African exports, thiscomponent of the programme is aligned to the inspectiondelivery stream and provided some prolific results in combatingnon-compliance and possible inconsistency in the process.The annual review of standards and intense discussionsamongst specialists, coupled with practical sessions forstandardising specialists, formed the basis of uniforminterpretation and application of technical instructionsinternally. The 2009/10 year also marked the very firstharmonization session between PPECB and container depots,thereby harmonizing the inspections of key defects eminenton refer containers. The Harmonization Programme, withits continued philosophy of learning and innovation, hasintroduced no less than 8 PPECB packhouse demonstrationsin various table grape areas attempting to harmonize theinterpretation of quality standards applied at packhouse levelat the PPECB.Concerning International Standards development, the PPECBhas attended at 3 international meetings on product qualitystandards. These meetings included both workgroup andplenary meetings of the OECD in Paris, the UNECE SpecialisedSection for Fresh Fruit and Vegetables in Geneva, Switzerlandand the bi-annual attendance of the UK HarmonizationMeeting in Reading, London. The PPECB’s contributiontowards these meetings have been paramount consideringthe deregulation of standards within the EU mid 2009,re-affirming the importance of standards benchmarkingcritical for market access. The attendance of these meetingsallowed also for sustaining networks with international policymakers and import authorities in lieu of the EC 1580accreditation for the South African inspection systemrecognized within the EU.The year under review highlighted the hosting of the inauguralInternational Harmonization Workshop on CommercialQuality Standards for African Countries. Partnering with theUNECE and DAFF on this initiative, the PPECB delivered awell organised event of international quality; at the forefrontof this workshop being the objectives of capacity buildingof the emerging region within Southern Africa and the restof the continent, including capacitating the South Africansmall scale sector; a venture supported by the NAMC. Thisworkshop saw the attendance of 18 countries within thecontinent of Africa as well as 22 small scale farmers withinvarious parts of the country across different product types.To continue building on the objectives of this workshop, theHarmonization Programme pursued further capacity buildinginitiatives amongst the same constituencies, involving thesame farmers during its first PPECB packhouse demonstrationson citrus fruit product quality standards during 2010.Programme: Inspection ServicesDuring the 2009/10 Financial Year, the certification deskaround the country processed 60 427 certificates, a significantincrease of 12,7% recorded on the previous fiscal. For theduration of this period 2 780 certificates had errors andreissued and 5 326 were cancelled due to various reasons.These certificates represent just short of 200 million cartonsand 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 todetermine the minimum residue levels on all export productsprior to export. During this period 10 121 samples wereanalysed in the Pretoria and Stellenbosch laboratories ofDAFF. Corrective actions were applied where exceedingoccurred.The PPECB inspection services managed to respond positivelyto all activity points with the aid of the national resourceplanning office. This office ensured that all activity pointswere manned and that mandated functions were executedsuccessfully.The Agricultural Export Technologist Programme (AETP)proved hugely beneficial to the agricultural industry as wellas PPECB. PPECB has successfully recruited new inspectorsfrom this programme into permanent posts all around thecountry. New inspector training and development continuedonce employed permanently as per the recruitment of ourinternal competency framework. Of the 22 students trainedin 2009/10, 8 were successfully employed within.Programme: Cold Chain ServicesThe Cold Chain value stream members were primarilyinvolved with physical inspection of equipment, as well as

the monitoring of product temperatures and overseeingstowage conditions in all modes and the supplying of exportdata according to predetermined requirements. Theserequirements were designed to conform to both Board’sand accepted international standards and meeting localconditions during storage and shipments.Container loading supervision over vast distances, as part ofthe so called door-to-door concepts, where PPECB had toensure that all criteria was met. This also includes the verystrict special shipment container programmes in and aroundport areas to 17 different sterile destinations.Reefer Vessel loading supervision in all ports included Maputo,where Cold Chain services ensured that inspected productswere loaded according to strict guidelines into correctlyallocated decks. This also includes the highly specialisedshipments to Japan and the USA, whereby PPECB participatedand contributed to the successful arrivals to these verystringent destinations.Container inspections executed at all 23 depots nationallyresulted in 148 139 containers inspected with a rejectionrate of 7,51%.A total of 487 cold stores were inspected in all PPECB regionsof which 3,9% did not conform to the standards andrequirements as published. PPECB also surveyed 188 vesselsbefore the loading of South African perishable products. Ofthese vessels surveyed a notable 11,2% were found to beunsuitable to carry SA perishable products. All activitiessuccessfully mitigated risks in the supply chain for our clients,shipping lines, cold store operators and South African fruitin general.For the duration of the 2009 season a total of 88 276containers 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 tookplace in all 4 ports. A total of 365 119 pallets were exportedon 201 shipments.During the period under review a total of 2 577 manifestswere audited which equates to 88 812 containers. Werecorded an 8,7% rejection rate emanating from erroneousdocumentation in this regard. This includes the checks andaudits prior sailing in all Ports of all reefer manifests forvarious container shipments.The auditing of temperature and ventilation settings of80 951 containers on 1 035 en-route vessels from the CapeTown port office for predetermined products resulted incorrective actions on 822 containers.All activities successfully mitigated risks in the supply chainfor our clients, shipping lines, cold store operators and SouthAfrican fruit in general.Programme: Food SafetyFood Safety is, and will remain, a critical aspect of perishableproducts intended for export and will remain a top prioritywithin PPECB. Continuous collaboration with the Departmentof Agriculture, Forestry and Fisheries (DAFF), the industryand PPECB exists to enhance the current South Africansystem ensuring its compliance to international and nationallegislation. The Official Food Safety Standard is continuouslyreviewed to ensure that changes and adaptations triggeredby the audits are incorporated into the standard.For the year under review PPECB remained vigilant in itsapplication of the Official Food Safety Standards by conducting261 new audits and 116 surveillance audits. All FBO’sremained committed to the standard by clearing out findingsin the allocated time, thus no FBO’s where prohibited fromexporting their produce. The decline in surveillance auditsis conducive to an ever changing environment. During2009/10 Fiscal Year we experienced those food businessoperators that were in compliance with the official foodsafety system opted for a commercial certification, as thisopened more markets for them to service. In contrast, thedecline can also attributed to an unsteady economicenvironment forcing food business operators not to export.PPECB remains active in awareness creation regarding foodsafety within the industry by means of published articles inmagazines, on the internet as well as radio talks. Buildingstrong partnerships within the industry ensures that the issueregarding food safety does not become dormant and thatit remains a top priority within the agricultural sector.Programme: CitrusWhile the 2007 and 2008 citrus seasons proved to be recordbreaking seasons the 2009 season saw a drop in exportvolumes which can be attributed to a number of reasonsbut difficult marketing conditions in especially Europe andthe 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 inspectorsalso had to deal with a new CBS risk management systemaimed at the European markets. The new system was rolledout in August 2009 after the Valencia season had alreadycommenced and our staff as well as the HarmonizationProgramme should be congratulated for the manner in whichthey responded to the challenge. One aspect that will continue48PPECB | annual report | 2009 - 2010

to receive attention through the Harmonization Programmeis the correct identification of CBS lesions. This aspect is nonnegotiableas there are dire consequences for producerswhose fruit were intercepted with CBS.A total of 100,2 million actual cartons were budgeted forbut at the end of March 2010 only 91,9 million cartons wereinspected 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 thezero tolerance approached followed this season with regardto decay as well as False Codling Moth (FCM) infestation.On a national basis the main rejection reasons were FCMon grapefruit and oranges, decay on soft citrus and blemisheson lemons.All citrus types except for grapefruit were down whenmeasured against the 2008 season. The biggest decline wasexperienced on the Valencia types. When looking at themarkets the European markets took less fruit while theRussian Federation, the Middle East and the Far East werethe star performers.A total of 1 231 720 pallets were exported in 2009 andwhilst there were calls for Maputo to be utilised optimally,more than half of the citrus crop were still exported throughDurban. Volumes through Cape Town port declined furtherwhilst Maputo and Port Elizabeth remained stable. Mucheffort was put into opening Port Elizabeth up for exports toJapan for the first time and it is hoped that producers willtake full advantage of this opportunity as it will benefit theregion immensely. It will also take some truckloads off theroad 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 weremore than a million cartons downward, largely due todamage 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 wasexperienced 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 periodunder review. Amidst threatening economic forces faced bystone fruit marketers and nature’s challenges, the industrymanaged to export 11, 6 million cartons (1% down onbudget for the fiscal) for export. The lighter crop, the globaleconomic crisis, the strong Rand and the adverse weatherconditions in the EU continent combined made it a challenging2009/10 season. The production of plums in the SouthernHemisphere was 17% down (SA -12% and Chile -21% afterthe earth quake). Although the demand was very strongduring the latter part of the season due to the shortage ofplums, the income of producers was under threat due to afairly strong Rand.The 2009 pome fruit season was a normal season and thepome crop was 1% lower than last season. The total applecrop was 6% (1,5 million cartons) lower compared to lastyear. Forelle pear volumes were 6% higher than last yearmainly due to new hectares that were coming into production.The total pear crop was also 9% (1,28 million cartons) highercompare to last year.Notwithstanding the apple crop in the Southern Hemisphereat 10,5 million cartons lower than last year, the apple stockin the EU Continent was 24,8 million cartons (62%) higherthan last year, a record for the last 4 years. This illustratesthe difficult season end for apples due to the worldwiderecession and oversupply of apples. On the whole thepome season were fairly moderate and volumes were 7%(2 582 915 cartons) above budget due to the positiveexchange rate during 2009.DAFF recently lifted the ban on importing apples from theUSA and apples were imported during December 2009 forthe first time from the USA. These apples were imported atR200 per carton.PPECB | annual report | 2009 - 2010 49

Active stakeholder engagement resulted in PPECB contributingintensely towards actively managing the Cold Chainrequirements for the plum variety Songold; providing avalue added weekly Statement of Fact for plum exports tothe industry, assistance with the development of localstandards and requirements for stone and pome fruit andthe effective execution of the 8 weeks storage period forForelle pears. PPECB continued its partnership with the stoneand pome industry in supplying accurate and timelyinformation.Programme: Table GrapesFavourable local market conditions and initial inclement(rainy) weather conditions in the Northern Regions were thecause for a 2 week late start to the 2009/10 table grapeseason. Furthermore poor weather conditions also attributedto the outbreak of Downy Mildew in Paarl and neighbouringareas. Preventative actions were unsuccessful with continuousdownfall of rain every second day with high humidityconditions. Downy Mildew contributed to an estimatedoverall loss of 1,4 million (4,5 kg) cartons of table grapes inthe Western Cape.Despite these negative conditions, the overall condition andquality of table grapes were very good in the high volumeareas of the Orange River and the Hex River Valley. Producers,as in the previous season, yet again managed to showexcellent discipline regarding harvesting grapes with anoptimum internal quality.Market conditions during November, December and thebeginning of January were favourable due to the lack ofsupply of competing countries in the Southern Hemisphere.Market conditions became negative during mid Januarywith Chile becoming more active in the market and thestrengthening of the Rand during mid January. Good qualityand grapes with good condition were supplied up to theend of season ensuring sustainability.Notwithstanding the drop in volume caused due to DownyMildew, a total of 52 243 653 cartons were packed.The 1% below the budgeted volume of 52 972 818 cartonsfor 2009/10 budget period was restricted mainly becauseof good quality and higher volumes obtained during themonths of February and March.The review period again saw PPECB continue its partnershipwith the grape industry in support of their competitivenessby providing accurate and timely information that enabledeffective marketing decisions.50PPECB | annual report | 2009 - 2010

Programme: Subtropical and Other ProductsThe 2009 avocado season reached an average export volumeof 9,7 million cartons, well below the record crop in excessof 12,5 million cartons experienced during the previous season.The lower volumes were due to unfavourable climatic conditionsand Cercospera in certain areas. Export markets howeverremained favourable throughout the season due to the higherdemand and well coordinated volumes during peak deliveryperiods. The industry also had to contend with a local marketwhich continued to absorb large quantities of avocados atfresh produce markets, retail outlets and the informal sector.Mango exports continued to decline as has been the trendfor the last few years, and litchi crops saw a 8% belowbudgeted figure; reasons which could be ascribed to increaseddemand for mangoes on the local market including theinformal sector, and due to high quantities attracted forprocessing. Lower onion and other vegetable volumes wereexported due to lower demand and prices overseas resultingfrom the global credit crunch.The groundnut sector experienced a crop of just below20 000 metric tons recorded for export during the fiscal yearwhich has been characterised by an additional effort fromthe PPECB to reduce aflatoxin risks at the point of export.Other noteworthy movements were red tea showing anupward trend.Due to the volatility of volumes, cost containment withinthis program demands a “hands on” approach duringmanagement of key activity drivers.Further highlights of the programme involve the PPECB’scontribution to the management of maturity testing onavocados as part of a SAAGA local market campaign.The 2009/10 year also saw the commencement of a producttraining service for the Johannesburg Market, the biggestfresh produce market in Africa. QC personnel and floorinspectors have been trained in at least 6 product modulesin Johannesburg Market’s endeavour to revolutionise its“market of the future” programme based on food safety andquality. The PPECB committed to capacity building programmeswith individuals acquiring a basic understanding of the principlesand requirements involved with the inspections of fresh qualityproduce commonly traded at the market. This venture is thebeginning of the first phase of capacity building of this strategicpartner with the programme destined to reach the premisesof Johannesburg Market suppliers as well as strategic allianceswithin the SADC region over time.PPECB | annual report | 2009 - 2010 51

value added servicesPPECB’s Value Added Services division experienced somesignificant staff movements during the year in review. Thesestaff movements were largely confined to managerial positionsleaving core service delivery capability intact and continuityunaffected. Notwithstanding these changes, the division alsomanaged to maintain a clear focus on its strategic directionas contained in the 5 year corporate strategic plan.The year in review again saw the organisation’s accreditationsbeen subjected to scrutiny by the South African NationalAccreditation System (SANAS). In this regard managementcan very proudly boast that all accreditations includingISO 17021, ISO guide 65 and ISO 17025 were reconfirmedwhich supports our efforts in expanding our service offeringsunder these accreditations.Pursuant to its goal of acquiring the coveted ISO 17020accreditation for competent inspection bodies, PPECBrecommissioned a project in this regard and together withits sister Harmonization Programme, which measuresconsistent interpretation and application of product qualitystandards, have made huge inroads as to the inspectorate’sstate of readiness and eventual accreditation.PPECB’s Mycotoxin Analytical Laboratory, situated in Pretoria,posted good financial results on the back of a very goodgroundnut export season. Holding the industry benchmarkfor turnaround times and volume capacity for mycotoxinanalysis, the lab continues to be one of the biggest mycotoxinlaboratories in the world, with service excellence second tonone. The laboratory is poised to expand its service offeringsto include additional analysis using existing GC and HPLCtechniques mainly due a significant increase in demand forthese services by our current client base.Our Cold Chain Research and Development Unit took theopportunity to review its strategy going forward. A completelyrevamped R&D strategy has been approved and some of theplans have already been actioned in the period under review.The importance of continued Cold Chain research anddevelopment has been reconfirmed by PPECB’s Board of Directorsrepresenting industries and understood by importantstakeholders, such as Government, thereby laying the foundationfor repositioning the unit’s output to further support the exportcompetitiveness of the industries that PPECB serves.Further momentum was gained in terms of PPECB’s effortsto contribute to the overall development of the horticulturalsector in South Africa during the reporting period. PPECBhas partnered with the National Agricultural MarketingCouncil and the Johannesburg Fresh Produce Market inidentifying needs in the small scale farmer sector and todeliver skill transfer programmes and compliance trainingand awareness.PPECB Analytical LaboratoryThe laboratory has excelled in technically optimising itsaccuracy and efficiencies of existing and new analyticalmethods of mycotoxin analyses. The laboratory utilisessensitive, ISO 17025 accredited analytical systems for thetesting of mycotoxins. The efficiency of the methods employedenables the testing facility to expand to the point where it52PPECB | annual report | 2009 - 2010

can analyse up to 200 samples per day. The laboratory hasalso continued to focus on expanding into dried fruit, treenuts, spices and consumer food product market segments,generating income from mycotoxin analyses of these matrices.Expanding into a fats analytical programme, the laboratoryhas seen an increased demand for analyses of foodcommodities for fat content (trans fats, unsaturated vs.saturated fatty acids) and rancidity.CertificationsThe certifications unit showed positive client growth despitethe economic down turn. This correlated well with a continuedimprovement in turnaround times, service delivery and thenational accessibility of our service countrywide. AlthoughHACCP certifications have showed a distinct upturn,GlobalGAP certifications remained the major income generatorfor the unit in the period under review. The greatly anticipatedpublication of the Consumer Protection Act has sparkedrenewed vigour and demand in the certification space whichprompted management to track developments and impactson the industry closely throughout the review period. Duringthe reporting period, the certifications unit added ISO 22000to its service offering which further includes GlobalGAP;BRC; HACCP; LEAF; 360 Quality; Tesco Nurture and RetailSupplier audits.Cold Chain R&DEmanating from its approved 3 year strategy, the R&Dprogramme has identified and commissioned various appliedresearch projects during the period under review: Conductingsuccessive research trials to review and update the currentpost harvest recommendations within the Cold Chain, forall major perishable products destined for export. 2 Furtherco-funded projects to record the “Post-harvest Biology andTechnology of Leucadendron and Leucospermum under ColdStorage” and the “Development of Post-harvest and ShippingProtocols for South African Pomegranate – An emergingExport Crop” have already produced initial results in thereporting period. A further project will look into investigatingthe non-destructive monitoring and prediction of rind qualityin citrus fruit in an attempt to use alternative post harvestmethodologies.Training and DevelopmentThe delivery of training services were limited during thereview period mainly due to the ramp up phase associatedwith properly constructed outcomes based training materialthat attracted the focus of many subject matter experts atPPECB. In addition, training was also limited to needscontained in partnership agreements where predeterminedskills transfer programmes were driving delivery. Once a fullyconstituted training services menu has been finalised, theservices will become available to the broader spectrum ofthe market.Our development efforts with small scale farmers hasproduced a further 9 farmers certified to globally recognisedgood agricultural practices. Furthermore, a total of8 small scale farmers received good agricultural practicepre-audits to determine their compliance GAPS. These farmerswill be further assisted to close out all findings to becomecompliant.PPECB | annual report | 2009 - 2010 53

corporategovernancecontentsRisk ManagementTop 5 Risks5556Structure58Materiality Framework61Controls62Looking Ahead62Administration62Audit Committee Statement of Responsibility6354PPECB | annual report | 2009 - 2010

isk managementPPECB is committed to the principles and values of goodcorporate governance and a fundamental part of this iseffective risk management. In compliance with the provisionsof the PFMA, risk management is not a compliance issuebut a business imperative. We remain committed todeveloping and growing the business of PPECB within ourBoard-determined risk appetite.The Board, through the Risk Management Committee, isultimately responsible for risk management process andcontrols. The Risk Management Committee assists the Boardin fulfilling its oversight role. The Board approves riskmanagement policies and its strategy and ensures thatmanagement has adequately discharged their responsibilityof designing appropriate structures, systems and controls tointegrate risk management into day-to-day activities.The Risk Management Committee advises the Board on theidentification and management of the main risks withinPPECB. Annual risk assessments are conducted to ensurethe effectiveness of the risk management policy andstrategies. The Risk Management Committee itself is annuallyassessed to ensure its value, effectiveness and to makerecommendations on improvements.The Risk Management Committee strategy is that risks, bytheir very nature, are not static, hence the vigilant approachto risk management. PPECB mitigating strategies areconstantly being monitored and adapted. Regular feedbacksand reports are provided to the Risk Management Committeeen route to the Board.PPECB is committed to increasing value and growing thebusiness but seek to do this in a controlled environment.Despite a tough economic environment in 2009, ExecutiveManagement and the Board has remained closely involvedwith risk management initiatives and risk management strategieshave proven effective throughout the year under review.Responsibility and accountability for risk management resideat all levels within the organisation. Every business unit isrepresented on the Risk Management Committee. PPECBuses the 3 line of defence model: the business unit managerwho is responsible for day-to-day risk management activities;the Risk Management Committee responsible for the riskmanagement framework and policy, oversight andindependent reporting; and finally the internal audit functionwhich provides an independent assessment of the adequacyand effectiveness of the risk management framework andrisk governance structures.The Year under ReviewOur focus for the year was aimed at reinforcing the buildingblocks that have been established in the previous years. Oneof the key focus areas was to strengthen the risk maturityin the organisation through developing a risk managementculture. During the year under review, PPECB provided riskmanagement training to all its key business managers. Riskmanagement strategies are deployed throughout ourorganisation in the form of operational strategies, measurableaction plans and projects. This is rigorously monitored bythe responsible project leader.The Risk Management Committee has refined its riskmanagement framework, strategies and policies to alignthese with best practice.The main threats to PPECB are emanating from the HR andIT areas. Capacity and retention of skill remain an area ofconcern for PPECB. There is continued focus on employingand retaining high-quality people. It is essential for PPECBto remain technologically relevant to be able to deliver onits objective to be a credible source of information. The Boardhas recognised that PPECB needs to invest significantly in ITinfrastructure and capacity.During the year under review, the annual risk assessmentwas attended by members of the Board, ExecutiveManagement and the Risk Management Committee andwas externally facilitated. The purpose was to ensure thatthere is a uniform understanding of the risks facing PPECBand application of risk management strategies.There has been significant improvement in the risk maturityof the organisation. To support and grow the culture of riskawareness in the business, training programmes and systemswill be implemented and will serve to reduce risk exposureand increase day-to-day accountability within PPECB.PPECB | annual report | 2009 - 2010 55

Top 5 RisksPPECB Discloses its Top 5 Risks:RiskNo.Risk Cause ResponseRiskCategoryResidualRiskExposure1 Motivatedemployees toensure delivery onoperational andstrategic objectives.- Poor relations with staff.- Non-recognised performancemanagement system.- Lack in support systems tostaff.- Employee Wellness Policyimplemented.- Performance ManagementSystem that coaches, evaluatesand rewards employees for goodperformance implemented.- Preparing the environmentfor the Employee SatisfactionSurvey will be conducted in2010 and then every 2 years.- Dialogue completed andsubmission made to Exco.- Development andTransformation Committeeapproved in May 2010.- Review the services of theAdministrator to the Fund.- Review the services of theConsultant to the Fund.- Benchmark the current Fundstructure with other similarFunds simultaneously benchmarkingthe Administration andConsultant services and costs.- Annual Newsletter, Bi-annualRoadshow, Monthly Index,Intranet (member guide andinformation guide).Operational56%2 Cost escalation inproviding services.- Current inspectionmethodologies are expensiveand does not consider risk.- Escalating inland loadingpoints.- The impact of qualitymanagement systems onthe risk of non-complianceneeds to be considered.- Inspection systems createresource constraints.- Client perceptions that costsare too high.- Actively pursuing risk baseapproach for inspectionmethodology.- Investigate and evaluatealternative methodologies forcontainer loading for certainagriculture products.- Project definition report andJoint Steering Committee formedbetween PPECB and DAFF forstrategic projects e.g. alternativesampling methodology.- Monitor expenses and testbudget against a zero base.- Re-engineer processes toimprove process efficienciesand reduce lead times.Strategic56%3 PPECB’soperational modelis designed toensure theeffective andefficient delivery ofcore functions.- Misaligned processes maylead to reputational damage,claims, loss of clients and notdelivering on PPECB'smandate.- High demand for timelymanagement information tosupport decision-making inoperations and management.- Inefficiencies of currentprocesses.- Insufficient skills and capacityto perform business analysis.- Project team focuses onaligning and integrating exportcertification processes, bothmanual and flow of informationprocesses.- Value Added Services ensurecompliance to SANASaccreditation requirements.- Introduce internal audit onregulatory processes.- The SLA's between PPECBand customers ondeliverables to manageexpectations, within reason.Operational56%Risk 3 Causes continued on page 57. Risk 3 Responses continued on page 57.56PPECB | annual report | 2009 - 2010

RiskNo.Risk Cause ResponseRiskCategoryResidualRiskExposure3 PPECB’soperational modelis designed toensure theeffective andefficient delivery ofcore functions.- All critical business processeshave not been published inpolicies and procedures.- National resource planningensures effective and efficientdelivery of core business.- Evaluation by HarmonizationProgramme (SOP) supporteffective and efficient deliveryof services (Including specificCBS training interventions).- ISO17020 certification in process.The document review for theprocess will be implemented.- Operational roll out of updateprocedures (in alignment withISO 17020)- Harmonization implementedon all main products excluding subtropicalproducts. Partial implementationin Cold Chain Services.Operational56%4 Impact of externalinfluences /environment onfinancial results ofPPECB.- Changes in volumes couldlead to costs not recovered,financial losses.- Climatic influence onvolumes resulting in loss ofbusiness.- Global warming.- Carbon footprint.- Climatic conditions.- Floods, rain, drought, hailstorms, etc.- Worldwide recession.- Land claims on commercialfarm land may result inreduced production andexport.- Water quality.- Political Influence.- Water footprint.- Illegal exports.- Continuous environmental scanas part of the strategicmanagement process.- Volumes are re-estimated ona bi-annual basis.- Reserves are maintained tosustain operations in case offinancial distress.- Monthly Debtors ManagementMeeting.- Operations monitor volumesand performance of activitypoints and compare resultsto previous years.- Established an Academy toprovide training in GAP toemerging farmers.- Carbon footprint project hasstarted. A committee dealingwith the reduction of PPECB'scarbon footprint has been formed.- Conducting an analysis of theimpact of land claims on ourbusiness.- PPECB reported illegal exportsto DAFF and have an interimarrangements in place.Sustainability56%5 The SA perishableproduct industryhas sufficientcapacity and skillsavailable toimprove SA'sglobalcompetitiveness.- PPECB's second objective isto support the exportcompetitiveness of the SAperishable 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, resourceneeds and implementation actions.- Programme needs to beharmonized with ISO 17020and the AETP programme.- Source funding opportunities.- New R&D strategy in development.- Establish a Training Academyto transfer skills.- Capacity building initiativeimplemented with JohannesburgMarket.- MOU development for mediumto long term synergies whichinclude broader capacity building.- Capacity building initiativewith Egypt under development.Strategic28%PPECB | annual report | 2009 - 2010 57

structureThis corporate governance statement sets out the governanceframework adopted by the PPECB Board and highlights thekey activities for the year under review.The Board’s approach to governance is based on theunderstanding that sound governance practices arefundamental to earning the trust of our stakeholders. Ourstakeholders include Government, industries we serve, ouremployees, our clients, our service providers and thecommunities which we serve.The governance framework enables the Board to fulfil itsrole of providing oversight and strategic counsel in balancewith its responsibility to ensure conformance with legislativeand regulatory requirements and risk tolerance. It also providesthe parameters for delegating its authority.Compliance with applicable legislation, and in particularPPECB’s enabling legislation: the PPEC Act 9 of 1983; theAPS Act 119 of 1990 and the Public Finance ManagementAct 1 of 1999, as well as regulations, standard, protocolsand codes is an essential characteristic of the PPECB culture.PPECB welcomes the publication of King III and has investedwisely in training management and the Board on therecommendations of the report. Management is analysingthe requirements to ensure implementation in the comingmonths.Board of DirectorsThe PPECB Board is structured in accordance with the PPECAct, with the Board members appointed by, and accountableto, the Minister of Agriculture, Forestry and Fisheries. TheBoard is comprised of non-executive Directors, representingindustries in which PPECB operates.Details of members of the Board are disclosed in the Director’sreport. The roles and responsibilities of the Board are definedin the PPEC Act.The Board meets at least 4 times in a year with special oradditional 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 to31 March 2010 is set out below:Member 21/5/09 27/8/09 21/11/09 11/3/10E AlexanderChairpersonCA AtkinsHP BooysenCH EngelbrechtAM HawesM MannyaM MokoeneVice ChairpersonA RabeC SixoloL VorsterPresentAbsent with apologyThe ChairpersonThe Chairperson of the Board is Mrs Elaine Alexander. Sheis responsible for the effective functioning of the Board, withher primary duties being to:Preside over meetings of the Board of Directors toensure their smooth functioning.Serve as the main informal link between the Boardand the Executive Management to provide supportand advice while respecting executive responsibility.;Serve as the main link between the Board and theMinister for Agriculture, Forestry and Fisheries.Ensure that regular and objective appraisals ofindividual directors, as well as of the Board itself andits committees, are completed to assess the Board’seffectiveness.Assist with the formulation of the annual work plan forPPECB Board and ensure that it is strictly adhered to.Lead and direct the proceedings, deliberations anddecisions of the Board.The Chairperson’s term of service ends on 31 March 2010and is extended until 30 June 2010. Vice Chairperson is MrMolefe Mokoene and he serves the same term of office.

The Audit CommitteeThe Role of the CommitteeActs in accordance with the requirements set out inthe Public Finance Management Act and TreasuryRegulations.Reports to the Board and has the authority to makerecommendations.Met 3 times this year.The Executive CommitteeThe PPEC Act provides for the certain powers of the Board tobe delegated and the Board has consequently delegated itspowers pertaining to the day-to-day operations of the businessto the Chief Executive Officer. The Executive Committee assiststhe Chief Executive Officer in executing these duties.The Executive Committee meets formally every 2 weeks andadditional formal and informal meetings are scheduled onan 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 accordancewith the delegation of authority.Mr Luvuyo Mabombo is the Chief Executive Officer.The Composition of the CommitteeThe Audit Committee comprises of 3 non-executive Directors.Members of management, external and internal audit attendmeetings by invitation. Members of the external and internalaudit have unrestricted access to members of the AuditCommittee and its chairman, thereby maintaininguncompromised independence.Members of the committee and their attendance record areset out below:Member 20/5/09 26/8/09 5/3/10A RabeChairpersonCA AtkinsL VorsterPresentAbsent with apologyThe Human Resource CommitteeThe Role of the CommitteeThe Board CommitteesIn order to discharge its duties more effectively, the Board hasapproved and delegated authority for specific matters tovarious committees. These committees have been establishedto ensure that operational performance and risk managementare monitored. These committees serve under written andapproved charters, which are reviewed and updated annually.The minutes of all Board committee meetings are presentedto the Board for information.Specific responsibilities are delegated to the followingcommittees to support the functioning of the Board:Audit CommitteeHuman Resource CommitteeRisk Management CommitteeReviews all aspects relating to human resources.Monitors compliance with the relevant employmentand labour legislation.Met 4 times this year.Members of the committee and their attendance record areset out below:Member 20/5/09 26/8/09 26/11/09 10/3/10HP BooysenChairpersonE AlexanderA RabePresentAbsent with apologyPPECB | annual report | 2009 - 2010 59

The Risk Management CommitteeThe Role of the CommitteeAdvises the Board on risk management processes.Develops risk strategies and policies.Met 4 times this year.Members of the committee and their attendance record are set out below:Member 15/4/09 3/6/09 2/10/09 16/11/104/3/10A FortuneChairpersonL Groenewald-N MbokaneZ MakhayeJ SchwiebusS van WykW van ZylR RobinsonC. Farrell(Internal Audit)Present Absent with apology By invitation - ResignedCorporate SecretariatPPECB employs a Company Secretary, Ms Adela Fortune, who in addition toperforming statutory functions, also supports the Executives and Directors alikeensuring the effective functioning of the Board and its committees.Board members receive annual and ongoing training on corporate governanceby reputable service providers. Board members also have access to appropriateinformation and to the advice and services of the Company Secretary.60PPECB | annual report | 2009 - 2010

materiality frameworkThe framework of acceptable levels of materiality and significance applied during 2009/10, for the purpose of interpretationof, and compliance with, the PFMA (as amended) is the following:PFMA Section Quantitative (Amount) Qualitative (Nature)(1)(c)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.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 whichspecific disclosure is requiredby legislation, King III Reportor GRAP.- Any fact discovered of whichits omission or misstatement,in the Board's opinion, couldinfluence the decisions oractions of the executiveauthority or legislature.(2)(b)(c)(d)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 ina company.- acquisition or disposal of a significant asset.- commencement or cessation of a significant businessactivity.Acquisition or disposal of asignificant asset;- Acquisition: Market valuegreater than Materiality figure- Disposal: Market value greaterthan 50% of Materialityfigure.- Any participation outside ofthe approved strategic planand budget.- Any acquisition or disposal ofany asset that would increaseor decrease the overalloperational functions of theBoard, outside of the approvedstrategic plan and budget.- Disposal of the major part ofthe assets of the Board.- Any business activity thatwould increase or decrease theoverall operational functionsof the Board, outside of theapproved strategic plan andbudget.(2)(a)(b)(i)(ii)(iii)(iv)(v)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, itsbusiness, its financial results, its performance againstpredetermined objectives and its financial position asat the end of the financial year concerned.- include particulars of-- any material losses through criminal conduct and anyirregular expenditure and fruitless and wastefulexpenditure that occurred during the Financial Year.- any criminal or disciplinary steps taken as aconsequence of such losses or irregular expenditureor fruitless and wasteful expenditure.- any losses recovered or written off.- any financial assistance received from the state andcommitments made by the state on its behalf.- any other matters that may be prescribed.- Losses through criminalconduct.- any loss identified.- Losses through anyexpenditure.- if the combined totalexceeds the planningmateriality figure afterconsultation with the AuditCommittee for the yearunder review.- Any irregular, fruitless andwasteful expenditure asdefined by the PFMA will bereported.Any identified loss throughcriminal, reckless or negligentconduct.Section 66 (1) / Restrictions on borrowing, guaranteesand other commitmentsRnilThis 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)).PPECB | annual report | 2009 - 2010 61

controlsInternal ControlInternal control is a process designed to provide reasonableassurance on the achievement of organisational objectives.The Board has ultimate responsibility for internal control.The Executive Management, as mandated by the Board, hasestablished a system of control to manage significant risks.Ongoing monitoring and reporting processes by the RiskManagement Committee provide for high-level assessmenton the status of internal controls. The Board also receiveassurances from the Audit Committee, which derives someof the information from regular internal and external reports.AuditInternal audit is outsourced to KPMG. Internal audit provides theAudit Committee and Management with reasonable assurancethat 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 appraisaland evaluation of the risk management processes, internalcontrols and governance processes as well as by identifyingcorrective actions and suggested enhancements to thecontrols and processes. The risk-based audit plan focuses onthe major risks emanating from the organisation’s internalrisk assessment process.Internal audit is fully supported by the Board and the AuditCommittee and has unrestricted access to all organisationalactivities, records, property and personnel.The external auditors are, as per statutory requirement,responsible for independently auditing and reporting on thefinancial statements in conformity with International Standardsof Auditing.The external auditors are PriceWaterhouseCoopers.Business ConductPPECB has adopted a Code of Ethical Conduct which isapproved by the Board. Compliance to this code is closelymonitored by Executive Management and the RiskManagement Committee and awareness of ethical behaviouris encouraged by regular communications with employeesand an externally monitored Fraud and Ethics Hotline. PPECBaccepts its duty to address matters of significant interest andconcern to all stakeholders, taking into account greaterdemand for accountability.looking aheadThe Board is preparing the organisation for implementation of King III requirements. PPECB continues to review andmonitor legislative and regulatory developments to ensure the business is prepared to respond appropriately. Ofsignificant interest to PPECB is the implementation of new or amended legislation relating to competition, privacyof information and consumer protection. Finally, the internal governance structures are being assessed to ensurenew requirements are being met.administrationExternal Auditors: PriceWaterhouseCoopersInternal Auditors: KPMGBusiness Address: 45 Silverboom Ave, Plattekloof, 7500Postal Address: PO Box 15289, Panorama, 7506Telephone: +27 21 930 1134Facsimile: +27 21 939 6868Website: www.ppecb.com62PPECB | annual report | 2009 - 2010

audit committeestatement of responsibilityThe Audit Committee reports that it has complied with its responsibilities arising from Section 38(1)(a) ofthe Public Finance Management Act 1 of 1999 and Treasury Regulations 3.1.13. The Audit Committeealso reports that it has updated and adopted appropriate formal terms of reference as its Audit CommitteeCharter, and have executed its affairs in compliance with this charter and has discharged all its responsibilitiesas contained therein.All weaknesses in internal control reported by the internal and external auditors to the Audit Committeehave 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 reportedand 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 serviceprovided and has recommended to the Board of Directors the continued appointment ofPriceWaterhouseCoopers for the Financial Year. In the period under review the Committee has reviewedthe scope of the interim review and year end audit including the Materiality level. Auditor independenceis discussed and confirmed at each meeting.Evaluation of Financial StatementsThe Audit Committee has:Reviewed and discussed the audited annual financial statements to be included in the Annual Reportwith 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 auditedfinancial 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 theBoard of Directors at their meeting held on 19 May 2010.29 / 07 / 2010A RabeChairperson of the Audit CommitteeDatePPECB | annual report | 2009 - 2010 63

annualfinancialstatements31 March 2010contentsStatement of Responsibility by the Board of PPECB65Independent Auditor’s Report66Directors’ Report68Statement of Changes in Net Assets70Statement of Financial Position71Statement of Financial Performance72Cash Flow Statement72Notes to the Financial Statements73Detailed Statement of Financial Performance - unaudited8964PPECB | annual report | 2009 - 2010

statement of responsibilityby the board of PPECBThe Directors are required by the Public Finance Management Act, to maintain adequate accounting records and are responsiblefor the content and integrity of the financial statements and related financial information included in this report. It is theirresponsibility to ensure that the financial statements fairly present the state of affairs of the entity as at the end of the financialperiod and the results of its operations and cash flows for the period then ended, in conformity with the Standards of GeneralRecognised 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 uponappropriate 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 theentity and place high importance on maintaining a strong control environment. To enable the Directors to meet theseresponsibilities, the Directors set standards for internal control aimed at reducing the risk of error or loss in a cost effectivemanner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accountingprocedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughoutthe entity and all employees are required to maintain the highest ethical standards in ensuring the entity’s business is conductedin 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 internalcontrol 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 materialmisstatement or loss.The going concern basis has been adopted in preparing the financial statements. The Directors have no reason to believe thatthe entity will not be a going concern in the foreseeable future, based on forecasts and available cash resources. These financialstatements 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 signedon their behalf by:E AlexanderChairperson of the BoardS E MokoeneVice ChairpersonPPECB | annual report | 2009 - 2010 65

independent auditor’s reportINDEPENDENT AUDITOR’S REPORT TO PARLIAMENT AND THE MEMBERS OF THE BOARD OF THEPERISHABLE PRODUCTS EXPORT CONTROL BOARD FOR THE YEAR ENDED 31 MARCH 2010REPORT ON THE FINANCIAL STATEMENTSIntroductionWe have audited the accompanying financial statements of the Perishable Products Export Control Board, which comprisethe statement of financial position as at 31 March 2010, and the statement of financial performance, statement of changesin net assets and cash flow statement for the year then ended, and a summary of significant accounting policies and otherexplanatory 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 withSouth African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and in the manner required bythe Public Finance Management Act of South Africa. This responsibility includes: designing, implementing and maintaining internalcontrol relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whetherdue to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonablein the circumstances.Auditor's ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with International Standards on Auditing. Those standards require that we comply with ethical requirements andplan 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 misstatementof the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internalcontrol relevant to the Board's preparation and fair presentation of the financial statements in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Board'sinternal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof 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 ProductsExport Control Board as at 31 March 2010, and its financial performance and its cash flows for the year then ended inaccordance with the Standards of GRAP and in the manner required by the Public Finance Management Act of South Africa.66PPECB | annual report | 2009 - 2010

Other MattersWithout qualifying our opinion, we draw attention to the fact that supplementary information set out on page 89 does notform part of the annual financial statements and is presented as additional information. We have not audited this scheduleand, accordingly, we do not express an opinion thereon.REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTSIn terms of the Public Audit Act of South Africa and General notice 1570 of 2009, issued in Government Gazette No. 32758of 27 November 2009 we include below our findings on the report on predetermined objectives, compliance with the PFMAand financial management (internal control).FindingsPredetermined objectivesThere are no significant findings to report.Compliance with laws and regulationsNo material issues were noted relating to legal compliance during the audit.INTERNAL CONTROLWe considered internal control relevant to our audit of the financial statements and the report on predetermined objectivesand 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 IncDirector: JM CalitzRegistered AuditorCape Town28 May 2010PPECB | annual report | 2009 - 2010 67

directors’ reportIntroductionThe Board of Directors has pleasure in presenting its reportand the audited financial statements of the PerishableProducts Export Control Board (The Board) for the year ended31 March 2010.OwnershipThe Perishable Products Export Control Board is a statutoryentity and is listed as a Schedule 3A, national public entityin South Africa. It is accountable to the Minister of Agriculture,Forestry and Fisheries.Principle ActivitiesThe Board conducts its business by bringing about the orderlyand efficient export of perishable products from the Republicof South Africa, in terms of the Perishable Products ExportControl Act 9 of 1983. It also operates as an assignee forthe Department of Agriculture, Forestry and Fisheries underthe requirements of the Agricultural Product Standards Act119 of 1990. PPECB was established in 1926.PPECB BoardThe present members of the PPECB Board are:Mrs E Alexander(Chairperson)Mr S E Mokoene(Vice Chairperson)Mr CA AtkinsMr HP BooysenMs MC SixoloMs CH EngelbrechtMr AM HawesMr A RabeMr L VorsterMs BM MannyaDeciduous Industry RepresentativeOrganised Agriculture RepresentativeFishing Industry RepresentativeObserverVegetable Industry RepresentativeCitrus Industry RepresentativeMinisterial RepresentativeDeciduous Industry RepresentativeSubtropical Industry RepresentativeObserverFinancial ResultsThe financial results of the Board are set out in the attachedfinancial statements.Going ConcernThe financial statements have been prepared on the basisof accounting policies applicable to a going concern as theentity had a reserve fund of R77,914,814. This basis presumesthat funds will be available to finance future operations andthat the realisation of assets and settlement of liabilities,contingent obligations and commitments will occur in theordinary course of businessEvents Subsequent to Balance Sheet DateNo matter which is material to the financial affairs of theBoard has occurred between the balance sheet date and thedate of approval of the financial statements.Compliance with LegislationThe Department of Agriculture is in the process of reviewingthe Perishable Products Export Control Act 9 of 1983 andAgriculture Products Standard Act 119 of 1990.Sections 51 and 55 of the PFMA impose certain obligationson the Board and these relate to the prevention, identificationand reporting of all fruitless, wasteful and irregular expenditureand collection of all revenue. In order to comply with theseobligations, the Board of Directors has prepared a materialityframework.The Directors believe that the Board has, during the year,complied, in all material respects, with all legislation andregulations applicable to it, including without limitation, thePublic Finance Management Act, 1 of 1999, the TreasuryRegulations 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.68PPECB | annual report | 2009 - 2010

Remuneration ReportBoard of DirectorsThe Directors of the Board are appointed by the Minister of Agriculture, Forestry and Fisheries for a 3 year term. Fees paid tothe Directors vary based on their appointments to the various committees of the Board. Fees paid to the Directors servingon the Board of Directors as at 31 March 2010 are:FeesOtherPayments20102009Mrs E AlexanderChairperson106,74738,677145,424145,976Mr SE MokoeneVice Chairperson62,4034,22766,63060,022Mr CA Atkins 74,18735,772109,959121,239Mr HP Booysen 84,438-84,43884,086Ms MC Sixolo 41,9982,88044,87850,158Ms CH Engelbrecht 34,16012,94847,10857,336Mr AM Hawes ---8,131Mr A Rabe 118,5983,065121,663110,873Mr LL Vorster 68,32030,46098,780124,210Ms BM Mannya 41,9987,16949,16744,579632,849135,198768,047806,610Executive Management MembersAll senior executives of the Board are employed on a full-time basis. Remuneration paid to Executives in service of the Boardon 31 March 2010 are:SalaryAllowancePaidRetirementBenefit FundContributionOtherPayments 20102009Mr L Mabombo 1,325,729 130,000 223,908- 1,679,637 1,745,257Mr D Martin 458,572 420,000 51,189 28,791 958,552 1,018,610Dr G Bruwer - - -- - 1,776,493Mr JA Schwiebus 886,638 80,000 164,956 20,637 1,152,231 1,221,604Mr Z Makhaye 709,643 12,000 79,216 35,721 836,580 571,086Ms A Fortune 515,166 250,000 57,507 339 823,012 767,0503,895,748 892,000 576,776 85,488 5,450,0127,100,100A performance bonus was paid to the employees of PPECB according to the principles as approved by the Board of Directorsin March 2010. This bonus payment related to the 2010 financial year. The amount that was allocated to the ExecutiveManagement members totalled to R379,372. The bonus payment is not included in the amounts above.PPECB | annual report | 2009 - 2010 69

statement of changes in net assetsNet AssetsNotes2010R2009RSurplus levy for disposal in terms ofSection 18(8) and (9) of Act No 9 of 1983At beginning of year --Surplus for the year 19,540,448 17,358,327Transfer 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 (19,010,448) (15,705,369)At end of year --Reserve fundAt beginning of year 58,904,366 43,198,997Transfer from surplus levy for disposal in terms19,010,448 15,705,369of Section 18(8) and (9) of Act No of 1983At end of year 77,914,814 58,904,366Self-insurance reserve 2At beginning of year 3,690,0003,160,000Transfer from surplus levy for disposal in termsof Section 18(8) and (9) of Act No of 1983530,000530,000Excess paid on insurance claim --At end of year 4,220,0003,690,000Asset replacement fund 2At beginning of year 5,582,0714,459,113Transfer from surplus levy for disposal in terms-1,122,958of Section 18(8) and (9) of Act No of 1983At end of year 4,220,0003,690,000Revaluation reserve 2At beginning of year 9,791,2639,791,263Revaluation of property --Transfer to suplus levy on revaluation of property --Realised on disposal of property --At end of year 9,791,2639,791,263The Board applied to the Minister of Agriculture, Forestry and Fisheries on 16 January 2009 for approval to increase the reservefund level to R75,000,000 with effect from 31 March 2008 and to be adjusted annually thereafter by the annual CPIX asannounced by SA Statistics. Based on above, the reserve level at 31 March 2010 will be R85,305,150. The current level ofreserve fund, which was approved by the minister in October 2004, is R46,306,834.70PPECB | annual report | 2009 - 2010

statement of financial positionAssetsNotes2010R2009RNon-Current assetsProperty, plant and equipment 5 15,661,750 16,640,08615,661,75016,640,086Current assetsFinancial assets - Held to maturity 6 63,550,366 46,369,940Trade and other receivables 7 19,596,690 20,803,416Cash and cash equivalents 8 23,127,096 25,182,127106,274,152 92,355,483Total assets 121,935,902 108,995,569Net AssetsNotes2010R2009RReservesReserve fund 77,914,814 58,904,366Self - insurance reserve 4,220,0003,690,000Asset replacement fund 5,582,0715,582,071Revaluation reserve 9,791,2639,791,263Net assets97,508,148 77,967,700LiabilitiesNotes2010R2009RCurrent liabilitiesTrade and other payables 9 23,319,323 21,656,665Receiver of Revenue 991,667912,984Provisions 10116,7648,458,22024,427,75431,027,869Total equity and liabilities 121,935,902 108,995,569PPECB | annual report | 2009 - 2010 71

statement of financial performanceNotes2010R2009RRevenue 11 145,405,530 134,880,025Other income 12 7,195,2917,843,810Employee compensation and benefits 13, 18 (93,226,892) (89,884,988)Operating expenses 13 (39,814,939) (35,463,922)Operating surplus19,558,99017,374,925Finance cost 14 (18,542)(16,598)Surplus for the year 19,540,448 17,358,327cash flow statementNotes2010R2009RCash flow from Operating Activities 16,008,389 21,145,993Net cash generated by operations 17 10,715,345 14,923,449Interest received 5,311,5866,239,142Interest paid (18,542)(16,598)Cash Flow from Investment Activities (18,063,420) (22,235,923)Purchase of property, vehicles and equipment (1,069,654) (4,057,474Proceeds on disposal of property, vehicles and equipment 186,6601,517Increase in investments held to maturity (17,180,426) (18,179,966)Financing activities --Increase in Cash and Equivalents (2,055,031) (1,089,930)Cash and Equivalents at Beginning of Year 25,182,127 26,272,057Cash and Equivalents at End of Year 8 23,127,096 25,182,12772PPECB | annual report | 2009 - 2010

notes to the financial statements1 General InformationPPECB (The Board) is a statutory organisation which conductsits business in terms of the Perishable Products Export ControlAct 9 of 1983. The Board also operates as an assignee forthe Department of Agriculture, Forestry and Fisheries underthe requirements of the Agricultural Product Standards Act119 of 1990.PPECB is a Section 3A Public Entity in terms of the PublicFinance Management Act of 1999. The registered office is45 Silverboom Avenue, Plattekloof, Cape Town.2 Summary of Significant Accounting PoliciesThe principal accounting policies applied in the preparationof these financial statements are set out below. These policieshave been consistently applied to all the years presented,unless otherwise stated.2.1 Basis of PreparationThe financial statements have been prepared in accordancewith the effective South African Standards of GenerallyRecognised Accounting Practices (GRAP) issued by theAccounting Standards Board.The financial statements have been prepared under thehistorical cost convention, as modified by the revaluation ofland and buildings, financial assets and financial liabilitiesheld at fair value.The preparation of financial statements in conformity withSouth African Standards of Generally Recognised AccountingPractices (GRAP) requires the use of certain critical accountingestimates. It also requires management to exercise itsjudgement in the process applying its accounting policies.The areas requiring a higher degree of judgementor complexity or areas where assumptions and estimatesare significant to the financial statements are set out innote 4.a) Standards, amendments and interpretations effective in 2010.GRAP 09,GRAP 13,GRAP 14,GRAP 17,GRAP 19,Revenue from exchange transactionsLeasesEvents after the reporting dateProperty, plant and equipmentProvisions, Contingent Liabilities andContingent AssetsIAS 32 (AC125), Financial instruments: Presentation -amendedb) Standards, amendments and interpretations effective in2010 but not relevant.Certain new accounting standards, interpretations andamendments have been published that are mandatory foraccounting periods beginning on or after 1 April 2009 or laterperiods but which the Board has not adopted. None of thesenew standards, interpretations and amendments, as set outbelow, are deemed relevant to the Board's operations.GRAP 04, The Effects of changes in Foreign Exchange RatesGRAP 05, Borrowing costsGRAP 06, Consolidated financial statementsGRAP 07, Investment in associatesGRAP 08, Interest in joint venturesGRAP 10, Financial Reporting in Hyperinflationary EconomiesGRAP 11, Construction ContractsGRAP 12, InventoriesGRAP 16, Investment propertyGRAP 100, Non-current assets held for sale anddiscontinued operationsGRAP 101, AgricultureGRAP 102, Intangible AssetsIFRIC 13, Customer Loyalty ProgrammesIFRS 3, Business combinations - revisedIFRS 6, Exploration for and Evaluation of Mineral ResourcesIAS 12 (AC 102), Income TaxesPPECB | annual report | 2009 - 2010 73

c) Standards, interpretations and amendments to publishedstandards that are not yet effective.Certain new standards, amendments and interpretations toexisting standards have been published that are mandatoryfor the Board’s accounting periods beginning on or after 1April 2010 or later periods but which the Board has not earlyadopted, as follows:GRAP 18, Segment reportingGRAP 21, Impairment of non-cash-generating assetsGRAP 23, Revenue form non exchange transactionsGRAP 24, Budget informationGRAP 25, Employee benefitsGRAP 26, Impairment of cash generating assetsGRAP 104, Financial instrumentsIAS 17 (AC 105), LeasesIAS 27 (AC 132) Revised, Consolidated and SeparateFinancial Statements ( effective July 2009)IFRS 3 Revised, Business Combinations(effective July 2009)IFRIC 17 (AC 446), Distribution of non cash assets to ownersIFRIC 18 (AC 451), Transfer of assets from customersManagement have considered the above and concluded thatit will not have a material effect on the Board's results. Thiswill be reassessed in the future.directly to revaluation reserve. Decreases that offset previousincreases of the same asset are charged against revaluationreserve directly in equity; all other decreases are charged tothe statement of financial performance.Land is not depreciated. Depreciation on other assets iscalculated using the straight-line method to allocate theircost or revalued amounts to their residual values over theirestimated useful lives. The useful lives are approximately:BuildingsFurniture and equipmentTechnical equipmentMotor vehiclesComputer equipment50 years3 - 10 years3 - 8 years5 years3 - 7 yearsCosts associated with developing or maintaining computersoftware programmes are recognised as an expense asincurred. Minor assets of R5 000 or less are charged to thestatement of financial performance in full as an expenditurein the year purchased.The assets’ residual values and useful lives are reviewed, andadjusted if appropriate, at each balance sheet date. An asset’scarrying amount is written down immediately to its recoverableamount if the asset’s carrying amount is greater than itsestimated recoverable amount.2.2 Property, Equipment and VehiclesLand and building comprise mainly office buildings. Freeholdland and buildings are shown at fair value, based on valuationsby external independent valuers every three years, lesssubsequent depreciation for buildings. Any accumulateddepreciation at the date of revaluation is eliminated againstthe gross carrying amount of the asset, and the net amountis restated to the revalued amount of the asset. All otherproperty and equipment is stated at historical cost lessdepreciation. Historical cost includes expenditure that isdirectly attributable to the acquisition of the items.Subsequent costs are included in the asset’s carrying amountor recognised as a separate asset, as appropriate, only whenit is probable that future economic benefits associated withthe item will flow to the Board and the cost of the item canbe measured reliably. All other repairs and maintenance arecharged to the statement of financial performance duringthe financial period in which they are incurred.Increases in carrying value arising on revaluation are creditedGains and losses on disposals are determined by comparingproceeds with carrying amount. These are included in thestatement of financial performance. When revalued assetsare sold, the amounts included in revaluation reserve aretransferred to reserve funds.2.3 Impairment of Non-financial AssetsAssets that have an indefinite useful life, such as land, arenot subject to amortisation and are tested annually forimpairment. Assets that are subject to amortisation arereviewed for impairment whenever events or changes incircumstances indicate that the carrying value may not berecoverable. An impairment loss is recognised for the amountby which the asset's carrying amount exceeds its recoverableamount. The recoverable amount is the higher of theasset's fair value less costs to sell and value in use. For thepurpose of assessing impairment, assets are grouped at thelowest levels for which there are separately identifiable cashflows. Non-financial assets that suffered an impairment arereviewed for possible reversal of the impairment at eachreporting date.74PPECB | annual report | 2009 - 2010

2.4 Financial InstrumentsFinancial instruments carried on the balance sheet includeinvestments, cash and bank balances, receivables, tradecreditors and borrowings. The particular recognition methodsadopted are disclosed in the individual policy statementsassociated with each item. The directors are of the opinionthat the carrying value of financial instruments approximatesfair value.2.5 Financial AssetsThe Board classifies its financial assets as held to maturity.Management determines the classification of financial assetsat initial recognition.This applies to investments where there are fixed ordeterminable payments and fixed maturity dates and theBoard has the positive intent and ability to keep theinvestments until maturity. These investments are measuredand recognised at amortised costs with interest-incomerecognised in the statement of financial performance.Assets in this category are classified as current assets if theyare expected to be realised within 12 months of the balancesheet date.The Board assesses at each balance sheet date whether thereis objective evidence that a financial asset or a group offinancial assets is impaired. If any such evidence exists foravailable-for-sale financial assets, the cumulative loss – measuredas the difference between the acquisition cost and the currentfair value, less any impairment loss on that financial assetpreviously recognised in profit or loss – is removed from equityand recognised in the statement of financial performance.2.6 Trade and Other ReceivablesTrade receivables are recognised initially at fair value andsubsequently measured at amortised cost using the effectiveinterest method, less provision for impairment. A provisionfor impairment of trade receivables is established when thereis objective evidence that the Board will not be able to collectall amounts due according to the original terms of receivables.Significant financial difficulties of the debtor, probability thatthe debtor will enter bankruptcy or financial reorganisation,and default or delinquency in payments are consideredindicators that the trade receivable is impaired. The amountof the provision is the difference between the asset’s carryingamount and the present value of estimated future cashflows, discounted at the original effective interest rate.The carrying amount of the asset is reduced through the useof an allowance account and the amount of the loss isrecognised in the statement of financial performance. Whena trade receivable is uncollectible, it is written off againstthe allowance account for trade receivables. Subsequentrecoveries of the amounts previously written off are creditedin the statement of financial performance.2.7 Cash and Cash EquivalentsCash and cash equivalents includes cash on hand and depositsheld at call with banks and bank overdrafts. Bank overdraftsare shown within borrowings in current liabilities on thebalance sheet.2.8 Trade PayablesTrade payables are recognised initially at fair value andsubsequently measured at amortised cost using the effectiveinterest method.2.9 ProvisionsA provision is recognised in the balance sheet when theBoard has a present legal or constructive obligation as aresult of a past event, and it is probable that an outflow ofeconomic benefits will be required to settle the obligation.If the effect is material, provisions are determined bydiscounting the expected future cash flows at a pre-tax ratethat reflects current market assessments of the time valueof money and, where appropriate, the risks specific to theliability. Provisions are reviewed at each balance sheet dateand adjusted to reflect the current best estimate.2.10 Reservesi) Self-insurance reserve:A self-insurance fund was established to manage theuninsured risks of the Board.ii) Asset replacement fund:This reserve was established to provide for the replacementof computer and technical equipment.iii) Revaluation reserve:This reserve was established due to surpluses that weregenerated on the revaluation of land and buildings.2.11 Revenue RecognitionRevenue comprises the fair value of the consideration receivedor receivable for the sale of services in the ordinary coursePPECB | annual report | 2009 - 2010 75

of the Board's activities. Revenue is recognised in theaccounting period in which the services are rendered, netof Value Added Tax.Revenue is recognised when the amount of revenue can bereliably measured and it is probable that future economicbenefits will flow to the Board. The amount of revenue isnot considered to be reliably measurable until all contingenciesrelating to the delivery of service have been resolved. TheBoard bases its estimates on historical results, taking intoconsideration the type of customer, the type of transactionand the specifics of each arrangement.Interest income is recognised on a time proportion basisusing the effective interest method. When a receivable isimpaired the Board reduces the carrying amount to itsrecoverable amount being the future estimated cash flowdiscounted at the original effective interest rate of theinstrument. Interest income on impaired loans is recognisedusing the original effective interest rate.2.12 OffsettingIf the Board undertakes, in the course of its ordinary activities,transactions that do not generate revenue but are incidentalto its main revenue-generating activities, the results of suchtransactions are presented by netting any income with relatedexpenses arising on the same transaction, when this presentationreflects the substance of the transaction or other event.2.13 LeasesLeases of assets in which a significant portion of the risksand rewards of ownership are retained by the lessor areclassified as operating leases. Payments made under operatingleases are charged to the statement of financial performanceon a straight-line basis over the period of the lease.2.14 Retirement BenefitsThe Board’s contributions to the defined contribution plansare charged to the statement of financial performance inthe year to which they relate.3 Financial Risk Management3.1 Financial Risk FactorsThe Board's activities expose it to a variety of financial risks:market risk (including currency risk, fair value interest raterisk, cash flow interest rate risk and price risk), credit riskand liquidity risk.The Board acknowledges its responsibility for establishingand communicating appropriate risk and control policies andensuring that adequate risk management processes are inplace. The Audit Committee is in place to assist the Boardin discharging its risk management obligations.The principal objectives of risk management are to:Review the Board's risk philosophy, strategy, policiesand processes recommended by senior management;Review compliance with risk policies and with theoverall risk profile of the Board;Review and assess the integrity of the process andprocedures for identifying, assessing, recording andmonitoring of risk;Review the adequacy and effectiveness of the Board'srisk management function and its implementation bymanagement;Ensure that material risks have been identified, assessedand receive attention.The Board's risk management processes, of which the systemsof internal, financial and operating controls are an integralpart, are designed to control and monitor risk throughoutthe Board. For effectiveness, these processes rely on regularcommunication, sound judgement and a thorough knowledgeof statutory and operational activities. Management is taskedwith integrating the management of risk into the day-todayactivities of the Board.Market Risk(i) Foreign currency riskForeign exchange risk arises when future commercialtransactions or recognised assets or liabilities are denominatedin a currency that is not the entity’s functional currency.Foreign currency risk is created due to the influence ofexchange rate fluctuations.The Board has a policy not to take out cover on outstandingforeign currency transactions due to the fact that these takeplace on an ad hoc basis.At balance sheet date, the Board had no financial assetsheld in foreign denominated currencies.ii) Cash flow and fair value interest rate riskThe Board's interest rate risk arises from investments held76PPECB | annual report | 2009 - 2010

to maturity as well as from cash and equivalents. The Board'spolicy is to maintain its investments across a range of highcredit-qualityfinancial institutions. Interest rate exposureand investment allocations are evaluated by managementon a regular basis.This risk is managed by maintaining an appropriate mix ofinvestments with registered financial institutions. Interestbearing investments are held with reputable financialinstitutions in order to minimise exposure.The sensitivity of the Board's cash flow to a change of 100basis points in interest rates for variable rate instruments atthe reporting date would have impacted net results by R0,87million (2009: R0,72 million). This analysis assumes that allother variables remain constant.Credit RiskCredit risk is managed on an entity's basis. Credit risk arisesfrom cash and cash equivalents and deposits with banks andfinancial institutions, as well as credit exposures to customers,including outstanding receivables and committed transactions.The Board only banks with major financial institutions ofhigh credit standing.The table below shows the credit ratings and balances ofthe financial institutions in which the Board held deposits atbalance sheet date:Measures taken by the Board to limit credit risk to acceptablelevels include, inter alia, assesses the credit quality of thecustomer taking into account its financial position, pastexperience and other factors, the application of standardcredit acceptance procedures to assess potential clients, dailymonitoring of collectible balances at both branch and headoffice level and the suspension of services to accounts whichexceed the Board's payment terms.The table below shows the balances of the major counterpartiesat the balance sheet date:Financial InstitutionsFitchCredit Rating2010R2009RStandard BankAA23,127,09625,182,127Rand Merchant BankAA+19,744,51714,066,931NedbankAA28,093,40622,103,516ABSAAAA15,712,44310,199,49386,677,463 71,552,067Account holders with amounts above R500 000 at balance sheet date:CreditLimit2010R2009RCustomer A3,000,000834,788894,683Customer B2,500,0001,206,158561,055Customer C1,550,000474,7911,534,423Customer D650,000540,449374,9627,700,0003,056,186 2,990,161The carrying amounts of financial assets included in the balance sheet represent the Board's exposure to credit risk in relationto these assets. Management does not expect any losses from non-performance by these counterparties.PPECB | annual report | 2009 - 2010 77

The Board's exposure to concentrated credit risk is low dueto the large number of customers and their dispersion acrossdifferent geographical areas and product sectors. Thedispersion of our income per product sector from statutorylevies is:Citrus fruitGrapesPome fruitStone fruitSubtropical fruitVegetablesFlowers and bulbsCanned productsOther products2010 200939%20%19%5%2%1%1%1%12%41%20%19%5%3%1%1%1%9%100% 100%Liquidity RiskPrudent liquidity risk management implies maintainingsufficient cash reserves. Due to the dynamic nature ofoperational activities, the Board aims to be conservative infunding by keeping committed cash reserves available.The table below analyses the Board's financial liabilities intorelevant maturity groupings based on the remaining periodat the balance sheet to the contractual maturity date. Theamounts disclosed in the table are the contractualundiscounted cash flow. Balances due within 12 monthsequal their carrying balances as the impact of discountingis not significant.Trade andOther Payables1 Year2 to 5 YearsOver 5 Years2010R23,319,323--2009R21,656,665--3.2 Capital Risk ManagementCapital is regarded as total reserves which is a result ofaccumulated surpluses. The Board strive to maintain asufficient reserve as to sustain it's statutory obligations. Thelevel of the reserves are dependant on the approval of theMinister of the Department of Agriculture, Forestry andFisheries as mentioned in the Statement of Changes in NetAssets on page 70.3.3 Fair Value EstimationThe carrying value less impairment provision of tradereceivables and payables are assumed to approximate theirfair values. The fair value of financial liabilities for disclosurepurposes is estimated by discounting the future contractualcash flows at the current market interest rate that is availableto the Board for similar financial instruments.The Directors are of the opinion that the carrying value offinancial instruments approximates fair value.4 Critical Accounting Estimates and JudgementsEstimates and judgements are continually evaluated and arebased on historical experience and other factors, includingexpectations of future events that are believed to bereasonable under the circumstances.The Board makes estimates and assumptions concerning thefuture. The resulting accounting estimates will, by definition,seldom equal the related actual results. The estimates andassumptions that have a significant risk of causing a materialadjustment to the carrying amounts of assets and liabilitieswithin the next financial year. These estimates relate to theprovision for bad debts.The fair value of financial instruments that are not traded inan active market is determined by using valuation techniques.The Board uses its judgment to select a variety of methodsand make assumptions that are mainly based on marketconditions existing at each balance sheet date. The assetreplacement reserve balance estimate has been adjusted bythe difference in the dollar foreign exchange and theproduction price index for the year ended March 2009 forimported appliances and instruments for measuring, checkingand testing activities.Closing balancefor period23,319,323 21,656,66578PPECB | annual report | 2009 - 2010

5 Property, Equipment and Vehicles5.1 Land and Buildings2010R2009RProperty, equipment and vehiclesLand and buildings15,661,750 16,640,08612,219,634 12,356,475Cape Town - Erf 19927, Parowwith office building thereon9,429,174 9,518,981Book value as at 1 AprilCostAccumulated surpluses on revaluation of land and buildingsAccumulated depreciationAdditions in the yearRevaluation of land and buildingsCostAccumulated depreciation9,518,9812,000,6797,644,321(126,019)----9,608,7882,000,6797,644,321(36,212)----Depreciation for the year(89,807) (89,807)CostAccumulated surpluses on revaluation of land and buildingsAccumulated depreciation2,000,6797,644,321(215,826)2,000,6797,644,321(126,019)Book value as at 31 March9,429,174 9,518,981The property was revalued by BM Hofmeyr, a registered valuer as at 31 December 2007. Valuations were made on the basisof recent market transactions, rentals of similar properties in the area and an insurance valuation of the property.

2010R2009RDurban - Portion 1 of Erf 1736, Wentworthwith office building thereon2,790,460 2,837,494Book value as at 1 AprilCostAccumulated surpluses on revaluation of land and buildingsAccumulated depreciationAdditions in the yearRevaluation of land and buildingsCostAccumulated depreciation2,837,494753,0582,146,942(62,506)----2,884,528753,0582,146,942(15,472)----Depreciation for the year(47,034) (47,034)CostAccumulated surpluses on revaluation of land and buildingsAccumulated depreciation753,0582,146,942(109,540)753,0582,146,942(62,506)Book value as at 31 March2,790,460 2,837,494The property was revalued by C Hearn, a registered valuer as at 1 January 2008. Valuations were made on the basis of recentmarket transactions, rentals of similar properties in the area and an insurance valuation of the property.5.2 Motor Vehicles2010R2009RMotor vehicles- 326Book value as at 1 AprilCostLess: Accumulated depreciationDisposal in the yearCostLess: Accumulated depreciation326103,454(103,128)-(1,754)1,75424,310103,454(79,144)---Depreciation for the year(326) (23,984)CostLess: Accumulated depreciation101,700(101,700)103,454(103,128)Book value as at 31 March- 32680PPECB | annual report | 2009 - 2010

5.3 Furniture and Equipment2010R2009RFurniture and equipment692,893 595,071Book value as at 1 AprilCostLess: Accumulated depreciationAdditions in the yearDisposal in the yearCostLess: Accumulated depreciation595,0712,696,484(2,101,413)442,022(8,716)(88,672)79,956437,0512,370,014(1,932,963)326,470---Depreciation for the year(335,484) (168,450)CostLess: Accumulated depreciation3,049,834(2,356,941)2,696,484(2,101,413)Book value as at 31 March692,893 595,0715.4 Technical Equipment2010R2009RTechnical equipment2,749,222 3,688,214Book value as at 1 AprilCostLess: Accumulated depreciationAdditions in the yearDisposal in the yearCostLess: Accumulated depreciation3,688,21414,560,806(10,872,592)627,632(160,199)(6,302,274)6,142,075464,44610,829,811(10,365,365)3,731,004(8)(8)-Depreciation for the year(1,406,424) (507,228)CostLess: Accumulated depreciation8,886,164(6,136,941)14,560,806(10,872,592)Book value as at 31 March2,749,222 3,688,214PPECB | annual report | 2009 - 2010 81

5.5 Temporary Idle Assets and Assets held for DisposalLand and buildingsMotor vehiclesFurniture and equipmentTechnical equipment2010R----2009R----- -5.6 Cost of Assets with Zero Book ValueLand and buildingsMotor vehiclesFurniture and equipmentTechnical equipment2010R-101,700390,5874,094,5382009R-1,754479,28810,127,6434,586,825 10,608,6856 Financial Assets Held to MaturityRand Merchant BankNedbankABSA2010R19,744,51728,093,40615,712,4432009R14,066,93122,103,51610,199,49363,550,366 46,369,9407 Trade and Other ReceivablesTrade debtorsProvision for impairment of receivablesSundry debtorsProvision for loss on amounts receivable2010R19,578,370(218,466)19,359,904430,570(193,784)2009R20,864,888(302,592)20,562,296434,904(193,784)19,596,690 20,803,41682PPECB | annual report | 2009 - 2010

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 ofR483 663 (2009: R877,392) were past due but not impaired. These relate to a number of independent customers for whomthere is no recent history of default. The ageing analysis of these trade receivables is as follows:Between 30 and 60 days after statementGreater than 60 days after statement2010R436,83046,8332009R292,185585,207483,663 877,392As of 31 March 2010, trade receivables of R218,466 (2009: R302,592) were impaired and provided for. The individuallyimpaired receivables mainly relate to producers and exporters, who are in unexpectedly difficult economic situations.The ageing of these receivables is as follows:Less than one yearBetween one and three yearsGreater than three years2010R183,48734,0609192009R158,143114,01530,434At 31 March218,466 302,592Movements on the provision for impairment of trade receivables are as follows:At 1 AprilProvision for receivable impairmentBad debt written offUnused amounts reversed2010R302,592218,466(208,945)(93,647)2009R213,663302,592-(213,663)At 31 March218,466 302,592PPECB | annual report | 2009 - 2010 83

8 Cash and Cash EquivalentsCash at bank and in handSA PIP - Current and Call Account (Note 9)2010R18,374,4994,752,5972009R21,250,1223,932,00523,127,096 25,182,127The SA PIP balance above is not available for use by the PPECB as it relates to a bank account held by PPECB on behalf ofSA 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;2010R2009RCash and cash equivalents23,127,096 25,182,12723,127,096 25,182,127The effective interest rate is between 0,1% and 7,55%.9 Trade and Other PayablesAccrued expensesSA PIP Project Funds (note 8)External Audit FeesInternal Audit FeesAgricultural product samplesWorkmen's compensationDebtor deposits2010R14,315,0274,752,597307,237158,875122,101349,9963,313,4902009R13,979,2263,932,005314,890187,51782,410291,8112,868,80623,319,323 21,656,66584PPECB | annual report | 2009 - 2010

10 ProvisionsAt 1 AprilProvision for performance bonusUsed during the yearProvision for performance bonus reversedProvision for performance bonus utilised2010R8,458,220116,764(8,458,220)3,389,8115,068,4092009R1,188,2448,458,220(1,188,244)-(1,188,244)At 31 MarchThe provisionProvision for performance bonus116,764 8,458,220- -116,764 8,458,220The performance bonus payout is subject to approval by the Board. For the 2010 financial year, the Board approved theperformance bonus, prior to year end. The performance bonus was paid in March 2010. The provision above relates to theCEO's performance bonus which was paid subsequent to the financial year end.11 RevenueAgricultural product standards leviesPerishable products export leviesContainer inspectionsAncillary servicesOther services2010R94,103,83033,672,5282,725,00611,665,9893,238,1772009R89,299,61429,215,4352,686,09410,729,8102,949,072145,405,530 134,880,02512 Other IncomeInterest receivedTraining and developmentProfit on disposal of fixed assets2010R5,311,5861,865,96017,7452009R6,239,1421,603,1591,5097,195,291 7,843,810PPECB | annual report | 2009 - 2010 85

13 Expenses by NatureEmployee expensesOperational activity expensesComputer expensesOffice occupancy expensesAdministrative expensesDepreciationCorporate identity and stakeholder communicationRental and lease expensesExternal audit feesCurrent yearPrior year under provisionOther servicesLegal fees2010R93,226,89223,958,9614,008,1403,461,6131,966,2401,879,0751,663,2662,428,992366,060352,2602313,77782,5922009R89,884,98821,286,8704,246,0233,002,7622,123,887836,5031,153,4422,188,766396,590314,89027,40054,300229,079133,041,831 125,348,91014 Finance Costs2010R2009RFinance charge18,542 15,59815 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 CommitmentsNo contractual commitments for future capital expenditure were made.Operating Lease CommitmentsThe future minimum lease payments under non-cancellable operating leases are as follows:Not later than one yearLater than one year and not later than five yearsLater than five years2010R1,704,2542,045,667-2009R2,027,252880,363614,1443,749,921 3,521,75986PPECB | annual report | 2009 - 2010

17 Reconciliation of Surplus for the YearNet surplus for the yearAdjusted for:DepreciationInterest receivedInterest paidLoss / (Profit) on disposal of fixed assetsCash inflow before changes in working capitalChanges in working capitalDecrease in accounts receivableIncrease in accounts payable and provisions2010R19,540,4481,879,075(5,311,586)18,542(17,745)16,108,734(5,393,389)1,206,726(6,600,115)2009R17,358,327836,503(6,239,142)16,598(1,509)11,970,7772,952,672(5,019,848)7,972,520Net cash generated by operations10,715,345 14,923,44918 Employee Compensation and BenefitsSalaries and wagesDefined contribution costs - retirement fund2010R84,909,6568,317,2362009R82,469,7727,415,21693,226,892 89,884,98819 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 PPECBof R2,513,925 (2009: R3,986,767) and are outstanding debtors of R245,927 (2009: R212,809) within the normal terms.Directors' emolumentsChairperson of the BoardBoard membersTravelling reimbursements2010R768,047106,747526,102135,1982009R806,610114,536541,809150,265Key management compensationSalariesDefined contribution towards retirement fund5,450,0124,873,236576,7767,100,1006,529,851570,2496,218,059 7,906,710PPECB | annual report | 2009 - 2010 87

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 2009.2010 ActualR2010 BudgetRDifferenceRRevenue and other income152,600,821144,923,783 7,677,038ExpenditureEmployee expensesTrainingOperational activity expensesComputer expensesOffice rental and maintenanceAdministrative expensesDepreciationCorporate identity and stakeholder133,060,37393,226,8923,228,31623,470,5874,008,1403,097,3842,385,5791,879,075144,923,78196,605,5288,746,36624,851,5405,232,4413,303,0872,913,0301,089,740(11,863,408)(3,378,636)(5,518,050)(1,380,953)(1,224,301)(205,703)(527,451)789,335communicationLegal feesFinance charge1,663,26682,59218,5422,083,04999,000-(419,783)(16,408)18,542Surplus for the year19,540,4482 19,540,446Revenue and other income is R7,677,038 above budget. The budget was mainly based on volume estimates received fromthe various industry bodies at budget time. Actual volumes inspected and exported during the year however exceeded industryestimates 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 resultingin 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 improvedefficiencies on network costs.Depreciation cost is R789,335 over budget due to the majority of CAPEX purchases made early in the year as well asan under provision in the budget.88PPECB | annual report | 2009 - 2010

detailed statement offinancial performanceunaudited2010R2010 BudgetR2009RRevenue and other incomeAgricultural product standards leviesPerishable products export leviesContainer inspectionsValue added servicesOther servicesTraining and developmentInterest on investmentsProfit on disposal of fixed assets152,600,82194,103,83033,672,5282,725,00611,665,9893,238,1771,865,9605,311,58617,745144,923,78389,670,90628,201,7612,270,4819,843,1122,321,8546,723,8105,891,859-142,723,83589,299,61429,215,4352,686,09410,729,8102,949,0721,603,1596,239,1421,509ExpenditureAdministration expensesAuditors remunerationComputer expenditureConsultation feesCorporate identity and communicationDepreciation on historic costDirectors' emolumentsEmployee costFinance chargesInsuranceLaboratory expensesLegal feesLicense and affiliation feesMovement in provision for bad debtOffice rental and maintenanceOverseas travellingPublications and membership feesReplacement of field equipment and consumablesStationeryTelephone, fax and postageTrainingTravelling and subsistenceWater, electricity, rates and taxes133,060,373419,339366,0604,008,140518,1981,663,2661,879,075768,04793,226,89218,542313,935284,63382,592574,834124,8193,097,384472,59679,8762,119,801561,0632,096,5723,228,31616,792,164364,229144,923,781403,750280,0005,232,441735,2802,083,0491,089,7401,104,00096,605,528-390,000-99,000973,73340,0003,303,087585,395159,7871,491,567453,7352,298,7508,746,36618,528,825319,748125,365,508548,387396,5904,246,023619,5271,153,442836,503806,61089,884,98816,598301,160-229,079917,37494,7302,698,994648,392128,3492,531,072581,5351,776,9282,157,26214,488,197303,768Surplus for the year 19,540,4482 17,358,327PPECB | annual report | 2009 - 2010 89

world cup tickets expenditure scheduleunaudited2009 / 2010Quantity2009 / 2010R’0002008 / 2009R’000Tickets Acquired- - -Distribution of TicketsClients/StakeholdersAccounting AuthorityExecutiveNon-executiveAccounting OfficerSenior ManagementOther employeesFamily members of officialsOther Government entitiesAudit Committee membersOther---------------------------------Total - - -Travel CostsClients/StakeholdersAccounting AuthorityExecutiveNon-executiveAccounting OfficerSenior ManagementOther employeesFamily members of officialsOther Government entitiesAudit Committee membersOther----------------------- -90PPECB | annual report | 2009 - 2010

2009 / 2010Quantity2009 / 2010R’0002008 / 2009R’000Purchase of Other World Cup ApparelCorporate and world cup branded shirts 450 56 -Total world cup expenditure 450 56 -2010Quantity2010R’000Tickets Acquired after Year End (30 June 2010)- -Distribution of Tickets acquired after year endClients/StakeholdersAccounting AuthorityExecutiveNon-executiveAccounting OfficerSenior ManagementOther employeesFamily members of officialsOther Government entitiesAudit Committee membersOther----------------------Total - -PPECB | annual report | 2009 - 2010 91

92PPECB | annual report | 2009 - 2010

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