3. PPECB Annual Report 2009-2010

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