2016/17 DRDLR Annual Financial Statement Presentation Presentation to the Portfolio Committee on Rural Development and Land Reform 4 October 2017 2016/17 DRDLR Annual Financial Statement Presentation

Table of Contents Introduction Financial Statements Analysis Agricultural Land Holding Account (ALHA) Deeds Registration Trading Account 2

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Introduction Unqualified Audit Opinion 2016/17 2015/16 Management Report Unqualified Audit Opinion 2016/17 2015/16 Accounting Policies The financial statements have been prepared in accordance with policies, which have been applied consistently in all material aspects, unless otherwise indicated. Where appropriate and meaningful, additional information has been disclosed to enhance the usefulness of the financial statements and to comply with the statutory requirements of the PFMA and Treasury Regulations issued in terms of PFMA and DORA 4

Financial Statement Analysis Financial Performance: Revenue Financial Performance: Expenditure per programme Expenditure amounted to R10.067 bil or 99.4% leaving R57.3 mil unspent in 2016/17 and R9.118 bil or 99.1% leaving R79.3 mil unspent in 2015/16. Unspent funds were mainly due to vacancies Increased expenditure was mainly due to the implementation of more land claims settlement agreements received. Total Revenue of R10.241 bil and R9.288 bil for 2016/17 and 2015/16 respectively included voted funds, departmental revenue and aid assistance; The department’s revenue increased from R54.6 mil in 2015/16 to R89,8 mil in 2016/17. This recorded actual increase of R35,2 mil. 5

Financial Statement Analysis Financial Performance: Expenditure per Econ class Expenditure was mainly on; Compensation of employees to cater for 3 995 filled posts; Goods and Services such as computer services, office accommodation charges, travel and subsistence, consultants and training and development; Transfers and subsidies such as departmental agencies and accounts, Provincial and municipalities and Non-profit institutions; Payments for capital assets such as Land and subsoil assets, Buildings and other fixed structures and machinery and Equipment; and Payments for financial assets Total surplus to be surrendered: 2016/17: R57.3 mil 2015/16: R79.3 mil Unspent funds were mainly due to vacancies 6

2016/17 2015/16 R2.678 bil for Land claims R2.020 bil for Land claims Financial Performance: per priority R2.678 bil for Land claims 2015/16 Total : R6.942 bil R2.020 bil for Land claims 2016/17 Total : R7.331 bil R1.607 bil for Support services such as office accomm R1.337 bil for Support services e.g. office accomm R881 mil for Land acquisition R1.007 bil for Land acquisition 2016/17 2015/16 R782.4 mil for Land reform/Recap R1.034 bil for Land reform/Recap R660 mil for RID R732.1 mil for RID R372.6 mil for REID R527.7 mil for REID R349.4 mil for NARYSEC R274.3 mil for NARYSEC 7

Financial Statement Analysis Financial position Changes in Net Assets Total Assets of R340.4 mil in 2016/17 and R296.2 mil in 2015/16 mainly include PMG, Restitution balances, and interdepartmental claims (ALHA/Deeds); Total Liabilities of R326.9 mil in 2016/17 and R268.8 mil in 2015/16 include unclaimed Restitution balances; Net Assets amount to R13.5 mil in 2016/17 and R27.5 mil in 2015/16. Movement was mainly on capitalisation reserves that decreased to nil in 2016/17 8

Financial Statement Analysis Major items on Financial Disclosures

AGRICULTURAL LAND HOLDING ACCOUNT (ALHA) PORTFOLIO COMMITTEE ANNUAL FINANCIAL STATEMENT PRESENTATION 2016/17

MANAGEMENT REPORT AND REPORT ON AUDITOR GENERAL Unqualified (Clean) Audit Opinion with no findings 2016/17 2015/16 Audit Opinion In my opinion, the financial statements present fairly, in all material respects, the financial position of the Agricultural Land Holdings Account as at 31 March 2017, and its financial performance and cash flows for the year then ended in accordance Standards of South African Standards of Generally Recognised Accounting Practices (SA Standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA). 10

Financial Statement Analysis Financial Performance: Revenue Financial Performance: Expenditure Expenditure in 2016/17 amounted to R594.5 mil or 90% of the allocated budget and R527.4 mil or 98% in 2015/16 excluding capital expenditure of R 679.8mil and R 900m for 2016/17 and 2015/16 Unspent funds in 2016/17 were mainly due to unspent SRR projects funds, whereas in 2015/16 it was due to land acquisition commitments not transferred by year end Increased expenditure was mainly due to the implementation of more land claims settlement agreements received. Total Revenue of R1.607 bil and R1.424 bil for 2016/17 and 2015/16 respectively includes grant income, interest income and other income which accounts to 93% and 3% and 4% respectively; The entity’s grant income increased by R160.9 mil in 2016/17, whereas interest increased by R8.7 mil. This increases represent 11% and 18% increase from 2015/16 financial year.

Financial Statement Analysis Capital expenditure decreased by 31% due to SRR funds for the acquisition of land and working capital not disbursed by NEF. Operating expenditure rose by 13%, this is attributed to the bad debts written off in the current financial year with none written off in the previous year. Surplus increased to R1.012 billion due to unspent funds for SRR projects. Grant income (revenue: non-exchange) increased to R1.5 billion representing 13% increase. Revenue from exchange transactions consists of rental and interest on lease transactions and interest earned from the bank representing 13% increase from prior year. Total surplus to be surrendered: 2016/17: R1.012 bil 2015/16: R897.151 mil

Financial Statement Analysis Financial position Changes in Net Assets Total Assets of R13.042 bil in 2016/17 and R11.911 bil in 2015/16 consists of property, plant and equipment, intangible assets and other financial assets with Land Bank; Total Liabilities of R247.214mil in 2016/17 and R129.476 mil in 2015/16 include unclaimed SRR transfer balances of R140 mil made by the department on behalf of ALHA representing 38% increase from prior year; Net Assets amount to R12.795 bil in 2016/17 and R11.782 bil in 2015/16. Movement was mainly on capitalisation reserves

2016/17 2015/16 R603 mil for Land acquisition Financial Performance: Standard item 2015/16 Total : R1.484 bil 2016/17 Total : R1.377 bil R603 mil for Land acquisition R1.007 bil for Land acquisition R463 mil for Land reform/Recap R401 mil for Land reform/Recap Rnil for Drought 2016/17 2015/16 R76 mil for Drought Rnil for SRR Projects R278.394 mil for SRR Projects R19.156 mil for Planning R14.094 mil for Planning

Registration of Deeds Trading Account Performance Report :2016/17 Financial Year

2016/2017 Financial Performance

Intangible Impairment FINANCIAL performance: Growth trends Intangible Impairment

Cumulative Financial Performance: Per Economic Classification

Governance and audit trail 2011/12 2012/13 2013/14 2014/15 2015/16 (over the past 5 years) 2011/12 2012/13 Qualified Unqualified 2013/14 Unqualified 2014/15 Unqualified 2015/16 2016/17 Unqualified Clean

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