1. DRDLR ANNUAL FINANCIAL STATEMENT PRESENTATION 2017/18 PORTFOLIO COMMITTEE

2. Table of Contents 2017/18 financial year: 2018/19 Financial year:
Introduction;
Financial Statements/Performance Analysis;
Report on various investigations.
2018/19 Financial year:
Financial performance;
2018/19 adjustment;
2019 MTEF;
State of Financial Management. 2

3. 2017/18 Financial year 3

4. Introduction Unqualified Audit Opinion 2016/17 2017/18
Management Report
Unqualified Audit Opinion
2017/18
2016/17
Accounting Policies
The financial statement 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

5. Financial Statement Analysis
Financial Performance: Revenue
Financial Performance: Expenditure per programme
Expenditure amounted to R9,730 bil or 95.5% of the total appropriated funds.
The unspent 4.5% was due to the saving on COE due to the vacant posts and the unspent PPP funds
Total Revenue of R bil and R bil for 2016/17 and 2017/18 respectively included voted funds, departmental revenue and aid assistance;
The department’s revenue decreased from R89./ mil in 2016/17 to R81,6 mil in 2017/18. 5

7. 2016/17 2017/18 R2.408 bil R2.678 bil for Land claims R406.6mil
Financial Performance: per priority
R2.408 bil
Land claims
R667 mil Rural Infrastructure Development
R579 mil
Rural Enterprise and Industrial Development
R374 mil
National Rural Youth Services Corps
R406.6mil
Land Reform
R2.678 bil for Land claims
R660 mil Rural Infrastructure Development
R375mil
Rural Enterprise and Industrial Development
R349.6 mil
National Rural Youth Services Corps
R382.1 mil
Land Reform
2017/18 Total : R4.435 bil
2016/17 Total : R4.445 bil
2016/17
2017/18 7

8. Financial Statement Analysis
Financial position
Changes in Net Assets
Total Assets of R428.6 mil in 2016/17 and R mil in 2017/18 mainly include PMG, Restitution balances, and money receivable from GTAC for the PPP
Total Liabilities of R415.1 mil in 2016/17 and R mil in 2017/18 is made up mainly of Restitution unclaimed balances and the unspent Voted funds to be surrendered. The bulk of the balance is the R436 million resulting from the PPP funds to be received back from GTAC
Net Assets amount to R13.5 mil in 2016/17 and R14.1 mil in 2017/18.This represents the total outstanding debts on recoverable expenditure 8

9. Financial Statement Analysis
Major items on Financial Disclosure
Movements were mainly on;
Contingent liabilities that increased due to an increase in the S42D claims that have been supported by the QCC, but are yet to be approved by the Minister/CLCC increased claims against the department,
Principal Agents decreased as most appointments to provide services now go through normal procurement process. 9

10. Financial Statement Analysis
Commitment: details
A slight increase was due to an increase in the recap , bog and logis commitments. 10

11. Financial Statement Analysis
Financial Disclosures cont.…
The bulk of the decrease is due to the decrease in the related party transactions( reduction resulted from the settlement of the amount owed by ALHA for the NEF payment) and the operating lease commitments( the decrease is as a result of the expiration of the rentals of some of the office buildings). Both these items account for 85% of the decrease. 11

12. Financial Statement Analysis: Principal Agent12

13. Financial Statement Analysis
Financial Disclosures: Movable Assets
Movable Assets slightly increased due to new additions. 13

14. Financial Statement Analysis
Contingent Assets
Contingent Liabilities
The decrease is due to the finalisation of the AFU cases. The assets have now been transferred to the Department.
There has been a slight movement in the claims against the Department. This could be attributed to the long turnaround times of the office of the State Attorneys. The QCC cases have increased due to the S42 D claims that are yet to be approved by the Minister/CLCC 14

15. Organisational Non-financial performance
Total Target 27
The department achieved 62% of planned targets for 2017/18 financial year
Key achievements include;
The department achieved 850 out of planned land claims to be settled; 15

16. REPORT ON VARIOUS INVESTIGATIONS16

17. INTERNAL INVESTIGATIONSNO
ALLEGATION 1
Performance of remunerative work outside public service and corruption. 2
Irregularities relating to mechanisation project at Willowvale,
as well as failure by the official to declare conflict during the interviews. 3
Fraudulent land claim: Toekomsrus. 4
Fraudulent overtime claims at National Office. 5
Financial mismanagement at Tsolo. 6
Fraud and corruption at Dumisa Property Association. 7
Manipulation of appointment process at REID. 8
Stock theft. 9
Irregularities in the Bizana Fish Project. 10
Corruption regarding the rural institution school gardening funds: Nelspruit. 11
Irregularities relating to payments made by the DRDLR to Kwena Project. 12
Fraudulent land claim at EC: RLCC. 13
Fraud and corruption and other irregularities in KZN: PSSC. 14
Fraudulent payment at Balmoral Farm. 15
Corruption in the Doornhoek Land Claim. 16
Fraudulent payments regarding Pardeplaats Farm. 17
Fraudulent activities by official at GP: RLCC. 18
Land claims irregularities at the KZN RLCC. 19
Irregularities relating to land claim applications and unfair treatment at KZN: RLCC. 20
Fraud and Corruption in training transaction at OCIO. 17

18. EXTERNAL INVESTIGATIONSNO
ALLEGATION
SERVICE PROVIDER 1
Fraud, corruption and irregular appointment of service providers at EC: RLCC.
Nexus Forensic Services 2
Irregularities in the Labour Tenants Related Contracts or assignments awarded to and undertaken by Association for Rural Advancement and/ or any other organisation ( AFRA investigation).
PWC 3
Acquisition and management of the Bambanani Share Equity Scheme Project (Bambanani).
Deloitte 4
Acquisition and management of the Bekendvlei Proactive Land Acquisition Strategy Project (Bekendvlei). 18

19. SIU INVESTIGATION PROCLAMATIONSNO
PROCLAMATION NUMBER
OFFICE 1
Proclamation No. R 53, 2012
Land Restitution 2
Proclamation No. R 7, 2014 amended by Proclamation No. R 599
Deeds 3
Proclamation No. R 24, 2017
Land Reform 19

20. 2018/19 Financial year 20

21. Financial Performance: first quarter
Programmes
Programmes
ENE Budget Allocation
Expenditure to date
Available Budget
% Spent
Drawings to date
% Spent of Drawings
R'000 %
ADMINISTRATION
1,825,416
382,279
1,443,137
21%
339,345
112.7%
NATIONAL GEOMATICS MANAGEMENT SERVICES
690,437
139,170
551,267
20%
169,097
82.3%
RURAL DEVELOPMENT
1,814,515
279,865
1,534,650
15%
392,444
71.3%
RESTITUTION
3,371,024
329,291
3,041,733
10%
626,528
52.6%
LAND REFORM
2,723,851
613,558
2,110,293
23%
692,990
88.5%
Grand Total
10,425,243
1,744,163
8,681,080
17%
2,220,404
78.6%
Expenditure for the period ended 30 June 2018 amounted to R1.744 billion or 17 % of the annual budget of R billion. The largest deviation of expenditure incurred against the approved drawings to date is accounted for by Restitution, followed by Rural Development, Land Reform, and National Geomatics Management.
On the other hand Administration exceeded approved drawings to date  
Note: 2nd Quarter report to be updated at the end of the quarter 21

22. Financial Performance: First Quarter
Economic Classification
Economic Classification
ENE Budget Allocation
Expenditure to date
Available Budget
% Spent
Drawings to date
% Spent of Drawings
R'000 %
COMPENSATION OF EMPLOYEES
2,325,590
514,036
1,811,554
22%
565,645
90.9%
GOODS AND SERVICES
1,721,049
345,487
1,375,562
20%
337,842
102.3%
INTEREST AND RENT ON LAND - 4 -4 *
TRANSFERS AND SUBSIDIES
6,339,111
871,371
5,467,740
14%
1,310,958
66.5%
PUR/CONST CAPITAL ASSETS
39,493
13,265
26,228
34%
5,959
222.6%
Grand Total
10,425,243
1,744,163
8,681,080
17%
2,220,404
78.6%
Of the reported expenditure compensation of employees accounted for R514.0 million, goods and services R345.5 million, transfer payments R871.4 million, and payments for capital assets R13.3 million. The cumulative spending trends were below the linear target of 25 %, mainly due to slow moving expenditure for households’ projects. Compared to the approved drawings to date amounting to R2.220 billion, expenditure resulted in an under expenditure of R476.2 million. 22

23. Financial Performance: second quarter
Programmes
Programmes
ENE Budget Allocation
Expenditure to date
Available Budget
% Spent
Drawings to date
% Spent of Drawings
R'000 %
ADMINISTRATION
1,825,416
928,660
897,000
51%
735,843
126%
NATIONAL GEOMATICS MANAGEMENT SERVICES
690,437
303,569
387,000
44%
347,002
87%
RURAL DEVELOPMENT
1,814,515
646,842
1,168,000
36%
917,429
71%
RESTITUTION
3,371,024
1151,203
2,220,000
34%
1,631,638
LAND REFORM
2,723,851
1156,507
1,156,000
42%
1,333,245
Grand Total
10,425,243
4,186,781
6,238,000
40%
4,965,157
84%
Expenditure for the period ended 30 September 2018 amounted to R4.187 billion or 40 % of the annual budget of R billion. The largest deviation of expenditure incurred against the approved drawings to date is accounted for by Restitution, followed by Rural Development, Land Reform, and National Geomatics Management.
On the other hand Administration exceeded approved drawings to date   23

24. Financial Performance: second Quarter
Economic Classification
Economic Classification
ENE Budget Allocation
Expenditure to date
Available Budget
% Spent
Drawings to date
% Spent of Drawings
R'000 %
COMPENSATION OF EMPLOYEES
2,325,590
1,089,224
1,236,366
47%
1,131,794
96%
GOODS AND SERVICES
1,721,049
719,969
1,001,080
42%
708,109
102%
INTEREST AND RENT ON LAND -
736
-736 0%
TRANSFERS AND SUBSIDIES
6,339,111
2,181,352
4,157,759
34%
3,111,506
70%
PUR/CONST CAPITAL ASSETS
39,493
195,385
-155,892
495%
13,748
14211%
PAYMENT FOR FINANCIAL ASSETS
115
-115
Grand Total
10,425,243
4,186,781
6,238,462
40%
4,965,157
84%
Of the reported expenditure compensation of employees accounted for R1,089 billion, goods and services R720 million, transfer payments R2,181 billion, and payments for capital assets R195 million. The cumulative spending trends were below the linear target of 50 %, mainly due to slow moving expenditure for households’ projects. Compared to the approved drawings to date amounting to R4,965 billion, expenditure resulted in an under expenditure of R778.4 million. 24

25. 2018/19 Adjustments
Programmes
Main Budget
Shifts/Virement
Adjusted appropriation
R'000
Administration
1,825,416
52,529
1,877,945
National Geomatics Management Services
690,437
-32,773
657,664
Rural Development
1,814,515
-27,266
1,787,249
Restitution
3,371,024
-11,694
3,359,330
Land Reform
2,723,851
19,204
2,743,055
10,425,243 -
Economic Classification
Main Budget
Shifts/Virement
Adjusted appropriation
R'000
Compensation of employees
2,325,590 -
Goods and services
1,735,668
-188,796
1,546,872
Interest and rent on land 50
Transfers and subsidies
6,338,969
-90,615
6,248,354
Payments for capital assets
25,016
279,361
304,377
Total
10,425,243
Funds were reprioritised to fund computer services, communication strategy and compensation of employees shortfalls;
Realignment from Goods and services to Capital Assets class correct allocation for the construction of the new building;
The Department requested additional R1.214 billion as unforeseeable and unavoidable expenditure (re-opening of land claims, rates taxes and new building project) however it was not approved. 25

26. Medium-term expenditure estimate
2019 MTEF: Programmes
Programme
Medium-term expenditure estimate
R thousand
2019/20 Baseline
Baseline Reduction
2019/20 Reallocated Baseline
2020/21 Baseline
2020/21 Reallocated Baseline
2021/22 Baseline
2021/22 Reallocated Baseline
Administration
1,869,203 -
1,992,908
2,111,622
Geospatial and Cadastral Services
744,603
790,578
840,031
Rural Development
1,924,483
(176,797)
1,747,686
2,035,460
(175,586)
1,859,874
2,150,860
(173,271)
1,977,589
Restitution
3,603,590
3,810,703
4,024,585
Land Reform
2,907,931
3,076,052
3,249,405
Total
11,049,810
10,873,013
11,705,701
11,530,115
12,376,503
12,203,232

27. Medium-term expenditure estimate
2019 MTEF: Econ Class
Economic classification
Medium-term expenditure estimate
R thousand
2019/20 Baseline
Baseline Reduction
2019/20 Reallocated Baseline
2020/21 Baseline
2020/21 Reallocated Baseline
2021/22 Baseline
2021/22 Reallocated Baseline
Current payments
4,306,942 -
4,595,425
4,875,079
Compensation of employees
2,502,879
2,690,594
2,865,483
Goods and services
1,804,063
1,904,831
2,009,596
Interest and rent on land
Transfers and subsidies
6,718,990
(176,797)
6,542,193
7,085,134
(175,586)
6,909,548
7,474,899
(173,271)
7,301,628
Payments for capital assets
23,878
25,142
26,525
Total
11,049,810
10,873,013
11,705,701
11,530,115
12,376,503
12,203,232 27

28. 2019 MTEF: Funding pressures
Branch
Economic Classification
Cost Pressure
2019/20
2020/21
2021/22
Total MTEF
R’000
Restitution
Compensation of Employees
After the Phakisa process it was advised that Restitution becomes an independent entity
Management
Goods and Services
Security – Guarding Services
14 767
15 948
17 224
47 939
Communication
Communication Strategy
39 451
41 621
27 980
OCIO
Resolve IA & AG findings
81 000
Office Accommodation
Mun Services & Lease
50 900
68 024
87 375
Land Tenure Admin - Rates & Taxes
Transfers - Prov & Local Gov
Rates & Taxes in arrear on State Own Land at Local Mun
99 222
Households
TOTAL COST PRESSURES 28

29. State of Financial Management
In 2017/18 key achievement of internal control included;
Verification of payments before and after processing;
Identification of internal control weaknesses through pre-checking of all BAS and LOGIS;
Rollout of all approved financial management policies and awareness on existing policies;
Awareness on the newly revised Treasury Regulations;
ICT Unsuccessful participation in the State Information Technology Agency disaster recovery test for the Basic Accounting System (BAS). 29

30. AGRICULTURAL LAND HOLDING ACCOUNT (ALHA) ANNUAL FINANCIAL STATEMENT PRESENTATION /18 PORTFOLIO COMMITTEE

31. EXECUTIVE SUMMARY
The overall spending of R 204.8million represents 14% against total budget of R1, 48 billion which is made up of Grant Allocation of R1, 326 billion and surplus funds of R154 million.
Strategic Land Acquisition spending of R 90.6 million which represents 9% of the annual budget of R960 million.  
Recap Commitments spending is at 11% against the annual budget of R74 million. 
One Household One Hectare spending of R 33.9 million is at 108% against the annual budget of R31 million.
Head Office expenditure (Rates & Taxes, Project Management Unit) spending is at 58% of the annual budget of R51.8 million which represents 8% over performance against the linear target.
Head Office non-cash: surplus funding spending is at 26% of the R154 million annual budget.

32. REMEDIAL ACTIONS
Improvement plans have been developed and will be implemented during September in order to catch up on the underperformance and to ensure that the 80% spending target by end of November is met.
Strategic Land Acquisition: An improvement plan of R937 million worth of projects was developed to address under spending. R238 million is at conveyance stage expected to be transferred during September, NLARCC approvals amounts to R111 million of which conveyancing process has commenced and transfers are expected during October, and projects amounting to R176 million has been recommended by PTC and is ready for NLARCC. Projects of R411 million are in process of negotiation with seller and/or valuations have been completed.
Recapitalisation and Development: An improvement plan has been developed to address short fall and the target by November 2018.
 One Household One Hectare: Over-expenditure in the line item will be addressed during AENE process to cover the deficit incurred.
 Head Office: Rates and taxes invoices were received from municipalities in the current month and being reconciled.
 Budget adjustments to be made during the AENE for the initial projects that are not going to be undertaken during the year

33. AUDITOR GENERAL : 5 YEAR PERIOD AUDIT REPORTS 2013/14- 2017/18
UNQUALIFIED
2014/15
UNQUALIFIED
2015/16
CLEAN AUDIT
2016/17
CLEAN AUDIT
2017/18
CLEAN AUDIT

34. OVERVIEW OF MANAGEMENT REPORT;
RESPONSES TO THE REPORT OF THE AUDITOR - GENERAL
ALHA had 9 audit findings during the 2017/18 statutory audit compared to 15 in the previous financial year. This represent 40% decrease in the audit findings.
8 of the 2017/18 audit findings were resolved during the audit compared to 11 out of 15 resolved. This represent 27% improvement in resolving audit queries raised.
No repeat findings in were identified 2017/18 compared to 4 repeat findings. This represent 100% improvements repeat findings
The only findings not yet resolved relates to the SLA between OCIO and Financial services Branch. There is a signed SLA in place between the Department (OCIO) and Financial services Branch in which ALHA falls under.
The query relate to Tripartite SLA between Department (OCIO) Deeds Office and Financial Services Branch (representing ALHA) , mainly due to the infrastructure (Servers and Software Licences) shared amongst the parties and hosted at Deeds Office, supported by OCIO.

35. ANNUAL FINANCIAL STATEMENT ANALYSIS
FINANCIAL POSITION
CHANGES IN NET ASSETS
Total Assets of R13, 212billion in 2016/17 and R13, 973billion in 2017/18; the increase is as a result of cash and cash equivalent due to slow spending and increase in PPE.
Total Liabilities of R290mil in 2016/17 and R116mil in 2017/18, the decrease is a result of the settlement of the interdepartmental credit that was paid during the current financial year.
Net Assets amount to R12, 921billion in 2016/17 and R13, 857billion in 2017/18.
The accumulated surplus increase is as a result of the surplus recognised for the year

36. ANNUAL FINANCIAL STATEMENT ANALYSIS
FINANCIAL PERFORMANCE: REVENUE
FINANCIAL PERFORMANCE: EXPENDITURE
Total Revenue of R75, 489mil and R102, 729mil for 2016/17 and 2017/18 respectively.
The grant relates to the allocation received from DRDLR for the purposes of executing the Proactive Land Acquisition mandate. 2016/17: R billion; 2017/18: R billion.
Total expenditure amounted to R530, 011million for 2017/18. Farmers grant expenditure amounts to R197, 830million and other expenditure amounting to R87, 447million.
The R2, 430million relates to Rates and taxes and interest expense of R1, 630million and Other interest paid of R800thosand.
Loss on disposal of asset R 956 thousands relates to transfer of Intangible asset share packaging rights and write off of unverified assets.

37. ANNUAL FINANCIAL STATEMENT ANALYSIS
COMMITMENT: DETAILS

38. ANNUAL FINANCIAL STATEMENT ANALYSIS
MAJOR ITEMS ON FINANCIAL DISCLOSURE

39. 2017/18 2016/17 Financial Performance: Standard item
2016/17 Budget: R1.3billion
2017/18 Budget: R1.4billion
Expenditure:
R536mil
Land acquisition
Expenditure:
R603m
Land acquisition
Expenditure:
R52mil
Recap
Expenditure:
R401m
Recap
Expenditure:
Rnil
1H1H
Expenditure:
R21mil
1H1H (New Project)
2017/18
2016/17
Expenditure:
R62mil
Drought
Expenditure:
R76m
Drought
Expenditure:
R278m
SRR Projects
Expenditure:
R9mil
SRR Projects
Expenditure:
R5mil
Planning
Expenditure:
R19m
Planning

40. NON-FINANCIAL PERFORMANCE INFORMATION
TARGETS VS. ACHIEVED 2016/17
TARGETS VS. ACHIEVED 2017/18

41. AGRICULTURAL LAND HOLDING ACCOUNT QUARTER 1 FINANCIAL PERFORMANCE
(ALHA)
QUARTER 1 FINANCIAL PERFORMANCE
30 JUNE 2018

42. EXPENDITURE PER CATEGORY AS AT 30 JUNE 2018
CURRENT YEAR EXPENDITURE
UNDER/OVER SPENT
% SPENT
ENE BUDGET
Land Acquisition
26 621
2.8%
Recap Commitments
74 868
6 612
68 256
8.8%
1H1H
31 500
23 760
7 740
75.4%
Land Development -
0.0%
Maintenance and Repairs
12 266
Security
2 526
429
2 097
17.0%
Planning
15 757
149
15 608
0.9%
Head Office
30 288
14.7%
87 859
5.9%

43. MONTHLY COMPARISON EXPENDITURE PER CATEGORY AS AT 30 JUNE 2018
The total expenditure to date is R 87m against R 1.4 billion total budget for the year 2018/19 representing only 6% against linear target of 25%.
Compared on a month-to-month, expenditure for the entity increases on average by 41%.
Total payments at national office amount to R 47million will only account to 9% of the allocated budget.
No expenditure for the Land Development and Maintenance and Repairs recorded with a total budget of R 189.3m

44. EXPENDITURE PER PROVINCE AS AT 30 JUNE 2018
ENE BUDGET
CURRENT YEAR EXPENDITURE
UNDER/OVER SPENT
% SPENT
R’000 % EC
10 275 8% FS
1 088 1% GP
22 066
17%
KZN
17 050
11% LP
84 062
429
83 633 MP
1 090 NC
65 413 57
65 356 0% NW
5 516 3% WC - HO
51 819
10 254
41 565
20%
Total Allocation Non Cash
67 825 5%
HO: SURPLUS
20 034
13%
Total Allocation Cash
87 859 6%

45. EXPENDITURE COMPARISON: 2016/17 - 2018/19

46. AGRICULTURAL LAND HOLDING ACCOUNT QUARTER 2 FINANCIAL PERFORMANCE
(ALHA)
QUARTER 2 FINANCIAL PERFORMANCE
30 SEPTEMBER 2018

47. EXPENDITURE PER CATEGORY AS AT 30 SEPTEMBER 2018
ENE BUDGET
CURRENT YEAR EXPENDITURE
UNDER/OVER SPENT
% SPENT
LAND ACQUISITION
90 685
9.4%
RECAP COMMITMENTS
74 868
8 184
10.9%
1H1H
31 500
33 947
(2 447)
107.8%
LAND DEVELOPMENT -
0.0%
MAITNENANCE AND REPAIRS
12 266
SECUIRTY
2 526
1 316
52.1%
PLANNING
15 757
929
14 828
5.9%
HEAD OFFICE
69 778
33.9%
 TOTAL
13.8%

48. MONTHLY COMPARISON EXPENDITURE PER CATEGORY AS AT 30 SEPTEMBER 2018
The total expenditure to date is R 204.8m against R 1.4 billion total budget for the year 2018/19 representing only 13.8% against linear target of 50%.
Compared on a month-to-month, expenditure for the entity increases on average by 37%.
Total payments at national office amount to R 69million will only account to 14% of the allocated budget.
No expenditure for the Land Development and Maintenance and Repairs recorded with a total budget of R 189.3m

49. EXPENDITURE PER PROVINCE AS AT 30 SEPTEMBER 2018
ENE BUDGET
CURRENT YEAR EXPENDITURE
UNDER/OVER SPENT
% SPENT
R’000 %
Eastern Cape
18 512
14%
Free State
3 828 2%
Gauteng
29 079
22%
KwaZulu-Natal
19 299
13%
Limpopo
84 062
860
83 202 1%
Mpumalanga
12 054 7%
Northern Cape
65 413
379
65 034
North West
47 161
24%
Western Cape
3 887 3%
Head Office
51 819
30 158
21 661
58%
Total Allocation Non Cash
12%
Head Office (Surplus Funds)
39 620
26%
Total Allocation Cash

50. EXPENDITURE COMPARISON: SEPTEMBER 2017/18 - 2018/19

51. DEEDS REGISTRATION TRADING ACCOUNT 2017/18 ANNUAL FINANCIAL STATEMENT PRESENTATION PORTFOLIO COMMITTEE

52. FINANCIAL REPORTING

53. AUDITOR GENERAL : 5 YEAR PERIOD AUDIT REPORTS 2013/14- 2017/18
UNQUALIFIED
2014/15
UNQUALIFIED
2015/16
UNQUALIFIED
2016/17
CLEAN AUDIT
2017/18
CLEAN AUDIT

54. OVERVIEW OF MANAGEMENT REPORT;
DASH BOARD REPORT
ALHA had 9 audit findings during the 2017/18 statutory audit compared to 15 in the previous financial year. This represent 40% decrease in the audit findings.
8 of the 2017/18 audit findings were resolved during the audit compared to 11 out of 15 resolved. This represent 27% improvement in resolving audit queries raised.
No repeat findings in were identified 2017/18 compared to 4 repeat findings. This represent 100% improvements repeat findings
The only findings not yet resolved relates to the updating of the SLA between OCIO and Financial services Branch.
The updated SLA is still a draft format only as it was not clear whether ALHA's ICT requirements will be addressed by the DRDLR OCIO or Deeds and this also resulted in performance monitoring processes not being implemented as yet.

55. OVERVIEW OF MANAGEMENT REPORT:
RESPONSES TO THE REPORT OF THE AUDITOR - GENERAL
Deeds had 18 audit findings during the 2017/18 statutory audit all of which relate to other administrative matters and IT. The findings were all immaterial.
5 of the 2017/18 audit findings are repeat findings from prior years and 10 out of 13 of the 2016/2017 audit findings have been resolved.
Corresponding figures disclosed in the 2017/18 financial years were restated as a result of an error in the financial statements.
The trading entity is a defendant in disputes. Claims instituted against the entity resulting in litigation amount to R526 million.
The only findings not yet resolved resulting in control deficiencies at year end relates to the updating of the SLA between OCIO and Deeds, this has since been resolved.
Some IT controls pertaining to user access management and programme change management are not effectively designed. These are currently being resolved.

56. SIGNIFICANT ACCOUTNING POLICIES AND OTHER MATTERS
SIGNIFICANT ACCOUNTING POLICIES
OTHER MATTERS
Financial Statements are prepared in accordance with effective Standards of Generally Accepted Accounting Practice (GRAP).
The audited annual financial statements have been prepared on an accrual basis of accounting and incorporated the historical cost conventions as the basis of measurement except where specified otherwise.
The annual financial statements have been prepared n the expectation that the entity will continue to operate as a going concern for at least the next 12 months.
For prior period errors and changes in accounting policies, the corrections are made retrospectively as far as is practicable and the prior year comparatives are restated accordingly.
Management has made and disclosed estimates and assumption that affect the amounts represented in the annual financial statements and related disclosures.
The following financial statement items have accounting policies that are specific in accordance with the relevant standard of GRAP.
The GRAP on Accounting by Principles and Agents has been early adopted by the entity.

57. Annual Financial Statement Analysis
Financial Performance: Revenue
Financial Performance: Expenditure per programme
Total Revenue of R654,932 mil and R680,203 mil for 2016/ and 2017/18 respectively.
The grant refers to the allocation received from DRDLR. 2016/17 – R 22,648 mil: 2017/18 – R22,818 mil– all the amounts have been spent for IT related infrastructure maintenance as required by the condition of the Grant.
Expenditure amounted to R686,674 million for 2017/18.
The expenditure reflects a 2% decrease for 2017/2018 and due to cut in spending for PPE and other general expenses.

58. Annual Financial Statement Analysis
Financial position
Changes in Net Assets
Total Assets of R613, 849mil in 2016/17 and R629, 787mil in 2017/18;
Total Liabilities of R110,249 mil in 2016/17 and R131, 131 mil in 2017/18
Net Assets amount to R498, 654mil in 2016/17 and R503, 601mil in 2017/18.
The accumulated surplus increase is as a result of the increase in cash reserves due to improved collection of revenue from Debtors.

59. Annual Financial Statement Analysis
Cash Flow 17/18
Cash Flow 16/17
Net Cash Inflow from Operating Activities is R82, 536 mil.
Net Cash Outflows from Investing Activities is R6, 556 mil.
Net Cash Outflows from Financing Activities is R1, 825 mil.
Net Increase in cash and cash equivalents is R74,155 mil.
Cash and Cash Equivalents for the financial year are R392, 406 mil.
Net Cash Inflow from Operating Activities is R16, 804 mil.
Net Cash Outflows from Investing Activities is R30, 290 mil.
Net Cash Outflows from Financing Activities is R1, 446 mil.
Net Decrease in cash and cash equivalents is R14,932 mil.
Cash and Cash Equivalents for the financial year are R318, 251 mil.

60. Annual Financial Statement Analysis
Commitment Disclosure Note
Major items on Financial Disclosure

61. SIGNIFICANT DISCLOSURE NOTES
COMMITMENT DISCLOSURE
OTHER DISCLOSURE NOTES
Commitments relate to contracts of which payments are due in future years and the related services have not been rendered.
Capital commitments relate to those of capital expenditure and an amount of R1, 356 mil (2016/17: R987) is due within 1 year.
Operational commitments relate to goods and services provided to the entity in the normal course of its operations and an amount of R23, 044 mil (2016/17: R26, 669 mil) is due between 1 and 5 years.
Inter-departmental receivable relates to services render by the entity to the department and other related entities within the department at no cost and amounts to R4,3 mil in 2017/2018 and was R107, 152 mil in 2016/2017.
Fruitless and Wasteful in 2017/2018 financial year is R5,331 mil.
Irregular expenditure in 2017/2018 is R1,889 mil and in 2016/2017 was R172, 269 mil.
Contingent liabilities relate to litigation against the trading entity and amounts to R517,366 mil in 2017/2018 as opposed to R16,971 mil in 2016/2017.

62. 2017/18 2016/17 Service Delivery and Financial Performance
R749 million
2017/18 Budget:
Revenue:
R465 mil
Registrations
R764 million
2016/17 Budget:
Revenue:
R463 mil
Registrations
Revenue:
R169mil
Sale of Information
Revenue:
R149 mil
Sale of Information
2017/18
Deeds and Documents Registered:
2016/17 Target Achieved
Deeds and Documents Registered:
2017/18 Target Achieved
Expenditure:
R480, 253 mil
Compensation of Employees
2016/17
Expenditure:
R450, 969 mil
Compensation of Employees
Expenditure:
R167, 988 mil
General Expenses
Expenditure:
R118, 872 mil
General Expenses

63. 2018/2019 QUARTERLY PERFORMANCE INFORMATION

64. QUARTER 1

65. Consolidation : Economic Classification
R’000
Quarter 1
Projected Revenue
Revenue collected
Variance %
Revenue
32 329
82.8%
Interest
5 207
3 599
1 608
69.1%
Total Revenue
33 937
82.4%
Economic Classification
Q1 Projected Expenditure
Actual spending
As at 30 June 2018
Q1 Spent %
Compensation of Employees
31 508
77.9%
Goods and services
70 273
42 709
27 564
60.8%
Depreciation
11 178
5 849
5 329
52.3%
Total Operating Expenditure
64 401
71.3%
Surplus/ (Deficit) from Operating Activities
(31 215)
(751)

66. Expenditure per office- Economic Classification
Name of
Office
Quarter 1 Revenue Generated (Billed)
Quarter 1 Revenue collected
Quarter 1
Comp of Employees
Quarter 1 Goods and Services
Quarter 1 Assets Q1
Total Exp
Variance: Revenue Collected & actual exp
% spent
OCRD
35 411
31 064
14 214
36 212
-15
50 426
(19 363)
162%
PTA
35 169
34 356
22 408
912
23 320
11 063
68%
JHB
20 945
20 689
15 080
776
491
15 856
4 833
77%
CPT
32 859
32 395
16 986
948 30
17 934
14 462
55%
PMB
16 314
16 229
13 626
759
139
14 385
1 844
89%
BLM
4 829
4 253
9 172
603 15
9 775
(5 522)
230%
KIM
1 285
1 284
2 735
482
188
3 217
(1 933)
251%
VRY
874
841
3 157
349
-49
3 506
(2 665)
417%
KWT
6 442
6 396
3 425
762
201
4 187
2 209
65%
UMT
313
310
2 071
225
2 296
(1 986)
741%
NEL
4 517
4 453
5 654
535 51
6 189
(1 736)
139%
LMP
3 265
3 175
2 709
146
2 855
320
90%
Total
42 709
1 051
1 499
99%

67. Executive summary
The Deeds Registration Trading Account is a self-funding trading entity generating its own income, mainly from the registration of deeds and the sale of deeds registration information, of which revenue generated represents budget.
In terms of PFMA Trading entities are not allowed to budget for deficit unless there are special arrangements, as a result of these the expenditure projected was aligned to the revenue projected.
Deeds Trading Account (billed) R162,2 million revenue and collected R155,4 million revenue representing R7 million under collection.
The entity projected R192,9 million revenue to be billed and collected in first quarter; but received R159 million which includes interest from the bank, resulted in under achievement of R34 million and the amount received represents R159 million (82%) of the projected revenue of R192.9 million.
The entity collected 96% of the billed amount which is above 95% set target on collection.
Debtors are given 30 days after billing to settle their accounts and are suspended after 30 days and handed to debt collector after 90 days
Spending on compensation of employees amounted to R111,2 million representing 78% of their projections of R142,7 million.
Deeds spending on goods and services amounted to R42,7 million, representing 61% of the projected spending of R70,2 million.
Revenue collected amounted to R155,4 million vs. expenditure of R153,9 million which represents 99% of spending vs. revenue collected, leaving positive balance of R1,5 million.
The entity collected R155,4 million as a result of deeds and documents registered .The target was for the first quarter and it was more achieved with
Some offices do not generate enough revenue to cover operational cost, hence they are subsidized by others for compensation of employees. The current alignment of Deeds Registries situated across the country to the demarcated provincial boundaries established post 1994, will assist in increasing their revenue.
Bank balance as at 30 June 2018 is R424,8 million, which include R39,9 million for OVG that must be surrendered to National Treasury.

68. Non-Financial Performance
Indicator
1st Quarter
Target as per APP
1ST Quarter Achievement(Actual Performance)
Variance on Actual Performance
Reasons for Variance
Planned Interventions to address the challenges and variance
Number of deeds and documents registered
12 486
Not Applicable
% of Deeds made available within 7 days from lodgement for execution
95% within 7 days
91% within 7 days 4%
Deeds scan and Deeds verify was totally offline for (During the first two weeks of June) In CPT, the same for 2nd and 3rd week of June in BLM. The above-mentioned challenge affected All office during the month of June.
The lack of human resources in KWT as a result of delays in appointments (pre-screening results were delayed) negatively affected performance during this quarter. The labour dispute instance in PMB resulted in backlogs and increased turn-around time.
The incidents were reported to OCRD IT and they were resolved.
Pre- screening results from CD: Safety & Security Services have now been received and filling of posts finalized before end of June.
A 10 day plan was put in place to eradicate the backlog in PMB Deeds Office. The office no longer has any backlog however, it will take another month or so to see the results and improvement in turnaround

69. QUARTER 2

70. Consolidation : Economic Classification
R’000
Quarter 2
Projected Revenue
Revenue Generated
Variance %
Quarter 1
Revenue
37 182
80.6%
82.8%
Interest
5 063
5 963
-900
117.8%
68.8%
Total Revenue
36 282
81.6%
82.4%
Economic Classification
Q2 Projected Expenditure
Spending
As at 30 Sept 2018
Q2 Spent %
Q1 Spent %
Compensation of Employees
93 629
46 107
67%
77.9%
Goods and services
65 217
12 968
19.9%
60.2%
Depreciation
11 305
8 771
2 534
77.6%
52.3%
Total Operating Expenditure
53.3%
71.1%
Surplus/ (Deficit) from Operating Activities
(19 319)
45 289

71. Expenditure per office- Economic Classification
Name of
Office
Quarter 2 Revenue Generated (Billed)
Quarter 2 Revenue collected
Quarter 2
Comp of Employees
Quarter 2 Goods and Services
Quarter 2 Assets Q2
Total Exp
Variance: Revenue Generated& Spending
Quarter 1
% spent
OCRD
36 321
24 598
11 759
-372 83
11 387
24 934
162%
31%
PTA
33 870
28 617
18 822
2 301
-95
21 123
12 747
68%
62%
JHB
19 780
17 221
12 730
1 969
14 699
5 081
76%
74%
CPT
29 253
20 576
14 530
1 912 25
16 442
12 811
55%
56%
PMB
14 301
10 974
11 649
1 592 6
13 241
1 060
88%
93%
BLM
4 733
2 992
7 292
1 198
8 490
-3 757
229%
179%
KIM
1 092
985
2 319
645
2 964
-1 872
250%
271%
VRY
905
864
2 726
829
3 555
-2 650
417%
393%
KWT
6 888
4 802
3 042
1 062 36
4 104
2 784
65%
60%
UMT
273
221
1 796
390 -6
2 186
-1 913
741%
801%
NEL
4 132
3 345
4 867
1 079
5 946
-1 814
138%
144%
LMP
3 146
2 217
2 092
363
2 460
686
78%
Total
93 629
12 968 49
48 097
99%
69%

72. Executive summary
The Deeds Registration Trading Account is a self-funding trading entity generating its own income, mainly from the registration of deeds and the sale of deeds registration information, of which revenue generated represents budget.
In terms of PFMA Trading entities are not allowed to budget for deficit unless there are special arrangements, as a result of these the expenditure projected was aligned to the revenue projected.
Deeds Trading Account (billed) R154,7 million revenue and collected R117,4 million revenue representing R37 million under collection.
The entity projected R191,8 million revenue to be billed and collected in second quarter; but received R123 million which includes interest from the bank, resulted in under achievement of R68.8 million and the amount received represents 62% of the projected revenue of R196,9 million.
The entity collected 76% of the billed amount which is below 95% set target on collection.
Debtors are given 30 days after billing to settle their accounts and are suspended after 30 days and handed to debt collector after 90 days
Spending on compensation of employees amounted to R93,6 million representing 67% of the projected spending of R139,7 million.
When comparing revenue collection between two quarters,(1st quarter R155,4 mil) and (2nd quarter R117,4 mil) there is a reduction in collection of R38 million.
Deeds spending on goods and services amounted to R12,9 million, representing 19,9% of the projected spending of R 65,2 million.
Revenue generated amounted to R154,6 million vs expenditure of R106,5 million which represents 69% of spending vs revenue generated, leaving positive balance of R48,1 million
Some offices do not generate enough revenue to cover operational cost, hence they are subsidized by others for compensation of employees. The current alignment of Deeds Registries situated across the country to the demarcated provincial boundaries established post 1994, will assist in increasing their revenue.

73. Performance Indicator
2018/19 Financial Year: Q2
Output
Performance Indicator
Annual Target
2018/19
Quarter 2
Target
July
Performance
August
Deeds registered in accordance with relevant legislation
Number of deeds and documents registered
79 293
82 215
% of deeds made available within 7 days from lodgement for execution
95%
93%
96%

74. NON-FINANCIAL REPORTING

75. 2016/17 Financial Year Programme 2: Geospatial and Cadastral Services
Strategic objective
Performance indicator
Baseline (Actual output) 2015/16
Actual performance
against target
Reasons for variance
Target (2016/17)
Achievement (2016/17)
Ensure an integrated and comprehensive land administration system
Number of deeds and documents registered
994,556
982,241
1,001,554
The target was over-achieved due to number of deeds and documents registered was more than the anticipated target in the larger Deeds Registries, i.e. Cape Town and Pretoria due to an increase in lodgement in these offices.
% of deeds made available within 7 days from lodgement for execution
86%
95%
The target was partially achieved due to Deeds Registries experiencing a national system downtime in December and January which affected the overall annual turnaround times. Whilst smaller offices were able to catch up; larger offices due to large volume of lodgements were negatively affected and could not recover in time.

76. Programme 2: Geospatial and Cadastral Services Performance indicator
2017/18 Financial Year
Programme 2: Geospatial and Cadastral Services
Strategic objective
Performance indicator
Baseline
(Actual output) 2016/17
Actual performance
against target
Reasons for variance
Target (2017/18)
Achievement (2017/18)
Ensure an integrated and comprehensive land administration system
Number of deeds and documents registered
1,001,554
There was a large number of deeds lodged that were rejected due to non-compliance with legislation and withdrawals by conveyancers.
This was further exacerbated by the decline in the lodgement of deeds and documents due to the state of the economy.
% of deeds made available within 7 days from lodgement for execution
84%
95%
92%
Limited capacity in deeds examination sections in King Williams Town, Limpopo and Cape Town deeds offices.
The frequent instability and slow network performance throughout the financial year resulted in systems often being down thus delaying turnaround times in offices. Occasional power outages at several offices, e.g. Johannesburg lost power for close to 3 weeks, also affected service delivery.

77. Thank You!