1. Financial Report: DRDLR’s Annual Report Ending 31 March 2015
Presentation to the Select Committee on Land and Mineral Resources
17 May 2016

2. Statement of Financial Performance Statement of Financial Position
Contents
Executive summary
Statement of Financial Performance
Statement of Financial Position
Statement of Changes in Net-Assets
Cash flow statement
Disclosure Notes

3. Executive Summary
The Department received an appropriation of R9.455 billion which represents a decrease of R48 million from prior year R9 560 billion.
The Department’s expenditure for the financial year 2014/15 amounted to R9,396 billion or 99.4% of the budget allocation of R9,455 billion. This resulted in an under-spend of R59 million
Goods & services decreased by R807 million or 53.8% from R2.1 billion to 1.3 billion in 2014/15. This due to Expenditure for NARYSEC participants that was reclassified from Goods & Services to Transfer Households as well as ccost containment measures that were implemented following cost containment circular issued by National Treasury.
The decrease indicate that the Department spent most its budget towards achieving it’s mandate supported by the fact that 61% of the total spent was on Transfers and subsidies.

4. Statement of Financial Performance
2014/15
2013/14
Note
R'000
REVENUE
Annual appropriation 1
Departmental revenue 3
87 439
Aid assistance 4
30 316
7 909
TOTAL REVENUE
EXPENDITURE
Current expenditure
Compensation of employees 5
Goods and services 6
Interest and rent on land 7
5 674
5 759
11 605
3 346
Total current expenditure
Transfers and subsidies 9
Total transfers and subsidies

5. Statement of Financial Performance cont..
2014/15
2013/14
Note
R'000
Expenditure for capital assets
Tangible assets 10
Total expenditure for capital assets
Payments for financial assets 8
4 361
6 528
TOTAL EXPENDITURE
SURPLUS/(DEFICIT) FOR THE YEAR
Reconciliation of Net Surplus/(Deficit) for the year
Voted Funds
59 550
5 684
Annual appropriation
Departmental revenue and NRF Receipts 19
87 439
Aid assistance 4
18 412
4 563

6. Analysis of movement R’000

7. Revenue Analysis (Decrease)
Revenue decreased by 16%, prior year revenue included reversals of unclaimed Restitution vouchers of R39 million, compared to R4 million in current year.
These are vouchers which were issued to claimants as settlement of their claim, however as at year end the claimants have not taken their settlement money . Once these vouchers are unclaimed for a period of 3 or more years, the money is declared as Departmental Revenue and paid over to the National Revenue Fund.

8. Expenditure Analysis (Decrease)
Description
2014/15
2013/14
Variance %
Ref
R '000
Travel expenditure
-64.9% 1
Administrative fees (travel related)
27 070
61 446
34 376
-55.9%
Training & development
9 482
99 521
-91.3% 2
Agency outsourced services
33 838
93 655
59 817
-63.9%
Consultants Business Advisory Services
69 791
-29.5%
Contractors
22 093
53 617
31 524
-58.8%
Venues and facilities
70 164
98 783
28 619
-29.0% 3
Advertising
28 344
47 896
19 552
-40.8% 4
Audit cost: External
14 728
15 675
947
-6.0% 5
Catering
5 423
15 097
9 674
-64.1% 6
Infrastructure and planning services
4 071
12 628
8 557
-67.8% 7
Fleet Services
11 170
16 998
5 828
-34.3%
Inventory
2 830
11 490
8 660
-75.4% 8
Minor Assets
8 954
12 671
3 717
-29.3% 9
Rental & hiring
6 791
10 267
3 476
-33.9% 10
Consumable
28 073
31 839
3 766
-11.8% 11

9. Increase Analysis Description 2014/15 2013/14 Variance % Ref R '000
R '000
Legal costs
25 507
24.4% 1
Communication
67 100
54 260
12 840
23.7% 2
Property payments
93 660
11 950
12.8% 3
Transport provided Dept Activities
7 428
3 223
4 205
130.5% 4
Operating payments
8 686
4.8% 5
Bursaries (Employees)
4 419
3 604
815
22.6% 6

10. Reasons for increase
The Department’s overall expenditure on goods and services decreased, however the following individual expenditure items increased by 5% or more:
Legal Costs
Total increase of R25, 5 million or 24.4% year on year. An increase of R12 million was spent on Legal representation for claimants in court, to resolve Restitution claim disputes and to represent the department in cases relating to payment disputes raised by landowners. Land Reform legal cost incurred increased by R9, 4 million.
2. Communication
An increase of R12.8 million due to an incorrect billing by Telkom in 2013/14 financial year amounting to an additional cost of R6, 8 million on the April 2014 billing. Landline telephone cost for branch Land Reform increased year on year with R1, 2 million - Switchboards at PSSC offices in provinces is linked to land reform from previous PLRO structure. The extension of PSSC establishment directly increase cost for Land Reform due to the linkage.

11. Reasons for increase…cont
5. Operating lease payments
The increase of R8,6 million (4,8%) is attributed to inflationary escalations
6. Bursaries
Employees bursaries saw an increase of R or 22.6% due to increase in number of internal bursary holders and the cost of studies.

12. Statement of Financial Position
2014/15
2013/14
Note
R'000
ASSETS
Current Assets
Cash an cash equivalents 12
Prepayments and advances 14
49 224
23 447
Receivables 15
7 464
12 711
Non-Current Assets
33 923
26 422
Investments 16
16 112
17 811
10 310
TOTAL ASSETS
LIABILITIES
Current Liabilities
Voted funds to be surrendered to the Revenue Fund 18
59 550
5 684
Departmental revenue and NRF Receipts to be surrendered to the Revenue Fund 19
25 949
40 940
Payables 21
Aid assistance repayable 4
18 412
4 563
TOTAL LIABILITIES
NET ASSETS
24 694
22 294
Represented by:
Capitalisation reserve
Recoverable revenue
8 582
6 182
Revaluation reserves -
TOTAL

13. Analysis of movement R’000

14. Analysis of movement (increase)
Description
2014/15
2013/14
Variance %
Ref
R '000
Cash and cash equivalents
86.9% 1
Prepayment and advances
49 224
23 447
25 777
109.9% 2
Receivables
25 275
23 021
2 254
9.8% 3
Payables
77.3% 4
Aid Assistance
18 412
4 563
13 849
303.5% 5

15. Statement of Changes in Net Assets
2014/15
2013/14
Note
R'000
Capitalisation Reserves
Opening balance
16 112
Closing balance
Recoverable revenue
6 182
4 262
Transfers
2 400
1 920
Debts recovered (included in departmental receipts)
-3 450
-2 371
Debts raised
5 850
4 291
8 582
TOTAL
24 694
22 294

16. Cash Flow Statement 2014/15 2013/14 Note R'000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts
Annual appropriated funds received
1.1
Departmental revenue received 3
74 873
85 613
Interest received
3.3
12 043
18 862
Aid assistance received 4
30 316
7 909
Net (increase)/ decrease in working capital
( )
Surrendered to Revenue Fund
( )
( )
Surrendered to RDP Fund/Donor
(4 563)
(2 841)
Current payments
( )
( )
Interest paid 7
(5 490)
(5 417)
Payments for financial assets
(4 361)
(6 528)
Transfers and subsidies paid
( )
( )
Net cash flow available from operating activities 23

17. Cash Flow Statement CASH FLOWS FROM INVESTING ACTIVITIES
Payments for capital assets 10
( )
( )
Proceeds from sale of capital assets
3.4
523
147
Net cash flows from investing activities
( )
( )
CASH FLOWS FROM FINANCING ACTIVITIES
Increase/ (decrease) in net assets
2 400
1 920
Net cash flows from financing activities
Net increase/ (decrease) in cash and cash equivalents
( )
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period 24

18. Disclosure Notes

19. Summary of disclosure notes
Description
2014/15
2013/14
Variance %
Ref
R '000
Contingent liabilities
-37.8% 1
Contingent assets
73 529
42.3% 2
Commitments
-1.1% 3
Accruals
-47.8% 4
Employee Benefits
11 935
7.4%
Operating Lease Commitments
46.5% 5
Finance Lease Commitments
4 815
5 814
-999
-17.2%
Accrued departmental revenue
-17.8%
Irregular expenditure
14 778
26 065
11 287
43.0% 6
Fruitless and wasteful expenditure
15 677
41 095
-61.9% 7
Related party transactions
2 959
3 878
-828
-21.3%
Key management personnel
93 811
81 287
12 524
15.3%
Impairment
99 191
-11.1%
Provisions
22 373
12 891
9 482
73.6% 8
Movable Tangible Capital Assets
41.0% 9
Immovable Tangible Capital Assets
11.5%

20. Public Entities and Trading Accounts
Name of Public Entity
Services rendered by the public
entity
Amount transferred to the
public entity
Achievements of the public
Ingonyama Trust Board
The trust manages land for the material
benefit and social wellbeing of the individual members of the tribes.
17,294
The funds transferred to the entity were utilised to augment the entity’s operational expenditure
Registration of Deeds Trading Account
Registration of title deeds in order to
ensure the security of tenure
113,194
The funds transferred to the entity were utilised to augment the entity’s operational expenditure. It further funded work towards the development of the E-Cadastre

21. Public Entities (Cont.)
Name of Public Entity
Services rendered by the public
entity
Amount transferred to the
public entity
Achievements of the public
Agricultural Land Holding Account
The Agricultural Land Holding Account
was established in terms of the Provision
of Land and Assistance Act, Act No. 126 of Section 10(1) (a) gives legal effect to the proactive acquisition of land, where the Minister may, from money appropriated by Parliament for this purpose, acquire land for the purposes of this Act. Therefore the
State will proactively target land and match this with the demand or need for land.
1,613,529
The funds transferred to the entity funded the pro-active acquisition of the strategically located
agricultural land

22. Programme Expenditure
2014/15 Final Appropriation
2014/15 Actual expenditure
2014/15(Over)/Under Expenditure
2013/14 Final Appropriation
2013/14 Actual expenditure
2013/14 (Over)/Under Expenditure
Programmes
R’000
Administration
2 233
1 071
National Geomatics Management Services
2 278
1 244
Rural Development
49 944
3 197
Restitution
805
148
Land Reform
4 290 24
Total
59 550
5 684

23. Irregular, Fruitless and Wasteful expenditure
Fruitless and wasteful expenditure increased by 12% ( R 5,417 million to R 6,073 million) from previous year. This is due to the extension on the NARYSEC training program from 2 to 4 years due to the unavailability of accredited work place sites, unavailability of space at accredited colleges for further education and training and interest paid as compelled by the courts on Restitution matters.
The Department has also seen an increase in Irregular expenditure (R 12,647 million to R25,286 million:2014/15). This is due to non-compliance with Supply Chain prescripts
These case are still in the process of being investigated by the Financial Compliance Committee

24. Irregular, Fruitless and Wasteful expenditure
On all the finalized cases of fruitless and irregular expenditure, warning letters were issued and disciplinary actions are underway for the officials who were found guilty.
The Department remains committed to eradicating non-compliance with the laws and regulations applicable to it.
The internal control environment is continuously being monitored for its effectiveness and weaknesses identified are addressed in order to improve financial management and the overall efficiency in the operations of the department
In addition the Department has improved its standard operating procedures to identify fruitless and wasteful expenditure before it occurs

25. Report of Auditor General
The audit report was issued by AGSA on 31 of July 2015 and the Department has obtained an unqualified audit opinion.
The audit report contains emphasis of matter regarding significant uncertainties. These matters were not as a result of audit findings but as disclosed upfront by the Department in the notes to the AFS. The AG deemed it necessary to bring these matters to the attention of the users of the AFS. The emphasis was on:
Claims instituted against the Department amounting to R2 123 million. These claims are subject to the outcome of legal proceeding. As a result, no provision for any liability that may result has been made in the Department’s financial statements.
The Department has a possible liability towards the claimants in terms of the Restitution of Lands Rights Act, 1994 (Act No. 22 of 1994). The total amount of claims verified and on route for approval in terms of section 42D of this Act amounts to approximately R113 million, for which once approved by the Minister it will increase the commitment amount disclosed in Note 19 to the AFS.

26. Report of Auditor General-cont
Provision has been made for the impairment amounting to R16 million. This relates to Inala Farms(Pty) Ltd which is in the process of being liquidated and the investment might not be recovered.
Provision amounting to R 99 million has also been made, of which R43 million relates to non-recovery of lease debtors and R28 million relates to provision for doubtful debts.
Other important matters were reported by the AG and the department has already developed Management Action Plans in order to address these matters. The action plans are monitored monthly by management and progress is reported to the Audit Committee & Senior Management Committee for oversight.
The Department remains committed to maintaining the unqualified audit opinion that it received and will continue to implement measures to attain this ideal.

27. AGRICULTURAL LAND HOLDINGS ACCOUNT (ALHA)

28. Contents Executive summary Statement of Financial Position
Statement of Financial Performance
Statement of Changes in Net Assets
Cash Flow Statement
Other Financial Matters/Disclosures

29. Statement of Financial Position As at 31 March 2015
AFS Notes
2014/15
2013/14
Movement
Expl Notes
R’000 %
Restated
Assets
Non-current assets
Property, plant and equipment 3
11% 1
Intangible Assets 4
2 592
2 006
586
23% 2
Other Financial assets 5
13 489 5%
Current assets
Trade and other receivables - exchange transaction 7
41 796
44 868
(3 072)
(7%)
Receivables and other receivables - Non exchange transaction 8
(37 641)
(25%)
Cash and cash equivalents 6
91 849
67%
31%
TOTAL
12%

30. Statement of Financial Position As at 31 March 2015 - continued
AFS Notes
2014/15
2013/14
Variance
Expl
R'000 %
Note
Restated
EQUITY AND LIABILITIES
Current Liabilities
Trade and other payables – exchange transaction 9
30 533
14 192
16 341
54% 7
Trade and Other Payables – non exchange transaction 10
31 347
26 709
4 638
15% 8
Total current liabilities
61 880
40 901
20 979
34%
Net assets
Accumulated surplus
12%
TOTAL EQUITY AND LIABILITIES

31. Statement of Financial Performance As at 31 March 2015
AFS Notes
2014/15
2013/14
Variance
Expl
R'000 %
Note
Restated
REVENUE
Exchange transactions
67 090
(34 562)
(52%)
Rental income 11 -
60 840
(60 840) 0% 9
Interest – lease receivable
19 229
15 752
3 477
18% 10
Other operating income
18 317
11 831
6 486
35%
Interest received – bank
29 544
13 229
16 315
55% 12
Non – exchange transaction
( )
(6%)
Grant income – Non exchange
(83 590)
(5%) 13
Donation received
1 545
21 813
(20 268)
(13%) 14
TOTAL REVENUE
( )
(8%)

32. Statement of Financial Performance As at 31 March 2015-continued
AFS Notes
2013/14
2014/15
Variance
Expl
R'000 %
Note
Restated
EXPENDITURE
Depreciation
(40 498)
(35 066)
(5 432)
13% 15
Impairment 16
(65 044)
( )
( )
(397%)
Finance costs -
(35) 0%
Operating expenditure farmers/strategic partners 14
( )
( )
( )
(153%) 17
Other operating expenditure
(25 124)
(42 366)
(17 242)
(69%) 18
Loss on disposal of asset
(128)
( )
( )
( )
(171%)

33. Statement of Changes in Net Assets As at 31 March 2015
AFS
Note
Accumulated surplus
Total Net Asset
Expl note
Balance at 01 April 2013
Correction of prior period error 26
(5 593) 19
Restated balance 01 April 2013
Surplus for the year 2014
Balance at 01 April 2014
Surplus for the year
Balance at 31 March 2015

34. Statement of Cash Flows As at 31 March 2015
AFS Notes
2014/15
2013/14
Variance
R'000 %
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts
( )
(78%)
Sale of goods and services
2 694
5 906
(3 212)
(45%)
Grants income
(83 590)
(5%)
Interest income
29 544
13 229
16 315
55%
Other operating revenue
17 260
32 951
(15 691)
(91%)
Cash paid to suppliers and employees
( )
( )
( )
69%
Suppliers and other payables
( )
( )
Finance costs -
(35) 0%
Net cash flows from operating activities 17
(20%)

35. Statement of Cash Flows As at 31 March 2015 - continued
AFS Notes
Note
2014
Variance
R'000 %
6 months
12 months
Restated
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases from Property, Plant and Equipment 3
( )
( )
( )
11%
CASH FLOWS FROM FINANCING ACTIVITIES
Other financial assets
(13 489)
(11 387)
(2 102)
16%
Net (decrease)/ increase in cash and cash
( )
(39 754)
(21%)
Cash at beginning of the year
91 849
(247%)
Total cash at end of the year 6
67%

36. DEEDS REGISTRATION

37. Statement of Financial Position for the year ended 31 March 2015
Restated
2015
2014
R'000
Assets
Current Assets
Inventories
3 283
3 006
Prepayments
8 743
49 292
Receivables from exchange transactions
53 227
49 562
Cash and cash equivalents
Non-current Assets
Property, Plant and Equipment
48 989
Intangible Assets
TOTAL ASSETS

38. Statement of Financial Position As at 31 March 2015 (cont)
Restated
2015
2014
R'000
Liabilities
Current Liabilities
Finance Lease Obligations
1 007
697
Payables from exchange transactions
71 669
33 847
Unspent conditional grants and receipts
91 922
Provisions -
Non-current Liabilities
15 638
15 274
903
749
14 735
14 525
Total Liabilities
Net Assets
Accumulated surplus

39. Statement of Financial Performance for the year ended 31 March 2015
Restated
2015
2014
R'000
Revenue
Revenue from exchange transactions
Registration of Deeds and Sale of Information
Other Income
2 793
1 186
Interest received - investment
12 386
6 569
Transfer revenue
Government grants
77 741
Public contributions and donations
2 824
Total revenue

40. Statement of Financial Performance for the year ended 31 March 2015
Restated
2015
2014
R'000
Expenditure
( )
( )
Employee costs
( )
( )
Depreciation and amortisation
(20 490)
(24 770)
Impairment of prepayment
(23 937) -
Impairment loss
(2 298)
(1 558)
Finance costs
(177)
(130)
Impairment of receivables
(586)
(41)
Repairs and maintenance
(44 730)
(13 600)
General expenses
( )
( )
Total revenue
Total expenditure
Operating surplus
Loss on disposal of assets and liabilities
(549)
(754)
Surplus for the year

41. Cash Flow Statement for the year ended 31 March 2015
Restated
2015
2014
R'000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts
Registration of Deeds and sale of information
Grants
Interest income
12 386
6 569
Payments
( )
( )
Employee costs
( )
( )
Suppliers
( )
( )
Net cash flows from operating activities

42. Cash Flow Statement for the year ended 31 March 2015 (cont)
Restated
2015
2014
R'000
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property, Plant and Equipment
( )
(6 594)
Proceeds from sale of property, plant and equipment 70 48
Intangible Assets -
(50 177)
NET CASH FLOWS FROM INVESTING ACTIVITIES
( )
(56 723)
CASH FLOWS FROM FINANCING ACTIVITIES
Finance lease payments
288
(366)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
10 121
Cash and cash equivalents at the beginning of the year
95 452
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

43. Conditional grants received 2014/2015
The Deeds Registration Trading Account received the following grants in 2014/2015 from the Department Rural Development and Land Reform:
E-cadastre project R98, 3m
Annual salary increases R14, 9m

44. Irregular expenditure
The Trading Account had an opening balance of R39, 8m
Movement during the 2014/2015 financial year:
Irregular expenditure recovered: R1 m
Condoned relating to 2011/2012: R2m
Condoned relating to 2012/2013: R4m
Condoned relating to 2013/2014: R827 thousand
During 2014/2015 irregular expenditure to the value of R6, 9m was condoned with the following steps taken: condoned, condoned with warning letters and disciplinary letters

45. Fruitless and Wasteful expenditure
The Trading Account had an opening balance of R20 thousand
Movement during the 2014/2015 financial year:
Additional cases added: R7 thousand
Condoned: R20 thousand
The R20 thousand was condoned with the following steps taken: recovery from officials and warning letters

46. Services in kind
Administrative services in kind: The Deeds Registration Trading Account falls under the administration of the Department of Rural Development and Land Reform. The executive of the department spend some of their time on the affairs of the Trading Account. Furthermore, the department provides the services of information technology, office accommodation and staff training. There is no cost charged by the department in this regard Other services in kind: The Department of Public Works provides office accommodation for some of the Deeds Registries

47. Report of Auditor General
The audit report was issued by AGSA on 31 of July 2015 and the Deeds Registration Trading Account has obtained an unqualified audit opinion.
The audit report contains emphasis of matter regarding significant uncertainties. The AG deemed it necessary to bring these matters to the attention of the users of the AFS.
3. The emphasis was on:
3.1 Restatement of corresponding (2013/2014) figures – Prior period errors
Useful life of assets with R1 value were not re-assessed R6,99m
Donated assets at R1 book value were not re-assessed R2, 8m
Provision of R5m for Datacentrix to be removed as a provision and disclosed as a note under “contingent liabilities”

48. Report of Auditor General (cont)
3.2 Material losses/impairments
Impairment provision for R23m relating to prepayment
Provision for doubtful debts R3,5m
3.3 Significant uncertainties
Contingent liabilities raised relating to a dispute of whether services were rendered R12.9m
Other important matters were reported by the AG and the Deeds Registration Trading Account has already developed Management Action Plans in order to address these matters. The action plans are monitored monthly by management and progress is reported to the Audit Committee for oversight.
The Deeds Registration Trading Account remains committed to maintaining the unqualified audit opinion that it received and will continue to implement measures to attain this ideal.

49. Thank You