FOODBEV SETA Food and Beverages Manufacturing

1. FOODBEV SETA FOODBEV SETAFood and Beverages Manufacturing Annual General Meeting 28 October 2009 Ravin Deonarain

2. Company Name Introduction and Appreciation • Thanks and Appreciation: • Hon Minister of Labour • Hon Chairperson of Labour Portfolio Committee • Hon Committee Members • Representatives of FoodBev Seta • Chairman: Mr Willie Prinsloo • Vice Chair: Mr Boaz Mashele • Corporate Services Manager: Ms Liezl Gerryts • CFO: Mr Raj Rajcoomar • Skills Development Projects Manager: Mr Khotso N Potele • CEO: Mr Ravin Deonarain

3. Ravin Deonarain Presentation Outline • FoodBev Sector • Highlights and Challenges • Funds Management • NSDS Performance • Customer Satisfaction • Portfolio Committee Specific Concerns • Consultants • Training Layoff Provision • Employment Equity

4. FoodBev SectorEconomic Characteristics • Diverse sector • Price sensitive products • High production volumes – costs driven • Capital intensive and technology driven • Intense brand competitiveness • Dominance - large companies and multinationals • Large number small food manufacturers (85%) • Mergers and acquisitions (brands)

5. Company Name FoodBev Sector • Companies and Products: SA Breweries, Kellogg's, Nestle, Frito-Lay Simba, ABI, Coke Cola, Tiger Brands, Unilever Foods, Clover, Oceana Fishing, Enterprize Meats, Nabisco, McCain's Foods, Beacon, Cadbury’s Bokomo • Contribution to GDP : R83.2 b for Food R30 b for Beverages • Total employment : +-176 000 (known)

6. Ravin Deonarain Labour Market • 1994: Macro Economic Stabilisation and Trade Liberalisation • Growth in demand for skilled labour • Job shedding of unskilled and semi skilled • Production - 17,16 % of manufacturing sector output • Employment - 15,63% of manufacturing sector • Wages - 13,74% of manufacturing sector • Employment – 2 % of total economy (DTI, 2007)

7. Ravin Deonarain Funds Management Trend (Rm)

8. Ravin Deonarain 2.1 80% OF LARGE FIRMS’ AND 60% OF MEDIUM FIRMS’ EMPLOYMENT EQUITY TARGETS SUPPORTED BY SKILLS DEVELOPMENT. IMPACT ON OVERALL EQUITY PROFILE OF FIRMS AND SECTORS MEASURED

9. Financial Review F2008/929 October 2009Sun City Food & Beverages Manufacturing Sector Education Training Authority

10. Presentation Outline • Introduction • Economic Climate • Investments • Audit Report • Annual Financial Statements • The Year Ahead • Questions

11. Economic Climate • Interest Rate (average 10% - positive investment returns) • Inflation (6 -10%; admin exp) • Minimal Exchange Rate Risk (local operations) • Business Cycle (current down-no major retrenchments in sector impacting on levy income)

12. Investments • Investment Policy • Approved banks NT • Split funds between banks authorised by NT • Liquidity Risk (monitor closely) • Shielded from global financial crisis • Optimise interest earned via investment strategy

13. Audit Report • Unqualified – consecutive 9 years • Emphasis of Matter – Nil reported • More emphasis on performance information • AG will express an opinion in the F2011/12 AFS in respect of PI • Stakeholders can expect AG to do audit at local sites • Currently only major project sites are visited

14. Annual Financial Statements • Report of the Audit Committee • Report of the Accounting Authority • Statement of Financial Performance • Statement of Financial Position • Statement of Changes in Net Assets • Cash Flow Statement

15. Preparation of AFS • Adherence to GRAP and GAAP • Guided by Accounting Policies

16. Skills Development Levy

17. Income Analysis

19. Financial Performance

20. AFS for the year ending 31 March 2009 • Statement of Financial Performance - SDL Income up by 12.8% - Penalties & Interest increase of 25% - NSF projects – Scarce skills project, major roll out - Interest income – favourable interest rate (10%) - Other income – sharp increase due to recovery from stakeholders for non compliance with grant policy

21. AFS for the year ending 31 March 2009 • Statement of Financial Performance - Employer Grant & Project expenditure up by 18% - Mandatory grant disbursement rate = 82.5% - Administration expenses contained within the 10% allowance as per SDL funding regulations - Finance Costs – copiers & printers - NSF expenditure – Scarce skills project - Net increase in Surplus of R5.2m

22. AFS for the year ending 31 March 2009 • Surplus increase due to (inter alia): - learning interventions extending from a period of 10 months to 24 months • Slow down in the completion of training, grant claims • Favourable interest and grant recovery • Excluding Grant Recovery (R7.7m) and Interest (R4.5m) revised surplus = R7.4m (100% decrease from F2007/8)

23. AFS for the year ending 31 March 2009 • Statement of Financial Position - Assets acquired, CE=R458k, FF=R86k, OE=R339k S/W=R568k - Disposal CE – (R55k) FF – (7k) OE – R8k S/W – (R10k) - Depreciation charge R305k - Amortisation charge R186k

24. AFS for the year ending 31 March 2009 • Statement of Financial Position - Prepayments & Advance R5.1m – EVA – Learnerships/Skills Programs - Trade Receivable – Inter Seta Rec – R0.5m • Trade Receivables – R5.4m from Employers – non performance L/S • Investment interest – R1.5m & Cash – R125.8m • Current Liabilities - Accounts Payable – R15.2m owing for WSP – last quarter - SME income received in advance – R2.3m - NSF – cash received in advance - Provisions = Bonus Provision - Finance Lease Obligations – copiers & printers

25. AFS the year ending 31 March 2009 • Cash Flow Statement - Cash generated from operating activities R153.7m - Cash paid to stakeholders, suppliers & employees R168.9m - Investment income R14.5m - Cash spent on acquisition of assets R1.5m - Net decrease in cash – R2.1m - Closing balance of R125.8m - Funding of commitments and liabilities

26. Summary - Financial Ratios

27. THE YEAR AHEAD • REPORTING • Changes in F2009/10 – GRAP Standards that become effective from 01 April 2009 • Note 29 to AFS • PERFORMANCE INFORMATION • Focus on Audit of Performance info • AG to conduct site visits to verify data submitted to FBS

28. THE YEAR AHEAD • ECONOMIC CLIMATE • Declining interest rates impact on investment income • Improvement in production, coming out of recession • Stability of levy income • Inflation under control – cost containment • BUDGET • R65m planned for Discretionary Grants • R1.8m set aside for Training Layoff Scheme • 85% Mandatory Grant Compliance – R80m to employers

29. Questions • Questions???

30. 2.2 SKILLS DEVELOPMENT IN AT LEAST 40% OF SMALL LEVY-PAYING FIRMS SUPPORTED AND IMPACT MEASURED Ravin Deonarain

31. Ravin Deonarain 2.5 ANNUALLY INCREASING NUMBER OF SMALL BEE FIRMS AND BEE CO-OPERATIVES SUPPORTED BY SKILLS DEVELOPMENT. SURVEY PROGRESS AND MEASURE IMPACT.

32. Ravin Deonarain 2.7 700 000 workers have achieved ABET Level 4

33. Ravin Deonarain 2.8. 125 000 WORKERS ASSISTED TO ENTER AND AT LEAST 50% SUCCESSFULLY COMPLETE APPROVED PROGRAMMES

34. Ravin Deonarain 3.2. 2000 non-levy paying enterprises, NGOs, CBOs, and community-based co-operatives supported by skills development. Impact of support on sustainability measured with a targeted 75% success rate.

35. Ravin Deonarain 4.1. 125 000 unemployed people assisted to enter and 50% successfully complete programmes

36. Ravin Deonarain 4.2. 100% of learners in critical skills programmes covered by sector agreements and Nat Priorities from local FET and HET institutions assisted to gain work experience. 70% find placement in employment or self-employment.

37. Ravin Deonarain 4.3. 10,000 young people trained and mentored to form sustainable new ventures and at least 70% of new ventures in operation

38. Ravin Deonarain 5.1. By March 2010 each SETA recognises and supports at least five Institutes of Sectoral or Occupational Excellence (ISOE) within public and private institutions and through Public Private Partnerships (PPPs)

39. Ravin Deonarain 5.2. Each province has at least two provider institutions accredited to manage the delivery of a new venture creation qualification. 70% of new ventures still operating after 12 months

40. Ravin Deonarain 5.3. Measurable improvements in the quality of the services delivered by skills development institutions

41. FoodBev Funded Project “Snowflake Bake For Profit” “My name is Joyce Lungi. I live in Mpumalanga Township in KZN. In 2002 I graduated from the University of Kwa Zulu Natal with a Bachelors Degree in Political Science. I have sent more than 150 job applications, my focus was government organizations. I’ve never been called for even 1 interview.” Company Name

42. FoodBev Funded Project “Snowflake Bake For Profit” “In July 2004 I started at Snowflake Bake for Profit at the Umuzi Training Centre, in KwaMakutha and Tholi Mlaba is my trainer. I sell muffins, queen cakes and scones to taxi drivers and the community. My husband sells my products for me at the taxi rank. I make R 3000 profit a month. My dream is to open a big bakery and create jobs for my community” Company Name

43. FoodBev Seta SLA Performance • Rating Includes: • NSDS/SLA target performance for sector • Financial Performance

44. Customer Survey Results Ravin Deonarain

45. FoodBev StaffEmployment Equity Company Name

46. EQUITY PROFILE OF BENEFICIARIES Company Name

47. Consultants • Very specialized skills • Non recurring and infrequent • Specific tasks or projects • Costs and resources

48. Training Layoff • Communication in sector all media • Briefing • Organised Labour Forum • Employer Forum • Council Decision • 300 skills programmes – R 1.8 m • 30 new venture creation – R 0.75 m

49. Thank you Questions