The expenditure listed in the explanatory notes hereunder is proportionately divided between the three core business units, i.e. fresh produce markets, retail and imports.

No.

Category

Explanation

Remuneration

1

Total Remuneration

Total remuneration amounts to R14 619 915.00. When potatoes and imports are excluded, it amounts to R7 715 907.92 (52.78% of total remuneration) of which R3 081 956. 57 (21.08%) apply to the retail trade and R4 633 951. 35 (31.7%) to fresh produce markets.

2

Remuneration

Remuneration is based on the personnel component required to render the inspections service set out in the methodology.

The specific positions and numbers are indicated in the blue column

under the heading Remuneration.

The remuneration of management and the administrative personnel (Chief Executive Officer, Operations Manager, Administrative and Financial Manager, five administrative officers and two Database Officers) is based on actual salaries.

The remuneration of Inspectors (45) is based on industry norms which was confirmed by a study conducted by Blue Horizon during 2020 (see Annexure A) in order to benchmark the remuneration of all of Prokon’s inspectors and some of the administrative personnel.

Prokon’s Board of Directors took the decision to base the remuneration on the minimum pay scale with due cognisance of what applies in the fresh produce industry in order to retain qualified and component personnel, especially inspection personnel.

3

Wages

Wages apply to 32 general workers who assist the inspectors, and are actual wages. They are paid the minimum wage prescribed in the official wage determination applicable to general workers.

General Expenses

4

Relief Arrangement

Cost to provide relief if a staff member goes on vacation / sick leave.

5

Bank Charges

Normal bank charges payable on current account, based on income generated by each business unit.

6

Printing and Stationery

Printing and stationery (paper, pens, staples, etc.) required to perform the service.

7

Repair and Maintenance

Repair and maintenance of equipment used for inspections, e.g., scales and trollies.

8

Office Rent

Rental payable in respect of 16 offices rented. These offices serve as bases for conducting inspections on fresh produce markets, distribution centres and retail outlets, wholesalers and ports of entry.

9

Equipment Rent

Cost of rental of equipment such as copiers and fax machines.

10

Labels

Additional labels to be affixed to containers when inspections are conducted for traceability purposes.

11

Postage

Primarily to send parcels (e.g., colour plates, documentation, protective ware and inspection equipment) to Prokon offices.

12

Relationship Management

Funding to establish and maintain relations with stakeholders in the fresh produce value chain.

13

Protective and Company Wear

Protective wear worn by inspectors such as dust coats, overalls, freezer jackets and safety shoes.

14

Travel and Accommodation

Operational related travel and accommodation expenses for personnel to conduct their duties and attendance of industry and producer meetings to report on inspection related matters.

15

Conferences, AGMs and Workshops

Expenses to attend (travel, accommodation, registration of fresh produce industry body conferences and AGMs, e.g., Potatoes SA, Produce Marketing Association and African Potato Association, international workshops offered by KCB and the International Quality Standards Harmonization Meeting in Europe.

16

Computer Software

Purchasing of computer software required to conduct inspections.

17

Mobile Phones

For use by management and inspectors in conducting daily tasks (taking inspection photos, scan barcodes, take GPS points), to communicate with one another and submit inspection information.

18

Landlines

Used as a back-up for communication purposes and to send faxes.

19

Internet

Used by all staff do conduct daily business activities, e.g., by inspectors as the inspection program is Internet based.

20

Consumable Stock

For example, knifes, side cutters, ink and stamping pads, Iodine to determine starch content, specifically for inspections on regulated fresh fruits and vegetables.

21

Refreshments

For example, tea, coffee and sugar.

22

Fuel and oil

For travelling and upkeep of existing company pool vehicles to perform daily duties.

23

Repair and maintenance Vehicles

Servicing, tyres and general repairs to existing company pool cars.

24

Licences

Annual renewal of licences of existing company pool cars vehicles.

Administration fees

25

Management Committee (personnel)

Quarterly meetings – Head office management and regional managers, e.g., to appraise operational performance across all regions and to strategize current and future inspection activities.

26

Board Meetings

2 Board meetings, 2 Risk and Audit Committee meetings, 1 AGM.

27

Data Base – Fresh Mark Systems

Payments to access data such as daily, monthly and yearly market volumes and sales as well as obtaining data on product, classes, cultivars and packaging sizes, when required.

28

E-Click Electronic Software System

Electronic inspection equipment for daily inspections at inspection points (retail, wholesale, fresh produce markets).

29

Contract Expenses (Distribution Centre Visits)

Transport expenses to conduct inspections at distribution centres and other outlets, where necessary. (This expenditure applies to retail inspections only.)

30

Professional Services

Professional services, e.g., SANAS, SEESA and SETA affiliation, legal opinions, design of production aids (colour plate book and tomato quality inspection guide), promotional material and sample testing.

31

Communication (Industry and Consumer)

Direct communication with the industry and the consumer, articles in the agricultural and consumer media and brochures to create awareness about the company’s services to the industry and to inform consumers about the role Prokon plays to ensure quality produce reaching their households.

32

Subscriptions

Renewal of industry magazine subscriptions, etc.

33

Training Expenses (Inspectors)

Training expenses incurred to ensure that personnel are at all times geared to render top quality services and are abreast of latest developments.

34

Training Expenses (Emerging Farmers)

Training expenses incurred to train emerging farmers to ensure that their products comply with official quality standards, e.g., packaging, size groups and marking. This will ensure that their consignments are market ready and thus prevent downgrading and furthermore being prohibited from being sold.

35

Auditors' remuneration

Auditors’ fees in respect of annual audit.

36

Inspector Transfer Fees

Costs related to personnel being transferred to a different office and/or inspection point.

37

Insurance

Insurance premiums in respect of vehicles, equipment, etc.

38

Business Review

Cost to produce Prokon’s Annual Business Review (compilation, lay-out and printing).

Overhead expenses

39

Financial Administration

Payment for external financial administration service.

40

Remuneration Administration

Payment for external remuneration administration service.

41

Administrative Services

Payment for external administrative service.

42

Membership fees

Payment of fees for membership fees of industry bodies, e.g., Produce Marketing Association (PMA).

Depreciation

43

Depreciation – Equipment

Provision for depreciation of existing equipment, e.g., office furniture that is written-off over three years.

44

Depreciation – Computer Equipment

Provision for depreciation of existing computer equipment, e.g., laptops and cellular phones that are written-off over three years.

45

Depreciation – Vehicles

Provision for the depreciation of seven existing motor pool vehicles which are written-off in terms of the company’s motor vehicle policy.