Annual Report & Accounts...In compliance with the Public Corporations Act, 1992 and the Tanzania Financial Reporting Standard No. 1 on Directors’ Report, the Directors submit their

A n n u a l R e p o r t a n d A c c o u n t sf o r t h e y e a r e n d e d 3 0 t h J u n e 2 0 1 5

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Annual Report & AccountsfoR the yeAR ended 30th June 2015

SUGAR BOARD OF TANZANIA

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A n n u a l R e p o r t a n d A c c o u n t s

f o r t h e y e a r e n d e d 3 0 t h J u n e 2 0 1 5


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Table of ContentsLetter of Transmittal ........................................................................................................................iii

Chairperson’s Statement ............................................................................................................... iv

Report of the Director General ........................................................................................................v

Board of Directors ......................................................................................................................... vi

Management Team ........................................................................................................................vii

Office of the Controller and Auditor General ....................................................................................1

Vision. ............................................................................................................................................2

Mission ...........................................................................................................................................2

Definitions of Terms and Abbreviations ............................................................................................3

(i) Definitions ...............................................................................................................................3

(ii) Abbreviations ..........................................................................................................................3

1.0 BACKGROUND AND GENERAL INFORMATION .............................................................4

1.1 Introduction .....................................................................................................................4

1.2 Financing of the Sugar Board of Tanzania ........................................................................4

1.3 Audit Mandate .................................................................................................................4

1.4 Audit Objectives ...............................................................................................................4

1.5 Audit Methodolgy ............................................................................................................4

1.6 Audit Scope .....................................................................................................................5

2.0 REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30TH JUNE, 2015 ......................6

3.0 AUDIT REPORT ON THE FINANCIAL STATEMENTS .....................................................16

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE, 2015 ........................................ 18


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LETTER OF TRANSMITTAL

Hon. Charles Tizeba (MP),Minister for Agriculture, Livestock and Fisheries, P. O. Box 9192,Dar es Salaam.

Honourable Minister,

In accordance with Section 28 - (5) of the Sugal Industry Act No. 26 of 2001, I hereby submit, on behalf of the Board of Directors, the Audited Accounts and Annual Report for the Sugar Board of Tanzania for the year ended 30.06.2015

Yours sincerely,Sugar Board of Tanzania

Dr. Ashura Luzi - KihupiCHAIRpERSON OF THE BOARD OF DIRECTORS


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CHAIRpERSON’S STATEMENT

The year to 30th June 2015 saw the Sugar Board of Tanzania stepping up efforts to stabilize the local sugar market through a coordinated team work with other government organs.

During the year under review, special attention was paid to checking against sugar smuggling, abuse of industrial sugar concessions as well as diversion of transit sugar into the local market. Resulting from the above interventions, the local market gained further stability, with improved sales performance registered by local producers, and good prices for most of the outgrower cane.

The Sugar Industry Regulations, 2010 were amended to provide for bulk sugar importation for domestic consumption sugar, paving way for the establishment of an entity to be formed by various stakeholder groups, for carriage and management of bulk sugar importation. Formation of the entity was on the right course.

On the aspect of the quest for attracting investments in new sugar projects, the Sugar Board of Tanzania continued to work hand in hand with other government authorities in debottlenecking difficulties in accessing unencumbered land for project development in potential areas.

On the financial and human capital aspects, the Sugar Board of Tanzania remained sound and strong, making it capable of delivering its mandate going forward.

From what has been achieved during the year under review, it can safely be asserted that the institution is on the right direction. The challenges that have been encountered have, to a large extent, been resolved as a result of joint efforts with other government authorities.

Dr. Ashura Luzi-KihupiCHAIRpERSONSBT BOARD OF DIRECTORS


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REpORT OF THE DIRECTOR GENERAL

Once again, it is time to reflect on the performance of the Board for the financial year ended 30th June 2015.

It is, indeed, very pleasing to note an overall good performance for the year under review, despite the troubled river through which the Sugar Board of Tanzania had endured and managed to cross over.

In terms of performance of the planned activities, notable achievements have been registered in areas of operations, ranging from legal, regulatory and development to financial and human capital.

All operations were kept within the overall approved budget, ending with a surplus of Tshs. 308 million against the surplus of Tshs. 296 million registered in the previous year.

Oversight on the implementation of the Accompanying Measures Project being funded by the European Union was maintained. The project which aims at improving infrastructure in outgrower cane fields and capacity building to outgrower communities and governance structures around the existing sugar factories, has registered positive achievements for everyone to see.

The local market has now gained stability, as a result of improved controls against smuggling and other illegal activities.

The need for fresh investments in greenfield large, as well as medium and small scale sugar projects is highly pronounced given the rising local demand for sugar.

SBT is commissioning a study on sugar demand, to update on the current needs for purposes of guiding strategic planning and actions aimed at taking the country to self-sufficiency and beyond.

Henry J. SemwazaDIRECTOR GENERAL


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THE DIRECTORS

Dr. Ashura Luzi - KihupiCHAIRpERSON

Mr. Jonas L. Fute

DIRECTOR

Mrs. Siama Songambele

DIRECTOR

Mr. George Mandepo

DIRECTOR


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Mr. Abdul S. Mwankemwa

BSc. (Agric. General)

MSc. (Agric. Economics)

DIRECTOR OF DEVELOpMENT, pLANNING

AND LIAISON

Mr. Moses T. Mkoba

Bcom (Accountancy), CPA

MSc. (Accountancy & Finance)

CHIEF INTERNAL AUDITOR

THE MANAGEMENT

Mr. Henry J. Semwaza

LLB (Hons) LLM (Dar)

Registered Advocate of

the High Court

DIRECTOR GENERAL

Mr. Miraji S. Kipande

ADA, MBA (CM), ACPA

DIRECTOR OF FINANCE AND ADMINISTRATION

Ms. Silvia D. Shetui

BSc (Agric. Engineering),

MBA (CM)

DIRECTOR OFREGULATORY SERVICES

Ms. Netiwe E. Mhando

LLB (Hons), MBA (ESAMI)

Registered Advocate of

the High Court

DIRECTOR OF LEGAL SERVICES & SECRETARY TO THE BOARD


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THE UNITED REpUBLIC OF TANZANIA

NATIONAL AUDIT OFFICE

REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE

FINANCIAL STATEMENTS OF THE SUGAR BOARD OF TANZANIA

FOR THE YEAR ENDED 30 JUNE 2015

The Controller and Auditor General,National Audit Office,Samora Avenue/Ohio Street,P.O. Box 9080,Tel: 255 (022) 2115157/8,Fax: 255 (022) 2117527E-mail: [email protected]: www.nao.go.tz

Dar es Salaam

January, 2016 AR/SBT/2015


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OFFICE OF THE CONTROLLER AND AUDITOR GENERAL,

UNITED REPUBLIC OF TANZANIA,

(Established under Article 143 of the Constitution of the URT).

The statutory duties and responsibilities of the Controller and Auditor General are given under Article 143 of the Constitution of the URT of 1977 (revised 2005) and in Sect. 45 and 48 (1) of the Local Government Finances Act No. 9 of 1982 (revised 2000) together with Sect. 10 (1) of the Public Audit Act No. 11 of 2008.

VISIONTo be a centre of excellence in public sector auditing.

MISSIONTo provide efficient audit services in order to enhance accountability and value for money in the collection and use of public resources.

CORE VALUES

In providing quality services, NAO is guided by the following Core Values:

OBjECTIVITY: We are an impartial organization, offering services to our clients in an objective and unbiased manner;

ExCELLENCE: We are professionals providing the highest quality audit services based on best practices;

INTEGRITY: We observe and maintain the highest standards of ethical behaviour and the rule of law;

pEOpLE FOCUS: We focus on our stakeholders’ needs by building a culture of good customer care and having competent and motivated work force;

INNOVATION: We are a creative organization that constantly promotes a culture of developing and accepting new ideas from inside and outside the organization and

BEST RESOURCE UTILISATION: We are an organisation that values and uses public resources entrusted to it in an efficient, economic and effective manner.

WE DO THIS BY:• Contributing to better stewardship of public funds by ensuring that our clients are accountable for the

resources entrusted to them;

• Helping to improve the quality of public services by supporting innovation on the use of public resources;

• Providing technical advice to our clients on operational gaps in their operating systems;

• Systematically involve our clients in the audit process and audit cycles; and

• Providing audit staff with appropriate training, adequate working tools and facilities that promote their independence.


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(c) This audit report is intended to be used by Government Authorities. However, upon receipt of the report by the Speaker and once tabled in parliament, the report becomes a matter of public record and its distribution may not be limited.

Definitions of Terms and Abbreviations

(i) Definition of Terms

According to IPSAS, a complete set of Financial Statements comprises of the followings:

(a) Statement of Financial Position;

(b) Statement of Financial Performance;

(c) Statement of Changes in Net Assets/Equity;

(d) Cash Flow Statement;

(e) Statement of Comparison of Budget and Actual Amounts; and

(f) Notes, comprising a Summary of Significant Accounting Policies and Other Explanatory Notes.

(ii) Abbreviations

HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome

IpSAS International Public Sector Accounting Standards

ISSAI International Standards of Supreme Audit Institutions

MDAs Ministries, Departments and Agencies

pAA Public Audit Act No. 11 of 2008

pAR Public Audit Regulations, 2009

pAC Public Accounts Committee

pFA Public Finance Act No.6 of 2001 (Revised 2004)

pFR Public Finance Regulations, 2001

ppA Public Procurement Act, 2011

ppR Public Procurement Regulations, 2013

Reg. Regulations

Sect. Section

URT United Republic of Tanzania

SBT Sugar Board of Tanzania


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1.0 BACKGROUND AND GENERAL INFORMATION

1.1 Introduction

I have audited the financial statements of the Sugar Board of Tanzania for the year ended 30th June, 2015. Audit findings and recommendations arising from examination of the accounting records, appraisal of Board’s activities as well as evaluation of the internal control system which requires management attention and action are set out in a management letter issued separately to the Accounting Officer.

1.2 Financing of the Sugar Board of Tanzania

The Board is financed by (as per Sugar Industry Act, 2001); as amended by Crop Boards (Miscellaneous Amendments Act) 2009:-

(a) Such sums of money as may be provided by the parliament;

(b) any monies, raised by way of loans, donations or grants made within and outside the United Republic of Tanzania;

(c) any monies raised by the way of cess or levy imposed by the Board under Sugar Industry Act (2001);

(d) any loan or subsidy granted to the Board by Government or any other person;

(e) Such sum of money or property which may become payable to or vested in the Board under the Sugar Industry Act, 2001 or any other written law or in respect of any matter incidental to the carrying out of its functions.

During the financial year 2014/2015, the Board had a total revenue of Tzs 3,541.9 million compared with Tzs 2,805.5 million for the year 2013/2014.

1.3 Audit Mandate

By virtue of the provisions of Article 143 of the Constitution of the United Republic of Tanzania of 1977 (revised 2005) and Sect.10 of the Public Audit Act No 11 of 2008, the Controller and Auditor General is the statutory auditor of all Government revenues and expenditures including the revenues and expenditures of the Sugar Board of Tanzania.

1.4 Audit Objectives

The main objective of conducting this audit is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the CAG to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework; and whether laws and regulations have been complied with.

1.5 Audit Methodology

My audit approach included tests of the accounting records and other procedures in order to satisfy the audit objectives. My audit procedures included the following:

• Identify and assess risks of material misstatement, whether due to fraud or error, based on an understanding of the entity and its environment, including the entity’s internal controls.


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• Obtain sufficient appropriate audit evidence about whether material misstatements exist, through designing and implementing appropriate responses to the assessed risks.

• Form an opinion on the financial statements based on conclusions drawn from the audit evidence obtained.

• Follow up on the implementation of the previous year’s audit findings and recommendations and directives issued by PAC to ensure that proper action had been taken in respect of all matters raised.

1.6 Audit Scope

The audit was carried out in accordance with the International Standards of Supreme Audit Institutions (ISSAIs) and other audit procedures as were deemed appropriate under the circumstances. This covered the evaluation of the effectiveness of the financial accounting system and internal control over various activities of the Sugar Board of Tanzania.

The audit was conducted on a sample basis; therefore the findings are confined to the extent that records, documents and information requested for the purpose of the audit were made available to me.

As auditor, I am not required to specifically search for fraud and errors, therefore, my audit cannot be relied upon to disclose all such matters. However my audit was planned in such a way that I would have reasonable expectations of detecting material errors and misstatements in the financial statements resulting from irregularities including fraud. The responsibility for detection, prevention of irregularities and the maintenance of an effective and adequate system of internal control rests with the management of the Sugar Board of Tanzania.


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2.0 REpORT OF THE BOARD OF DIRECTORS FOR THE YEAR ENDED 30TH jUNE, 2015

2.1 BACKGROUND

In compliance with the Public Corporations Act, 1992 and the Tanzania Financial Reporting Standard No. 1 on Directors’ Report, the Directors submit their report and financial statements of the Sugar Board of Tanzania for the year ended 30th June, 2015. The financial statements are set out on pages 18 to 22.

2.2 CORpORATE OUTLOOK

VISION

The vision of SBT is to become an efficient and effective regulatory body able to service and support the sugar industry towards achieving competitiveness and sustainability.

MISSION

Guided by principles of impartiality, excellent services and integrity, SBT seeks to create, sustain and regulate an environment conducive to sugar stakeholders to efficiently and profitably produce cane, sugar and related products.

2.3 pRINCIpAL ACTIVITIES

Sugar Board of Tanzania (SBT) was established under Section 3 of the Sugar Industry Act, 2001 and came into operation on 1st July 2003. The principal functions of the SBT include:

• To promote the development and expansion of sugarcane cultivation; production and marketing of sugar and the use of its by-products;

• To advise the Government on the policies and strategies for promotion and development of the sugar industry;

• To promote the development of small-holder sugarcane growers;

• To create and promote a competitive environment conducive to fair play among stakeholders in the sugar industry;

• To regulate and recommend measures for prescription and enforcement for the control of sugarcane pests and diseases;

• To recommend and regulate measures and procedures for the importation of sugarcane planting materials; and

• To monitor the execution of contracts and marketing arrangements between sugarcane Outgrowers and sugar manufacturers or other bodies related to the sugar sector and reconcile the parties, when disputes arise.


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1 REpORT OF THE BOARD OF DIRECTORS FOR THE YEAR ENDED 30TH jUNE, 2015

2.4 COMpOSITION OF THE BOARD OF DIRECTORS

The names of the members of the Board of Directors who served during the financial year were:

S/N Name position Qualification Nationality Date of Appointment/ Retired Age

1. Dr. Ashura Luzi-Kihupi Chairperson PhD (Plant Breeding) Tanzanian18th January 2015 63

2. Mr. Jonas L. Fute Member MSC (Agriculture) Tanzanian18th January 2015 65

3. Mr. George Mandepo Member LLM Tanzanian18th January 2015 40

4.Mrs. Siama Songam-bele

Member BSC (Agriculture) Tanzanian18th January 2015 66

2.5 FINANCE pLANNING AND AUDIT COMMITTEE

The Government is yet to appoint remained five (5) members of the Board of Directors for establishment of Finance Planning and Audit Committee to date.

2.6 OTHER COMMITTEE

The Board established various committees to oversee financial accountabilities and value for money. Internally the following Committees have been formed and are functioning:-

2.6.1 TENDER BOARD COMMITTEE

S/NName position

Qualificationposition in the Organization

Training on ppA & Regulations

Date of Appointment

1. Mr. A.S. MwankemwaChairman

MSc. Agriculture Economics

BSc. Agriculture General

Director of Development Planning and Liaison YES

7/12/2014 – 7/12/2017

2. Mr. K. O. Ooko Secretary

MSc. Procurement & Supply Chain Management, CPSP (T), Advance Diploma in Procurement & Supplies Mngmt (ADPS)

Senior Procurement & Logistics Officer YES

Sept, 2014

3. Ms. S.D. Shetui MemberMBA (CM), BSc. Agricultural Engi-neering

Director of Regulatory Services YES

7/12/2014 – 7/12/2017

4. Mr. T. Dilliwa MemberBSc. Agricultural Economics

Senior Regulatory Services Officer YES

15/7/2013 – 15/7/2016

5. Ms. N.E. Mhando MemberMBA (ESAMI) Bachelor of Law

Director of Legal Services YES

7/12/2014 – 7/12/2017

6. Mr. A. Mwinyimanga Member BSc. Civil Engineer-ing FTC (Civil)

Senior Estate Officer

YES

1/9/2014 – 1/9/2017


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7. Mr. M.S. Kipande Member ACPA (T), MBA (cm) Business Administration, Advanced Diploma in Accountancy (ADA)

Director of Finance & Administration YES

15/7/2013 – 15/7/2016

8 Ms V. Mwanisawa Member MBA, BSc. Agric Business & Agricultural Economics

Senior Development Planning and Liaison Officer

YES 09/08/2016-08/08/2019

2.6.2 AppOINTMENT AND DISCIpLINARY COMMITTEE

S/N Name position Designation

1. Mr. H.J. Semwaza Chairman Director General

2. Mr. M.T. Mkoba Secretary Chief Internal Auditor

3. Mr. A.S. Mwankemwa Member Director of Development Planning and Liaison

4. Ms. S.D. Shetui Member Director of Regulatory Services

5. Mr. M.S. Kipande Member Director of Finance and Administration

6. Ms. N.E. Mhando Member Director of Legal Services and Secretary to the Board

7. Mr. B.K. Munubi Member TUICO - Chairman

8. Ms. V. Mwanisawa Member Women Representative

2.6.3 Executive Committee

S/N Name position Designation

1.Mr. H.J. Semwaza Chairman Director General

2. Ms. N.E. Mhando Secretary Director of Legal Services and Secretary to the Board

3. Mr. A.S. MwankemwaMember

Director of Development Planning and Liaison

4. Ms. S.D. Shetui Member Director of Regulatory Services

5. Mr. M.S. Kipande Member Director of Finance and Administration

6. Mr. M.T. Mkoba Member Chief Internal Auditor

7. Mr. B.K. Munubi Member TUICO - Chairman

8. Mr. T. Dilliwa Member Departmental Representative


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REpORT OF THE DIRECTORS FOR THE YEAR ENDED 30TH jUNE, 2015 (Continued)

2.7 RISK MANAGEMENT AND INTERNAL CONTROL

The internal controls have been assessed as Low Risk. A review of transactions from initiation and authorization, recording and processing indicated that the controls are adequate; however there are some areas highlighted in the management letter which need improvements so that internal controls and its control environment become adequate and more reliable.

2.8 STATEMENT OF DIRECTORS RESpONSIBILITY

The Board’s directors are responsible for the preparation and fair presentation of the financial statements, comprising the Statement of Financial Position at 30 June 2015, the Statement of Comprehensive Income, the statement of changes in equity, Statement of cash flows for the year then ended, Statement of comparison of budget and actual amounts and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, in accordance with International Public Sector Accounting Standards(IPSAS).

The directors’ responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

The directors have made an assessment of the Board’s ability to continue as a going concern and have no reason to believe the business will not be a going concern in the financial year ahead.

The Board of Directors confirm that suitable accounting policies have been used and applied consistently, and that reasonable and prudent judgements and estimates have been made in the preparation of the financial statements for the year ended 30th June, 2015.

The Directors also confirm that:-

• Suitable accounting policies have been adopted and applied consistently.

• The International Public Sector Accounting Standards (IPSAS) have been adhered to in preparing the financial statements.

• SBT keeps proper books of accounts and accounting records, which disclose with reasonable accuracy all the financial transactions, assets and liabilities.

• SBT maintains adequate system of internal controls and takes reasonable steps for the prevention and detection of fraud, errors and other irregularities.

• SBT has prepared the financial statements, which the Directors believe reasonably disclose the financial position of the Sugar Board.


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2.9 REVIEW OF pERFORMANCE FOR 2014/2015

Attainment in Physical Terms

(a) Operational performance

During the year ended 30thJune 2015 SBT recorded a net operating surplus excluding gains and losses of TZS 308 Million compared to Surplus of TZS 296 Million made in the previous year 2013/14.

(b) Financial performance and Liquidity

As at 30th June, 2015 total assets held amounted to TZS 55,002 Million and total liabilities TZS 3,059 Million and net worth TZS 51,943 Million.

As at 1st July, 2014 SBT had total assets amounting to TZS 54,462 Million, total liabilities TZS 3,058 Million and net worth of TZS 51,404 Million.

The performance referred to above are summarized below:-

30 June 2015TZS ‘000’

30 June 2014TZS ‘000’

Total Assets 55,002,385 54,462,346

Current Assets (a) 3,473,821 3,107,690

Current Liabilities (b) 200,517 191,200

Net worth 51,943,496 51,404,062

Current Ratio (a)/(b) 17.3:1 16.2:1

2.10 REpORT ON SUGAR INDUSTRY pERFORMANCE

SBT Strategic Plan for the same period foresees improved financial sustainability, improved Legal and Regulatory framework as well as coordinating development activities targeting increasing cane and sugar productivity.

(a) Sugarcane production by Millers based on milling season

During the 2014/15 financial year, sugarcane production by millers observed a slight increase by 5% to 2,440,569.98 MT from 2,316,297.88 MT in the preceding season as shown in the table below. This was attributed to the use of new varieties, good weather conditions, and slight field expansion in other estates amid decreased harvest area at Mtibwa Sugar Estates.

Sugar EstateArea Harvested (hectares) Cane Harvested (Metric Tons)2014/15 2013/14 2014/15 2013/14

Kilombero 9,037.70 8,074.11 794,397.10 677,023.00

Mtibwa 5,412.71 5,715.46 220,852.79 214,631.88

TPC Ltd 6,269.51 6,100.42 901,234.00 962,371.00

Kagera 9,009.00 10,528.00 494,847.60 462,272.00

Total 29,728.31 30,417.99 2,411,330.89 2,316,297.88


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(b) Sugarcane production by Outgrowers

During the year under review, sugarcane production by Outgrowers has increased from 639,029.54 MT in 2013/14 to 691,645.8 MT. This is attributed to good weather conditions and continuous efforts to sensitize cane growers to adopt better cane husbandry practices. Outgrowers harvest area has decreased in Mtibwa as some growers have shifted to other crops due to challenges related to low cane price and delayed cane payments. Further significant amount of cane was deferred at Kilombero mill area due to limited factory capacity.

LocationArea Harvested (hect-

ares)Cane Harvested (Metric

Tons) Number of Outgrowers

2014/15 2013/14 2014/15 2013/14 2014/15 2013/14

Kilombero 11,407.00 11,407.00 562,152.00 518,722.00 17,130.00 17,224.00

Mtibwa 1,560.00 1,600.00 58,661.80 70,229.54 6,120.00 6,120.00

Kagera 1,131.00 1,325.60 70,832.00 50,078.00 507.00 713.00

Total 14,098.00 14,332.60 691,645.80 639,029.54 23,757.00 24,057.00

(c) Total Cane and Sugar production

Status of cane and sugar production at the sugar mills is as shown in the table below:-

Sugar EstateTotal cane production (MT) Total Sugar production (MT)2014/15 2013/14 2014/15 2013/14

Kilombero 1,356,549.10 1,195,745.00 125,374.00 116,495.00

Mtibwa* 279,514.59 286,180.18 23,724.00 26,491.00

TPC Ltd 901,234.00 962,371.00 99,373.00 101,226.00

Kagera 565,679.60 512,350.00 55,536.00 50,207.00

Total 3,102,977.29 2,956,646.18 304,007.00 294,419.00

*ThedeclineofCaneandSugarproductionatMtibwaSugarEstatesLtdwasduetowithdrawalofsomeOutgrowersincanegrowingbusiness.

(d) 2014/15 Total Relative percentages of Sugarcane production

LocationSugarcane

by Millers & OG (MT)

% of Total Industry

Cane pro-duction

Sugar-cane by Millers

(MT)

% of To-tal Millers Cane pro-

duction

Sugarcane by OG (MT)

% of Total OG Cane

production

Kilombe-

ro1,356,549 43.30 794,397 32.54 562,152 81.28

Mtibwa 280,369 8.95 220,853 9.08 58,661.8 8.48

TPC Ltd 930,472 29.70 930,472 38.11 n/a n/a

Kagera 565,680 18.06 494,848 20.27 70,832 10.24

Total 3,133,070 100.00 2,440,570 100.00 691,645.8 100.00


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(e) Molasses production (MT)

Molasses produced in the Country are used for cattle feeding and as fertilizer. Kilombero Sugar Company Ltd uses molasses to produce Extra Neutral Alcohol and sell it as raw materials to other alcohol based industries for production of a wide range of beverages products. TPC sells molasses locally and do export some.

FactoryMolasses produced* (MT)

2014/15 2013/14

Kilombero** 49,173.00 48,130.00

Mtibwa 13,850.00 13,115.00

TPC Ltd 42,832.00 41,138.00

Kagera 18,011.00 19,823.00

Total 123,866.00 122,206.00

(f) Sugar Imports and exports

During the year 2014/2015 status of sugar imports and exports was as follows:-

INDUSTRIAL SUGAR

2014 / 2015 2013 / 2014Approved Imported Approved Imported

182,765mt 120,730.6mt 170,050mt 143,281.5mt

DOMESTIC GAp SUGAR

2014 / 2015 2013 / 2014

Approved Imported Approved Imported

100,000 86,942.05 mt - -

SUGAR ExpORTS*

2014 / 2015 2013 / 2014

- 2,800mt

* No sugar exports during 2014/2015 due to improvement of the local market.

2.11 STATEMENT OF SOLVENCY

As at 30thJune, 2015 current assets stood at TZS 3,474 million and current liabilities were TZS 200 million. Current assets exceeded current liabilities by TZS 3,274 million. The current ratio is 17.3:1. The Directors confirmed that SBT was solvent as at 30thJune 2015.


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2.12 RELATED pARTY DISCLOSURES

Sugar Board of Tanzania is a Public Institution whose operations are governed by the Sugar Industry Act 2001. The Board is controlled by the Government of Tanzania, through Ministry of Agriculture, Food Security and Cooperatives. Related party relationship exists between the Board, Directors and Management. Related party transactions and balances in accordance with the International Public Sector Accounting Standards for key Personnel (Directors & Members of Management) were as follows:-

2015TZS ‘000’

2014TZS‘000’

Directors Expenses 98,418 23,651

Emoluments to Key Management Personnel: 2015TZS ‘000’

2014TZS‘000’

Key Management Salaries 214,344 211,968

Pension/Gratuity 40,180 15,392

Staff Car loans outstanding 356,961 12,513

2.13 CORpORATE SOCIAL RESpONSIBILITY

SBT continued with its principle of corporate social responsibility and committed itself in promotion of socio-economic development of the society through extension of financial support towards implementation of community development projects.

During the year under review the Management donated to various communities based societies and organizations a total of TZS3.9 million.

2.14 CORpORATE GOVERNANCE

The Board of Directors considers that a high standard of good governance is as a result of high levels of organization’s performance and at the same time raising confidence to the public.

The Board of Directors takes overall responsibility to ensure that there is adequate control of the assets of the Sugar Board of Tanzania, including identifying the key risk areas that have significant impact in both the internal and external environments in which the Board operates, and ensuring that the internal control policies and procedures are followed adequately. Procurement of goods and consultancy services as reflected in the financial statements have been done in accordance with the Public Procurement Act No.07 of 2011.

The board of directors delegates daily operations to the management and, management performance is reviewed through various Board of Directors meetings.

During the year, the Board of directors held two (2) ordinary and thee (3) extraordinary meetings which deliberated on various issues pertaining to regulatory, promotion and administrative matters including deliberation and approval of the following matters:


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a) The 2015/16 Annual Budget

b) The 2013/14 Audited Financial Statements and Management Letter

c) Review on quarterly Performance Reports

d) Staff Matters

2.15 HIV/AIDS

SBT under-scores the need to fight HIV/AIDS at the work place and adhere to Government policy on HIV/AIDS to provide assistance to SBT employees who are affected. In the meantime, sensitization and wellness programmes are promoted.

1.16 RECRUITMENT pOLICY

Recruitment at SBT is done on fair basis without regard to gender, race, political affiliation or any other form of discrimination.

SBT advertises vacancies in news papers and prospective applicants pass through interviews before final selection is made. In the period in question, the Board recruited four (4) employees.

The SBT staff complement as at 30thJune 2015 was 30 (27 as at 30th June 2014) employees, of which, 18 were male and 12 female. One staff resigned during the financial year 2014/15.

2.17 EMpLOYEES WELFARE

Management and Employees’ Relationship

The relationship between employees and Management continued to be good. There were no significant unresolved conflicts or complaints received by the Management during the year under review.

Training

During the year a total of TZS 137 million was used in staff training (2013/2014: TZS 173 million).Training efforts were focused on short-term and long-term training inside and outside the country geared towards enhancing professional competence as well as improving employee’s performance.

Medical Service

All Members of Staff together with a maximum number of four beneficiaries (dependants) for each employee were availed with medical insurance services provided by the National Health Insurance Fund (NHIF) where employer contributes 3 percent of employee basic salary; the employees also contribute 3 percent of their basic salaries.

Financial Assistance to Staff

This is available to all confirmed employees depending on the assessment made by Management of the need and circumstance and ability to make payment in accordance with the existing Board’s Staff Regulations and Staff Loan Policy as approved by the Board of Directors.

persons with disabilities:

It is the policy of the Board not to discriminate persons with disability in recruitment.


15


2.18 pROCUREMENT

Procurement was in conformity with the Public Procurement Act 2011 and its related Regulations of 2013.

Tenders were awarded under framework contracts during the financial year 2014/2015 for Supply of goods, Non-consultancy services and consultancy services.

2.19 INDEpENDENT AUDITOR

The Controller and Auditor General (CAG) is the Statutory Auditor of the Public Authorities and other Bodies by virtues of section 143 of the Constitution of the United Republic of Tanzania as amplified in Section 32 (4) of the Public Audit Act No. 11 of 2008. However, in accordance with Section 33 (1) of the Same Act, M/s. Matsab & Company were authorized to carry out the audit of the Sugar Board of Tanzania for the year ended 30th June, 2015 on behalf of the Controller and Auditor General (CAG).

BY THE ORDER OF THE BOARD

…………………………………… ………………………………………CHAIRpERSON BOARD MEMBER

DATE:.....................................


16

3.0 AUDIT REpORT ON THE FINANCIAL STATEMENTS

To: Dr. Ashura Luzi-Kihupi,

Chairperson of the Board of Directors,

Sugar Board of Tanzania,

P.O. Box 4355,

DAR ES SALAAM.

RE: REpORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF SUGAR BOARD OF TANZANIA FOR THE YEAR ENDED 30TH jUNE, 2015

Introduction

I have audited the financial statements of Sugar Board of Tanzania which comprises of the statement of financial position, statement of financial performance, statement of changes in net assets and accounting policies, statement of cash flows, Statement of comparison of budget and actual amounts; and notes to the financial statements for the year ended 30th June, 2015 as shown on pages 17 to 21 of this report.

Board of Directors Responsibility for the financial statements

Management of Sugar Board of Tanzania is responsible for the preparation and fair presentation of these financial statements in accordance with the International Public Sector Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error as per the Statement of Management responsibility on the Financial Statements enclosed in this report as set out on page 7.

Responsibilities of the Controller and Auditor General

My responsibility as an auditor is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAI) and such other procedures I considered necessary in the circumstances. These standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, I considered the internal control relevant to the Board’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Board’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

In addition, Sect. 10 (2) of the PAA No. 11 of 2008 requires me to satisfy myself that the accounts have been prepared in accordance with the appropriate accounting standards and that; reasonable precautions have been taken to safeguard the collection of revenue, receipt, custody, disposal, issue and proper use of public property, and that the law, directions and instructions applicable thereto have been duly observed and expenditures of public monies have been properly authorized.


17

3.0 AUDIT REpORT ON THE FINANCIAL STATEMENTS continued

Further, Sect 48(3) of the Public Procurement Act No.7 of 2011 and 269 (1) of the Public Procurement Regulations 2013 require me to state in my annual audit report whether or not the auditee has complied with the provisions of the Law and its Regulations.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Unqualified opinion

In my opinion, the financial statements present fairly, in all material respects the financial position of the Sugar Board of Tanzania as at 30thJune 2015, its financial performance and cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSAS).

Report on Other Legal and Regulatory Requirements

Compliance with procurement Legislation

In view of my responsibility on the procurement legislation, and taking into consideration the procurement transactions I have reviewed as part of this audit. I state that the Sugar Board of Tanzania has generally complied with the requirements of the PPA No.7 of 2011 and it’s underlying Regulations of 2013.

Jasper N.S. Mero

Ag. CONTROLLER AND AUDITOR GENERAL

21stJanuary, 2016

Copy: The Chief Secretary,

State House,

P.O. Box 9120,

DAR ES SALAAM.

Permanent Secretary and Paymaster General,

Ministry of Finance,

P.O. Box 9111,

DAR ES SALAAM.


18

STATEMENT OF FINANCIAL pOSITION AS AT 30TH jUNE, 2015

NOTES 30.06.2015 30.06.2014

TZS TZS

ASSETS ‘000’ ‘000’

Current assets Restated

Cash and Cash Equivalents 5 1,961,318 2,497,376

Receivables from Exchange Transaction 6 927,732 442,480

Receivables from Non Exchange Transaction 7 578,354 158,629

Inventories 8 6,417 9,205

Total current assets 3,473,821 3,107,690

Non-current assetsProperty, Plant and Equipment 9 9,271,366 11,636,827

Investment Property 10 42,101,546 39,565,349

Interest in Jointly Controlled Asset 11 152,000 147,001

Intangible Assets 12 3,652 5’479

Total non-current assets 51,528,564 51,354,656

TOTAL ASSETS 55,002,385 54,462,346

LIABILITIESCurrent Liabilities

Trade Payables from Exchange Transactions 13 155,986 169,700

Payables from Non Exchange Transactions 14 4,351 6,108

Gratuity Payables 40,180 15,392

Total Current Liabilities 200,517 191,200

Non Current Liabilities

Deferred tax liabilities 15 2,008,887 1,881,309

Capital Grant (NSP) 16 849,485 985,775

Total Non Current Liabilities 2,858,372 2,867,084

TOTAL LIABILITIES 3,058,889 3,058,284

NET ASSETS 51,943,496 51,404,062

NET ASSETSCapital Fund 17 6,568,307 6,568,307

Revaluation Reserve 18 14,499,723 14,499,723

Accumulated Surplus 30,875,466 30,336,032

TOTAL NET ASSETS 51,943,496 51,404,062

Notes to the Financial Statements on pages 23 to 45 form an integral part of the financial statements.

The Financial Statements on pages 18 to 22 were approved by the Board of Directors and were signed on its behalf by:

________________ ___________________ __________________

CHAIRPERSON DATE DIRECTOR


19

STATEMENT OF FINANCIAL pERFORMANCE FOR THE YEAR ENDED 30TH jUNE, 2015

NOTES 30.06.2015 30.06.2014

TZS TZS

‘000’ ‘000’

REVENUE Restated

Revenue from Non- Exchange Transaction

Fees, Fines, Levies and Licenses 19 1,310,315 708,789

Government Subvention 20 - 25,405

Amortization of Capital Grant 136,290 199,478

Revenue from Exchange Transactions

Revenue from Rented Properties 21 2,095,289 1,871,881

Finance Income 22 19 -

Total Revenue (Excluding Gains) 3,541,913 2,805,553

ExpENSES

Wages, Salaries and employee benefits 23 1,199,857 1,137,653

Maintenance expenses 24 458,040 367,273

Supplies and Consumables used 25 373,205 251,972

Operating Expenses 26 865,119 411,657

Grants and other transfer payments 16 136,290 199,478

Provisions for Amortizations of Intangible Assets 1,827 1,827

Depreciation 163,386 106,407

Audit Fees 24,000 24,200

Finance Cost 11,809 8,518

Total Expenses (Excluding Losses) 3,233,533 2,508,985

Operating Surplus/(Deficit) before gains and losses 308,380 296,568

Other Gains/(losses)

Gain/(Loss) on Disposal of Assets (2,291,672) 30,000

Gain/(Losses) on foreign exchange transactions 160,847 16,042

Impairment (Loss)/Gain (35,531) 58,474

Unrealized gain on fair value of investments 2,524,988 21,720,237

Surplus/ Deficit before tax 667,012 22,121,321

Deferred Tax (127,578) (2,545,108)

Surplus/ Deficit after tax 539,434 19,576,213

Accumulated Surplus brought forward 30,336,032 10,759,819

Balance as at 30th june 2015 30,875,466 30,336,032



________________ ___________________ __________________



20

STATEMENT OF CASH FLOW FOR THE YEAR ENDED 30TH jUNE, 2015

CASH FLOW FROM OpERATING ACTIVITIES NOTES 30.06.2015 30.06.2014

TZS TZS

Receipts 000’ 000’

Receipts from Rented Properties 1,735,353 2,151,889

Receipts from Levies, fines and Licenses 890,590 734,194

Receipts from Finance Income 19 -

Total cash received from operations 2,625,962 2,886,083

Cash was disbursed to:

Compensations to employees 1,175,069 1,156,322

Cash paid to suppliers and Service Providers 866,172 641,855

Cash paid to finance Operating activities 866,876 411,657

Finance Cost 11,809 8,518

Total cash disbursed to operations 2,919,926 2,218,352

Net Cash flows from Operating Expenses (A) 27 (293,964) 667,731

Cash Flow from Investing Activities

Purchase of Property and Equipment (89,595) (7,793)

Expenditure on Investment Property (11,209) (31,393)

Cash proceeds from Asset Disposal - 41,000

Other Non Current Assets (5,000) (24,400)

Net Cash used in Investing Activities (B) (105,804) (22,586)

Cash Flow from Financing Activities

Capital Grant (136,290) (149,479)

Net Cash Flow from Financing Activities (C) (136,290) (149,479)

NET CASH AND CASH EQUIVALENTS USED (A + B + C) (536,058) 495,666

CASH AND CASH EQUIVALENT AS AT 01/07/2014 2,497,376 2,001,710

CASH AND CASH EQUIVALENT AS AT 30/06/2015 1,961,318 2,497,376



________________ ___________________ __________________



21

STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 30TH jUNE, 2015

CApITAL FUND REVALUATION RESERVE

ACCUMULATED SURpLUS

TOTAL

TZS ‘000’

TZS ‘000’

TZS ‘000’

TZS ‘000’

Balance as at 1st july, 2013 as previously reported

6,568,307 10,750,546 10,752,513 28,071,366

Restatement to correct prior year errors (NOTE 29)

- - 7,306 7,306

Balance at start of the year as restated

6,568,307 10,750,546 10,759,819 28,078,672

Revaluation Gain - 3,749,177 - 3,749,177

Surplus/(Deficit) for the Period - - 19,576,213 19,576,213

Balance as at 30th june 2014 6,568,307 14,499,723 30,336,032 51,404,062

Balance as at 01st july 2014 6,568,307 14,499,723 30,336,032 51,404,062

Surplus/(Deficit) for the Period - - 539,434 539,434

Balance as at 30th june 2015 6,568,307 14,499,723 30,875,466 51,943,496

IPSAS 1 requires that the financial statements should include a statement showing either all changes in equity or changes in equity other than those arising from capital transactions with owners and distributions to owners. The above illustrates an approach which presents all changes in equity.



________________ ___________________ __________________



22

STATEMENT OF COMpARISON OF BUDGET AND ACTUAL AMOUNTS FOR THE YEAR END-ED 30TH jUNE 2015

NOTES Original Budget

Adjust-ments

FinalBudget

Actual Amount

Difference

TZS. TZS. TZS. TZS. TZS.

000’ 000’ 000’ 000’ 000’

REVENUE

Fees, Fines, Levies and Licenses

28(a) 1,044,500 - 1,044,500 1,310,315 265,815

Revenue - Exchange Transaction

28(b) 1,999,470 - 1,999,470 2,095,289 95,819

Amortization of Capital Grant

- - - 136,290 136,290

Finance Income - - - 19 19

3,043,970 - 3,043,970 3,541,913 497,943

EXPENDITURES**

Wages, salaries for em-ployees

1,200,551 - 1,200,551 1,199,857 694

Maintenance expenses 361,023 98,000 459,023 458,040 983

Supplies and Consumable 567,077 (190,000) 377,077 373,205 3,872

Operating Expenses 28(c) 563,505 92,000 655,505 865,119 (209,614)

Grants and transfer pay-ments

28(d) - - - 136,290 (136,290)

Depreciation of PPE 28(e) - - - 163,386 (163,386)

Amortization of Intangibles 28(f) - - - 1,827 (1,827)

Finance cost 28(g) 10,000 10,000 11,809 (1,809)

Audit Fees 25,000 25,000 24,000 1,000

TOTAL ExpENDITURES 2,727,156 2,727,156 3,233,533 (506,377)

SURpLUS FOR THE pERIOD 316,814 316,814 308,380 (8,434)

IPSAS 24 requires a comparison of budgeted amounts and actual amounts arising from the execution of the budget to be included in the financial statements of entities that are required to make publicly available their approved budget and for which they are therefore held publicly accountable.

Explanations on Budget Variances are provided under Note 29 (a), (b) and (c).



________________ ___________________ __________________



23

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH jUNE, 2015

1. GENERAL INFORMATION

Sugar Board of Tanzania (SBT) was established by Sugar Industry Act (No 26) of 2001 which came into operation on 1 July 2003. To enable the SBT commence business it took over the assets and liabilities of the defunct Sugar Development Corporation (SUDECO) on 1 July 2003.The objective of SBT is to provide for regulations for improvement and development of sugar industry in Tanzania.

Sugar Board of Tanzania is established and registered in Tanzania. Its registered office and the address of its principal place of business is:

Sukari House,

Sokoine Drive/Ohio Street, Floor Nos. 5 & 6,

P. O. Box 4355,

DAR ES SALAAMFax: 022 2130598Email: [email protected]

Website: www.sbt.go.tz

2. SUMMARY OF SIGNIFICANT ACCOUNTING pOLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below. The Board has opted to present comparative information as allowed by IPSAS 1 Presentation of Financial Statements.

(a) Statement of Compliance and basis of preparation

These financial statements have been prepared in accordance with and comply with International Public Sector Accounting Standards (IPSAS). This is the first set of financial statements by Sugar Board of Tanzania prepared under IPSAS basis. The financial statements are presented in Tanzanian Shillings (TZS), which is the functional and reporting currency and all values are rounded to the nearest thousand (Tzs 000).

These financial statements have been prepared under the historical cost unless stated otherwise. The cash flows statement is prepared using the direct method. The financial statements are prepared on an accrual basis.

The preparation of financial statements in conformity with IPSAS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Board’s accounting policies.

The areas where a high degree of judgment or complexity has been applied, or where assumptions and estimates are significant to the financial statements are disclosed in Note 4.

(b) Foreign currency translation

Functionalandpresentationcurrency

Items included in the financial statements of the Board are measured using the currency of primary economic environment in which the Board operates (“the functional currency“). The financial statements are therefore presented in Tanzania Shillings, rounded to the nearest thousand which is the Board’s functional and presentation currency.


24

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH jUNE, 2015 (continued)

SUMMARY OF SIGNIFICANT ACCOUNTING pOLICIES (Continued)

ForeignCurrencyTransactionsandbalances

Transactions denominated in currencies other than Tanzania Shillings are translated into Tanzanian shillings at the exchange rates prevailing at the transaction dates. Monetary assets and liabilities in foreign currencies at the year end are translated into Tanzanian shillings at the rates of exchange ruling at the end of the financial year. The resultant gains/losses on exchange rate translations are recognized as income or expenses in the period in which they arise.

(c) property, plant and Equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the assets’ carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably.

Revaluations are performed after every five years to ensure that carrying amounts do not differ materially from those that would arise using fair values at the reporting date. The opening values of Property, Plant and Equipment resulting from revaluation have been taken as deemed costs.

Repairs and maintenance are charged to the statement of financial performance during the year in which they are incurred.

Land and buildings other than investment property are subsequently shown at re-valued amount (being fair value at the date of revaluation) less any subsequent accumulated depreciation and any subsequent accumulated impairment losses.

Revaluation differences are recorded in the revaluation reserve unless they are reversals of amounts originally accounted for in the income statement, in which case they are dealt with in statement of financial performance for the period.

Other items of property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is provided for on straight-line basis and is calculated separately for each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item. Applicable depreciation rates for Property, Plant and Equipment are as follows:

Buildings 2.5%

Plant, Machinery, Railway Siding 15.0%

Motor vehicles 20.0%

Furniture, Fixture and Equipment 20.0%

Computers and Accessories 25.0%

Land is not depreciated.

Major renovations are depreciated over the remaining useful life of the related asset or to the date of the next major renovation, whichever is sooner.


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(c) property, plant and Equipment (Continued)

Depreciation of an asset begins when it is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation ceases at the earlier of the date that the asset is classified as held for sale in accordance with IPSAS 17 and the date that the asset is derecognized.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. No depreciation is charged if the residual value of an item is equal to or greater than its carrying value.

(d) Investment property

Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day to day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the statement of financial performance in the period in which they arise.

Investment properties are derecognized when either they have been disposed off or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the disposal proceeds and the carrying amount of the asset is recognised in the statement of financial performance in the period of derecognition.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the Board accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

(e) joint Venture Arrangement

SBT has entered into a joint venture arrangement in the form of a jointly controlled asset under Public Private Partnership. SBT policy is to recognize in its Financial Statements its share of the Jointly Controlled Assets, any liability incurred, a share of liability jointly incurred, revenue received from the sale or use of its share of the Joint venture output and share of the joint venture expense or any other expenses incurred in relation to the interest in the joint venture.

(f) Intangible Assets

Intangible assets comprise of computer application software and computer packages. Intangibles assets with finite useful lives are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight line basis over the estimated useful lives of the intangible assets. Changes in intangible assets estimates are recognized in the Statement of Comprehensive Income prospectively.

The Board’s intangible assets have finite useful life of five years and amortization commences when the asset is available for its intended use. Intangible assets with indefinite useful lives are carried at cost less accumulated impairment losses. Intangible assets are derecognized when no future economic benefits are expected from their use.


26



(g) Impairment of assets

SBT recognizes an impairment loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets that are subject to amortization are also tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

(h) Trade receivables

SBT recognizes trade receivables initially at original invoice amount which is fair value at transaction date. Subsequently trade receivables other than short-term receivables are measured at amortized cost using the effective interest method less allowance for impairment.

Short term receivables are measured at cost less allowance for impairment. An allowance for impairment of trade receivables is established when there is objective evidence that SBT will not be able to collect all amounts due according to the original terms of the receivables. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate, or where appropriate, at the interest rate that SBT would have to pay to finance such receivables. The amount of the provision is recognized in the statement of financial performance.

(i) Cash and cash equivalents

The SBT’s cash comprises cash in hand and demand deposits with banks. Cash equivalents comprise of short term bank deposits with an original maturity of three to six months. Bank overdrafts are included within borrowings in current liabilities on the balance sheet if any. The carrying amounts of these assets approximate to their fair value.

(j) Inventories

Inventories comprise of sugar-for-own consumption and stationery stocks. These are stated at the lower of cost or net realizable value. Cost is determined using first-in first-out (FIFO) method. Net realizable value is the estimated selling price in the ordinary course of business less the costs of completion and selling expenses. Inventories are recognized as an expense when deployed for utilization or consumption in the ordinary course of operations of the Board.

(k) provisions

SBT recognizes provisions when it has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Where SBT expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.


27



(l) Grants

Grants received for capital expenditure are classified as capital grants in the statement of financial position, while grants received for operating expenses are treated as recurrent income and credited in the Statement of financial performance in the period in which it was received.

The method used for accounting for grants in respect of capital expenditure is the capital method. Grants are treated as deferred income which is recognised in the statement of financial performance on a systematic and rational basis over the useful life of the asset. Such allocation to income is usually made over the expenditures incurred during that financial year and in the proportions in which expenditure on related assets is paid.

Grants relating to revenue expenditure are credited to statement of financial performance in the same period in which the revenue expenditure to which they relate is charged.

(m) Revenue recognition

SBT’s revenue comprises of the commission, Government grant, Levies interest and rental fees received and accrued net of withholding tax, value-added-tax, rebates and discounts.

Revenue from non-exchange transactions

Fees, Levies and Licenses

SBT recognizes income from fees, Levies and Licenses when the event occurs and the asset recognition criteria are met. Other non exchange revenues are recognized when it is probable that the future economic benefits or service potential associated with the asset will flow to the entity and the fair value of the asset can be measured reliably.

Government Subventions

Revenues from non exchange transactions with government are measured at fair value and recognized on obtaining control of the asset (cash, goods, services and property) if the transfer is free from conditions and it is probable that the economic benefits or service potential related to the asset will flow to the Board and can be measured reliably.

Revenue from exchange transactions

Rental income

SBT earns rental income from its Investment Property. The income is recognised in the accounting year in which it is receivable by reference to the specific tenancy agreements.

Finance Income

Finance income is accrued using the effective yield method. The effective yield discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. The method applies this yield to the principal outstanding to determine finance income each period.


28



(n) Retirement benefit obligation

The staff of SBT have the right to register with pension funds of their choice. SBT makes pension contributions to Parastatal Pension Fund (PPF), National Social Security Fund (NSSF) and Public Service Pension Fund (PSPF). The fund will bear the pension obligations of the staff for the period after the members’ retirement from active employment with SBT. The Board’s contributions to the Pension Schemes are recognised as an employee benefit expense when they fall due.

The Board has no further payment obligations once the contributions have been paid. The Pension Scheme is contributory whereby members contribute 20% of basic salary (i.e. 5% of employee’s salary and 15% employer’s contribution for PPF and PSPF and 10% of employee’s salary and 10% employer’s contribution for NSSF).

The employees on contract are entitled to a gratuity of 25% of basic salary upon completion or termination of the contract. Since all employees on contract are members of PPF, SBT pays 15% PPF contribution on behalf of the employees and SBT will pay only 10% on gratuity to the employees upon completion of their contracts. Provision for gratuity is made in the financial statements based on the salary paid during the year. Gratuity Payable as at 30th June 2015 stood at Tshs 40.180 Million (Tshs 15.392 Million as at 30th June 2014).

The SBT’s contribution to the pension Schemes are charged to the Statement of financial performance in the year to which they relate and the additional 10% Provision for gratuity based on salary paid is recognised as a liability in the accounts. Employee benefits relating to annual leave are accrued in the financial statements.

(o) Taxes

Currentincometax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, by the reporting date.

Deferredtax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses,


29



(o) Taxes (continued)

to the extent that it is probable that taxable profit will be available against which the deductible temporary differences.

Carrying forward of unused tax credits and unused tax losses can be utilized except:

• Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in statement of financial performance or directly in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

ValueAddedTax

Revenues, expenses and assets are recognised net of the amount of value added tax except:

• Where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• Receivables and payables that are stated with the amount of sales tax included.

The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.


30


3 FINANCIAL RISK MANAGEMENT

Financial risk factors

The Board’s activities expose it to a variety of financial risks: foreign currency risk, credit risk, and liquidity risk. The Board’s overall risk management plan seeks to minimize potential adverse effects on the Board’s financial performance.

Risks management is carried out by the management under the policies approved by the Board of Directors.

Foreign currency risk

The Board’s exposure to foreign exchange risks arises from rental income, purchases, assets and liabilities denominated in currency other than the functional currency mainly with respect to the US dollar. At the year end, the Board has financial assets and liabilities denominated in United States Dollars (USD). As a result, the Board is subject to transaction and translation exposure from fluctuations in foreign currency exchange rates.

Exposure to foreign currency risk is mitigated by the fact that the Board maintains certain part of its income in US Dollars bank accounts. The effect of foreign currency risk is not significant and therefore management does not hedge against foreign currency risk.

Credit risk

Credit risk arises from trade receivables, cash and cash equivalents as well as deposits with banks. Significant concentration of credit risk is with rental receivables. A significant part of the trade and other receivable is made up of customers occupying the Board’s investment properties. Based on Board’s policy, management has made adequate provision where the recoverability is doubtful. Only reputable banks are used by the Board for banking services.

The amount that best represents the Board’s maximum exposure to credit risk at 30 June 2015 is made up as follows:

2014/2015 2013/2014

TZS ‘000’ TZS ‘000’

Cash and Bank 1,961,318 1,511,551

Tenants receivable (less impairment) 785,981 416,512

Staff debtors 530,791 42,527

Receivable from related party - 13,882

Other receivables 189,313 102,458

3,467,403 2,086,930

No collateral is held for any of the above assets. The Board does not grade the credit quality of receivables. All receivables that are neither past due nor impaired are within their approved credit limits, and no receivables have had their terms renegotiated.


31

All impaired receivables are carried at their estimated recoverable value.


4 CRITICAL ACCOUNTING ESTIMATES AND jUDGEMENTS

Management continuously evaluates estimates and judgments based on historical experience and other factors, including experience of future events that are believed to be reasonable under the circumstances.

(i) Critical accounting estimates and assumptions

property, plant and equipment

Critical estimates are made by the Directors in determining depreciation rates for property, plant and equipment and their residual values. The rates used are set out in Note 2(c) above.

Receivables

Critical estimates are made by Directors in determining the recoverable amount of impaired receivables.

(ii) Critical judgments in applying the entity’s accounting policies

In the process of applying the Board’s accounting policies, management has made judgments in determining the classification of financial assets and whether assets are impaired or not.

5. CASH AND CASH EQUIVALENTS 30.06.2015 30.06.2014

‘000’ ‘000’

Cash –on- hand 500 500

NBC Bank Tzs. 011103007489 323,804 441,556

NBC Corporate Br. USD Account 24,044 78,279

Stanbic Bank Tzs. Account 4,471 75,236

Stanbic Bank USD Account 759,125 915,980

Stanbic Bank Tzs Account – New Sugar Project 849,374 985,825

TOTAL 1,961,318 2,497,376

The Board’s Stanbic bank balance amounting to Tzs 849,374 is mainly to be used for new sugar project activities

6. RECEIVABLES FROM ExCHANGE 30.06.2015 30.06.2014

TRANSACTIONS TZS ‘000’ TZS ‘000’

Receivable from Rental Tenants 875,640 470,640

Other Trade Receivable 141,751 25,968

Sub-Total 1,017,391 496,608

Less: Allowance for Impairment (89,659) (54,128)

TOTAL 927,732 442,480


32


RECEIVABLES FROM ExCHANGE (continued

Movement in the Allowance for Impairment During the Year is as follows: TZS ‘000’ TZS ‘000’

Balance at 1st. July, 2014 54,128 112,602Provision for the Year 35,531 (58,474) Balance at 30th june, 2015 89,659 54,128

The Directors consider that the carrying amount of trade and other receivables from exchange transactions are approximate to their fair value. No interest is charged on trade and other receivables

7 RECEIVABLES FROM NON-ExCHANGE 30.06.2015 30.06.2014


Staff Car Loans 356,961 12,513

Staff long term Loan 144,295 30,014

SIDTF Debtors 3,101 39,612

Other Receivable 69,535 76,490

EU Project Debtors 4,462 -

TOTAL 578,354 158,629

8. INVENTORIES 30.06.2015 30.06.2014

TZS ‘000’ TZS ‘000’

Sugar for Consumption - 2,739

Stationery Stocks 6,417 6,466

TOTAL 6,417 9,205


33

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34


10: INVESTMENT pROpERTY

The Investment Properties are held by the Board for earning rental income.

2014 / 2015 Fair Value

ChangesAdditions/(Transfers) 2013 / 2014

TZS ‘000’ TZS ‘000’ TZS’000’ TZS ‘000’

AT Fair value:

Sukari House 10,930,705 1,561,263 - 9,369,442

Makambako Godown 1,038,000 55,000 - 983,000

Mikocheni Investment 7,072,003 (500,271) - 7,572,274

Kurasini Godown 10,800,000 200,000 - 10,600,000

Rented Houses 12,260,839 1,208,996 11,210 11,040,633

TOTAL 42,101,547 2,524,988 11,210 39,565,349

All investment property is held under leasehold interest. The fair value of the investment property as at 30thJune 2015 has been arrived at on the basis of revaluation carried out in June 2015 by Messrs Proper Consult (T) Ltd, Independent Valuers. Proper Consult (T) Ltd is a member of the Institute of Valuers and has appropriate qualifications and experience in the valuation of properties.

11. INTEREST IN jOINTLY CONTROLLED ASSET

2014/2015TZS ‘000’

2013/2014TZS ‘000’

Interest in Jointly Controlled Assets 152,002 147,001

This relates to all directly attributable costs necessary for investment purposes in a Jointly Controlled Assets/Joint Venture under Public Private Partnership arrangements in SBT prime land and property at Masaki Dar es Salaam for re-development for commercial/residential purposes in accordance with SBT Strategic Plan 2011/12 – 2015/16.

12. INTANGIBLE ASSETS

The movement of Intangible Assets is as shown below:-

2012/1Cost/ Valuation 2014/2015 2013/2014

Cost as at 30 june, 9,133 9,133

Amortization

At 01 July, 3,653 1,827

Charge for the year 1,827 1,827

At 30 June, 5,479 3,654

Net Book Value as at 30th june 3,654 5,479


35


13. TRADE AND OTHER pAYABLES FROM 30.06.2015 30.06.2014

ExCHANGE TRANSACTIONS TZS ’000’ TZS ’000’

Trade Payable and Accruals 129,586 145,500

Amount Due to Audit Service 26,400 24,200TOTAL 155,986 169,700

14. pAYABLES FROM NON ExCHANGE 30.06.2015 30.06.2014


Refundable levies from customer 353 353

Staff and other Payables 3,998 5,755

TOTAL 4,351 6,108

15. DEFERRED TAx LIABILITY

Opening Balance 1,881,309 663,800

Deferred Tax for the year 127,578 (2,545,109)BALANCE AS AT 30.06.2015 2,008,887 1,881,309

16. GRANTS AND OTHER TRANSFER pAYMENTS

In the financial year 2012/2013, the Board received Capital Grants of Tshs 1.150 Million from the Government through Ministry of Agriculture Foods and Cooperatives for facilitating preparations of new potential areas for investment purposes to address sugar deficit and growing sugar demand in the country.

The asset was recognized as part of the Cash and Cash Equivalent at a value of Tshs. 1.150 Million. On the other hand, the asset was treated as capital grant and recognized in the statement of financial performance on a systematic and rational basis over the useful life of the Fund .Therefore; its expenditures incurred is amortized to reduce the carrying amount of the grant. The carrying amount of the capital grant as at 30 June 2015 was as follows:


36


16. GRANTS AND OTHER TRANSFER pAYMENTS (CONTINUED)

2014/2015 2013/2014

Receipts TZS ‘000’ TZS ‘000’

Opening Balance 985,775 1,135,254

Funds during the Year

Government - 50,000

TOTAL GRANTS AVAILABLE 985,775 1,185,254

Less: payments (Ruipa project Expenses)

Bank Charges 999 544

Fuel and Lubricants 651 215

Valuation Expenses 254 131,061

Farmers Training 11,418 3,780

Sensitization Expenses 40,234 51,513

Stakeholders Meeting 33,421 12,366

Mini sugar Plants 47,093 -

Ruipa Office Rent 2,220 -

RELEASED TO INCOME STATEMENTS 136,290 199,479

CApITAL GRANTS BALANCE 849,485 985,775

30.06.2014: Add Back - Amount Due to Staff - 50

: Less - Staff Safari Imprest - -

: Less – SBT Fund 111 -

CASH BOOK BALANCE AT THE END OF THE YEAR 849,374 985,825


37


17. CApITAL FUND

30.06.2015 30.06.2014

TZS ‘000’ TZS ‘000’

Capital Balance as at 30 June 6,568,307 6,568,307

This represents value of net Assets taken over from the defunct Sugar Development Corporation (SUDECO) at the establishment of SBT in July 2003.

18. REVALUATION RESERVE

The revaluation reserve amounting to TZS 14.5 billion as at 30 June, 2015 is an aggregate surplus which arose from the revaluation of the Board’s property, plant and equipment. The re-valuation of the Board’s assets was done on 30th October 2013 by the independent accredited Valuer. The valuation method adopted by the consultant was Replacement Cost Method. The reserve is not available for distribution.

19. FEES,FINES, LEVIES AND LICENSES

Tzs 000’ Tzs 000’

Sugar Import Levies 1,308,912 703,361

Fees and Licenses Income 1,403 5,428

TOTAL

1,310,315 708,789

20. GOVERNMENT SUBVENTION – OTHER CHARGES

During the year 2014/2015, No government subvention was received for SBT activities. During 2013/2014, SBT received a total of Tshs. 25.405 million direct from the government to finance other regulatory functions of the Board.

21. REVENUE FROM RENTED pROpERTIES 30.06.2015 30.06.2014

TZS ‘000’ TZS ‘000’

Investment Property - Rental

2,095,289 1,871,881

22. FINANCE INCOME 30.06.2015 30.06.2014

TZS ‘000’ TZS ‘000’

Interest on short term loan 19 -

Finance Income relates to income earned from interest charged on staff loans during the financial year 2014/15. No interest income in the previous year was earned.


38


23. WAGES, SALARIES AND EMpLOYEE BENEFITS

2014/2015 2013/2014TZS TZS

‘000’ ‘000’

Salaries Control 532,050 493,970

Gratuity Paid to PPF (Employer’s Adv.) 32,481 27,466

House Maintenance Allowance 79,346 70,150

Leave Travel 61,130 48,795

LAPF Employers Contribution 894 -

NHIF Employer’s Contribution 13,000 11,863

NSSF Employer’s Contribution 1,015 952

Outfit Allowance 2,100 600

PPF Employers Contribution 21,690 28,386

PSPF Employer’s Contributions 9,756 5,609

Responsibility Allowance 2,660 2,726

Gratuity 32,120 17,434

Staff Transport Allowance 106,272 95,945

Staff Welfare 168,587 160,960

Training and Recruitment 136,756 172,797

TOTAL 1,199,857 1,137,653

24. MAINTENANCE ExpENSES

30.06.2015 TZS

‘000’30.06.2014

TZS ‘000’

Cleaning & Sanitation 28,199 24,936

Electricity & Power 38,999 34,408

Elevator Charges 5,047 4,748

Fuel Lubricants Vehicles 34,314 32,754

Gardening 3,729 4,323

Insurance 81,466 41,128

Office Equipment Maintenance 4,530 1,402

Property Maintenance 99,177 97,392

Property Tax 25,412 19,879

Repair Equipment and Furniture 17,062 2,143

Repair Vehicles 44,116 37,017

Security 42,530 44,035

Stamp Duty 25,296 19,753

Water & Sewerage Charges 8,163 3,355

TOTAL 458,040 367,273


39


25. SUppLIES AND CONSUMABLES

2014/2015 2013/2014

TZS TZS

‘000’ ‘000’

Accounts Closing Expenses 17,270 -

Audit Committee Expenses 16,699 10,935

Board Local Travel 337 2,535

Board Meetings 81,382 21,116

Book’s Publication and Periodicals 11,364 9,617

Donation 3,900 3,155

EDP Expenses 20,095 20,478

Entertainment Expenses 12,111 8,750

Executive Committee Expenses 3,918 4,295

Legal Charges 52,312 47,405

Loss Asset disposal - 5,833

Management Consultancy Fees - 19,205

Postage, Telephone & Fax 18,699 18,145

Bad Debts Expenses 29,294 -

Procurement Management Unit 1,290 1,460

Rates, Taxes and Licenses 11,518 21,893

Change of employment/ Retirement 14,159 5,837

Staff Local Travel 19,934 7,683

Tax Rebate/Subsidy 21,029 7,155

Tender Committee Expenses 7,640 19,233

Workers Council 7,430 7,382

Tax Consultancy Fee 22,824 9,860

GRAND TOTAL 373,205 251,972


40


26. OpERATING ExpENSES 2014/2015 2013/2014

TZS TZS

‘000’ ‘000’

Varieties & Planting Materials - 170

Performance imported varieties 4,114 43,137

Guideline Seedcane - 5,020

Cane Production Outgrowers - 242

Pest Disease Control 6,432 8,372

Inspection Fields 33,679 16,078

Better Cane Farming 1,908 -

Compliance Quality Standards 3,059 2,488

Inspections and Monitoring Services 45,135 -

Monitor Factory Performance 2,547 12,083

Advertisement & Publicity 6,743 12,428

Stake holders Forum 222,570 169,953

Cane Outgrower Registration 3,155 9,876

License Import Export 7,054 15,186

Liaise with TBS 3,200 -

Negotiate Miller & Outgrower 8,793 2,725

Evaluate New Investments 3,213 17,978

New Sugar Projects 1,350 9,844

Potential New Areas 1,470 1,511

Disseminate Product Data - 120

Survey Sugar Demand 6,457 145

Web Site 400 -

Small Scale Rehab - 575

Subscription 11,343 5,595

Stationery Printing 21,270 21,895

Registration Industrial Users 1,888 3,364

Amend Act 13,584 -

Collect Survey Sugar Market - 671

EU Project Expenses 288,386 -

Tariff EACU 11,045 -

Consultative meeting 25,564

Depot 2,280 180

East Africa stakeholders meeting 4,557 19,443

Sugar Mills out growers Visit 3,838 -

Other audit expenses 15,621 2,055

Access SADC - 2,995

All Recovery Bench Marks - 1,964

Contribution to SIDTF – Shared Functions 60,000 -

TOTAL 865,119 411,657


41


26. OpERATING ExpENSES 2014/2015 2013/2014

TZS TZS

‘000’ ‘000’

Varieties & Planting Materials - 170

Performance imported varieties 4,114 43,137

Guideline Seedcane - 5,020

Cane Production Outgrowers - 242

Pest Disease Control 6,432 8,372

Inspection Fields 33,679 16,078

Better Cane Farming 1,908 -

Compliance Quality Standards 3,059 2,488

Inspections and Monitoring Services 45,135 -

Monitor Factory Performance 2,547 12,083

Advertisement & Publicity 6,743 12,428

Stake holders Forum 222,570 169,953

Cane Outgrower Registration 3,155 9,876

License Import Export 7,054 15,186

Liaise with TBS 3,200 -

Negotiate Miller & Outgrower 8,793 2,725

Evaluate New Investments 3,213 17,978

New Sugar Projects 1,350 9,844

Potential New Areas 1,470 1,511

Disseminate Product Data - 120

Survey Sugar Demand 6,457 145

Web Site 400 -

Small Scale Rehab - 575

Subscription 11,343 5,595

Stationery Printing 21,270 21,895

Registration Industrial Users 1,888 3,364

Amend Act 13,584 -

Collect Survey Sugar Market - 671

EU Project Expenses 288,386 -

Tariff EACU 11,045 -

Consultative meeting 25,564

Depot 2,280 180

East Africa stakeholders meeting 4,557 19,443

Sugar Mills out growers Visit 3,838 -

Other audit expenses 15,621 2,055

Access SADC - 2,995

All Recovery Bench Marks - 1,964

Contribution to SIDTF – Shared Functions 60,000 -

TOTAL 865,119 411,657


27. CASH GENERATED FROM OpERATIONS

31.06.2015 30.06.2014

TZS ‘000’ TZS ‘000’

Surplus/(Deficit) for the year before Tax 667,012 22,121,321

Adjustment for Items not Involving Movement of Cash:

Adjustment for Depreciation 163,386 106,407

Provision for Amortization of Intangible Assets 1,827 1,827

Loss on Transfers of Property Plant and Equipment 2,291,672 5,833

Gains/(Loss) on Disposal - (30,000)

Unrealized Gain on fair value (2,524,988) (21,720,237)

Cash Flows Before Changes In Working Capital 598,909 485,151

Working Capital Changes

(Increase) / Decrease in Other Assets 2,788 (747)

(Increase) / Decrease in Trade and Other Receivables (904,978) 205,492

Increase /( Decrease) in Trade and Other Payables (15,471) (3,496)

Increase /( Decrease) in Gratuity Payables 24,788 (18,669)

Net Cash Inflow From Working Capital Changes (892,873) 182,580

NET CASH INFLOW FROM OpERATING ACTIVITIES (A) (293,964) 667,731

28. BUDGET VARIANCE

REVENUE

28(a) Fees, Fines, Levies and Licenses

Fees, Fines, Levies and Licenses were above the approved budget by Tzs 266 million mainly due to increase in quantity of imported gap sugar during the year from budgeted quantity of 50,000 MT to actual imported quantity of 86,942.05 MT. Value of Dollars increased during the year from budgeted exchange rate of 1 USD = Tzs 1,650 to actual exchange rate of up to 1USD = Tzs 2,020 as at 30th June 2015.

28(b) Revenue from Exchange Transactions

The budgeted Revenue from Exchange Transactions was Tzs 1,999 million against the actual amount received of Tzs 2,095 million which was higher than expected budget by Tzs 96 million. The reason was mainly due to increase in exchange rate from 1 USD = Tzs 1,650 in the approved budget to actual rate of up to 1USD = Tzs 2,020 as at 30th June 2015.

ExpENDITURES

28(c) Operating Expenses

The budgeted amount for Operating expenses was Tzs 655 million after adjustments while the actual amount spent was Tzs 865 million. Therefore, a difference of Tzs 209 million occurred. The main reason for this variance was due to counterpart funding by the Board on behalf of the Government for implementation of EU Donor Funded Project.


42


28. BUDGET VARIANCE – Continue

28(d) Grants and other transfer payments

Grants and other transfer payments are recognized in the statement of financial performance on a systematic and rational basis over the useful life of the Capital Grant. Actual Expenditures incurred during the year is amortized to reduce the carrying amount of the Capital Grant.

28(e) Depreciation and Amortizations

Depreciation is not provided for in the approved budget as the government budget was prepared on cash basis. Straight Line method for depreciation is still in use, there is no changes except for the variance that may arise as a result of additions occurred during the year.

28(f) Amortization of Intangible Assets

Provision for amortization is not provided for in the approved budget as the government budget was prepared on cash basis. Straight Line method for amortization is used, there is no changes except for the variance that may arise as a result of additions occurred during the year.

28(g) Bank Charges

The main reason for this variance was due to increase in exchange rate from 1 USD = Tzs 1,650 in the approved budget to actual rate of up to 1USD = Tzs 2,020 as at 30th June 2015.

29. pRIOR YEAR ADjUSTMENTS

Prior year adjustment relates to prior years error on treatment of Intangible asset. During the financial year 2012/2013, SBT procured TALLY ERP 9 Computer Software for accounting purposes at a cost of TZS 9.133 million, the amount was erroneously treated as expense in the Statement of Comprehensive Income instead of being treated as an Intangible Asset to be amortised over the useful life of the asset through Statement of Comprehensive Income.

Opening Accumulated Surplus and comparative amounts have been restated to reflect these prior period adjustments. Changes to Key Financial Statements were as follows:


43


STATEMENT OF FINANCIAL pERFORMANCE FOR THE YEAR ENDED 30TH jUNE, 2014

30.06.2014 30.06.2014

TZS‘000’ TZS‘000’

REVENUE As previously Reported prior Adjustment Restated

Total Revenue (Excluding Gains) 2,805,553 - 2,805,553

ExpENSES

Wages, Salaries and employee benefits 1,137,653 - 1,137,653

Maintenance expenses 367,273 - 367,273

Supplies and Consumables used 251,972 - 251,972

Operating Expenses 411,657 - 411,657

Grants and other transfer payments 199,478 - 199,478

Amortization of Intangible Assets - 1,827 1,827

Depreciation 106,407 - 106,407

Audit Fees 24,200 - 24,200

Finance Cost 8,518 - 8,518

Total Expenses (Excluding Losses) 2,507,158 1,827 2,508,985

Operating Surplus/(Deficit) before gains and losses 298,395 (1,827) 296,568

Other Gains/(losses)

Gain/(Loss) on Disposal of Assets 30,000 - 30,000

Gain/(Losses) on foreign exchange transactions 16,042 16,042

Impairment (Loss)/Gain 58,474 - 58,474

Unrealized gain on fair value of investments 21,720,237 - 21,720,237

Surplus/ Deficit before tax 22,123,148 (1,827) 22,121,321

Deferred Tax -2,545,108 - (2,545,108)

Surplus/ Deficit after tax 19,578,040 (1,827) 19,576,213

Accumulated Surplus brought forward 10,752,513 7,306 10,759,819

Balance as at 30th june 2015 30,330,553 5,479 30,336,032


44


STATEMENT OF FINANCIAL pOSITION AS AT 30TH jUNE 2014

previously Re-ported

prior Adjust-ment Restated

30.06.2014 30.06.2014

TZS TZS

ASSETS ‘000’ ‘000’

Current assets

Total current assets 3,107,690 - 3,107,690

Non-current assets

Property, Plant and Equipment 11,636,827 - 1,636,827

Investment Property 39,565,349 - 9,565,349

Interest in Jointly Controlled Asset 147,001 - 147,001

Intangible Assets - 5,479 5,479

Total non-current assets 51,349,177 5,479 51,354,656

TOTAL ASSETS 54,456,867 5,479 54,462,346

Liabilities

Total Current Liabilities 191,200 - 191,200

Total Non Current Liabilities 2,867,084 - 2,867,084

TOTAL LIABILITIES 3,058,284 - 3,058,284

NET ASSETS 51,398,583 5,479 51,404,062

NET ASSETS

Capital Fund 6,568,307 - 6,568,307

Revaluation Reserve 14,499,723 - 14,499,723

Accumulated Surplus 30,330,553 5,479 30,336,032

TOTAL NET ASSETS 51,398,583 5,479 51,404,062


45


30. INCOME TAx ExpENSE

No provision for Corporation Tax has been made in these accounts as there are tax credits on account of huge losses carried over from the defunct Sugar Development Corporation (SUDECO). The final tax assessment agreed and issued by Tanzania Revenue Authority is for the year of income 2010 which reflects the tax loss carried forward of TZS 4,789.7 million. Income tax computation for the year of income 2014 which has been prepared by the Board’s tax consultant reflects the tax loss carried forward of TZS 4,498 million.

31. CONTINGENT LIABILITIES

As at 30thJune 2015, the Board was a defendant in several lawsuits. While liability in these lawsuits is not admitted, if defence against the actions is unsuccessful, then amount claimed in these lawsuits could amount to TZS 3,160 million. Based on legal advice, the Directors do not expect the outcome of the actions to have material effect on the Board’s financial position and hence no provision has been made.

32. CApITAL COMMITMENTS

Capital expenditure contracted for as at 30thJune 2015 which was recognized in the financial statements is TZS 61.5 million being retention money for the construction of one block of eight flats at Mikocheni B. Plot 541 to 544 Kinondoni Municipality Dar es Salaam.

DIRECTOR GENERALSUGAR BOARD OF TANZANIA

P.O. Box 4355, Dar es Salaam TanzaniaTel: +255 22 2111523 Fax: +255 22 2130598

Email: [email protected]: www.sbt.go.tz

Documents

Annual Report & Accounts...In compliance with the Public Corporations Act, 1992 and the Tanzania Financial Reporting Standard No. 1 on Directors’ Report, the Directors submit their