1 st QUARTER FINANCIAL PERFORMANCE REPORT: 2015-2016 FINANCIAL YEAR PRESENTATION TO THE STANDING...

1st QUARTER FINANCIAL PERFORMANCE REPORT: 2015-2016 FINANCIAL YEAR

PRESENTATION TO THE STANDING COMMITTEE ON APPROPRIATIONS

2 SEPTEMBER 2015

Presentation OutlinePresentation Outline1.Financial performance per programme

2. Suppliers payment within 30 days

3.Cost containment measures

4. Agricultural Land Holding Account

5.Deeds Registration Trading Account

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FIN PERFORMANCE REPORT: 2015-2016 FINANCIAL YEAR

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Per ProgramPer ProgramProgrammeProgramme 2014/152014/15 2015/162015/16

R’000R’000 OutcomeOutcome CommentComment Main Main appropriatioappropriationn

Available Available budgetbudget

April- June April- June ExpExp

April- June April- June Percentage Percentage spentspent

Reason Variance / RemedialReason Variance / Remedial

1. Administration 1,382,192 Final appropriation of 1,384,430 and pent 99.8%

1,264,265 1,014,504 249,761 19.8% Timing difference due to late billing by the service provider for services rendered for travelling expenditure. The lead time between the date of initial travel and billing takes over 60 daysSoftware renewals are also cost driver within this programme and most of these are paid towards the last quarter of financial year.Remedial Steps-Project to Channel transport expenditure through LOGIS Transversal System to tighten controls with National Implementation from 15th of Sept 2015 and Provincial by Nov’15-Electronic Invoice tracking system project nearing implementation phase, we envisage the tighten controls will dramatically reduce time lapse between service rendered and payments made.-Department to engage DPW to submit invoice on time

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R’000R’000 OutcomeOutcome CommentComment Main Main appropriationappropriation




Reason Variance Reason Variance

2. Geo-spatial & Cad Serv

732, 537 Final appropriation of 734, 815 and spent 99.7%

799,903 659,645 140,258 17.5% • Payments for bursary scheme under households have not yet been paid to institutions as they depend on school calendar and most of them are paid during the third and fourth quarter of financial year

• Transfers to Deeds to augment budget and support for E-Cadastre project have not yet been processed.

• Due to commitments for consultants under branch SPLUM amounting to R52, 7 million that are not yet translated into expenditure, the bulk of consultants relate to SDF that in turn is dependent on finalizing of projects.

Remedial Steps- Savings under E-cadastre project to be

reprioritized to fund among other shortage such as establishing a Surveyor Council, SDF Surveying, and leases Office Accommodation.

- Fast Track SPLUM projects to translate commitment to expenditure.

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April- June April- June ExpenditureExpenditure



3. Rural Development

1,800,988 Final appropriation of 1,850,932 and spent 97.3%

1,975,739 1,776,159 199,580 10.1% RID, REID review and realignment of Performance targets for the branch to incorporate Agri parks .

SOYD under spending on Households/training. Payments to colleges are processed when they are received from institutions, the expenditure is expected to increase once these invoices are received and paid.

Remedial Steps-Tight SLA’s with project manager to ensure faster delivery on RID, REID Agri Parks projects. -One on One sessions with FET colleges to fast track payments for training.

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Per ProgramPer ProgramProgrammeProgramme 2014/152014/15 2015/162015/16 2015/172015/17

R’000R’000

OutcomeOutcome CommentComment Main Main appropriatioappropriationn

AvailablAvailable budgete budget

April- April- June ExpJune Exp

April- June April- June PercentagPercentage spente spent


4. Restitution 2, 997 ,937Final appropriation 2, 998, 742 and spent 100 %

2,602,669 2,274,589 328,080 12.6% • Delays in the approval of S42D submissions Transfers of properties to state instead of CPAs due to community disputes. The expenditures reflects against Capital assets instead of Households

• Delays in finalizing the transfers of properties due to Conveyancing issues, this results in payments of final trenches being delayed

• Most offices are negatively affected by the new system of appointing conveyances through the SCM processes. The matter is currently being discussed with SCM unit and has been resolved

• A slow pace of appointing a panel of researchers for the claims lodged also affected spending on goods and services

• The roll-out of mobile units were delayed and thereby affected the projected expenditure in terms of maintenance, travelling, fuel costs, etc.

Remedial Steps- Departmental Circulars have been issued to fast track

administration and minimise mistakes on S42D approval processes.

- Mobile units in full operation and should expenditure increase.

- Branch will focus on assisting communities to establishing CPA’s, that is currently stumble block in restitution claim processes.

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5. Land Reform

2, 482,096 Financial appropriation of 2, 486, 386 and spent 99.8%

2,737,108 2,171,523 565,585 20.7%Households / Grants: Realignment of projects to Agri-Parks and consequent budget reprioritization Goods & Services:Budget Re-alignment to DMP’s took longer than anticipated as result the procurement was delayed.

Remedial Steps-Provinces to implement catch up plans & Agri-Parks projects at monthly Branch Management Meetings. -Monitor and report the implementation of DMP’s

Total Total 9,395,776 9,395,776 9,379,6849,379,684 7,896,4207,896,420 1,483,264 1,483,264 15.8%15.8%

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Per Economic ClassificationPer Economic ClassificationEconomic Economic classificationclassification

2014/152014/15 2015/162015/16

R’000R’000 OutcomeOutcome CommentComment Main Main appropriatiappropriationon





Compensation 1,802,631 Final appropriation of 1,810,352 and spent 99.6%

2,115,921 1,648,447 467,474 22.1%Compensation of Employees reflected an underspending of 3.9% against the linear target due to 714 vacant postsRemedial Steps-During the first quarter 656 posts were on recruitment process, 282 are filled. 374 to be filled during the second quarter.

-Fast track recruitment of long outstanding positions.

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2014/152014/15 2015/162015/16

R’000R’000 OutcomeOutcome CommentComment Main Main appropriatiappropriationon





Goods and services

1,342,197 Final appropriation of 1,379,993 and spent 97.3%

1,244,685 1,034,715 209,970 16.9%Consultant services- payment based on services rendered and project nature.

Computer services- Software renewals are also cost driver within this programme and most of these are paid towards the last quarter of the financial year. Property payments - due to delay of invoice submission from DPW.

Remedial Steps-Fast track the project and implement Agri-parks related project.

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2014/152014/15 2015/162015/16






Interest and Rent on Land

5,675 Final appropriation of 5,678 and spent 99.9%

- 724 - In the process of settling land claims court orders are issued that enforce payment of interest. This interest is also recorded as fruitless and wasteful in the Financials.

Payments for fin assets

4,358 Payment for write offs

- 370 -Losses written off mainly due to damages to car rentals.

Dept. agencies and acc.

1,752,447 Final appropriation of 1,752,678 and spent 100%

1,679,634 1,285,284 394,350 23.5% - Funds transferred to Entities.

Remedial Steps-Savings amounting to R73 million realised to change of scope in E Cadastre Project to be reprioritized to fund projects in NGMS and shortages experienced in leasing of Office Accommodation.

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2014/152014/15 2015/162015/16

R’000R’000 OutcomeOutcome CommentComment Main Main approprappropriationiation





Foreign Gov & Internat Organ

2,063 Final appropriation of 2,064 and spent 100%

1,495 - 0.0%Annual Membership Fee paid to Regional Centre for Mapping of Resources Developmental as part payment of membership contribution due from RSA towards the annual budget to RCMRD not yet paid

Non Profit Institutions (NPI)

3,020 Final appropriation of 3,020 and spent 100%

3,159 2,369 790 25.0%Quarterly payments to South African Council for planners

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2014/152014/15 2015/162015/16






Households 3,987,535 Final appropriation of 3,997,515 and spent 99.8%

4,253,471 3,939,983 313,488 7.4% RID, REID, Restitution, Land ReformRID, REID, Restitution, Land Reform has not made any payment to existing SLA as they are currently under review due to reprioritization of Agri Parks. SOYD under spending on Households/training. Payments to colleges are processed when they are received from institutions, the expenditure is expected to increase once these invoices are received and paid. Remedial Steps-Provinces to implement catch up plans & progress for Agri-Parks projects at monthly Branch Management Meetings. -Tighter controls on implementation of DMP’s.

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Per Economic ClassificationPer Economic ClassificationEconomic Economic classificatioclassificationn

2014/152014/15 2015/162015/16






Provincial and local gov.


8,965 -34,302 43,267 482.6%Challenges exist in budgeting sufficiently for Provincial and local governments in the sense that the exact extent of possible rates and taxes owed by the Department only becomes known when the Provincial Offices have verified the information with the relevant municipalities, which is usually only by year end. If sufficient savings cannot be made available to cover the payments, it subsequently needs to be accounted for from the following year’s allocation.Remedial Steps-Rates & Taxes Budget Appropriated to national DPW, inter departmental engagements to channel invoices to DPW where expenditure belong. Current over expenditure to be augmented with savings as part of 2015 AENE process.

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2014/152014/15 2015/162015/16

R’000R’000 OutcomeOutcome CommentComment Main Main appropappropriationriation





Build & Other Fixed Structures

7,671 Final appropriation 7,691 and spent 99.7%

11,781 11,084 697 5.9%Delay in DPW projects and late submission of invoices.Remedial Steps-More frequent follow ups and improve communication with DPW.

Machinery and equipment


59,100 55,228 3,872 6.6%Longer procurement process to replace capital assets.

Remedial Steps-Spending trends w.r.t. procurement of Capital Projects to be tightly managed by recon of DMP plan implementation by each responsibility.

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2014/152014/15 2015/162015/16

R’000R’000 OutcomeOutcome CommentComment Main Main appropriaappropriationtion





Land & Subsoil Assets

201,272

Final appropriation 201,275 and spent 100%

- -48,260

48,260 - Due to the registration of land transfers by Programme 4: Restitution not taking place as planned as a result of issues with the Community Property Associations (CPA). Subsequently the land had to be registered in the Department’s name and as such needs to be classified under this item until such time as the process of transferring it to the claimants have been finalised. This process needs to be finalised as soon as possible, and preferably before the end of the financial year.Remedial Steps-Fast track forming CPA’s to fast track the transfer of State Land. That expenditure can move to Transfers where budget is available .

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2014/152014/15 2015/162015/16

R’000R’000 OutcomeOutcome CommentComment Main Main appropriaappropriationtion





Software & Intangible Assets

- Final appropriation of 1,557 and no procurement of new software

1,472 - 0.0%Payment of utilisation of specialised GEO Spatial Software

Remedial Steps-Spending trends w.r.t. procurement of Software & Intangible Assets to be tightly managed by recon of DMP plan implementation by each individual responsibility .

Total Total 9,379,684 7 896 420 1,483,264 15.8%

Agricultural Land Holding Agricultural Land Holding AccountAccount

Executive summaryExecutive summary

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As at 30 June 2015 spending amounted to R105.9 million, representing 6,9% of the annual appropriation of R1.5 billion

Spending to date consisted mainly of Land Acquisition amounting to R62.2 million, representing 7.3% of the Land Acquisition budget, followed by Recapitalization and Development spending to the amount of R35.1 million, representing 5.2% of the Recapitalisation and Development budget, expenditure on Planning amounted to R8.5 million, representing 52.4% of the relevant budget.

The delay in spending had been due to the reprioritisation of the 2015/2016 budget and the reviewing of projects within the Branch Land Redistribution and Development (LRD) to align to the Agri-Parks programme.

The remedial action taken to address material variances in spending versus the budget is the development of recovery plans to ensure the implementation of the projects as a matter of priority.

Financial PerformanceFinancial PerformanceProgramme

2014/15 2015/16

R’000 Outcome

Comment Main appropriation

Available Budget

April to June expenditure

April to June % Spent

Comment

Planning 13 004 45% spending on a budget of R 29 058 million. The process of land acquisition was concluded with minimal costs spent on planning.

16 143 7 589 8 455 52.4% Reasons for variance

Projects at valuation and conveyance takes longer period to conclude.

Remedial Action

An SCM process of beefing up the panel of valuers has commenced and legal action to fast tract the processing of deeds of sale for land acquisition

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Financial Performance Cont…Financial Performance Cont…Programme

2014/15 2015/16

R’000 Outcome Comment Main appropriation

Available Budget



Comment

Recapitalisation and Development

234 176 81% of R 290 558 million was spent. Farmers not assisted are included as part of department commitments


Realignment of projects to Agri-Parks and consequent budget reprioritization which took longer than anticipated.

Remedial Action

1.Turnaround strategy developed earmarked to assist and fastrack farmers based on the planting season as per commodity calender.2.Process of approval of RADP projects to be managed in order to approve all outstanding RADP projects by December 2015

TOTAL 1 481 458 1 542 027 1 436 070 105 957 6.9%

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Financial Performance Cont...Financial Performance Cont...Programme

2014/15 2015/16

R’000 Outcome Comment Main appropriation

Available Budget



Comment

Land Acquisition

1 234 278 95% spending on a budget of R 1 293 913 million

was achieved. The balance was

committed as part of land acquisition

transfers that were not yet

finalised at year end.


1.Realignment of projects to Agri-Parks and consequent budget reprioritization which took longer than anticipated.2.Projects at valuation and conveyance takes longer period to conclude which impacted on land being transferred.

Remedial Action

1.An SCM process of beefing up the panel of valuers has commenced and legal action to fast tract the processing of deeds of sale for land acquisition

TOTAL 1 481 458 1 542 027

1 436 070

105 957 6.9%

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Registration of Deeds Registration of Deeds Trading AccountTrading Account

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R’000R’000 OutcomeOutcome CommentComment Projected Projected BudgetBudget


April- June April- June ExpenditurExpendituree



1. Deeds 503,283 Budget allocated to ICT not recovered by the department in terms of cost recovery strategy.Compensation of Employees contribute to an under-spending due to 151 vacant posts according 2014/15 recruitment plan

672,667 557,774 114,893 17.1% Office Accommodation and ICT in terms of Department cost recovery strategy are paid on the last quarter of the financial year. Compensation of Employees contribute to an under-spending due to 151 vacant posts according 2015/16 recruitment plan.

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2. E-Cadastre project 181,802 Under-spending is due to a re-scoping and re-alignment of the E-cadastre project.

185,135 174,713 10,422 5.6% Under-spending is due to a re-scoping and re-alignment of the E-cadastre project.

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2014/152014/15 2015/162015/16






Compensation 405,449 Expenditure has decreased due the to 151 vacant posts

496,912 391,170 105,742 21% Compensation of Employees reflected an underspending of 4% against the linear target due to 151 vacant posts

Goods and services 152,873 Expenditure has decreased due to re-scoping and re-alignment of E-cadastre project.Budget allocated to ICT not recovered by the department in terms of cost recovery strategy.

322,465 302,637 19,828 7% Under-spending due to re-scoping and re-alignment of E-cadastre project.Office Accommodation and ICT in terms of Department cost recovery strategy are paidOn the last quarter of the financial year.

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2014/152014/15 2015/162015/16






Depreciation 20,490 Vulindlela infrastructure procured has not been commissioned as a result is taking place.

19,500 17,318 2,182 11% Vulindlela infrastructure procured has not been commissioned as a result is taking place.

- -

Assets 166,518 Expenditure increases due to procurement of Vulindlela infrastructure.

40,281 38,402 1,879 5% Under-spending is due to a re-scoping and re-aligment of the E-cadastre project.

Suppliers payment within 30 daysSuppliers payment within 30 daysPerformance Indicator

Q1 Target

Q1 Results

Variance %

Explanation of the challenges leading to the variance

Planned Interventions to address the challenges and variance

% of valid invoices paid within 30 days upon receipt by supply chain management

100% 81% -19% System Down time , Expiry of Tax Clearance Certificates, changing of Banking details by Service Providers and Long route of invoice approval by client offices.

Introduction of a Nodal point for receipt of Invoices.

Continuous engagement with Service Providers with regards to constant changing of banking details.

Implementation of an Invoice tracking system

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Cost containment measures Cost containment measures ItemItem Reason Variance Reason Variance

Air travel Business class ticket purchases for air travel were limited foreign travel and only for the Director General, Deputy Minister and Minister and people with disability or special needs. Air travel was limited to important meetings and trips were arranged ahead of schedule

Accommodation A maximum of R 1300 limit for hotel accommodation pending a review by National Treasury. Temporary hotel accommodation is provided to officials relocating from one point to another in a radius exceeding 100 kilometers from official’s former place of work.

Private vehicle for official business Officials who used their private cars done so at their own risk , the department is not liable for any loss or damages to such vehicle. Officials who used vehicles with higher engine capacity than benchmarked , reimbursed is for fuel up to a maximum of engine capacity of 1950 cm3 for sedan and 2500 cm3 for LDV/SUV/ MPV. The maximum official kilometers per month is limited to 2333 and officials are required to provide proof of payments.

Venues and facilities For attendance of departmental sport events, common transport is provided and where officials used their own transports, they are not allowed to claim kilometers travelled. National and provincial Interview panels are composed by officials from national office in the case of national office and officials from the respective province in the case of provinces

Promotional items Careful consideration are taken when procuring promotional items for workshops, conference and seminars. All request for promotional items are approved by the Chief Director: Communications.

Catering Provisions of catering for meetings held with internal staff , only allowed for meetings involving officials from different Provinces

Acquisition of office furniture All acquisition of assets and furniture are approved by the Director: Logistics, Assets and transport management or Director: Finance and Supply Chain management. Officials were expected to comply with consistent standards for the Department’s office furniture as developed by the Director: Logistics, Assets and transport management.

Thank YouThank You

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1 st QUARTER FINANCIAL PERFORMANCE REPORT: 2015-2016 FINANCIAL YEAR PRESENTATION TO THE STANDING...

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