HOUSING COMPANY TSHWANE ANNUAL REPORT (DRAFT) … · 2015-02-17 · Housing Company Tshwane...
Transcript of HOUSING COMPANY TSHWANE ANNUAL REPORT (DRAFT) … · 2015-02-17 · Housing Company Tshwane...
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HOUSING COMPANY TSHWANE
ANNUAL REPORT (DRAFT)
2013/14
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MANDATE
The mandate of the Housing Company Tshwane is to:
Develop, own and manage affordable rental housing opportunities close to employment nodes, transport nodes, social amenities and related public services for households
earning between R 3 500 and R7 500 ( as revised by the National Department of Human Settlements from time to time);
Provide rental housing accommodation for people who do not qualify for subsidy and
are unable to participate in the formal, non-subsidised housing market;
Provide property management and turnaround services for low to medium density social or rental accommodation; and
Manage all rental stock owned by the Council of the City of Tshwane.
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GLOSSARY OF ACRONYMS & ABBREVIATIONS
ACRONYMS GLOSSARY OF TERMS
ARC Audit and Risk Committee
BBBEE Broad Based Black Economic Empowerment Act
BEE Black Economic Empowerment
CEO Chief Executive Officer
Constitution Constitution of the Republic of South Africa
CoT City of Tshwane
CSI Corporate Social Investment
EE Employment Equity
EEA Employment Equity Act
HCT Housing Company Tshwane
HDI Historically Disadvantaged Individuals
IDP Integrated Development Plan
LRA Labor Relations Act
MFMA Municipal Finance Management Act
MSA Municipal Systems Act, 2000 (Act No. of 2000)
NDHS National Department of Human Settlements
OHSA Occupational Health and Safety Act
SCM Supply Change Management
SDA Service Delivery Agreement
SDBIP Service Delivery and Budget Implementation Plan
SHRA Social Housing Regulatory Authority
SLA Service Level Agreement
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VISION
“A Social Housing provider of choice in the City of Tshwane”.
MISSION
“To deliver and manage social housing in the City of Tshwane on a sustainable basis”
The HCT vision and mission above are the foundation and framework that guides the company in providing
rental/social housing services which:
Contribute to the implementation of the City of Tshwane‟s approved spatial development framework.
Offer affordable social housing products to the targeted households or beneficiary community.
Promote the development of well-located, liveable communities within easy reach of social and other
amenities.
Promote local economic development activities within areas earmarked for social housing.
BUSINESS VALUES
In working towards the achievement of the vision and mission set out above, HCT subscribes to the following values:
i. Caring - we care about the people of the CoT and take responsibility and ownership of the obligations
vested in our mandate;
ii. Responsive – we seek to be proactive in identifying and being responsive to challenges faced by our
client-base;
iii. Transparency – HCT seeks to provide consistent, accurate verifiable and reliable information to our
stakeholders at all times;
iv. Integrity – HCT pledges to act with honesty and fairness in all our commitments; and
v. Professionalism – HCT is committed to delivering excellence through competent and capable human
resources supported by functional and excellent institutional processes and frameworks.
ORGANISATIONAL CULTURE
Housing Company Tshwane operates in an environment governed by, inter alia the City of Tshwane‟s principle of
Batho Pele (“People First”), which places great emphasis on service delivery to all the people of Tshwane in a caring,
transparent and responsible manner. In dealing with beneficiaries of social/rental housing, HCT officials strive to
exhibit this culture at all times.
HCT strives to be efficient and cost effective in the delivery of social housing services to its tenants and is committed
to ensuring that all the rental tariffs of housing stock under its management‟s remains affordable to the target market
as identified. All operations and interface with stakeholders are underpinned by the principles of honesty and
transparency, and all staff and directors are bound by the company‟s approved code of conduct.
An excellent social housing provider of choice in the City of Tshwane
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CONTENTS
Message from the Member of Mayoral Committee
Accounting Authority’s Report
Chief Executive Officer’s Report
Members of the Board
Executive Committee
Corporate Governance
Non-financial Performance Information Report
Performance against Strategic Objectives
Report of the Audit and Risk Committee
Statement of Responsibility
Report of the Auditor-General
Annual Financial Statements
Statement of Financial position
Statement of Financial performance
Statement of changes in net assets
Cash flow statement
Notes to the annual financial statements
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FOREWORD BY THE MEMBER OF MAYORAL COMMITTEE,
COUNCILLOR JOSHUA NGONYAMA
The City of Tshwane Metropolitan Municipality established the entity Housing Company Tshwane as its
vehicle to develop and manage social housing and other forms of institutional housing within and around
the City.
The main expectation, based on the mandate of Housing Company Tshwane is to:
a. Develop, own and manage affordable rental housing opportunities close to employment nodes,
transport nodes, social amenities and related public services for households earning between R 3
500 and R7 500 ( as revised by the National Department of Human Settlements from time to
time);
b. Provide rental housing accommodation for people who do not qualify for subsidy and are unable
to participate in the formal, non-subsidised housing market;
c. Provide property management and turnaround services for low to medium density social or
rental accommodation; and
d. Manage all rental stock owned by the Council of the City of Tshwane.
From inception, HCT struggled to develop and manage sufficient social housing stock to sustain its
operations. The CoT intervened by allocating annual operational grants to HCT. Over the years the
company (HCT) did not develop any new social housing stock beyond the 95 units it owns and manages.
The limited HCT social housing stock posed the following problems:
The expansion of the shareholder‟s social housing programme in the City of Tshwane is hampered due to HCT‟s inability to increase rental stock
The company cannot sustain itself financially through rental income/revenue, thus leading to a dependency relationship whereby the company relies on shareholder grants to continue its operations
It is within this context that the Council took a decision to transfer some of its rental stock to HCT to afford
the company an opportunity to expand its rental portfolio, enhance its viability and fulfil its mandate.
During the year under review, the HCT developed a turn-around strategy which has seen alignment of its
annual business plan with the Service Delivery Agreement and achievement of conditional accreditation
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by the Social Housing Regulatory Authority. The entity needs to start implementing programmes and
projects relating to the development of social housing units in the City of Tshwane rapidly.
Furthermore, the entity needs to enhance its stakeholder relations management in order to enhance
public perception and especially, since it has been tasked with management of selected Council-owned
rental stock. This will not only increase stock under the entity‟s management, but will enhance operational
capacity within HCT and will equally require capability by the entity moving forward.
It therefore expected that the entity continue with speed to enhance its operations in future by effectively
meeting and achieving all its objectives and is able to reach the required self-sustainability levels as a
social housing developer within the city.
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CHAIRPERSON’S REPORT
Housing Company Tshwane‟s (HCT) mandate is to develop and manage affordable social/rental housing
within the boundaries of the City of Tshwane. As a municipal entity, HCT derives its mandate from the
City of Tshwane (sole shareholder), and is therefore expected to contribute to the City‟s service delivery
programme as captured in the applicable Integrated Development Plan (IDP) and Service Delivery and
Budget Implementation Plan (SDBIP). Operations at HCT are underpinned by the four key guiding
principles encapsulated in the company‟s Strategic Plan, namely Sustainability, Affordability, Integrity,
and Independence.
Housing Company Tshwane did all it could to discharge of its mandate as per the old Service Delivery
Agreement (SDA) with the shareholder. Certain aspects of the old SDA have been implemented (e.g.
transferring of newly-refurbished City of Tshwane rental units/ buildings to HCT), and this will moving
forward assist in enhancing company‟s performance in terms of the set targets for 2014/15. It is
anticipated that this will be implemented smoothly throughout the 2014/15 financial year so that HCT can
effectively grow its rental stock under management.
Overall, the company‟s operations during 2013/14 improved significantly as a result of a reliable cash-flow
position, the capacitation of the company (i.e. the appointment of key personnel) as well as the continued
improvement of the governance environment and including the Conditional Accreditation by the Social
Housing Regulatory Authority (SHRA). This places the company at a level where it can, from now going
forward play a much more significant role in social and institutional housing development and
management in and around the City of Tshwane metropolitan area.
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The fourth, successive unqualified audit outcome achieved for 2013/14 bears testimony to the company‟s
efforts to contribute to the City‟s clean audit initiative. All the matters raised by the Auditor General in the
2013/14 audit report are being attended to as required and presented by HCT management to the Board
of Directors after the conclusion of the audit review. Also, the Auditor General‟s 2013/14 management
report will be used as a guideline towards correcting specific compliance, performance and internal
control issues which need urgent attention from the HCT management and board.
Finally, I wish to take this opportunity to thank the management and staff of Housing Company Tshwane
for the commitment and enthusiasm displayed during the past year. The contribution of the shareholder to
the company‟s 2013/14 operational re-engineering is also acknowledged and appreciated. On behalf of
all the Directors, I wish to thank the City of Tshwane for affording all of us the opportunity to serve the City
and to contribute to the development of Housing Company Tshwane as a social housing institution.
Mr Tshepo Phetla Date Chairperson: Board of Directors 15 December 2014
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ACTING CHIEF EXECUTIVE OFFICER’S REPORT
GENERAL PERFORMANCE
The company performance rating during the 2013/14 is subject to external audit of the pre-determined
(service delivery) objectives, however the management of company has ensured to enhance the
company‟s performance from the previous performance ratings of 2012/13. The company underwent
through a difficult period during the period under review when the former CEO departed and a Property
Development Manager was appointed to act as Chief Executive Officer. The leadership vacuum has had
an impact in the achievement of some of the company‟s objectives, especially relating to greenfield
development projects implementation, due to this arrangement. It is important to note the fourth,
successive unqualified audit outcome achieved for 2013/14, which is the reflection of the company‟s
efforts to contribute to the City‟s clean audit initiative. Almost all matters raised by the Auditor General in
the 2012/13 audit report have continuously been attended to as required by HCT management, resulting
in all findings being resolved.
The general performance is not completely satisfactory as some of the performance objective could not
be achieved by the company; however the company achieved a Conditional Accreditation milestone by
the Social Housing Regulatory Authority (SHRA). Going forward, the Board and management have
committed to raising performance levels during 2014/15 financial year as set out in the newly approved
company Business Plan (2013-2017) and as well as the revised five (5) year Strategic Plan of the
company.
UNITS UNDER MANAGEMENT
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A Service Level Agreement was concluded between the City of Tshwane and Housing Company
Tshwane in 2013/14 financial year for the transfer Council owned rental stock for management and
maintenance. This process presented the company with a firm commitment from the parent-municipality
to ensure that HCT increases its rental stock portfolio that is sufficient to support the sustainability of the
institution. This is a significant programme since Social Housing Institutions require at least a minimum
2000 units under management to break-even in terms of sustainability (assuming cost-recovery rentals at
least). The rental stock under HCT management at the end of the 2013/14 financial year was restricted to
the 95 units at the Eloff Building, but will from the first quarter of financial year 2014/15 increase by 154
units.
The entity is also managing and maintaining 160 units of Clarina Residential Complex on behalf of the
City of Tshwane.
NEW PROJECTS
Project planning of new greenfield projects to be implemented by the company during 2013/14, for
Townlands and Timberlands has commenced in the first quarter of 2014/15 financial year and is expected
to continue into the future financial years as per business plan of the company.
GOVERNANCE
The company‟s governance structure for 2013/14 has been sound, with twelve (12) regular board
meetings, one (1) annual general meeting, seventeen (17) sub-committee meetings, thirteen (13) joint-
meetings with shareholder, scheduled and concluded successfully. The increased number of meetings
with shareholders was as a result of company performance monitoring and also due to the departure of
the former CEO, including the review and approval of a number of company policies, in order to comply
with Social Housing Regulatory Authority (SHRA).
Company policies and operational procedures were duly reviewed and approved for implementation by
management. However, limited human resources continued to undermine the company‟s ability to comply
with inter alia certain provisions of the Companies Act and the Municipal Finance Management Act
(MFMA).
CONCLUSION
The company‟s general performance (relative to the company mandate scorecard and targets set in the
Service Delivery Agreement) is expected to be satisfactory, with a number of objectives achieved. In
2014/15, management‟s priority is to meet all the company‟s pre-determined objectives and targets as
detailed in the newly revised Service Delivery Agreement (SDA) and multi-year company business Plan
(2013-2017) and the five (5) Strategic Vision of the company, thus ensuring that there is overall
compliance and that set performance targets/pre-determined objectives are met.
Mr N.A Magubane Acting Chief Executive Officer
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MEMBERS OF THE BOARD
Board Chairperson: Mr Tshepo Phetla
Non-Executive Director: Advocate Shami T Kholong
Non-Executive Director: Dr. Anirood Singh
Non-Executive Director: Mr William Rowland
Non-Executive Director: Ms Mirriam Lehlokoa
Non-Executive Director: Advocate Edwin M Mphahlele
Non-Executive Director: Mr. Tebogo J Mokgor
Non-Executive Director: Ms Dombolo M Masilela
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EXECUTIVE MANAGEMENT
Acting Chief Executive Officer: Mr N. A Magubane
Finance Manager: Ms L Makibunyane
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CORPORATE GOVERNANCE
The Board of Directors of HCT is as stipulated in the King Code III and the Code of Conduct for Directors referred to in section 93L of the Municipal Systems Act, 2000 as amended. HCT Board of Directors: Table 1
Board Member Capacity: Executive / Non-Executive
Race Gender Board Committee Membership
Mr T. Phetla
Non-Executive
Black
Male
Board Chairperson
Adv. S.T Kholong
Non-Executive
Black
Male
Finance, Risk and Ethics
Projects and Development
Adv. M.E Mphahlele
Non-Executive
Black
Male
Finance, Risk and Ethics
Adv. A.J Singh
Non-Executive
Indian
Male
Projects and Development
Mrs M.N Lehlokoa
Non-Executive
Black
Female
Projects and Development
Ms D.M Masilela
Non-Executive
Black
Female
Human Resources
Dr W. Rowland
Non-Executive
White
Male
Human Resources
Dr T.J Mokgoro
Non-Executive
Black
Male
Finance, Risk and Ethics
1. LEGISLATIVE BACKGROUND PRESCRIBING THE FUNCTIONS OF THE ENTITY
1.1. The Constitutional Mandate
The constitution requires that all spheres of government work together to address poverty,
underdevelopment, marginalization of individuals and communities and other legacies of
apartheid and discrimination. Section 26 of the Constitution also states that everyone has the
right to access adequate housing and the state must take reasonable legislative and other
measures, within its available resources to achieve progressive realization of this right.
1.2. National and Provincial Legislation informing the work of HCT
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The Constitution provides a broad mandate to HCT whilst applicable national and provincial
legislation, the City of Tshwane‟s mandates and policies contained in the City of Tshwane draft
Sustainable Human Settlements Plan gives effect to how HCT intends to craft its 5 year strategy
in response to these guiding legal and policy frameworks.
1.3. National Housing Code
The national housing code addresses broad housing programmes of government. Within the
context of the code, there is specific focus on Social Housing. The critical focus of social housing
is captured in the following extract from the social housing chapter of the code; „the shift in
emphasis from the provision of housing to the creation of sustainable human settlements. This
includes the promotion of more efficient cities, towns and regions. In support of spatial
restructuring, the plan highlights the need to integrate previously excluded groups into the city
and the benefits it offers”.
The plan flags the need to promote densification, including housing products which provide
adequate shelter to households whilst simultaneously enhancing flexibility and mobility”. Hence
the focus on HCT to execute its mandate is very much to contribute to the restructuring of the
City.
The following key legislation and policy frameworks are relevant to HCT’s mandate:
Applicable Acts Relevance to HCT Mandate
The Constitution of the Republic
of South Africa Act no 108 of 1996 Sets out the values of the Republic and also specifies the
rights of all citizens. Furthermore, the Bill of Rights affirms
the democratic values of human dignity, equality and
freedom. Sections 25 and 26 specifically deal with issues
relating to property and housing.
Housing Act 107 of 1997 (housing
amendment Act 4 of 2001).
Sets out the principle of sustainable housing which is the
foundation of the approach that HCT adopts in terms of
social housing. It also spells out the role of local
government in housing delivery. The Act also creates the
space for a municipality to create a separate entity to deal
with housing delivery
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Applicable Acts Relevance to HCT Mandate
Rental Housing Act No.50 of 1999 To define the responsibility of government in respect of
rental housing property; to create mechanisms to promote
the provision of rental housing property; to promote
access to adequate housing through creating mechanism
to ensure the proper function of rental housing market; to
make provisions for the establishment of Rental Housing
Tribunals; to define the function, powers and duties of
such Tribunals; to lay down general principles governing
conflict resolution in the rental housing sector; to provide
for the facilitation of sound relations between tenants and
landlords and for this purpose to lay down general
requirements relating to leases.
Social Housing Act 16 of 2008 To establish and promote sustainable social housing
environments; to define the functions of national,
provincial and local governments in respect of social
housing; to provide for the establishment of Social
Housing Authority in order to regulate all social housing
institutions or having obtained public funds to allow for the
undertaking of approved projects by delivery agents with
the benefit of public money to give statutory recognition to
social housing institutions.
Local Government Municipal
Finance Management Act, Act 56
0f 2003
To secure sound and sustainable management of the
financial affairs of municipalities and other institutions in
the local sphere of government; establish treasury norms
and standards for the local sphere of government; and to
provide for matters connected therewith. Chapter 10
provides for the establishment of separate municipal
entities, under which HCT was established.
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Applicable Acts Relevance to HCT Mandate
Municipal Systems Act No 32 of
2000
To provide for the core principles, mechanisms and
processes that are necessary to enable municipalities to
move progressively towards the social and economic
upliftment of local communities, and ensure universal
access to essential services that are affordable to all.
Chapter 8A provides for the establishment of private
companies in terms of the Companies Act No 71 of 2008.
HCT was established in terms of Chapter 8A.
Rental Housing Act 50 of 1999
(as amended) To provide the responsibility of Government in respect of
rental housing property; to create a mechanism to
promote the provision of rental housing property; to
promote access to adequate housing through creating
mechanisms to ensure the proper functioning of the rental
housing market; to make provision for the establishment
of Rental Housing Tribunals.
Public Audit Act No.25 of 2004
(as amended)
The act provides for institutions like HCT to be audited.
This together with the MFMA and other frameworks
inform the governance frameworks that entities like HCT
strive to abide by. The audit reports are useful guidelines
for how the organisation can improve processes.
Companies Act No 71 of 2008 To provide for the incorporation, registration, organisation
and management of companies; to define the
relationships between companies and their respective
shareholders and directors; and to provide for a
consistent and harmonious regime of business
incorporation and regulation. Many of the provisions of the
Act are applicable to HCT.
Table 2
Which governance model adopted by the entity that sought to establish a clear separation
of powers between the entity’s Boards and administration of the entity?
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HCT is governed by an independent board of non-executive and executive directors, in terms of
the Companies Act of 2008 (as amended), and related legislation such as Municipal Systems Act,
Municipal Finance Management Act and Treasury Regulations. The company is bound by the
City‟s approved “reporting framework for municipal entities”, the Service Delivery Agreement
(hereinafter referred to as “SDA”) concluded between HCT and CoT, and also abides by industry-
specific legal and regulatory frameworks (e.g. the compliance and reporting regime of the Social
Housing Regulatory Authority). HCT‟s constitutional-statutory-regulatory framework for planning,
operation and compliance is also defined by the applicable City of Tshwane by-laws, judgments
of the High Court, the Supreme Court of Appeal, and the Constitutional Court insofar as they
relate to social housing.
1.4. Board of Directors
Being a municipal entity, the HCT is accountable to the sole shareholder, the City of Tshwane.
The board‟s primary role is to ensure that the company meets its mandate through its planning
and operations. To this end, the board gives strategic direction to the company and plays an
oversight role over the company‟s management. The Board is responsible for the oversight and
implementation of good governance in the conduct of business as well as strategy development
and implementation in line with good ethics and for maintaining relationships with all
stakeholders in order to achieve the corporate objectives. These include:
a. Giving strategic direction to the future of the Company;
b. Monitoring and overseeing management‟s performance; and
c. Be accountable to the stakeholders, in particular, the City of Tshwane, in terms of the SDA
and the relevant statutory framework.
Housing Company Tshwane Board of Directors has the following committees:
a. Risk, Finance and Social Ethics Committee
b. Human Resources and Remuneration Committee
c. Projects and Developments Committee
1.5. Executive Management
The Chief Executive Officer (CEO) is appointed by the Board of Directors and is accountable to
them. The CEO is the accounting officer responsible for the planning, development,
administration, management and monitoring of the company‟s assets. Provision is made in the
structure for the following executive management positions:
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a. Chief Financial Officer (to be filled in first quarter of 2014/15)
b. Chief Operations Officer (to be filled in first quarter of 2014/15)
c. Property Development Manager (filled)
d. Property Manager (to be filled in first quarter of 2014/15 )
1.6. Organisational Structure
In prior years, HCT‟s limited social housing portfolio hindered its expansion in terms of human
resources or skills/capacity to effectively carry out its mandate. In the light of new developments
around additional social housing units to be managed by HCT, as well as the further development
in relation to accreditation status (progressing from Conditional to Full Accreditation) of the
company by the Social Housing Regulatory Authority (SHRA), the HCT Board of Directors
approved the implementation of a human resources development plan which has thus far enabled
the company‟s capacity to be brought up to an acceptable level to enable it to carry out social
housing development and management mandate.
During the transition to implementing an optimal and best-fit organisational structure, HCT will
utilise a combination of in-sourcing (targeted expertise) and leveraging of institutional resources
from the broader City. It will also implement a targeted recruitment strategy in parallel to these
other resourcing initiatives.
1.7. Scope of corporate governance for HCT The Board of Directors and Executives recognises and are committed to the principles of
openness, integrity and accountability advocated by the King II/III Code on Corporate
Governance. Through this process, shareholders and other stakeholders may derive assurance
that the entity is being ethically managed according to prudently determined risk parameters in
compliance with generally accepted corporate practices. By and large, the entity has complied
with the Code in all respect during the year under review.
The Board of Directors has incorporated the City of Tshwane‟s Corporate Governance Protocol
(the Protocol) in its Board Charter, which inter alia regulates its relationship with the City of
Tshwane as its sole member and parent municipality in the interest of good corporate governance
and good ethics.
The Protocol is premised on the principles enunciated in the King Report for Corporate
Governance for South Africa 2002 (“King II/III report”). The Company steadfastly consolidated its
position in respect of adherence to the King II report on Corporate Governance. Housing
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Company Tshwane‟ practices are, in most material instances, in line with the principles set out in
the King II/III Report. On-going steps are however taken to align practices with the Report‟s
recommendations and the Board continually reviews our progress to ensure that we improve our
Corporate Governance. During the year under review the Company did not finalize its risk
management reviews as well as reporting and compliance assessments in terms of the
Companies Act and the Municipal Finance Management Act (MFMA).
2. FUNCTIONING OF THE BOARD AGAINST THE WORK PLAN 2013/14.
One of the critical areas of performance of the entity in the financial 2013/14 was the turn-around
strategy of the company, which included to achieve accreditation process by the Social Housing
Regulatory Authority (SHRA). The company has managed with the support and assistance of the
Shareholder, the City of Tshwane and the Board of Directors to attain Condition Accreditation
status, one level advance towards full accreditation.
As part of the turn-around strategy of the company, the Board of Directors and Management of
the entity have gone through a thorough strategic planning process which has produced a five (5)
year strategic vision of the company in line with City of Tshwane‟s Vision 2055, the National
Development Plan, and National Housing Policy.
To this end, the process has been concluded with the production of a five year (to be reviewed
annually) strategic direction of the company. The following phase to this is about the
management of the company to take the strategy through to various operational levels of the
company.
3. HUMAN RESOURCES AND REMUNERATIONS COMMITTEE
The committee consists of the following non-executive directors:
a. Dr. William Rowland
b. Ms. Dombolo Masilela
The committee advises the board on remuneration policies, remuneration packages and other
terms of employment for directors and senior executives and to the company. Its specific terms of
reference also include recommendations to the board on matters relating inter alia, general staff
policy, remuneration, bonuses, director‟s remuneration and fees.
4. PROJECTS AND DEVELOPMENTS COMMITTEE
The projects and development committee consists of the following non-executive directors, i.e.
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a. Dr. A J Singh;
b. Ms. M Lehlokoa;
c. Adv. S Kholong.
The functions of the committee is to fulfill the functions of Bid Adjudication committee, responsible
for the evaluation/adjudication of procurement of bids/tenders/proposals for the procurement of
goods and services in excess of R 250 000.00 in accordance with the frameworks for Supply
Chain Management framework and Treasury Regulations issued in terms of Municipal Finance
Management Act 56 of 2003.
5. RISK, ETHICS AND FINANCE COMMITTEE
Risk, Finance and Social Ethics Committee consists of the following non-executive directors:
a. Adv T.S Kholong;
b. Adv E.M Mphahlele; and
c. Dr T.J Mokgoro.
Section 43 (5) of the Companies Regulations, 2011 states that the Social and Ethics Committee has
the following functions:
(a) To monitor the company‟s activities, having regard to any relevant legislation, other legal
requirements or prevailing codes of best practice, with regard to matters relating to:
(i) Social and economic development, including the company‟s standing in terms of the goals and
purposes of:
(a) the 10 principles set out in the United Nations Global Compact Principles; and
(b) the OECD recommendations regarding corruption;
(c) the Employment Equity Act; and
(d) the Broad-Based Black Economic Empowerment Act;
(ii) Good corporate citizenship, including the company‟s:
(a) promotion of equality, prevention of unfair discrimination, and reduction of corruption;
(b) contribution to development of the communities in which its activities are predominantly
conducted or within which its products or services are predominantly marketed; and
(c) record of sponsorship, donations and charitable giving;
(iii) the environment, health and public safety, including the impact of the company‟s activities and of
its products or services;
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6. RISK MANAGEMENT AND INTERNAL CONTROLS
Effective risk management is integral to the company‟s objective of consistently adding value to
the business. Management is continuously developing and enhancing its risk and control
procedures to improve the mechanisms for identifying and monitoring risks.
Operating risk is the potential for loss to occur through a breakdown in control information,
business processes and compliance systems. Key policies and procedures are in place to
manage operating risk involve segregation of duties, transaction authorization, supervision,
monitoring and financial and managerial reporting.
In order to meet its responsibility with respect to providing reliable financial information, the entity
maintains financial and operational systems of internal controls. These controls are designed to
provide reasonable assurance that transaction are concluded in accordance with management
authority, that the assets are adequately protected against material loss or unauthorized
acquisition, use or disposal and that transactions are properly authorized and recorded.
The system includes a documented organization structure and visions of responsibility,
established policies and procedures, including a Code of Ethics to foster a strong ethical climate,
which ate communicated to the parent municipality. It also includes the careful selection, training
and development of people.
Internal auditors monitor the operation of the internal control systems and report findings and
recommendations to management and the board of directors. Corrective actions are taken to
address control deficiencies and other opportunities for improving the system as they are defined.
The board, operating through the audit and performance committee of the City of Tshwane,
provides supervisions of the financial reporting process and internal control systems. There are
inherent limitations in the effectiveness of any system of internal control, including the possibility
of human error and the circumvention or overriding of controls.
The City of Tshwane appointed a single Audit and Performance Committee servicing all City of
Tshwane departments and Municipal Entities during 2013/14.
The City of Tshwane‟s internal audit department has a specific mandate and independently
appraises the adequacy and effectiveness of the company‟s systems, financial internal controls
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and accounting records, reporting its findings to local and divisional management and the auditor-
general as well as the audit committee.
The internal audit coverage plan is based on risk assessment performed at each operating unit.
The coverage plan is updated annually, based on the risk assessment and results of the audit
work performed. This ensures that the audit coverage is focused on and identifies areas of high
risk.
The City of Tshwane‟s internal audit department reports regularly to the Audit and Performance
Committee. The Auditor General is invited to all meetings of the Audit and Performance
Committee.
The internal audit department interrogated the company‟s performance for all the four (04)
quarters of the 2013/14 financial year. The internal audit department assisted the company to
finalise its risk register for 2013/14.
The role of the audit and performance committee is to assist the boards of municipal entities by
performing an objective and independent review of the functioning of the organizations‟ finance
and accounting control mechanisms. It exercises its functions through close liaison and
communication with corporate management and the internal and external auditors.
The audit committee operates in accordance in with a written charter authorized by the City of
Tshwane as well as the boards of municipal entities, and provides assistance to the board with
regards to:
a. Ensuring compliance with applicable legislation and the requirements of regulatory
authorities;
b. Matters relating to financial accounting, accounting policies, reporting and disclosures;
c. Internal and external audit policy;
d. Activities, scope, adequacy and effectiveness of the internal audit function and audit
plans;
e. Review/ approval of external audit plans, findings, problems, reports and fees;
f. Compliance with the Code of Corporate Practices and Conduct; and
g. Compliance with code of ethics.
The audit committee addressed its responsibilities properly in terms of the charter during the year
under review. No changes to the charter were adopted during the year under review.
Management has reviewed the financial statements with the audit committee and the audit
24
committee has reviewed them without management or the external auditors being present. The
quality of the accounting policies was discussed with the external auditors as well.
The audit committee considers the annual financial statements of the entity to be a fair
presentation of its financial position on 30 June 2014 and of the results of its operations, changes
in equity and cash flow (where applicable) for the period ended then in accordance with GRAP
and the Companies Act.
AUDITOR-GENERAL FINDINGS
Section 1: Auditor-General’s Report for the Current Year
Note: The Constitution S188 (1) (b) states that the functions of the Auditor-General includes the
auditing and reporting on the accounts, financial statements and financial management of all
municipalities. MSA section 45 states that the results of performance measuremen must be
audited annually by the Auditor-General.
Refer to the Annual Financial Statements set out in Chapter 5 and the timescale for the audit of
these accounts and the audit of performance and the production of reports on these matters by
the Auditor General as set out in this Chapter.
Include a comparison of the previous audit opinions and share a narrative that analyses the
reasons for the outcome of the opinion. This should be at a high-level to assist the reader in
understanding the reasons for the audit outcomes.
2012/13 2013/14 2014/15
Audit
Opinion
Unqualified Unqualified
Historical Audit Findings and Remedial Action
ANALYSIS OF 2012/13 AUDIT FINDINGS
NEW IN
2014/15
REPEAT
FINDING
ACTIONS TO RESOLVE
Matters
affecting Audit
2 0 Overstatement of investment
property in the Statement of
25
opinion Financial Position of R 361 981
and understatement of cost of
sales (repairs and maintenance)
in the Statement of Financial
Performance of the same
amount. Also an understatement
in investment property in the
Statement of Financial
Position of R 361 981
and overstatement of fair value
adjustments in the Statement of
Financial Performance of R 361
981.
Understatement of employee
benefits (leave pay provision) in
the Statement of Financial
Position of R 90 014.32 and
employee cost in the Statement
of Financial Performance of the
same amount.
The matters were accordingly
corrected and resolved.
Important
Matters
Understatement of operating
lease liability in the Statement of
Financial Position of R 14
120.39 and understatement of
operating expenditure of the
same amount.
Administrative
Matters
Prepare regular, accurate and
complete financial and
performance reports that are
supported and evidenced by
reliable information.
26
7. ENTITY’S SUPPLY CHAIN PROCESSES AND PROCEDURES
7.1. Supply chain processes followed
The Entity has within its current scope of works (managing and maintaining one building of 95
units) been limited to Request for Quotation procurement processes. The only one project
requiring competitive bidding was for Affordable Housing Demand Survey, a project executed
over a period of three (3) months. Other than this type of a project, the entity is mainly working
with quotations for maintenance works on the properties under management. With transfer of 565
residential rental stock properties to HCT, the company is foreseeing an increased scope in terms
of Supply Chain Management in the near future.
7.2. Supply chain management capacity within HCT.
The Entity has recently finalized the appointment of Supply Chain Officer in order to take charge
of the supply chain management functions. HCT has as far as in the end of this financial year
ending 30 June 2014 had minimal supply chain management functions and will be implementing
major procurement function in the coming 2014/15 financial year. Processes are underway to
approach the parent-municipality to assist with the establishment of Bid Specification and
Evaluation Committee for the company in line with Supply Chain Management framework and
Treasury Regulations issued in terms of MFMA. Bid Adjudication Committee resides with the
Board committee for projects and development.
7.3. How does HCT procure its goods and services in line with the provisions of the
MFMA?
This has so far mainly been on quotation basis as the entity‟s main focus in this financial year has
been management of rental stock under HCT management. With the upcoming developments on
Townlands and Timberlands projects, there will be detailed project planning works to take place,
whereby the entity is going to be using the competitive bidding process as guided by the MFMA
and as well as well its Supply Chain Policy and in line with that of the City of Tshwane.
7.4. The Supply chain management policy approval in line with the Municipal Finance
Management Act No.56 of 2003.
The supply chain management policy is annually reviewed by the board for approval on each
financial year.
27
7.5. Challenges and deviations experienced from the normal procurement process during
the year under review.
Based on the nature of the entity‟s business, the challenges that are faced by the entity from time
to time are mainly in relation to the utilization of same service-providers more than three times.
Most of the times we get to have to deal with property management related emergency cases that
need to be attended to promptly in terms of maintenance, however we would still ensure to
observe the Supply Chain Management processes of three (3) quotations.
One of the strategies in the coming year (2014/15) will be to implement through the approval of
the Board to establish and utilize a list of service providers on a rotation basis, so that the entity
can receive the service to its properties within minimum delay at any time of the day. This will
also increase levels HCT Tenant satisfaction in terms of maintenance complaints management
and response.
28
HCT’s supply chain committees and functions Supply Chain Management Committees: Committee
Guidelines Functions and purpose of the Committee
No of Meetings targeted
Actual Reasons Intervention/ Action Taken
Bid Specification Committee
Board Terms of Reference
Drafting scope of works for upcoming tender.
One Drafting a specification for the Affordable Housing Demand Survey
Required for SHRA purposes.
Supply Chain Management framework and Treasury Regulations issued in terms of MFMA was implemented satisfactory in this regard.
Bid Evaluation Committee
Property Development Manager, Compliance Officer and Accounts Clerk
Bid Evaluation according to the Tender required submissions
Two Evaluation of Bids in accordance with the specification requirements.
A report was drafted and submitted to the Adjudication committee.
Bid evaluation report submitted to the Bid Adjudication committee with recommendations.
Bid Adjudication Committee
Board’s Projects and Development Committee
Considered the Tenders as reported by the Bid Evaluation Committee
Three Bid adjudication in line with terms of references.
Adjudication and recommendation to the Account Officer.
Successful bidder recommended to the Accounting Officer for appointment
29
Table 3 HCT’S Bid Adjudication Committee Structure and non-compliance with the requirements Supply Chain Management procurement threshold and delegations (Table 10) Value of Purchase
Procurement method and requirements
Delegated Authority Oversight role Procurement requirements defaults
Reasons Intervention/ Action Taken
0 to R2,000
Petty cash None Entity complied None
R2 0001 to R10 000 Three quotations system
Senior Manager Accounting Officer None Entity complied None
R10,000 to R30 000 Three written quotations system.
Senior Manager Accounting Officer None Entity complied None
R30 001 to R200 000 Three quotations systems
Senior Manager Accounting Officer None Entity complied None
Tenders above R200 000 to R10 million and long term contracts
Competitive Bidding BSC, BEC and BAC HCT Board None Entity complied None
Tenders above R10 million
Competitive Bidding BSC, BEC and BAC HCT Board None Entity complied None
30
Table 4
Housing Company Tshwane Bid Adjudication Committee Structure and non-compliance with the requirements Supply Chain Management procurement threshold and delegations (Table 10) Value of Purchase
Procurement method and requirements
Delegated Authority
Oversight role Procurement requirements defaults
Reasons Intervention/ Action Taken
0 to R2,000 Petty cash
None Entity complied None
R2 0001 to R10 000 Three quotations system
Senior Manager Accounting Officer None Entity complied None
R10,000 to R30 000 Senior Manager Accounting Officer
None Entity complied None
R30 001 to R200 000 Three quotations systems
Senior Manager Accounting Officer None Entity complied None
Tenders above R200 000 to R10 million and long term contracts
Competitive Bidding
BSC, BEC and BAC HCT Board None Entity complied None
Tenders above R10 million Competitive Bidding
BSC, BEC and BAC HCT Board None Entity complied None
31
32
NON-FINANCIAL PERFORMANCE REPORT
1. EXECUTIVE SUMMARY
HCT completed its five (5) year strategic planning process and an alignment with Tshwane Vision 2055,
National Development Plan goals and Human Settlements development plan of Social Housing were
major focus areas. In line with this also, the entity has utilised the opportunity afforded by the Social
Housing Regulatory Authority (SHRA) to re-submit for accreditation by the 30 June 2014. This has been
done and the company achieved a Conditional Accreditation status in terms of section 13 of the Social
Housing Act of 2008.
This has also been placed at the focal point of the organisation development in aligning its strategic
objectives with those of the City of Tshwane (its sole Shareholder), and in line with its Integrated
Development Plan.
The City of Tshwane adopted vision 2055 as macro vision and strategy that will drive growth,
development within the city over the medium to long-term period. The diagram on the following page
outlines the City‟s vision and the six outcomes around which is built.
It should be noted that HCT supports the „third‟ outcome, namely that of “quality infrastructure
development that supports livable communities”. In respect of this outcome the Human Settlements
Department have placed particular emphasis on building sustainable human settlements, transforming
the city‟s special form through densification and mitigating the costs associated with urban sprawl.
HCT also supports the „fourth‟ outcome of the City, namely “an equitable city that supports happiness,
social cohesion, safety and healthy citizens”. In this regard it is focused on fixing housing market gaps,
i.e. the provision of affordable, rental and social housing.
33
Figure 1
In summary, Vision 2055 seeks to do the following:
a. provide the City with a broad logic to guide growth and development and a programme
of action on how to tackle current imperatives of providing high quality of living
experiences for the present generation and plan for the future generational needs;
b. serves as a point of reference for the City interventions, priorities and strategic actions
over the next 40 years;
c. detail the City‟s interventions that are aimed at breaking the cycle of generational
poverty, inequality and underdevelopment;
d. provides us with a platform to establish strategic partnerships with communities and
stakeholders to imagine, transform, remake, and build a cohesive and adaptable
society;
e. is redressing apartheid-bound experience of settlement patterns, social and economic
exclusion which continues to define the city space; and
34
f. is about the remaking of South Africa’s capital city, creation of a new identity and
ensure that our City becomes a “well connected, well governed and managed City”.
As can be seen from Vision 2055 above, human settlements is a central element of Vision 2055
as it forms a critical part of what will make Tshwane and Liveable City1.
The Tshwane Inner City needs more integrated human settlements in order to create economic
opportunities for residents, support a 24 hour economy and reduce travel to work time and costs
for the City‟s residents. Those housing opportunities must be available in a range of sizes,
specifications and tenures to meet diverse and changing needs and incomes. Delivery of these
housing will require high quality design and supporting social infrastructure necessary for people
to lead good lives in the City.
Social Housing is rental accommodation for low to medium income households
which is developed by a social housing institution SHI.2
The South African government has developed a policy framework (Social Housing Act 2008,
Breaking New ground) which recognises social housing as a key instrument in restructuring
South African Cities. This restructuring must simultaneously respond to projections for
demographic growth and the existing backlog of need.
Through this, HCT expresses how it will fulfil its role as the City‟s social housing institution that
implements catalytic, `game changing projects‟ towards a broader goal of restructuring the city,
advancing social cohesion and making the city liveable, resilient and inclusive.
In achieving these aims the strategic considerations must take into account both the demographic
and spatial issues. Some of the key issues that need to be addressed particularly in the selection
of projects are the following:
a. Central Business Districts: Expanding the Property Rate Base and increasing land values
b. Inner City: Regeneration through property management and public and neighbourhood
management
c. Suburbs and Townships: Densification through projects or land use management
d. Information on functions of the Entity and environmental overview
The overall strategic outcome is the restructuring of the cities built environment to increase its
performance and to ensure spatial justice and equity.
1 Liveable is a concept developed to describe cities that offer a high quality of life to its residents of visitors
2 SHRA Social Housing Toolkit
35
2. KEY POLICY DEVELOPMENTS
This is based on Strategic alignment to the parent department and parent municipality as a whole,
focusing on impact and outcome achieved –
Table 5
City of Tshwane
Strategic Objective
HCT Strategic Objective Key Performance area(s)
Sustainable Basic
Services
Infrastructure and
Human Settlements
1. Provide new Social Housing
units on a sustainable basis
Increase in number of new social housing units
built (refer to the scorecard for quantifiable
targets)
2. Promote effective and efficient
management of HCT and Social
Housing portfolio (manage social
housing stock in accordance with
industry norms, and standards as
defined by the social housing
regulator from time to time)
Full compliance with legislative and risk
management frameworks and policies
Effective housing stock management
Improved Financial
Sustainability
3. Strive for financial sustainability
by 2017 (conduct business in a
manner which maximises revenue
collection from a growing social
housing stock)
Prudent credit control and revenue
management (rentals)
Effective financial management
Promote good
governance and
active citizenry
4. Promote sound governance
Full compliance with legislative and risk
management frameworks
Good corporate governance
*Tenant involvement and participation in social
housing planning, implementation, management
and monitoring (sound client management
services)
3. KEY SERVICE DELIVERY IMPROVEMENTS
a. The entity has received a Conditional Accreditation status by the Social Housing Regulatory
Authority (SHRA), a milestone closer to full accreditation which gives the company an
opportunity to the Social Housing development investment.
36
b. The transfer of the City of Tshwane owned rental stock to Housing Company Tshwane for
management has commenced with Blesbok and Bosbok buildings. This increases the
property management capability of the company and will strengthen its capacity as the
company grows.
4. SERVICE DELIVERY PERFORMANCE
a. The entity to confirm its targets aligning to the IDP within approved budget provision
b. HCT is mandated to develop, manage and maintain rental and affordable institutional
housing within the City of Tshwane region. To this end the entity contributes to the
general housing and human settlements delivery of the City along with the Housing and
Human Settlements department.
Social Housing is one of the housing programmes designed by National Department of Human
Settlements to offer quality, affordable and easily accessible housing opportunities within the
inner cities. In the City of Tshwane (CoT), social housing is seen as a vehicle to bring the low to
medium income earning groups closer to the city centre. The CoT is conscious of the fact that the
independent management of social and rental housing stock by HCT would relieve the pressure
on municipal finances by dedicating the collection or rentals to an entity without “municipal
baggage”, and that the non-payment culture and trends exhibited in municipal rental stock would
be reversed.
c. HCT has developed its Strategic Objectives in alignment with those of the City of
Tshwane as reflected on the table below to give effect to its mandate execution. The
HCT‟s main strategic goal is to provide social housing to meet the needs of the City of
Tshwane residents and as such is supported by the following objectives:
Table 7
City of Tshwane
Strategic Objective
HCT Strategic Objective Key Performance area(s)
Sustainable Basic
Services
Infrastructure and
Human Settlements
1. Provide new Social Housing
units on a sustainable basis
Increase in number of new social housing units
built (refer to the scorecard for quantifiable
targets)
37
City of Tshwane
Strategic Objective
HCT Strategic Objective Key Performance area(s)
2. Promote effective and efficient
management of HCT and Social
Housing portfolio (manage social
housing stock in accordance with
industry norms, and standards as
defined by the social housing
regulator from time to time)
Full compliance with legislative and risk
management frameworks and policies
effective housing stock management
Improved Financial
Sustainability
3. Strive for financial sustainability
by 2017 (conduct business in a
manner which maximises revenue
collection from a growing social
housing stock)
Prudent credit control and revenue
management (rentals)
Effective financial management
Promote good
governance and
active citizenry
4. Promote sound governance
Full compliance with legislative and risk
management frameworks
Good corporate governance
*Tenant involvement and participation in social
housing planning, implementation, management
and monitoring (sound client management
services)
Key service delivery highlights for the period under review are as follows:
a. Continued to successfully manage ELOFF building, 95 unit residential building owned by
Housing Company Tshwane.
b. Conditional Accreditation by the Social Housing Regulatory Authority (SHRA).
c. The Housing Company Tshwane board was active and functioned for an entire financial year
without any problems.
a. Service delivery Agreement (SDA) between the entity and the parent-municipality:
The implementation of the Service Delivery Agreement (SDA) was initiated during 2010/11, with a
newly signed in November 2013. The SDA spells out the relationship between HCT and the CoT
with respect to the discharging of the social housing delivery mandate. The SDA also spells out the
roles and responsibilities of both the HCT and the CoT, the land development process (including
future social housing projects to be developed and managed by HCT). The SDA also governs
among other things the deliverables and performance milestones expected from HCT as the City‟s
38
social housing delivery agent, and also stipulate the financial and other support to be given to HCT
by the City of Tshwane.
With the finalization of the Service Level Agreements between the City and HCT in June 2014 for the
management and maintenance of Clarina residential complex and other eight (8) rental properties,
the entity has begun implementing management processes as outlined in the SLA‟s for the
transferred rental stock. This covers the aspects of the SDA that could not be implemented (e.g. the
management of newly-refurbished City of Tshwane rental units/ buildings), and this has affected the
company‟s performance in terms of the set targets for 2013/14. The plan for 2013/14 is to gradually
build the portfolio under management by pursuing a strategy based on existing properties and new-
builds where possible. This is in line with the newly revised SDA (the old SDA expired 30 April
2013).
The currently approved Service Delivery Agreement between the City and Housing Company
Tshwane states that the entity should deliver social housing and affordable rental housing as a
contribution to the housing demand in the City.
b. Provision of services by the entity
The entity currently offers affordable rental housing to the general market through its building Eloff
Gebou. Housing Company Tshwane is also mandated with management and maintenance of
Clarina Residential complex, a City of Tshwane owned residential property. Furthermore, the entity
has recently at the end of quarter four (4) received the transfer of 565 additional rental units from the
City of Tshwane for management and maintenance.
These above mentioned properties are the rental stock under HCT„s management, while there is an
incremental programme to increase HCT‟s rental stock by transferring the city‟s rental stock to HCT
for management.
39
5. PERFORMANCE AGAINST SCORECARD FOR HOUSING COMPANY TSHWANE FOR 2013/14
5.1. Performance Overview
Performance against scorecard for Housing Company Tshwane for 2013/14
No Strategic
Objective
KPI
Number Corporate level
KPI Description
Annual
Target
Unaudited
Annual
Results
Audit
Quarter 1
Audit
Quarter 2
Audit
Quarter
3
Audit
Quart
er 4
Audited
Annual
Management Comment
1. SO1 Number of new
units built and
developed
(Greenfield
developments)
Finalise
Design
work for
Timberlan
ds and
Townland
s: Appoint
project
managers
for both
projects.
0 0 Target not achieved by the entity. The
entity is currently in a process to appoint
service providers for the refreshment
and update of engineering studies and
reports that were previously performed
on the two projects in order establish
milestone reached and those that need
to be implemented. Procurement
process to be finalized by the entity for
appointment at the first quarter of
2014/15. Addition to this, the entity has
established a Panel of Service Providers
to be utilised on pre-construction
planning.
2. SO1 Number of
COT rental
units
transferred to
HCT for
management
(Brownfields
development)
313 255 0 0 0 0 255 Target has not been entirely achieved by
the entity, however the entity concluded a
service levela agreement on quarter 4 of
financial year 2013/14 to transfer Besbok
and Blesbok to the entity for
management. Further transfers are to be
done over the financial year 2014/15
40
No Strategic
Objective
KPI
Number Corporate level
KPI Description
Annual
Target
Unaudited
Annual
Results
Audit
Quarter 1
Audit
Quarter 2
Audit
Quarter
3
Audit
Quart
er 4
Audited
Annual
Management Comment
(Baseline:95
Eloff Gebou)
period.
3. SO2
Number of
approved Risk
Register
1 1 1 0 0 0 1 The board has approved the new Risk
Register for the financial year 2013/2014.
4. SO2 Review
identified risks
in the risk
register
4 4 1 1 1 1 4 Target achieved on quarterly basis.
5. SO2
Number of
Risk
Management
Plans
approved
1 1 0 1 0 0 1 Performance achieved. The HCT Board
approved the Risk Management Plan in
January 2014 and will be reviewed
annually in the first quarter of 2014/15
financial year.
6. SO2 Approval of
Management
Plans for each
Housing
project
developed and
received from
COT (aligned
to number of
buildings
transferred in
each quarter)
3 3 1 0 2 0 3 Performance achieved. The operational
and maintenance plans were prepared,
submitted and approved by the HCT
Board for the properties expected to be
transferred by the City of Tshwane to
HCT for management.
41
No Strategic
Objective
KPI
Number Corporate level
KPI Description
Annual
Target
Unaudited
Annual
Results
Audit
Quarter 1
Audit
Quarter 2
Audit
Quarter
3
Audit
Quart
er 4
Audited
Annual
Management Comment
7. SO2 Number of
tenant
applications
and contracts
(Aligned to
total
occupancy of
units under
management
by HCT at the
time)
438 219 149 0 70 0 219 This target has not been achieved,
however processes are underway to
implement after the transfer of properties
has been concluded.
8. SO2 Approval of
management
and Internal
control
guideline/polic
y (Align with
Governance
KPA)
1 1 1 0 0 0 1 Target achieved and implemented on on-
going basis.
9. SO2 Frequency of
Updates done
on the
Complaints
Register.
1 4 4 0 0 0 4 This has been implemented with HCT
staff throughout the financial year and will
continue to be enhanced in the future
coming years.
10. SO2 Approval of
delegations of
authority
framework
1 0 0 0 0 0 0 Target not achieved, policy is currently
under review to be submitted to the
Board of Directors
11. SO3 % Compliance
with GRAP 17
in terms of
Asset Register
100% 100% 100% 100% 100% 100% 100% Performance achieved. HCT finance
management officials enrolled on GRAP
standard training and have been
42
No Strategic
Objective
KPI
Number Corporate level
KPI Description
Annual
Target
Unaudited
Annual
Results
Audit
Quarter 1
Audit
Quarter 2
Audit
Quarter
3
Audit
Quart
er 4
Audited
Annual
Management Comment
management. attending on monthly basis.
12. SO3 %
Reconciliation
of company
balances with
COT.
100% 100% 100% 100% 100% 100% 100% Target achieved on a quarterly basis
13. SO3 % of total
Spent on BEE
and SME
procurement.
60% 0 61% 42.3% 56% 61% 55% Over the last four quarters, the entity has
increased its spending on BEE up to 55%
and strives to reach the achievement on
this target.
14. SO3 % Compliance
with Income
Tax and VAT
requirements
100% 100% 100% 100% 100% 100% 100% Target achieved.
15. SO3 Number of
units billed as
per tenant
listings
(excludes
Clarina estate
targeted for
rent-free
alternative
accommodatio
n)
546 219 149 0 70 0 219 Target not entirely achieved by the entity.
This KPI dependent on the transfer of
rental stock for management to HCT,
which delayed due to consultations with
labour forum on the staff/personnel to be
transferred with the mentioned properties
and as well relating to finalise the service
level agreement between HCT and the
City of Tshwane for management of the
properties. The Service Level Agreement
processes have since been concluded.
16. SO3 % of
incorrectly
captured
payroll inputs
(NEW)
0 0 0 0 0 0 0 Performance achieved. Continued
sustainability of the performance.
17. SO3 Approval of
required HR
and finance
1 1 1 0 0 0 1 Target achieved and implementation
underway.
43
No Strategic
Objective
KPI
Number Corporate level
KPI Description
Annual
Target
Unaudited
Annual
Results
Audit
Quarter 1
Audit
Quarter 2
Audit
Quarter
3
Audit
Quart
er 4
Audited
Annual
Management Comment
policies and
procedures
18. SO3 Succession
Planning
Strategy
1 1 1 0 0 0 1 Target achieved, policy approved by the
Board of Directors in 2013/14 financial
year.
19. SO3 Approval of
Reviewed
Performance
Management
Policy
1 1 1 0 0 0 1 Performance achieved, the policy was
reviewed and approved by HCT Board of
Directors in January 2014.
20. SO3 %Vacant
Positions Filled
90% 62% 60% 0% 0% 0% 48% Performance not achieved. The entity
linked filling of vacancies with
incremental rental stock transferred to be
filled by quarter 1 of financial year
2014/15.
21. SO3 Approval of
Skills
Development
Plan
1 1 1 0 0 0 1 Target achieved implementation to
commence in financial year 2014/15.
22. SO3 Frequency for
conducting and
submitting
performance
appraisals for
staff
4 4 1 1 1 1 4 Performance achieved. This has been
implemented with HCT staff throughout
the financial year and will continue to be
enhanced in the future coming years.
23. SO3 Implementatio
n of a
Marketing and
Communicatio
n Strategy and
Plan
1 0 N/A 1 0 0 1 The policy was approved by the Board in
January 2014 and is currently being
implemented.
24. SO3 Number of
Public
1 0 N/A 0 0 0 0 The entity had planned to use the event
as a launch of the properties transferred
44
No Strategic
Objective
KPI
Number Corporate level
KPI Description
Annual
Target
Unaudited
Annual
Results
Audit
Quarter 1
Audit
Quarter 2
Audit
Quarter
3
Audit
Quart
er 4
Audited
Annual
Management Comment
Relations
events in
support of
Service
delivery
promotion
by the City, this has however resulted in
a delay, but planning to implement on the
first quarter of 2014/15 financial year are
underway.
25. SO3 Website to go
“live
1 1 1 0 0 0 1 Target achieved.
26. SO3 Frequency of
updates on the
website with
Social Housing
Information
4 4 1 1 1 1 4 Target achieved, the entity will continue
to sustain the achievement.
27. SO3 Review of
Legal
Document
Templates
1 1 1 0 0 0 1 Performance achieved.
28. SO3 Review of the
Strategic plan
1 1 1 0 0 0 1 Performance achieved. Strategic plan
reviewed and approved by the Board of
Directors.
29. SO3 Approval of IT
security policy
1 1 N/A 0 0 0 1 Performance achieved. Board of
Directors approved the policy in January
2014 and will be reviewed for 2014/15
financial year.
30. SO3 Frequency of
back-ups
made in
secure offsite
storage.
9 9 N/A, 3 3 3 9 Performance achieved. Continued
sustainability of the performance.
Table 8
45
6. ORGANISATIONAL DEVELOPMENT PERFORMANCE
6.1. HCT Organogram and staff component
Figure 2
46
6.2. Managing the entity’s workforce
6.2.1. Totals on injuries, sicknesses, suspensions, appointments and resignation
No injuries occurred in the HCT work environment during the financial year 2013/14, however from time to time employees have been
experiencing short term sickness. There has been one suspension in Quarter 3 of the year, which lead to the departure of former Chief
Executive Officer. The entity received a resignation from one of its building Caretakers in February 2014 and another from the Marketing
Officer in May 2014.
Table 9
Staff Movements
African Coloured Indian Whites
Male Female Male Female Male Female Male Female
Appointments 6 1 0 0 0 1 0 0
Resignations 1 1 0 0 0 0 0 0
Suspension 1 0 0 0 0 0 0 0
Sick leave 21 23 0 0 0 2 0 0
6.2.2 Capacity building, skills development and training
A number of capacity building initiatives took place during the financial year relating to Property Law and Leasing, Project Development
(attended by the Property Development Manager in Quarter 2) and other related training the staff members attended.
47
Table 10
Institution Degree/Diplom
a Male Female Total
A C I W A C I W
University of Pretoria - Municipal Financial Management Programme
0 0 0 0 1 0 1 0 0
National Treasury – GRAAP Standards
0 0 0 0 1 0 1 0 0
Gamelihle Business Consulting – Contract Management
Certificate 1 0 0 0 0 0 0 0 R8,749
National Association of Social Housing (NASHO) – Social Housing Legislation & Regulations training
Certificate 2 0 0 0 0 0 0 0 R6,500
Gamelihle Business Consulting - Property leasing
Certificate 3 0 0 0 1 0 0 0 R33,098
Total 6 0 0 0 3 0 2 0 R48,347
48
6.2.3 Employee expenditure
Table 11
6.2.4 Disclosure of Senior Management Salaries
Table 12
Designation Remuneration paid for FY 2013/2014
CEO 1,437,629.28 (only up to March 2014)
Finance Manager 518,033.65
Property Development Manager (Acting CEO) 486,931.71
6.2.5 HCT’S employee totals, vacancies turnover Table 13
Position Status Plan
Chief Executive Officer Vacant 30 September 2014
Chief Operation Officer Vacant 30 September 2014
Chief Financial Officer Vacant 31 October 2014
Property Development Manager Filled Filled
Property Manager Vacant Appointed to start on 01 September 2014
Finance Manager Filled Filled
Bookkeeper Filled Filled
Accounts Clerk Filled Filled
Supply Chain Officer Filled Filled
Leasing Officer Filled Filled
FY 2009/2010 FY 2010/2011 FY 2011/2012 FY 2012/2013 FY 2013/2014
Total Salary Cost (inclusive of directors remuneration) 1,965,713 2,382,227 3,246,257 4,098,771 4,914,447
49
Compliance Officer Filled Filled
Maintenance Officer Filled Filled
Accounts Clerk Filled Filled
Building Manager Vacant
Caretaker (Clarina) Filled Filled
Caretaker (Eloff) Filled Filled
Project Co-ordinator Vacant 31 October 2014
Marketing Officer Vacant 30 September 2014
Human Resource Officer Vacant Appointed
Office Assistant (Receptionist) Filled Filled
Personal Assistant (CEO) Vacant 31 October 2014
General Worker Vacant 31 October 2014
6.2.6 No of approved positions, filled and vacancies Table 14
Filled positions Vacancies
11 10
6.2.7 EEA report on (Female positions, people with disabilities) Table 15
Employment Equity figures
African Coloured Indian White Total
Male 7
7
Female 3
1
4
Total 10
1
11
Actual % 55.5% 0% 100% 0% 52.4%
Target % 100% 100% 100% 100% 100%
Gap 8 1 0 1 10
Target Total 18 1 1 1 21
50
Change Totals
Staff Levels:
Senior Management
2
2
Administration 9 9
6.2.8 Highlights Table 16
Highlights Narrative
1. Conditional Accreditation by the Social Housing Regulatory Authority (SHRA).
The company has achieved a progressive level of Conditional Accreditation by the Social Housing Regulatory Authority (SHRA) at the end of June 2014. This now enables the company to access and get assistance with project preparation, packaging for funding and other processes leading to project grant funding.
2 Sustained revenue collection based on a targeted 95% collection rate (target exceeded: current accounts and arrear amounts; see table below)
Eloff building continues to perform well in terms of revenue collection. This is attributed to the installation of Biometric access control installed and general tenant and property management processes by the company.
3 Reviewed Business Plan and alignment of targets with SDBIP (specifically the Housing & Human Settlement departmental scorecard)
The company‟s Business Plan and Service Delivery Agreement with the City of Tshwane were reviewed and approved. This has led to a new business focus in keeping with the company‟s mandate and shareholder performance expectations.
4 Five (5) year Strategic Plan HCT Board of Directors and management have on the last half of 2013/14 financial year embarked on a strategic planning process which will give guide and direction of the company over the next five (5) years in relation to the implementation of if mandate and projects thereof. The basis for the new strategic vision of the company focused more on how the company achieves the accreditation status by SHRA, how the company can enhance it operations within the property management and maintenance, while it develops for accreditation and regain the Shareholder confidence.
51
Table 17
12 Month Average
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Totals (July 2013 to June 2014)
Total No. of Units & Shops
177 154 154 188 222 222
No. of Vacant Flats 4 25 11 10 6 52
Vacancy Rate as a % 2.43% 16.23% 7.14% 5.32% 2.70% 23.42%
Total Month Billing 265,134.57 732,203.91 721,775.19 844,062.56 883,573.15 3,181,614.81
Total Receipts/collections
268,642.85 766,030.60 710,056.80 858,261.47 889,365.34 3,223,714.21
Collections as % of Billing
101.69% 104.62% 98.38% 101.68% 100.66% 101.69%
52
6.2.9 Challenges and interventions
Table 18
Challenges Interventions
1 Limited rental units under management The company and the City of Tshwane Human Settlements department are currently working on a programme to incrementally transfer rental stock to HCT for management. The first property (Clarina) was transferred to HCT for management at the beginning of quarter 1 (2013/14), on a rent-free basis, with Tenants only paying for levies, which is not accounted for as revenue to HCT. At the end of financial year 2013/14, the City of Tshwane and HCT concluded a service level agreement to transfer additional rental units in the financial year 2014/2015, which will enhance the company‟s capacity in terms of property management, revenue collection and tenant management.
2 New social housing development projects
planning works underway for
implementation.
The planning of the Townlands projects (±950 units) advanced in establishing the pre-construction studies and planning that was done previously. City Planning and Housing & Human Settlement departments are currently assisting the company to ensure that the project is implemented from quarter 1 of 2014/15 in line with the applicable and approved spatial development framework.
3 Mis-aligned service delivery targets (negative impact on the company‟s performance objectives and targets)
Business Plan targets reviewed in quarter 1 (September 2013), and are now in line with the City‟s Housing & Human Settlement department‟s scorecard. New KPIs feature specific, measurable, achievable, realistic and time-bound targets which contribute to the City‟s service delivery expectations.
6.2.10 HCT’s turnaround strategy on recruitment In accordance with the approved company‟s turn-around strategy and given the service delivery targets for the next few years starting with
2014/15, the company has adjusted its capacitation plans to be able to meet its social housing development and management mandate. There are
several areas that are targeted for capacitation in order to meet the service delivery requirements as stipulated in this business plan.The
management team is expected to be strengthened by the inclusion of the following position(s) in the short-to-medium term:
a. Chief Operations Officer b. Chief Finance Officer c. Property Manager
53
Any other positions will be factored into the structure as and when circumstances change.
The recruitment, selection and appointment processes for the following positions (based on the existing and planned organizational structure) is
underway within the last Quarter of 2013/2014 and will be concluded in the first Quarter of 2014/25 financial years:
Table 19
Position Expected filling of vacancy Deficiency addressed
Chief Operations Officer 01 September 2014 General management, strategic business planning and risk management within the organization.
Chief Financial Officer 01 September 2014 High-level investment and funding resource, as well as financial management oversight at a higher level
Property Manager 01 September 2014 Appropriate property management skills for the current and future social housing stock.
Supply Chain Officer 01 June 2014 Adherence to approved and legislated supply chain management processes and procurement practices
Finance Manager Filled Financial management (including the monitoring of the control environment across the organization)
Bookkeeper Filled Financial management
Accounts Clerk Filled Financial management
Human Resources Officer 01 August 2014 Corporate support services and human resources development
Caretaker 1
Filled Property management (operational)
Caretaker 2 Filled Property management (operational)
General worker 01 September 2014 General office assistance
Compliance Officer Filled Compliance with legislative frameworks and the fostering of good governance across the organization
Property Development Filled Project management and property development skills
54
Position Expected filling of vacancy Deficiency addressed
Manager
Information and Communications Technology (ICT) specialist
City of Tshwane resources to be used continuously. The company is not large enough to justify the appointment of a full-time employee to perform ICT functions
Information and Communications Technology (ICT) governance
6.2.11 Disclosures 6.2.11.1 Disclosures concerning HCT Senior management salaries. Table 20
Designation Remuneration paid for FY 2013/2014
CEO 1,437,629.28 (only up to March 2014)
Finance Manager 551,156
Property Development Manager (Acting CEO) 508,892
6.3. HUMAN RESOURCES AND REMUNERATIONS COMMITTEE The committee consist of the following non-executive directors:
c. Dr. William Rowland d. Ms. Dombolo Masilela
The committee advises the board on remuneration policies, remuneration packages and other terms of employment for directors and senior
executives and to the company. Its specific terms of reference also include recommendations to the board on matters relating inter alia, general
staff policy, remuneration, bonuses, director‟s remuneration and fees.
55
6.4. DIRECTOR’S REMUNERATION 6.4.1. Housing Company Tshwane Board of Directors Table: HCT Board of Directors Table 21
Board Member Capacity: Executive / Non- Executive
Race Gender Board Committee Membership
T Phetla Non-Executive ( Chairperson) Black Male Board Chairperson
D Masilela Non-Executive Black Female Human Resource and Remunerations
M Mphahlele Non-Executive Black Male Risk, Ethics & Finance
M Lehlokoa Non-Executive Black Female Projects and Developments
W Rowland Non-Executive White Male Human Resource and Remunerations
T Mokgoro Non-Executive Black Male Risk, Ethics & Finance
A Singh Non-Executive Indian Male Projects and Developments
S Kholong Non-Executive Black Male Risk, Ethics & Finance and
Projects and Developments
6.5. HTC BOARD COMMITTEE MEETINGS 2013/14 FINANCIAL YEAR HCT Board Committee Meetings Table 22
Name of Board Member
Board meetings, Retainer (80% attendance) & meetings with Shareholder
Risk, Ethics and Finance Committee
Human Resource Committee
Projects Committee
Total Challenges Comments
T Phetla R228,042 R228,042 None None
56
D Masilela R148,469 R20,568 R191,379 None None
M Mphahlele R170,811 R20,568 R191,379 None None
M Lehlokoa R175,601 R61,704 R237,305 None None
W Rowland R135,590 R27,424 R163.014 None None
T Mokgoro R163,088 R20,568 R183,656 None None
A Singh R150,243 R35,994 R186,237 None None
S Kholong R123,806 R15,426 R46,278 R185,510 None None
57
Human Resources Head Count per UNIT Table 23
2013/14
Units Units No. of posts
No. of filled posts
No. of vacancies
Vacancies %
Challenges Intervention/Action to be taken
Chief Executive Officer
2 0 2 100% No challenges, applications have been received.
Screening and selection process for suitable candidates underway. The interview processes expected to commence on the week of 28 August 2014.
Finance Department
5 4 1 20% The entity has in the past been managing minimal rental stock and current staff members have been coping with the workload.
Processes underway to fill the vacant post in the finance department by the first quarter of 2014/15 financial year.
Property Management
14 7 7 50% The entity has a had a delay in the implementation of filling in these positions due to minimal rental stock under management, however this is being addressed as the entity recently concluded a service level agreement to have Council owned rental stock transferred to it by the City.
Interviewing process for the Property Manager position expected to commence on the week beginning 21 July 2014. Outstanding vacancies to be filled will be implemented on the first quarter of 2014/15 financial year.
TOTAL 21 11 10 53%
58
6.6. TRAINING AND DEVELOPMENT Training and development Table 24
Management Type of training
2012/13 2013/14
Gender Employees in post as 30 June 2012/13
Learnerships Skills Programmes & Other Short Courses
Other Forms Of Training
Total Gender Employees in Post As 30 June 2013/14
Learnerships Skills Programmes & Other Short Courses
Other Forms of Training
Total Remarks
Case-ware Female Yes 0 0 0 R3,169 Yes 0 0 0
Municipal Financial Management Programme
0 0 0 Paid for by CoT
2 Females
Yes 0 0 0
GRAAP Standards
0 0 0 Paid for by CoT
2 Females
Yes 0 0 0
Contract Management
0 0 0 0 Male Yes 0 0 0 R8,749
Social Housing Legislation & Regulations training
0 0 0 0 2 Males Yes 0 0 0 R6,500
Property Leasing
0 0 0 0 3 Males & 1 female
Female resigned
0 0 0 R33,098
59
6.7. MANAGEMENT OF LEAVE Leave Records
Table 25
Types of leave
2012/13 2013/14 Days
Total Sick Leave
On special and sick leave (medical certificate provided, death certificate and study leave info)
Days Description Total Sick Leave
On special and sick leave (medical certificate provided, death certificate and study leave info)
Sick 30 26 30 Employees could not submit doctor‟s note as they were sick for 1 day
46 40 46
Vacation 109 109 109 116.50 116.50 116.50
Study 18 18 18
Special 24 24 24 33 33 33
Family responsibility
6 6 6 2 2 2
6.8. HUMAN RESOURCES GENDER AND RACE Human Resources Gender and Race Table 25
Indicator Baseline 2012/13 Target
2012/13 Actual
2013/14 Target
2013/14 Actual
Challenges Comments
African staff % of total staff
90% 52.4%
Female staff as % of total staff
38% 19%
African Female managers % of senior management
10% 5%
Staff turnover as % of total staff
0% 27%
60
STATEMENT OF RESPONSIBILITY For the year ended 30 June 2014 The Board, which is the Accounting Authority of the Housing Company Tshwane (HCT) is responsible for the preparation, integrity and fair presentation of the annual financial statements of the HCT. The annual financial statement for the year ended 30 June 2014 presented on page to …… have been prepared in accordance with the effective Standards of Generally Recognized Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. They are based on appropriate accounting policies which have been consistently applied and which are supported by reasonable and prudent judgments and estimates. The going concern basis has been adopted in preparing the annual financial statements. The Board have no reason to believe that the HCT will not be a going concern in the foreseeable future based on forecasts and available cash resources. The Board is also responsible for the HCT‟s system of internal controls. They are designed to provide reasonable, but not absolute assurance as to the reliability of the annual financial statements and to adequately safeguard, verify and maintain accountability of assets. These controls are monitored throughout the HCT by management and employees, in an attempt to address the segregation of authority and duties with available resources. The Board continues to design and implement processes to monitor internal controls, to identify material breakdown and implement timely corrective action. The Board and HCT management treat corporate governance matters seriously and whenever any instances of non-compliance to regulation are uncovered or reported, appropriate disciplinary measures in terms of policy and legislation are institute. The annual financial statements were approved by the Board on and are signed on its behalf: Mr. Tshepo Phetla Mr. Ayanda Magubane Chairperson: Board Acting Chief Executive Officer
61
62
63
64
FINANCIAL PERFORMANCE
Housing Company Tshwane - Table F1 Monthly Budget Statement Summary - M12 June 2014
Description
2012/13 Current Year 2013/14
Audited Outcome
Original Budget
Monthly actual
YearTD actual
YearTD budget
YTD variance
YTD varianc
e %
Full Year Forecast
R thousands
Financial Performance
Property rates – – – – – –
–
Service charges – – – – – –
–
Investment revenue 0 2
34 2 32 3300% 2
Transfers recognised - operational 7,028 14,373 0 12,288 14,373 (2,085) -14,51% 14,373
Other own revenue 2,763 8,816
3,706 6,842 (3,136) -45.83% 6,842
Total Revenue (excluding capital transfers and contributions) 9,791 23,191
16,028 21,217 (-5,189) -24.46% 21,217
Employee costs 3,335 4,905
3,370 4,372 1,002 22.92% 4,372
Remuneration of Board Members 763 858
1,544 1,227 (316) -25.75% 1,227
Depreciation and asset impairment 12 201
33 182 149 81.87% 182
Finance charges 463 427
419 425 6 1.41% 425
Materials and bulk purchases – – – – – –
–
Transfers and grants – – – – – –
–
Other expenditure 3,005 16,798
6,143 15,011 8,868 59.08% 15,011
Total Expenditure 7,578 23,191
11,509 21,217 9,708 45.76% 21,217
Surplus/(Deficit) 2,213 0 4,519 0 4,519 –
Transfers recognised - capital – – – – – –
–
Contributions recognised -
capital & contributed assets – – – – – –
–
Surplus/(Deficit) after capital transfers & contributions
2,213 0 4,519 – 4,519 –
Taxation – – – – – –
–
Surplus/ (Deficit) for the year
2,213 0 4,519 – 4,519 –
Capital expenditure & funds sources
65
Capital expenditure
Transfers recognised - capital – 8.915 - 625 7,780 7,155 -91.9% 7.780
Public contributions & donations – – – – – –
–
Borrowing – – – – – –
–
Internally generated funds 171 –
217 697 480 68.9% 697
Total sources of capital funds 171 8.915
842 8,477 7,635 90.1% 8,477
Financial position
Total current assets 27,614 17,635
31,765
31,765
Total non-current assets 13,480 26,619
14,228
14,228
Total current liabilities (9,040) (2,720)
(9,734)
(9,734)
Total noncurrent liabilities (2,803) (2,555)
(2,488)
(2,488)
Community wealth/Equity 29,251 39,980
33,771
33,771
Cash flows
Net cash from (used) operating 8,871 5,769
5,431 7,700 (2,269) 5,792 7,700
Net cash from (used) investing (170) (8,915)
(479) (8,477) 7,998 -842 (8,477)
Net cash from (used) financing (315) (315)
(315) (315) 0 0 (315)
Cash/cash equivalents at the year end 8,386 17,372
31,523 19,742 11,781 59.67% 19,742
Debtors & creditors analysis 0 -
30 Days 31 -
60 Days 91 -
120 Days
121 - 150
Days
151 - 180 Days
181 Days - 1 Year
Over 1 Year
Total
Debtors Age Analysis
Total By Revenue Source 90 55 44 71 141 – – 401
Creditors Age Analysis
Total Creditors 601 – – – – – – 601
Housing Company Tshwane - Table F2 Monthly Budget Statement - Financial Performance (revenue and expenditure) - M12 June 2014
66
Description
2012/13 Current
Year 2013/14
Audited Outcome
Original Budget
Adjusted Budget
Monthly actual
YearTD actual
YearTD budget
YTD variance
YTD variance
Full Year
Forecast
R thousands %
Revenue By Source
Property rates – – – – – – – –
Property rates - penalties & collection charges – – – – – – – –
Service charges - electricity revenue – – – – – – – –
Service charges - water revenue – – – – – – – –
Service charges - sanitation revenue – – – – – – – –
Service charges - refuse revenue – – – – – – – –
Service charges - other – – – – – – – –
Rental of facilities and equipment 2,436
8,762
6,703
3,203
6,703
(3,500) -52.21%
6,703
Interest earned - external investments – – – – – – –
–
Interest earned - outstanding debtors 0 2 2 - 34 2 32 1600% 2
Dividends received – – – – – – –
–
Fines – – – – – – –
–
Licenses and permits – – – – – – –
–
Agency services – – – – – – –
–
Transfers recognised - operational 13,500 14,373 14,373 - 12,288 14,373 (2,145) -14.92% 14,373
Other revenue 70 54 139 - 203 139 64 46.38% 139
Gains on disposal of PPE – – – – 300 – (300)
–
Total Revenue (excluding capital transfers and contributions) 16,007 23,191 21,217 - 16,028 21,217 (5,189) -24.46% 21,217
Expenditure By Type Employee related costs 2,903 4,905 4,371 - 3,370 4,372 1,002 22.92% 4,372
Remuneration of Directors 344 858 1,227 - 1,544 1,227 (317) 25.75% 1,227
Debt impairment – – – – – – –
–
Collection costs – – – – – – –
–
Depreciation & asset impairment 53 201 182
33 182 149 81.87% 182
Finance charges 506 427 425
419 425 6 1.41% 425
Bulk purchases – – – – – – –
–
Other materials – – – – – – –
–
Contracted services 464 1,847 2,244
2,092 2,244 152 -6.8% 2.244
67
Housing Company Tshwane - Table F4 Monthly Budget Statement - Financial Position - M12 June 2013
Vote Description 2012/13 Current Year
2013/14
Transfers and grants – – – – – – –
–
Other expenditure 2,962 14,953 12,768
4,051 12,767 8,716 --68.27% 12,767
Loss on disposal of PPE – – –
–
–
Total Expenditure 7,232 23,191 21,216
11,509 21,217 9,708 45.76% 21,217
Surplus/(Deficit) 8,774 0 –
4,519 – (4,519)
–
Transfers recognised - capital – – – – – – –
–
Contributions recognised - capital – – – – – – –
–
Contributions of PPE – – – – – – –
–
Surplus/(Deficit) before taxation 8,774 0 –
4,519 – (4,519)
–
Taxation – – – –
– –
–
Surplus/(Deficit) for the year 8,774 0 –
4,519 – (4,519)
–
References 1. Revenue includes sales of: (insert description) 2. Bulk purchases - electricity 2. Bulk purchases - water 3. Expenditure includes repairs & maintenance of:
68
Audited Outcome
Original Budget
Adjusted Budget
Year TD actual
Full Year Forecast
R thousands
ASSETS
Current assets Cash 26,889 17,373 19,742 31,524 19,742
Call investment deposits – – –
– Consumer debtors 27 22 85 85 85 Other debtors 698 240 74 156 74 Current portion of long-term receivables – – –
–
Inventory – – –
–
Total current assets 27,614 17,635 19,901 31,765 19,901
Non-current assets Long-term receivables – – –
–
Investments – – –
– Investment property 13,200 24,863 18,913 13,500 18,913 Property, plant and equipment 211 1,758 876 679 876 Agricultural assets – – –
–
Biological assets – – –
– Intangible assets 70 – 366 49 366
Total non-current assets 13,481 26,621 20,155 14,228 20,155
TOTAL ASSETS 41,095 44,256 40,056 45,993 40,056
LIABILITIES Current liabilities Bank overdraft – - –
–
Borrowing 315 315 315 315 315 Consumer deposits 0 445 432 479 432 Trade and other payables 8,044 1,776 1,784 8,840 1,784 Provisions 681 185 681 100 681
Total current liabilities 9,040 2,721 3,212 9,734 3,212
Noncurrent liabilities Borrowing 2,804 2,555 2,488 2,488 2,488
Provisions – – – - –
Total noncurrent liabilities 2,804 2,555 2,488 2,488 2,488
TOTAL LIABILITIES 11,844 5,276 5,700 12,222 5,700
69
NET ASSETS 29,251 38,980 34,356 33,771 34,356
COMMUNITY WEALTH/EQUITY
Accumulated Surplus/(Deficit) 29,251 38,980 34,355 33,771 34,355 Reserves
–
–
Share capital 4,614 – 4,614
4,614
TOTAL COMMUNITY WEALTH / EQUITY 33,865 38,980 38,969 33,771 38,969
70
Housing Company Tshwane - Table F5 Monthly Budget Statement - Cash Flows -
M12 June 2014
Description
2012/13 Current
Year 2013/14
Audited Outcome
Original Budget
Adjusted Budget
Monthly actual
YearTD actual
YearTD budget
YTD variance
YTD variance
Full Year
Forecast
R thousands
%
CASH FLOW FROM OPERATING ACTIVITIES
Receipts
Ratepayers and other 2,678 8,624 3,950
3,380 3,950 (570) -14.43% 3,950
Government - operating 13,727 14,373 15,214 – 13,666 15,214 (1,548) -10.17% 15,214
Government - capital – – – – – – –
–
Interest 6 2 1
34 2 32 1600% 2
Dividends – – – – – – –
–
Payments Suppliers and employees (7,077) (16,805) (11,040)
(11,230) (11,040) 190 -1.72% (11,040)
Finance charges (463) (425) (425)
(419) (425) 6 -1.41% (425)
Dividends paid – – – – – – –
–
Transfers and Grants – – – – – – –
–
NET CASH FROM/(USED) OPERATING ACTIVITIES 8,871 5,769 7,700
5,431 7,700 (2,269) -29.47% 7,700
CASH FLOWS FROM INVESTING ACTIVITIES Receipts Proceeds on disposal of PPE – – – 0 0 – 0
–
Decrease (Increase) in non-current debtors – – – – – – –
–
Decrease (increase) other non-current receivables – – – – – – –
–
Decrease (increase) in non-current investments – – – – – – –
–
Payments Capital assets (170) (8,915) (8,477)
(479) (8,477) 7,998 -94.34% (8,477)
NET CASH FROM/(USED) INVESTING ACTIVITIES (170) (8,915) (8,477)
(479) (8,477) 7,997 -94.34% (8,477)
CASH FLOWS FROM FINANCING ACTIVITIES Receipts Short term loans – – – – – – –
–
Borrowing long term/refinancing – – – – – – –
–
Increase (decrease) in consumer deposits – – – – – – –
–
Payments Repayment of borrowing (315) (315) (315)
(315) (315) 72 -22.86% (315)
NET CASH FROM/(USED) FINANCING ACTIVITIES (315) (315) (315)
(315) (315) 72 -22.86% (315)
71
Housing Company Tshwane - Supporting Table F1 Entity Material variance explanation - M12 June 2014
Description Variance Reasons for material deviations Remedial or corrective steps / remarks
R thousands
Revenue items
Property rates –
Property rates - penalties & collection charges –
Service charges - electricity revenue –
Service charges - water revenue –
Service charges - sanitation revenue –
Service charges - refuse revenue –
Service charges - other –
Rental of facilities and equipment
(3,499) The delay in transferring Blesbok and Bosbok Human settlement department is accelerating in the transfer process.
Interest earned - external investments –
Interest earned - outstanding debtors
32 Interest charged on overdue accounts Eloff and Clarina Under control
Dividends received –
Fines –
Licenses and permits –
Agency services –
Transfers recognised - operational
(2,084) Operating expenses is offset against grant once expenses has incurred. Under control
Other revenue 32 HCT has rented out advertising space. Under control
Expenditure items
Employee related costs
1,091 The difference is relative to resignation of employees and a delay in posts not filled thereafter. HCT is filling vacant positions in the new financial year
Remuneration of Directors
(316) Additional board meetings to deal with CEO suspension issues. There were more meetings .
Debt impairment –
Collection costs –
Depreciation & asset impairment 148 Reviewal of useful life of asset has reduced the depreciation Reviewal of useful life of asset has reduced the depreciation
Finance charges 6 Interest on NHFC loan Under control
NET INCREASE/ (DECREASE) IN CASH HELD 8,385 (3,461) (1,091)
4,635 (1,091) 5,727
(1,091)
Cash/cash equivalents at the year begin: 18,503 20,834 20,834
26,888 20,834
20,834
Cash/cash equivalents at the year-end: 26,888 17,372 19,742
31,523 19,742 11,781 59.67% 19,742
72
Bulk purchases –
Other materials –
Contracted services
152 Delay in transfer of Blesbok and Bosbok has resulted in contracted services not being required. Under control
Transfers and grants –
Other expenditure 9,077 Service Providers will be appointed once Townlands project start HCT has advertised services related to Townlands project
Loss on disposal of PPE (61) Few assets were written off in June 2014 and valuation at Eloff Gebou. Under control
Capital Expenditure items
Capital single-year expenditure sub-total
(5,927) Studies for Timberlands not yet appointed. Studies for Timberlands not yet appointed.
Cash flow items
Ratepayers and other
(569) Slow collection rate on Clarina Levies HCT is charging interest on overdue accounts.
Government - operating (1,548) Grant from COT was not claimed. Under control
Interest
32 NHFC interest. Under control
Suppliers and employees 171 Service Provider related to Town-lands project not yet appointed Under control
Finance charges 6 Interest on NHFC loan Under control
Capital assets 7,635 Studies for Timberlands not yet appointed. Studies will commence in the new financial year.
Repayment of borrowing
72 Capital repayment of NHFC loan Under control
Measurable performance
Total variance
Housing Company Tshwane - Supporting Table F3 Entity Aged debtors - M12 June 2014 Detail NT Current Year 2013/14
73
Code 0 -
30 Days 31 -
60 Days 61 -
90 Days
91 - 120
Days
121 - 150
Days
151 - 180 Days
181 Days -
1 Year
Over 1 Year
Total Bad
Debts >90 days
R thousands
Debtors Age Analysis By Revenue Source
Rates 1200 – –
Electricity 1300 – –
Water 1400 – –
Sewerage / Sanitation 1500 – –
Refuse Removal 1600 – –
Housing (Rental Revenue) 1700 90
55
44
71
141 401
315 212
Other 1900 – –
Total By Income Source 2000 90
55
44
71
141 – – – 401
315
Debtors Age Analysis By Customer Group
Government 2200 – – Business 2300 – – Households 2400 90 55 44 71 141 401 315 Other 2500
Total By Customer Group 2600 90 55 44 71 141 – – – 401 315
74
Housing Company Tshwane - Supporting Table F4 Entity Aged creditors - M12 June 2014
Detail NT Code
Current Year 2013/14
0 - 30 Days
31 - 60 Days
61 - 90 Days
91 - 120 Days
121 - 150 Days
151 - 180 Days
181 Days - 1 Year
Over 1 Year
Total R thousands
Creditors Age Analysis By Customer Type
Bulk Electricity 0100 –
Bulk Water 0200 –
PAYE deductions 0300 –
VAT (output less input) 0400 –
Pensions / Retirement deductions 0500 –
Loan repayments 0600 –
Trade Creditors 0700 601 601
Auditor General 0800 –
Other 0900 –
Total By Customer Type 2600 601 – – – – – – – 601
Notes Material increases in value of creditors' categories compared to previous month to be explained
Table: Economic Activity Economic Activity by Sector R’ 000
75
Sector 2012/13 2013/14 Challenges Comments
Marketing Not applicable Not applicable Not applicable Not applicable
Wholesale and retail trade Not applicable Not applicable Not applicable Not applicable
Travel and subsistence Not applicable Not applicable Not applicable Not applicable
Total
T3.11.2
76
National Treasury Circular 63: Appendices
The entity is required to complete the circular 63 Appendices below: Appendix I Municipal Entity/Service Provider Performance Schedule
Please provide Top 4 priority indicators as articulated in the IDP
Name of Entity & Purpose
(i)
(a)Service Indicators (b) Service Targets
(ii)
2012/13 2013/14 2014/15
Target Actual Target
*Previous Year
(v)
*Current Year
(vi)
(vii)
*Current Year
(viii)
Current Year
(ix)
Following Year
(x)