HOUSING COMPANY TSHWANE ANNUAL REPORT (DRAFT) … · 2015-02-17 · Housing Company Tshwane operates in an environment governed by, inter alia the City of Tshwane‟s principle of

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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


Adv. A.J Singh

Non-Executive

Indian

Male


Mrs M.N Lehlokoa

Non-Executive

Black

Female


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


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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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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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.


R30 001 to R200 000 Three quotations systems


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


R10,000 to R30 000 Senior Manager Accounting Officer

None Entity complied None

R30 001 to R200 000 Three quotations systems


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


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


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


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)


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


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


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


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


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


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


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)

Documents

HOUSING COMPANY TSHWANE ANNUAL REPORT (DRAFT) … · 2015-02-17 · Housing Company Tshwane operates in an environment governed by, inter alia the City of Tshwane‟s principle of