Municipality CONTENTS

Transcription

1 Municipality CONTENTS

2 CONTENTS CONTENTS... 6 REVISED ANNUAL REPORT TEMPLATE....6 CHAPTER 1 CHAIRPERSON S FOREWORD AND EXECUTIVE SUMMARY... 6 COMPONENT A: CHAIRPERSON S FOREWORD... 6 COMPONENT B: EXECUTIVE SUMMARY ACTIND MANAGER S OVERVIEW ENTITIES FUNCTIONS, POPULATION AND ENVIRONMENTAL OVERVIEW SERVICE DELIVERY OVERVIEW FINANCIAL HEALTH OVERVIEW ORGANISATIONAL DEVELOPMENT OVERVIEW AUDITOR GENERAL REPORT STATUTORY ANNUAL REPORT PROCESS CHAPTER 2 GOVERNANCE COMPONENT A: POLITICAL AND ADMINISTRATIVE GOVERNANCE POLITICAL GOVERNANCE ADMINISTRATIVE GOVERNANCE COMPONENT B: INTERGOVERNMENTAL RELATIONS INTERGOVERNMENTAL RELATIONS COMPONENT C: PUBLIC ACCOUNTABILITY AND PARTICIPATION PUBLIC MEETINGS IDP PARTICIPATION AND ALIGNMENT COMPONENT D: CORPORATE GOVERNANCE RISK MANAGEMENT ANTI-CORRUPTION AND FRAUD SUPPLY CHAIN MANAGEMENT BY-LAWS WEBSITES PUBLIC SATISFACTION ON MUNICIPAL SERVICES Municipality CONTENTS 2

3 CHAPTER 3 SERVICE DELIVERY PERFORMANCE (PERFORMANCE REPORT PART I) COMPONENT A: INTRODUCTION COMPONENT I: CORPORATE POLICY OFFICES AND OTHER SERVICES... Error! Bookmark not defined EXECUTIVE AND COUNCIL FINANCIAL SERVICES HUMAN RESOURCE SERVICES INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) SERVICES PROPERTY; LEGAL; RISK MANAGEMENT AND PROCUREMENT SERVICES CHAPTER 4 ORGANISATIONAL DEVELOPMENT PERFORMANCE (PERFORMANCE REPORT PART II) COMPONENT A: INTRODUCTION TO THE ENTITY PERSONNEL EMPLOYEE TOTALS, TURNOVER AND VACANCIES COMPONENT B: MANAGING THE MUNICIPAL WORKFORCE POLICIES INJURIES, SICKNESS AND SUSPENSIONS PERFORMANCE REWARDS COMPONENT C: CAPACITATING THE MUNICIPAL WORKFORCE SKILLS DEVELOPMENT AND TRAINING COMPONENT D: MANAGING THE WORKFORCE EXPENDITURE EMPLOYEE EXPENDITURE CHAPTER 5 FINANCIAL PERFORMANCE COMPONENT A: STATEMENTS OF FINANCIAL PERFORMANCE STATEMENTS OF FINANCIAL PERFORMANCE GRANTS ASSET MANAGEMENT FINANCIAL RATIO BASED ON KEY PRFORMANCE INDICATORS COMPONENT B: SPENDING AGAINST CAPITAL BUDGET CAPITAL EXPENDITURE Municipality CONTENTS 3

4 5.6 SOURCES OF FINANCE CAPITAL SPENDING ON 5 LARGEST PROJECTS COMPONENT C: CASH FLOW MANAGEMENT AND INVESTMENTS CASH FLOW BORROWING AND INVESTMENTS COMPONENT D: OTHER FINANCIAL MATTERS SUPPLY CHAIN MANAGEMENT GRAP COMPLIANCE CHAPTER 6 AUDITOR GENERAL AUDIT FINDINGS COMPONENT A: AUDITOR-GENERAL OPINION OF FINANCIAL STATEMENTS Year AUDITOR GENERAL REPORTS Year -1 (Previous year) COMPONENT B: AUDITOR-GENERAL OPINION YEAR 0 (CURRENT YEAR) AUDITOR GENERAL REPORT YEAR GLOSSARY APPENDICES APPENDIX A COUNCILLORS; COMMITTEE ALLOCATION AND COUNCIL ATTENDANCE APPENDIX B COMMITTEES AND COMMITTEE PURPOSES APPENDIX C THIRD TIER ADMINISTRATIVE STRUCTURE APPENDIX D FUNCTIONS OF MUNICIPALITY / ENTITY APPENDIX E WARD REPORTING APPENDIX F WARD INFORMATION APPENDIX G RECOMMENDATIONS OF THE MUNICIPAL AUDIT COMMITTEE YEAR APPENDIX H LONG TERM CONTRACTS AND PUBLIC PRIVATE PARTNERSHIPS APPENDIX I MUNICIPAL ENTITY/ SERVICE PROVIDER PERFORMANCE SCHEDULE APPENDIX J DISCLOSURES OF FINANCIAL INTERESTS APPENDIX K: REVENUE COLLECTION PERFORMANCE BY VOTE AND BY SOURCE APPENDIX K (i): REVENUE COLLECTION PERFORMANCE BY VOTE Municipality CONTENTS 4

5 APPENDIX K (ii): REVENUE COLLECTION PERFORMANCE BY SOURCE APPENDIX L: CONDITIONAL GRANTS RECEIVED: EXCLUDING MIG APPENDIX M: CAPITAL EXPENDITURE NEW & UPGRADE/RENEWAL PROGRAMMES APPENDIX M (i): CAPITAL EXPENDITURE - NEW ASSETS PROGRAMME APPENDIX M (ii): CAPITAL EXPENDITURE UPGRADE/RENEWAL PROGRAMME APPENDIX N CAPITAL PROGRAMME BY PROJECT YEAR APPENDIX O CAPITAL PROGRAMME BY PROJECT BY WARD YEAR APPENDIX P SERVICE CONNECTION BACKLOGS AT SCHOOLS AND CLINICS APPENDIX Q SERVICE BACKLOGS EXPERIENCED BY THE COMMUNITY WHERE ANOTHER SPHERE OF GOVERNMENT IS RESPONSIBLE FOR SERVICE PROVISION APPENDIX R DECLARATION OF LOANS AND GRANTS MADE BY THE MUNICIPALITY APPENDIX S NATIONAL AND PROVINCIAL OUTCOMES FOR LOCAL GOVERNMENT VOLUME II: ANNUAL FINANCIAL STATEMENTS VOLUME III: AUDITOR GENERAL REPORT YEAR Municipality CONTENTS 5

6 CHAPTER 1 CHAIRPERSON S FOREWORD AND EXECUTIVE SUMMARY COMPONENT A: CHAIRPERSON S FOREWORD a. Vision: CHAIRPERSON S FOREWORD The vision of the Brakpan Bus Company (BBC) is to provide public transport which is affordable, accessible, efficient, integrated and safe to the community of Brakpan, Springs, Nuffield, Tsakane, Sunward Park, Dalview and Dalpark including the surrounding arrears. The Municipal entity seeks to align its vision to the National Department of Transport one, which is: Transport is the heartbeat of South Africa s growth and social development, there is an inherent mandate to redress the apartheid legacy. b. Key Policy Developments: BBC as an entity of Ekurhuleni Metropolitan Municipality is broadly guided by policy directives enunciated in the Public Transport Strategy and Action Plan 2007, EMM s Modal Integration Strategy and Action Plan 2009, and Ekurhuleni Integrated Rapid Transport Network. The overarching policy mandate emphasizes the provision of an integrated, economically and environmentally sustainable, high quality, affordable, safe, reliable and efficient public transport that is accessible to citizens of Ekurhuleni. There are a number of good reasons for improving the accessibility of public transport services. Improving accessibility is good for business as it improves the perceived quality of services and leads to satisfied customers. It also enables transport services for a wider group of customers at all times of the day and week.. c. Key Service Delivery Improvements: In responding to the transport demands within Ekurhuleni, the entity together with Ekurhuleni Metropolitan Municipality (EMM) and other government stakeholders are also in the process of planning major spatial developments that would direct the future developments of the city, impacting on the spatial distribution of land use, population and employment. This is based on the background that, public transport needs to form the backbone of the urban structure. The Municipal entity together with The Department of Transport Planning and Provision consistently seek to deliver the targets in relation to the EMM GDS 2055, IDP and the SDBIP through various key projects. To ensure that it achieves its objectives and responds to the needs and demands of our communities, the following objectives were developed: 1. Improve operational efficiencies of the buses 2. Safe and reliable bus service Municipality CHAPTER 1 CHAIRPERSON S FOREWORD AND EXECUTIVE SUMMARY

7 3. Improve sustainability of the bus service 4. Clean and effective Administration The Municipal entity is in the process of extending its operations by extending routes to other areas within Ekurhuleni and to also integrate its services and or operations with the Boksburg and Germiston operations. The Municipal entity has started the process of also converting its operating permits to operating licences to be in line with the National Land Transport Act No:5 of 2009, an application has already been submitted to the Gauteng PRE. The greatest challenge is the in-efficiencies that are experienced from the Gauteng PRE. The establishment of MRE s by municipalities would to a great extent assist the in-efficiencies experienced from the Gauteng PRE, as intra municipal operating permits would be authorized at that level. d. Public Participation: During the year, several meetings were held with passenger representatives and passengers respectively, the purpose being to maintain a cordial relationship with the communities we serve, to inform them of fare increases and also the reasons for the temporary withdrawal of a particular service due to either the poor condition of the buses or an unforeseen accident and plans underway to remedy the latter e. Future Actions: The entity is in progress of increasing its revenue generating streams by roping in advertising companies to buy advertising spaces on the buses and also to increase its fleet, firstly to alleviate the over loading challenge and also to extend its routes as alluded to in service delivery improvements. f. Conclusion: With the appointment of the new Board of Directors and the increase in the number of members thereto, the entity now has sub committees which will assist with close oversight in strategic and critical areas where the entity was lacking and has no human resources to execute those functions. (Signed by :) Chairperson of the Board Municipality CHAPTER 1 CHAIRPERSON S FOREWORD AND EXECUTIVE SUMMARY 7

8 COMPONENT B: EXECUTIVE SUMMARY 1.1. ACTING MANAGING DIRECTOR S OVERVIEW The financial year under review was a difficult year for Brakpan Bus Company (BBC) however it remained focused in its vision of providing public transport which is affordable, accessible, efficient, integrated and safe to the commuters of Brakpan, Springs, Nuffield, Tsakane, Sunward Park, Dalview, and Dalpark, including the surrounding areas and placing a focus on service delivery through the Service Delivery Improvement Plan. The entity also seeks to align its vision to that of the Department of Transport nationally which proclaims that, Transport is the heartbeat of South Africa s growth and social development, there is an inherent mandate to redress the apartheid legacy. The transport mandate includes the provision of an integrated, economically and environmentally sustainable, high quality, affordable, safe, reliable and efficient public transport that is accessible to all its citizens irrespective of their social standing. The entity works in cooperation with Ekurhuleni Metropolitan Municipality (EMM) on transport matters and reports as such to EMM Transport Planning and Provision Division and to the Finance Division in terms of set procedures, Generally Recognized Accounting Principles (GRAP) standards, Municipal Finance Management Act (MFMA), Treasury Regulation and other applicable laws. The appointment of the new Board of Directors members and a comprehensive number is seen in a positive light as this will assist to bolster the entity in the challenging areas. This has assisted to form sub committees which were never there in the previous years, for example, the risk subcommittee and the finance and audit committee too. The major risk continues to be on operational issues such as shortage of buses, and challenges reflected by the meagre increase to the tune of 2.2% in the bus subsidy provided by the Department of Roads and Transport (DoRT), and the increase in cost of running the company. Sound internal controls have been developed, anti-corruption and fraud detection policies are in place and these are consistent with the entities policies firstly and to those of EMM. T Municipality CHAPTER 1 CHAIRPERSON S FOREWORD AND EXECUTIVE SUMMARY 8

9 1.2 ENTITIES FUNCTIONS, POPULATION AND ENVIRONMENTAL OVERVIEW INTRODUCTION TO BACKGROUND DATA The entities core function is to provide dedicated bus public transport to the communities of Tsakane, Kwa Thema, Duduza and the surrounding areas. This encompasses transporting workers to and fro their various working areas, and also scholars to their various schools. The special hire service in the form funerals and other transport related functions is also catered for predominantly over the weekends. The entity has been receiving a number of requests to assist with transport needs, especially for funerals from needy families around the areas of the entities operation. The recent customer satisfaction survey study conducted, indicates the challenges that, the unemployment rate has increased immensely, thus figures of commuters has since dropped. T SERVICE DELIVERY OVERVIEW SERVICE DELIVERY INTRODUTION The Municipal entity had strived to deliver, although with challenges. The number of un operated or cancelled trips did increase greatly given the number of buses which are still at the workshop for various mechanical reasons. The introduction of a perpetual cash coupon to decrease the rate of pilfering hasn t yielded positive results in terms of revenue generation; however it has assisted in decreasing the rate of pilfering and its related charges. The customer satisfaction survey results will be studied intensely and will then assist the entity to correct or improve its service delivery strategy. The second phase to evaluate change given the recommendations of the customer satisfaction survey will be done in quarter 3 of the 2015/16 financial year. T FINANCIAL HEALTH OVERVIEW FINANCIAL OVERVIEW The financial position of the Municipal entity is not completely satisfactory, albeit the entity has managed to make a surplus in the current financial year.the shortage of the busses and the temporal suspension of the special hire trips has had a negative impact in the revenue generated. Revenue enhancement plans have been put in place in order for the municipal entity to sustain itself. T Municipality CHAPTER 1 CHAIRPERSON S FOREWORD AND EXECUTIVE SUMMARY 9

10 DETAILS ORIGINAL BUDGET ADJUSTMENT BUDGET ACTUAL INCOME Grants R R Taxes, levis and tariffs R (R ) R other R R R Sub Total R R Expenses R R Surplus R R T Operating ratios Detail % Employee costs R % Repairs and maintenance R % Diesel and fuel R % T COMMENT ON OPERATING RATIOS: The main cost driver of the Municipal entity is employee cost, followed by diesel and fuel, and repairs and maintenance. The total expenditure for the year is R T TOTAL CAPITAL EXPENDITURE 2013/14 TO 2014/15 Details 2012/ / /15. Original budget R R R Adjustment R Actual R26,910 R265,569 R R 400,000 R 350,000 R 300,000 R 250,000 R 200,000 R 150,000 R 100, / / /15. R 50,000 R 0 Original budget Adjustment Actual Municipality CHAPTER 1 CHAIRPERSON S FOREWORD AND EXECUTIVE SUMMARY 10

11 Employee cost 42%. Repair and maintenance 7%. Finance cost and impairment are (2.53%) percentage, which is negative because of reversal of debt impairment. 1.5 ORGANISATIONAL DEVELOPMENT OVERVIEW ORGANISATIONAL DEVELOPMENT PERFORMANCE The business context of the entity offers challenges to which the organisation must respond to. In the last financial year the entity attracted competent and driven talent that will respond to the business challenges without necessarily being confined to their hierarchies. These talents are specifically in the Human Resources, Finance, Marketing and Operations Department. The Human Resources department ensured that the entity delivers on what it is known for with sufficient talent and without unnecessary work stoppages. 1.6 AUDITOR GENERAL REPORT AUDITOR GENERAL REPORT: 2013/14 (2014/15) Auditor General (AG) issued an unqualified audit opinion for 2012/2013 with 17 findings falling in the category of other matters. An OPCA plan was developed to address these findings in order to improve the entities systems and prevent the recurrence going forward. Issues which led to ten (10) of the findings were dealt with successfully and progress has been made in addressing the rest. Having worked on the Auditor General s opinion in 2012/13, the entity managed In 2013/14, to obtain a Clean Audit opinion, which was issued with 15 findings in the management report. 11 of those findings have been resolved, and the rest are in progress. The actual report is contained in Chapter 6 of this report. Municipality CHAPTER 1 CHAIRPERSON S FOREWORD AND EXECUTIVE SUMMARY 11

12 1.7STATUTORY ANNUAL REPORT PROCESS No. 1 Activity Consideration of next financial year s Budget and IDP process plan. Except for the legislative content, the process plan should confirm in-year reporting formats to ensure that reporting and monitoring feeds seamlessly into the Annual Report process at the end of the Budget/IDP implementation period Implementation and monitoring of approved Budget and IDP commences (Inyear financial reporting). 2 3 Finalise the 4th quarter Report for previous financial year 4 Submit draft year 0 Annual Report to Internal Audit and Auditor-General 5 Municipal entities submit draft annual reports to MM Audit/Performance committee considers draft Annual Report of municipality and entities (where relevant) Mayor tables the unaudited Annual Report Municipality submits draft Annual Report including consolidated annual financial statements and performance report to Auditor General Annual Performance Report as submitted to Auditor General to be provided as input to the IDP Analysis Phase Auditor General audits Annual Report including consolidated Annual Financial Statements and Performance data 12 Municipalities receive and start to address the Auditor General s comments 13 Mayor tables Annual Report and audited Financial Statements to Council complete with the Auditor- General s Report 14 Audited Annual Report is made public and representation is invited 15 Oversight Committee assesses Annual Report 16 Council adopts Oversight report 17 Oversight report is made public 18 Oversight report is submitted to relevant provincial councils 19 Commencement of draft Budget/ IDP finalisation for next financial year. Annual Report and Oversight Reports to be used as input Timeframe July August September - October November December January Municipality CHAPTER 1 CHAIRPERSON S FOREWORD AND EXECUTIVE SUMMARY 12

13 COMMENT ON THE ANNUAL REPORT PROCESS: The Municipal entity has improved on compliance to MFMA Circular No 63 on an incremental basis. The Annual Report will therefore be tabled to the relevant EMM department with apposite authority to review the report on whether it succintly follows the broard guidelines of the template provided by National Treasury (aptly taking into account the unique nature of the entity and in the main, whether the quality of information provided herein provides a genuine picture of the state of the entity. Municipality CHAPTER 1 CHAIRPERSON S FOREWORD AND EXECUTIVE SUMMARY 13

14 CHAPTER 2 GOVERNANCE INTRODUCTION TO GOVERNANCE BBC operates as a municipal entity established in terms of the Municipal System Act 32 of 2000 (as amended) and the Municipal Finance Management Act. In this regard, the parent municipality, EMM is the 100% shareholder tasked with amongst others, appointing the Board of Directors (BoD), which body provides strategic leadership based on principles contained in the Companies Act, King III on corporate governance and other applicable prescripts. EMM as the sole shareholder continues to provide oversight assistance to the Board to fulfill its mandate through the Department of Transport Planning and Provision as headed at a political level by the Member of the Mayor Committee (MMC) responsible for Transport and at administrative and operational level by the HOD Transport. COMPONENT A: POLITICAL AND ADMINISTRATIVE GOVERNANCE INTRODUCTION TO POLITICAL AND ADMINISTRATIVE GOVERNANCE The mandate of Municipal entity finds expression on the principles championed by the National Government and found in the operational and development objectives of the parent municipality. These find effects in the IDP, SDBIP, budgets, and adjustment budgets. 2.1 POLITICAL GOVERNANCE INTRODUCTION TO POLITICAL GOVERNANCE As an entity operating under EMM and also as part of various other entities tasked with basic service delivery issues, particularly this entity is mandated to provide safe and reliable commuter bus service transport to the communities situated on the eastern part of Ekurhuleni. In this regard, the parent municipality (EMM) through its Entities Framework appoints and capacitates Board of Directors (BoD) to enable them to fulfil their mandate. It is incumbent upon the parent municipality to ensure that the entity s Board of Directors has the requisite range of expertise to effectively manage and guide the activities of the entity. This will ensure that, the oversight role bestowed upon them is carried to the parent municipality s satisfaction. Municipality CHAPTER 2 GOVERNANCE

15 BOARD OF DIRECTORS AND ITS SUB- COMMITTTE S BOARD OF DIRECTORS Name of Director Designation Duration Mr T. Munyai Chairperson Non-Executive director 01 May 2015 to date Mr D.R Sibanda Mr H van Laar Mr M.J Gololo Ms N. Ntanjana Mr M.Koetle Mr Z.Letjane Mr M. Mdingi Non-Executive director Non-Executive director Non-Executive director Non-Executive director Non-Executive director Non-Executive director Non-Executive director 01 May 2015 to date 01 May 2015 to date 01 May 2015 to date 01 May 2015 to date 01 May 2015 to date 01 May 2015 to date 01 May 2015 to date FINANCE AND AUDIT COMMITTEE Mr M.J. Gololo Chairperson Ms N. Ntanjana Mr D.R. Sibanda RISK MANAGEMENT COMMITTEE Mr H. van Laar - Chairperson Mr M Mdingi Mr Z. Letjane, REMUNERATION AND ETHICS COMMITTEE Mr Z.Letjane - Chairperson Mr M.Koetle Mr D.R. Sibanda Municipality CHAPTER 2 GOVERNANCE 15

16 OPERATIONS, HUMAN RESOURCE AND ICT COMMITTEE Mr M. Koetle - Chairperson Mr H. van Laar Mr M.J. Gololo 2.2 ADMINISTRATIVE GOVERNANCE INTRODUCTION TO ADMINISTRATIVE GOVERNANCE Board of Directors provides effective leadership to the entity on principled foundation, and the entity subscribes to the governance principles of Code of Governance Principles for South Africa ("King III"), and other applicable laws and regulations. It further entrenches and strengthens recommended practices in its governance structures, systems, processes and procedures. The Board charter sets out the board s role and responsibilities as well as the requirements for its composition and meeting procedures. The Board and Executives recognize and are committed to the principles of openness, integrity, and accountability as are commended by King III. Through this process, the shareholder and other stakeholders derive assurance that the entity is ethically managed. The new Board of Directors (BoD) were appointment effectively from 01 May 2015 to 30 April The first board meeting was held on the 19 th June The municipal entity is in a precarious financial position due to operational losses over the past three (3) year period. In this regard one of Board s mandates given by the shareholder is that it (the shareholder) expects the entity to be selfsustainable. The Board is mandated to overhaul BBC in terms of governance arrangements, the importance of innovatively developing a strategy for revenue generation beyond the current methods, utilization of available research which is explicit on challenges faced by BBC, engaging on new research to help turn the company around.. Director s responsibility in relation to internal controls and financial controls The Board charter clearly sets out the board s role and responsibilities as well as the requirements for its composition and meeting procedures and remains accountable to Ekurhuleni Metropolitan Municipality. The Board acknowledges that it is ultimately responsible for the system of internal and financial controls established by the entity and places considerable importance on maintaining strong control environment. To enable the Board to meets these responsibilities. The Boards set standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. These controls are monitored throughout i.e. financial report, operations report, human resources report and other reports are submitted by Management to the Board every quarter to be reviewed. Board consists of mainly non-executive Director which they contribute an independent view to the entity matters. Given the boards oversight it has an unlimited access to all company information including compliance with company rules and regulations and best governance. The Acting Managing Director is responsible for the day to day management and administration and her entire staff led by the Executive Management. The Managing Director reports to the Board and is responsible for the implementation of company policy, the organizational strategy as directed by the Municipality CHAPTER 2 GOVERNANCE 16

17 Board of Directors. Regarding the financial report (annual financial statement), the Board has an opinion, based on the information and explanations given by management. Executive directors Name of Director Designation Duration Ms P.N Zondo Acting Managing Director - Non-Executive director 23 July 2013 to date COMPONENT B: INTERGOVERNMENTAL RELATIONS INTRODUCTION TO CO-OPERATIVE GOVERNANCE AND INTERGOVERNMENTAL RELATIONS Intergovernmental relations are mainly carried out by EMM at municipal level particularly through the Finance and Transport Planning and Provision Departments, which liaises directly with the entity as deemed appropriate. At Provincial level, a relationship is fostered with the Gauteng Department of Roads and Transport, given that the entity has an interim contract for bus operations, which the entity receives a subsidy towards this in the form of number of kilometres operated. 2.3 INTERGOVERNMENTAL RELATIONS PROVINCIAL INTERGOVERNMENTAL STRUCTURE The Municipal entity has an interim contract with the Gauteng Department of Roads and Transport (DRoT) for the provision of public bus transport services for which it receives a subsidy on a monthly basis. The prior year contract ended on the 31 st March 2015 and there is a new contract for coming three years, ending March COMPONENT C: PUBLIC ACCOUNTABILITY AND PARTICIPATION OVERVIEW OF PUBLIC ACCOUNTABILITY AND PARTICIPATION As an operation whose entire existence depends on the public for existence, BBC places high commitment to public participation and involvement of communities it provides services to. Customer relationship management has become a yardstick to gauge performance of entity. There have been initiatives aimed at improving feedback to services the entity renders in order to help the entity to improve on service provision. A customer satisfaction survey was conducted during the year under review. This will serve to identify the gaps and improve on service delivery. The overarching issues arising out of the review include, the timeous arrival of buses, and bus drivers conduct during operations. A 24 hour complaints and feedback line administered by a service provider has been established. A bulk SMS communication platform has been created too, to inform commuters Municipality CHAPTER 2 GOVERNANCE 17

18 about any challenges during the operations period. Plans are afoot to introduce an in-transit state-ofthe art communication system to inform passengers about new developments. The company has continued with its culture of public consultative meetings to enable commuters to voice their satisfaction or otherwise about the service provided. The most structured and sustainable form of engagement with the community is conducted through a customer liaison committee which meets with BBC representatives regularly and later extended to the communities. 2.4 PUBLIC MEETINGS COMMUNICATION, PARTICIPATION AND FORUMS During the year, several meetings were held with passenger representatives and passengers respectively, the purpose being to maintain a cordial relationship with the communities the entity serves, to inform them of fare increases and also the reasons for the temporary withdrawal of a particular service due to either the poor condition of the buses or an unforeseen accident and plans underway to remedy the latter. Public Meetings Number of Number of Number of Issue Date of Participating Participating Community Addressed Dates and Manner of Nature and Purpose of Meeting Events Municipality Municipality Members (Yes/No) Councillors Administrators Attending Feedback given to the Community Liaison Committee Meeting General Meeting 05 Feb Yes - 11 Mar Yes - 31 Mar Yes - 08 Apr Yes - 13 May Yes - 10 Jun Yes - 15 Jul Yes - 19 Apr Yes COMMENT ON THE EFFECTIVENESS OF THE PUBLIC MEETINGS HELD: The meetings have been effective and have alerted the entity to the challenges of the commuters. Consistent unavailability of our service has been communicated as the apex concern of the commuters. The primary reason for disturbances in service provision has been the poor turnaround time in the repair of our buses in the workshop; this major setback is in the process of being resolved. Maintenance and repairs agreement is in the process of being confirmed between the fleet department of the parent municipality and the entity. The meeting of the 31 st did take place however no attendance register was signed. Municipality CHAPTER 2 GOVERNANCE 18

19 2.5 IDP PARTICIPATION AND ALIGNMENT IDP Participation and Alignment Criteria* Yes/No Does the entity have impact, outcome, input, output indicators? Does the IDP have priorities, objectives, KPIs, development strategies? Does the IDP have multi-year targets? Are the above aligned and can they calculate into a score? Does the budget align directly to the KPIs in the strategic plan? Do the IDP KPIs align to the Section 57 Managers Do the IDP KPIs lead to functional area KPIs as per the SDBIP? Do the IDP KPIs align with the provincial KPIs on the 12 Outcomes Were the indicators communicated to the public? Were the four quarter aligned reports submitted within stipulated time frames? Yes Yes Yes Yes No N/A Yes Yes Yes COMPONENT D: CORPORATE GOVERNANCE OVERVIEW OF CORPORATE GOVERNANCE BBC seeks to align its vision to the National Department of Transport one, which is: Transport is the heartbeat of South Africa s growth and social development, there is an inherent mandate to redress the apartheid legacy. The transport mandate includes the provision of an integrated, economically and environmentally sustainable, high quality, affordable, safe, reliable and efficient public transport that is accessible to all its citizens irrespective of their social standing. The Company s core function is entrenched in a number of legislations, namely; The National Land Transport Act (NLTA) 5, of 2009, wherein the routes operated and the mode used are authorized by the Act; The Batho Pele principles, which expects us to put the customer first, in this instance putting commuters first; The National Road Traffic Act No. 93 of 1996, which regulates the number of commuters transported, which also includes issuing of road worthy certificates; Administration Adjudication of Road Traffic Offences Act No. 46 of 1998, which administers none compliance with traffic regulations. Municipality CHAPTER 2 GOVERNANCE 19

20 The key stakeholders are the Ekurhuleni Community at large, the Commuters, and the Businesses that are operating in Ekurhuleni. It is to be noted that for the entity to be successful in achieving it s mandate, is to be related and working closely with the Shareholder through the Department of Transport Planning and Provision. The Board of Directors gives effective direction of the entity with the mandate established by the Municipal entity. 2.6 RISK MANAGEMENT The Accounting Officer which is Managing Director is committed to the municipal entity s process of risk management that is aligned to the principles of good corporate governance, as supported by Municipal Finance Management Act (MFMA),section 95 {c} (i) A risk assessment exercise was carried out and the audit processes tailored accordingly. The major risk continues to be under capacity of the fleet of buses, under capitalization, underpayment and receipt of the DoRT subsidy, and cost increases. The annual Risk Assessment exercise which the entity undertakes is an appropriate tool which the management utilises to effectively mitigate the identified areas of concern in terms of risk. Municipal entity s risks are aligned to the entity s SDBIP objectives and major risks identified: are as follows Road accidents Financial sustainability Disruption in bus services (unreliability of services) Revenue leakage/loss Increase in fuel and oil costs 2.7 ANTI-CORRUPTION AND FRAUD An organization operating in the environment such as the Municipal entity is prone to the ugly and unfortunate reality of corruption and fraudulent practices. However, in general, Municipal entity s internal controls are sound; for example, there are anti-corruption and fraud detection policies in place. To date, a number of bus drivers have been charged with misconduct and subsequently expelled as a result of fraudulent practices and corruption. An important mechanism which might assign the Municipal entity to tighten its responses on corruption and fraud can also involve conscientising the public to anonymously report acts of corruption through whistle blowing, training of all staff on ethical conduct by engaging bodies such as Ethics South Africa etc. These and many other methods are to be explored in the response to this quagmire as it continues to drain BBC of its dwindling revenue and assets As a starting point to mitigate fraud, a cash card has been introduced, which then eliminates the collection of cash by the bus drivers. Municipality CHAPTER 2 GOVERNANCE 20

21 2.8 SUPPLY CHAIN MANAGEMENT OVERVIEW SUPPLY CHAIN MANAGEMENT The Municipal entity has an SCM systems which comply with general legislative directives governing entities of its stature, namely, (MFMA, National Treasury regulations and the Municipal Supply Chain Management Regulations) and it s own internal Supply Chain Management Policy, Whilst the practices in terms of SCM seek to assist the company to improve its governance processes and gain best value in services procured, they also embrace national directives on key themes such as Preferential Procurement Policy Framework Act (PPPFA) and Broad Based Black Economic Empowerment Act (BBBEE) and its resultant scorecards. The entity s SCM policies complies with Section 112 of the MFMA, and also provides for the exclusion of awards to persons in the service of the state subject to the exemptions and regulations issued by National Treasury from time to time. To further bolster our efforts and improve our capacity on SCM governance, evidence narrates a promising turnaround at BBC. Following the permanent appointment of a Supply Chain Clerk there has been much improvement on this front, i.e. formulation of the check list to monitor compliance as stipulated in Circular 40, the irregular expenditure and deviations are reported on a quarterly basis and mitigating controls on the risk register will henceforth be quarterly reported BY-LAWS No new by laws were introduced in the period under review COMMENT ON BY-LAWS: No new by laws were introduced in the period under review WEBSITES Documents published on Brakpan Bus Company Website Yes / No Published Date Current annual and adjustments budgets and all budget-related documents All current budget-related policies The previous annual report The annual report 2012/2013 published / to be published All supply chain management contract as tabled, year 2013/2014 All quarterly reports tabled in the council in terms of section 52(d) during 2012/2013 No No No No Yes No Municipality CHAPTER 2 GOVERNANCE 21

22 COMMENT ENTITY WEBSITE CONTENT AND ACCESS The entity will strive to display all annual and adjustments budgets and all budget-related documents, this will also include quarterly and annual reports on its website going forward, however, it should be noted that when all reports are consolidated with the one of the parent municipality are displayed at the Municipal s website. Supply management contracts are displayed on the website 2.11 PUBLIC SATISFACTION ON ENTITIES SERVICES PUBLIC SATISFCATION LEVELS As part of BBC s engagement with the community it serves and understanding the quality of service to them, the Board took a resolution to appoint a service provider to undertake a customer satisfaction survey. Part of the key terms of reference for a service provider appointed is to test on the issues such as the efficiency of the services, the entity provides, the nature of relations with the Client Liaison Committee, the extent of satisfaction on as to whether service rendered correlates with fares paid, state of the fleet, conduct/ behavior of bus drivers and the inspectors etc. The result of this survey will thus become BBC s yardstick for service improvement Satisfaction surveys Undertaken during: Year 1 Subject matter of Survey Survey Method Survey date No. of people included in survey Survey results indicating satisfaction or better (%) Overall Satisfaction with: (a) Brakpan Bus Company service Research on: a) Causes of satisfaction/disatisfacti on b) Areas where the bus service is needed Interviews 7 April 26 June 2015 Interviews Interviews 1700 people Shortage of buses/ c) Affordability of service Interviews 52% not affordable d) Customer service Interviews 88% satisfied T Municipality CHAPTER 2 GOVERNANCE 22

23 Comment on Satisfaction Levels The research concluded that: - The shortage of buses be addressed - A formal complaint line (telephone) be introduced and a system of monitoring commuter complaints be implemented - The bus drivers and ticket inspectors receive training in customer care and Batho-Pele policy - The number of bus stops be increased in order to improve accessibility - Quality control system to monitor the cleanliness of the buses be introduced Municipality CHAPTER 2 GOVERNANCE 23

24 CHAPTER 3 SERVICE DELIVERY PERFORMANCE (PERFORMANCE REPORT PART I) COMPONENT A: INTRODUCTION INTRODUCTION The core business of Brakpan Bus Company is embodied in its vision of providing public transport which is affordable, accessible, efficient, intergrated and safe to the commuters of Brakpan, Springs, Nuffield, Tsakane, Sunward Park, Dalview, and Dalpark, including the surrounding areas. The Company seeks to align its vision to the National Department of Transport one, which is: Transport is the heartbeat of South Africa s growth and social development, there is an inherent mandate to redress the apartheid legacy. The transport mandate includes the provision of an integrated, economically and environmentally sustainable, high quality, affordable, safe, reliable and efficient public transport that is accessible to all its citizens irrespective of their social standing. The Company s core function is entrenched in a number of legislations, namely; The National Land Transport Act (NLTA) 5, of 2009, wherein the routes operated and the mode used are authorized by the Act; The Batho Pele principles, which expects us to put the customer first, in this instance putting commuters first; The National Road Traffic Act No. 93 of 1996, which regulates the number of commuters transported, which also includes issuing of road worthy certificates; Administration Adjudication of Road Traffic Offences Act No. 46 of 1998, which administers none compliance with traffic regulations. The key stakeholders are the Ekurhuleni Community at large, the Commuters, and the Businesses that are operating in Ekurhuleni. It is to be noted that for us to be successful in achieving our mandate as a Company, we are related and working closely with the Shareholder through the Department of Transport Planning and Provision. There are other Departments without whom certain things cannot be achieved, for example, the finance department, with whom on annual basis we consolidate our financial statements and annual reports for presentation to the Auditor General. Municipality CHAPTER 3 SERVICE DELIVERY PERFORMANCE (PERFORMANCE REPORT PART I)

25 Brakpan Bus Company Data 2013/ / /16 Details Actual No. Estimate No. Actual No. Estimate No. Passenger journeys Seats available for all journeys 1,350,159 1,586,240 1,283,058 1,425,620 Average Unused Bus Capacity for all journeys 5% 5% 3,3% 3% Size of bus fleet at year end Average number of Buses off the road at any one time 6% 4% 2,6% 2% T T Municipality CHAPTER 3 SERVICE DELIVERY PERFORMANCE (PERFORMANCE REPORT PART I) 25

26 T Municipality CHAPTER 3 SERVICE DELIVERY PERFORMANCE (PERFORMANCE REPORT PART I) 26

27 COMMENT ON THE PERFORMANCE OF TRANSPORT OVERALL: The operation result of the company is considered unsatisfactory since the company revenue is below the budget by 10%. The Entity has contracted with the Department of Transport (DoT) for the provision of transport services for which it receives a subsidy on a monthly basis. The current contract end 31 March According to the company it will receive less than it is entitled to in the new financial year. T FINANCIALSERVICES INTRODUCTION TO FINANCIAL SERVICES The entity is tasked with provision of financial service in an accountable, effective and transparent manner through service excellence T The entity has the following components Income Expenditure Financial control Budget and Financial Management \ Administration Total Revenue Revenue of BBC for the period under review consist of Rendering of bus services of R8.5 million,bus hire of R3.2 million other income received of R26,468, TETA (leaner-ship) of R121,305, interest received (ABSA call account ) of R45,703 and Subsidy from DORT of R11.4 Million. Operational expenditure Municipality CHAPTER 3 SERVICE DELIVERY PERFORMANCE (PERFORMANCE REPORT PART I) 27

28 Total revenue Employee related costs Depreciation and amortisation Lease rentals on operating lease General Expenses 38% Director's emoluments Finance costs Repairs and maintenance 43% 6% 7% 1% 1% 4% The net surpluses achieved are as follows: Profit/ (Loss) before tax CASH FLOW (decrease in cash flow) 2014/ ,445, /2014 (R ) (R ) 3.26 HUMAN RESOURCE MANAGEMENT AND DEVELOPMENT INTRODUCTION TO HUMAN RESOURCE SERVICES The departmental provides quality driven Human Capital strategies and support for BBC.A Human Resource Manager has been appointed during the year; this appointment will assist in improving the working relations. BBC is going through a transition and is in the process of developing, reviewing and amending all HR policies; most of the proposed policies are an outcome of Union and Management consultations. T GENERAL INFORMATION Performance of human resource services overall: Departments Employees Brakpan Bus Company 2013/ /15 Employee Posts No Employee Vacancies N0 No (full time Vacancies as a % of total posts equivalent) MD s Office % OPS Office % Municipality CHAPTER 3 SERVICE DELIVERY PERFORMANCE (PERFORMANCE REPORT PART I) 28

29 Finance % Human Resources % General & Garden Services % T Financial Performance 2013/2014: Human Resource Management 2012/ /2014 Details Actual Budget Adjusted Actual Variance budget Employee costs 11,253, T INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) SERVICES The IT service i.e. internet access, s, telephone and intranet services are provided by EMM. The application systems which are in place namely pastel for monthly management accounts, Payday for employee costs, Wayfare for the bus operation, ticket sales and to generate coupons and for subsidy claims. These systems have a great impact for smooth running of the company operations, however, the Wayfare machine has depreciated to a zero value T LEGAL, RISK MANAGEMENT AND PROCUREMENT SERVICES The company had a number of disciplinary matters which resulted in the dismissal of some employees Since the appointment of Human Resource Manager, the company was able to attend to most of the cases and also strengthen employee and employer relations. There is also improvement in the supply chain department as a result of employing Supply chain clerk in the prior years. SCM regulations are followed e.g. obtaining three quotation and tax clearance certificates from the suppliers, etc. T Municipality CHAPTER 3 SERVICE DELIVERY PERFORMANCE (PERFORMANCE REPORT PART I) 29

30 CHAPTER 4 ORGANISATIONAL DEVELOPMENT PERFORMANCE (PERFORMANCE REPORT PART II) INTRODUCTION TO THE ENTITY PERSONNEL The business context of BBC offers challenges to which the organisation is striving at all costs to respond to, which has necessitated getting competent personnel to promote the Entity s vision. The entity managed to attract competent and driven talent that will respond to the business challenges without necessarily being confined to their hierarchies. These talents are specifically in the Human Resources, Finance, Marketing and Operations Department. HR ensured that BBC delivers on what it is known for with sufficient talent and without unnecessary work stoppages. COMPONENT A: INTRODUCTION TO THE ENTITY PERSONNEL 4.1 EMPLOYEE TOTALS, TURNOVER AND VACANCIES Employees Brakpan Bus Company 2013/ /15 Departments Employee No Posts No Employee No Vacancies (full time equivalent) Vacancies as a % of total posts MD s Office % OPS Office % Finance % Human Resources General & Garden Services % % Total % Municipality CHAPTER 4 ORGANISATIONAL DEVELOPMENT PERFORMANCE

31 Designation *Total Approved Posts Vacancy Rate: 2014/2015 *Vacancies (Total time that vacancies exist using fulltime equivalents) *Vacancies (as a proportion of total posts in each category) No. No. No. MD s Office % Operations Office % Finance Office 9 0 0% HR Office 2 0 0% General Workers & Garden Workers % Total % T Turn-over Rate Total Termination during the Turn-over Rate Details Appointments as Financial Year of beginning of Financial Year No. No. % 2012/ % 2013/ % 2014/ % T COMMENT ON VACANCIES AND TURNOVER: The true reflection picture of our staff turnover is 3.57% in the financial year 2013/14. The rest of the terminations were dismissals and death. The 3.57% indicates growth opportunities as reasons for leaving Municipality (PERFORMANCE REPORT PART II) 31

32 COMPONENT B: MANAGING THE ENTITY WORKFORCE INTRODUCTION TO ENTITY WORKFORCE MANAGEMENT Workforce Management aligns to the SARPBAC Agreement directives, board approved policies, procedures and resolutions. 4.2 POLICIES No Name of policy Completed (%) Adopted by the Board 1. Code of conduct 100% Yes 2. Performance Management 100% Yes 3. Recruitment & selection 100% Yes 4. Training & development 100% Yes 5. Occupational health & safety 100% Yes 6. Annual Leave 100% Yes 7. Salaries 100% Yes 8. Overtime 100% Yes 9. Uniform 100% Yes 10. Allocation of responsibilities 100% Yes 11. Certificate of service 100% Yes 12. Abscondment policy 100% Yes 13. Learner-ship policy 100% Yes 14. Incapacity policy 100% Yes 15. Policy on HIVAIDS at workplace 100% Yes 16. Leave 100% Yes 17. Induction orientation 100% Yes Municipality (PERFORMANCE REPORT PART II) 32

33 COMMENT ON WORKFORCE POLICY DEVELOPMENT; BBC is going through a transition and is in the process of developing, reviewing and amending all HR policies; most of the proposed policies are an outcome of Union and Management consultations 4.3 INJURIES, SICKNESS AND SUSPENSIONS INJURIES: Number and Cost of Injuries on Duty Type of injury Injury Leave Taken Days No. Required basic medical attention only Employees using injury leave Proportion employees using sick leave % Average Injury Leave per employee Days Total Estimated cost R % Temporal total % disablement Permanent disablement Fatal Total % Salary band Number of days and Cost of Sick Leave (excluding injuries on duty) Total Proportion Employees Total Average sick Sick of sick using sick employees leave per leave leave leave in post Employees Days without medical certificate Days Estimated cost % No. No. R 000 Lower skilled 93 5% Skilled 213 8% Highly Skilled 29 3% Senior 16 2% management Total % T Municipality (PERFORMANCE REPORT PART II) 33

34 Average Number of Days Sick Leave ( excludingiod) Series Lower Skilled Skilled Highly Skilled Senior Managers T COMMENT ON INJURY AND SICK LEAVE Policies have been developed, to manage injury on duty and another policy is at the draft stage that would manage the high rate of absenteeism due to illness Position Bus Operator Nature of Alleged Misconduct Threatening to Assault & displaying a fire arm Number and Period of Suspensions Date of Suspension 20 February 2015 Details of Disciplinary Action taken or status of case and Reason why not Finalised Formal Disciplinary Date Finalised 19 March 2015 Cashier Fraud 17 April 2015 Formal Disciplinary 16 July 2015 T Municipality (PERFORMANCE REPORT PART II) 34

35 Disciplinary Action Taken on Cases of Financial Misconduct Position Nature of Alleged Disciplinary Action taken Date Finalised Misconduct and Rand value of any loss to BBC Cashier Fraud (R1.1m) Formal Disciplinary 16 July 2015 T COMMENT ON SUSPENSIONS AND CASES OF FINANCIAL MISCONDUCT There are no suspensions that have lasted more than 4 months 4.4 PERFORMANCE REWARDS Performance Rewards By Gender Beneficiary profile Designations Gender Total number of employees in group Number of beneficiaries Expenditure on rewards year 1 R 000 Lower Skilled Female Male Skilled Female Male High Skilled Female Male Senior Female Management Male Total T 4.4. Proportion of beneficiaries within group % T There were no performance rewards in the year 2014/15 Financial year T Municipality (PERFORMANCE REPORT PART II) 35

36 COMPONENT C: CAPACITATING THE ENTITY WORKFORCE INTRODUCTION TO WORKFORCE CAPACITY DEVELOPMENT Brakpan Bus Company encourages skills development of its employee it engaged even TETA, Following are the programmes.offered and below are those offered by TETA for skills development training: - How to conduct disciplinary enquiry for Managers and Shop Stewards. - How to investigate and prepare for a winning case. - Supply Chain Management training TETA: SKILLS DEVELOPMENT: Brakpan Bus Company entered into agreement with Transport Education and Training Authority (TETA) to conduct training in term s of skills development act 97 0f Following are current Learning Programs: 4.5 SKILLS DEVELOPMENT AND TRAINING Municipality (PERFORMANCE REPORT PART II) 36

37 Description A. Total number of officials employed by BBC (regulation 14(4)(a) and (c)) Financial Competency Development: Progress Report B. Consolidated; Consolidated: Consolidated: Total Total of A and competency Total number number of B assessments of officials officials completed for whose employed A and B performance by (regulation agreements municipal 14(4)(b) and (d) comply with entities regulation 16 (regulation (Regulation 14(4)(a) 14(4)(f) and (c)) Financial Officials Accounting officer Chief Financial Officer Senior managers Any other financial officials Supply Chain Managemen t Officials Heads of Supply Chain units Supply chain managemen t senior managers Total Consolidated: Total number of officials that meet prescribed competency levels (regulation 14(4)(e)) T Municipality (PERFORMANCE REPORT PART II) 37

38 COMMENT ON SKILLS DEVELOPMENT AND RELATED EXPENDITURE AND ON FINANCIAL COMPETENCY REGULATIONS There is a training plan in place which seeks to address specifically the skills gaps and other statutory regulation training. On the financial competency regulations, two top managers have started with their MFMA training, while the other two are fully competent and qualified. T COMPONENT D: MANAGING THE WORKFORCE EXPENDITURE INTRODUCTION WORKFORCE EXPENDITURE Human Resource Manager is reviewing all the policies including employee capacity issues of the company relating to human resource department, this will also assist to identify any gaps and discrepancies on issues \ Municipality (PERFORMANCE REPORT PART II) 38

39 4.6 EMPLOYEE EXPENDITURE T COMMENT ON WORKFORCE EXPENDITURE The training expenditure was in line with the budget, some of the training expenditure came from SETA. Number of employees whose salaries were increased due to their positions being upgraded Beneficiaries Gender Total Female 0 Lower Skilled Male 0 Female 0 Skilled Male 0 Female 0 High Skilled Male 0 Female 0 Senior Management Male 0 T Municipality (PERFORMANCE REPORT PART II) 39

40 Employees whose salary levels exceed the grade determined by job evaluation Occupation Number of Job Evaluation Remuneration Level Reason for deviation Employees Level Bus Operators They were employed before the positions were graded. General Workers They were employed before the positions were graded. T COMMENT ON UPGRADED POSTS AND THOSE THAT RE AT VARIANCE WITH NORMAL PRACTICE The employees who are earning more than the minimum wage were employed before the year 2004, this was before the company became the member of SARPBAC which regulates all conditions of employment. It is for this reason that a total of 29 employees earn above their grades due to unregulated increases over the years T None DISCLOSURE OF FINANCIAL INTERESTS T Municipality (PERFORMANCE REPORT PART II) 40

41 CHAPTER 5 FINANCIAL PERFORMANCE INTRODUCTION INTRODUCTION Chapter five contains information regarding financial performance and highlights accomplishments. This chapter comprises of three components: specific Component A : Statement of financial performance Component B : Spending against Capital Budget Component C : other financial matters COMMENT ON FINANCIAL PERFORMANCE COMPONENT A: STATEMENT OF FINANCIAL PERFORMANCE INTRODUCTION TO FINANCIAL STATEMENTS The budgeted income is R31m and actual is R28m deviation is R2,9m. The budgeted expenses is R30,7m and actual is 26,6m deviation is R4m The CAPEX budget is R and actual is R deviation is R T Municipality CHAPTER 5 FINANCIAL PERFORMANCE

42 5.1 STATEMENTOF FINANCIAL PERFORMANCE T Municipality CHAPTER 5 FINANCIAL PERFORMANCE

43 T COMMENT TO FINANCIAL STATEMENTS Next surplus of the entity was R before taxation and R after taxation. However actual performance was 10% below the annual budget. Main reason the entity operated below the budget is the shortage of buses due to workshop turn around. T Municipality CHAPTER 5 FINANCIAL PERFORMANCE 43

44 5.2 GRANTS Grants from Ekurhuleni Metropolitan Municipality 2013/ / T COMMENT ON GRANT: Until the last day of the financial year BBC was still waiting for the R5 million grant to be deposited as it was accrued throughout the financial year. 5.3 ASSET MANAGEMENT. INTRODUCTION TO ASSET MANAGEMENT The estimated useful lives and remaining useful lives and remaining useful lives of all assets are reviewed at each reporting date. Taking into account and changes in asset lifecycle strategies described in the entity asset management plans. The availability of funding to implement life cycle strategies change in operating conditions and other relevant factors such as the availability comparative data. Municipality CHAPTER 5 FINANCIAL PERFORMANCE

45 COMMENTS ON ASSET MANAGEMENT BBC do not have big projects only acquisition of one vehicle and one mobile office and cost for both amount to R T Municipality CHAPTER 5 FINANCIAL PERFORMANCE

46 Repairs and Maintenance Expenditure 2014/15 Original Adjustment Actual Budget amount budget budget Repairs and maintenance R R R %. COMMENT ON REPAIR AND MAINTENANCE EXPENDITURE; Repairs and Maintenance total was R most of it was repairs of buses, 10 of those are owned by BBC and 30 are leased from EMM. 5.4 FINANCIAL RATIOS BASED ON THE KEY PERFORMANCE INDICATORS T Liquidity ratio helps you determine if you have enough capital to meet financial obligations. A general rule of thumb is to have a current ratio of 2.0. Although this will vary by business and industry, a number above two may indicate a poor use of capital. A current ratio under two may indicate an inability to pay current financial obligations with a measure of safety. Municipality CHAPTER 5 FINANCIAL PERFORMANCE

47 T Cost Coverage - measures a firm ability to pay its expenditure. The higher the ratio indicates a healthier and less risky business. T Municipality CHAPTER 5 FINANCIAL PERFORMANCE

48 T T Municipality CHAPTER 5 FINANCIAL PERFORMANCE

49 T T Employee cost - measures what portion of the revenue was spent on paying employee cost. Municipality CHAPTER 5 FINANCIAL PERFORMANCE

50 T Repairs and maintenance- this represents the proportion of operating expenditure spent. COMMENT ON FINANCIAL RATIOS Although there was some improvement to the ratios compared to previous years however there is indication that BBC is unable to pay its creditors on time, the company is making a loss and repairs and maintenance have improved over the years because of the new buses purchased. COMPONENT B: SPENDING AGAINST CAPITAL BUDGET INTRODUCTION TO SPENDING AGAINST CAPITAL BUDGET BBC had no construction projects in the period under review but however there was purchased of fixed assets amounting to R Municipality CHAPTER 5 FINANCIAL PERFORMANCE

51 5.5 CAPITAL EXPENDITURE Brakpan Bus Company financials are attached as VOLUME II: T SOURCES OF FINANCE Municipality CHAPTER 5 FINANCIAL PERFORMANCE

52 COMMENT ON SOURCE OF FINDING In house finance T CAPITAL SPENDING ON 5 LARGEST PROJECTS None 5.8 BASIC SERVICE AND INFRASTRUCTURE BACKLOCKG - OVERVIEW None COMPONENT C: CASH FLOW MANAGEMENT AND INVESTMENTS INTRODUCTION TO CASH FLOW MANAGEMENT AND INVESTMENTS The capital repayment was R3.2m. At the end of financial year the entity had only R2.9m long term commitment that is payable within 12 months and no other long term commitments. T 5.9 Municipality CHAPTER 5 FINANCIAL PERFORMANCE 52

53 5.9 CASH FLOW T5.9.1 Municipality CHAPTER 5 FINANCIAL PERFORMANCE

54 COMMENT ON CASH FLOW OUTCOMES: BBC has improved its cash flow. The increase in cash and cash equivalents was R3.4m. However the municipality was not paid all the money owed but it was accrued BORROWING AND INVESTMENTS INTRODUCTION TO BORROWING AND INVESTMENTS The entity has a long term loan from Nedbank which carries interest at prime less 1.5 basis points; this loan was for the acquisition of 10 buses. Brakpan Bus Company has a call account with ABSA in money market instruments. Municipality CHAPTER 5 FINANCIAL PERFORMANCE 54

55 T COMMENT ON BORROWING AND INVESTMENTS: BBC does not have investments but its long term loan taken five years ago of R2.9m is still active and will be paid within 12 months, the cost of the loan is prime less 1.5%. COMPONENT D: OTHER FINANCIAL MATTERS 5.12 SUPPLY CHAIN MANAGEMENT The entity has Supply Chain Management (SCM) policy as aligned and required by MFMA and the National Treasury Municipal Chain Management Regulations, SCM department is under control. Supply Chain Clerk has been permanently appointed to follow SCM process e.g. requesting quotation, tax clearance, etc as requested by the SCM Check list. Municipality CHAPTER 5 FINANCIAL PERFORMANCE

56 5.13 GRAP COMPLIANCE BBC is in compliance with GRAP (General Recognized Accounting Principally Standards. The annual financial statements have been prepared in accordance with the Standards of Generally Recognized Accounting Practices (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. The 2014/15 annual financial statements have also been prepared in accordance with Generally Recognised Accounting Practice (GRAP), issued by the Accounting Standards Board in accordance with Section 122(3) of the Municipal Finance Management Act, (Act No 56 of 2003). Municipality CHAPTER 5 FINANCIAL PERFORMANCE

57 CHAPTER 6 AUDITOR GENERAL AUDIT FINDINGS INTRODUCTION Information will be available when we receive the Audit Report on the 30 th of November T COMPONENT A: AUDITOR-GENERAL OPINION OF FINANCIAL STATEMENT 6.1 AUDITOR GENERAL REPORTS YEAR ( ) AUDITOR GENERAL REPORT ON FINANCIAL PERFORMANCE 2013/14 Status of audit report Clean Audit NON -COMPLIANCE ISSUES Non-compliance with section 170 Expired lease agreed Policy for Reporting of Performance Information Budget allocation to key performance Employees overtime exceeds 30% of their salaries. REMEDIAL ACTION TAKEN MFMA Negotiation with EMM at an advanced level Draft policy in place Still negotiated around Policy revised on overtime and subsistence allowance and implemented T AUDITOR GENERAL ON SERVICE DELIVERY PERFOMANCE YEAR 2013/14 Audit Report Status Noncompliance issues Policy for Reporting of Performance Information Budget allocation to key performance Clean Audit Remedial Action taken Draft policy in place Still negotiated around T Auditor General Reports Year ( ), Attached as Volume III Auditor General s (AG) audit opinion for 2013/2014 is attached, which indicates 16 findings and the company has since worked on them in avoidance of repeat findings. See attached Auditor General Report Municipality CHAPTER 6 AUDITOR GENERAL AUDIT FINDINGS 57

58 COMPONENT B: AUDITOR-GENERAL OPINION YEAR 0 (CURRENT YEAR) 6.2 AUDITOR GENERAL REPORT YEAR 0 Auditor-General Report on Financial Performance Year 0* Status of audit report: Non-Compliance Issues Remedial Action Taken Note:* The report's status is supplied by the Auditor General and ranges from unqualified (at best); to unqualified with other matters specified; qualified; adverse; and disclaimed (at worse). This table will be completed prior to the publication of the Annual report but following the receipt of the Auditor- General Report on Financial Performance Year 0. T Auditor-General Report on Service Delivery Performance: Year 0* Status of audit report**: Non-Compliance Issues Remedial Action Taken * This table will be completed prior to the publication of the Annual report but following the receipt of the Auditor- General Report on Service Delivery Performance Year 0 ** Inclusion of "Status" depends on nature of AG's remarks on Performance Data. T AUDITOR GENERAL ON SERVICE DELIVERY PERFOMANCE YEAR 2014/15 Status of audit report Noncompliance issues Remedial Action taken T AUDITOR GENERAL ON SERVICE DELIVERY PERFOMANCE YEAR 2014/15 Status of audit report Noncompliance issues Remedial Action taken T Municipality CHAPTER 6 AUDITOR GENERAL AUDIT FINDINGS 58

59 AUDITOR GENERAL REPORT ON THE FINANCIAL STATEMENTS: 2014/15 T COMMENTS ON AUDITOR-GENERAL S OPINION FOR 2014/ COMMENTS ON MFMA SECTION 71 RESPONSIBILITIES: Section 71 of the MFMA requires monthly budget statements. (1) The accounting officer of a municipality must by no later than 10 working days after the end of each month submit to the mayor of the municipality and the relevant provincial treasury a statement in the prescribed format on the state of the municipality s budget reflecting the following particulars for that month and for the financial year up to the end of that month All the documents were submitted by BBC as required by section 71 of the MFMA. Signed (Chief Financial Officer)... Dated Municipality CHAPTER 6 AUDITOR GENERAL AUDIT FINDINGS 59

60 GLOSSARY Accessibility indicators Accountability documents Activities Adequacy indicators Annual Report Approved Budget Baseline Basic service Budget year Cost indicators Distribution indicators Financial Statements General performance indicators municipal Key Explore whether the intended beneficiaries are able to access services or outputs. Documents used by executive authorities to give full and regular reports on the matters under their control to Parliament and provincial legislatures as prescribed by the Constitution. This includes plans, budgets, in-year and Annual Reports. The processes or actions that use a range of inputs to produce the desired outputs and ultimately outcomes. In essence, activities describe "what we do". The quantity of input or output relative to the need or demand. A report to be prepared and submitted annually based on the regulations set out in Section 121 of the Municipal Finance Management Act. Such a report must include annual financial statements as submitted to and approved by the Auditor-General. The annual financial statements of a municipality as audited by the Auditor General and approved by council or a provincial or national executive. Current level of performance that a municipality aims to improve when setting performance targets. The baseline relates to the level of performance recorded in a year prior to the planning period. A municipal service that is necessary to ensure an acceptable and reasonable quality of life to citizens within that particular area. If not provided it may endanger the public health and safety or the environment. The financial year for which an annual budget is to be approved means a year ending on 30 June. The overall cost or expenditure of producing a specified quantity of outputs. The distribution of capacity to deliver services. Includes at least a statement of financial position, statement of financial performance, cash-flow statement, notes to these statements and any other statements that may be prescribed. After consultation with MECs for local government, the Minister may prescribe general key performance indicators that are appropriate and applicable to local government generally. Impact Inputs Integrated Development (IDP) Plan The results of achieving specific outcomes, such as reducing poverty and creating jobs. All the resources that contribute to the production and delivery of outputs. Inputs are "what we use to do the work". They include finances, personnel, equipment and buildings. Set out municipal goals and development plans. Municipality GLOSSARY

61 National Key performance areas Outcomes Outputs Performance Indicator Performance Information Performance Standards: Performance Targets: Service Delivery Budget Implementation Plan Vote: Service delivery & infrastructure Economic development Municipal transformation and institutional development Financial viability and management Good governance and community participation The medium-term results for specific beneficiaries that are the consequence of achieving specific outputs. Outcomes should relate clearly to an institution's strategic goals and objectives set out in its plans. Outcomes are "what we wish to achieve". The final products, or goods and services produced for delivery. Outputs may be defined as "what we produce or deliver". An output is a concrete achievement (i.e. a product such as a passport, an action such as a presentation or immunization, or a service such as processing an application) that contributes to the achievement of a Key Result Area. Indicators should be specified to measure performance in relation to input, activities, outputs, outcomes and impacts. An indicator is a type of information used to gauge the extent to which an output has been achieved (policy developed, presentation delivered, service rendered) Generic term for non-financial information about municipal services and activities. Can also be used interchangeably with performance measure. The minimum acceptable level of performance or the level of performance that is generally accepted. Standards are informed by legislative requirements and service-level agreements. Performance standards are mutually agreed criteria to describe how well work must be done in terms of quantity and/or quality and timeliness, to clarify the outputs and related activities of a job by describing what the required result should be. In this EPMDS performance standards are divided into indicators and the time factor. The level of performance that municipalities and its employees strive to achieve. Performance Targets relate to current baselines and express a specific level of performance that a municipality aims to achieve within a given time period. Detailed plan approved by the mayor for implementing the municipality s delivery of services; including projections of the revenue collected and operational and capital expenditure by vote for each month. Service delivery targets and performance indicators must also be included. One of the main segments into which a budget of a municipality is divided for appropriation of money for the different departments or functional areas of the municipality. The Vote specifies the total amount that is appropriated for the purpose of a specific department or functional area. Section 1 of the MFMA defines a vote as: a) one of the main segments into which a budget of a municipality is divided Municipality GLOSSARY 61

62 for the appropriation of money for the different departments or functional areas of the municipality; and b) which specifies the total amount that is appropriated for the purposes of the department or functional area concerned Municipality GLOSSARY 62

63 APPENDICES APPENDIX A COUNCILLORS; COMMITTEE ALLOCATION AND COUNCIL ATTENDANCE Council Members Councillors, Committees Allocated and Council Attendance Full Time / Part Time Committees Allocated *Ward and/ or Party Represented Percentage Council Meetings Attendance Percentage Apologies for nonattendance FT/PT % % Note: * Councillors appointed on a proportional basis do not have wards allocated to them T A Concerning T A Delete Directive note before publication: Provide comments on the above table. T A.1 Municipality APPENDICES 63

64 APPENDIX B COMMITTEES AND COMMITTEE PURPOSES Committees (other than Mayoral/ Executive Committee) and purposes of Committees Entities Committees Purpose of Committee Finance and Audit The finance and Audit Committee support the Board of directors in discharging its financial audit oversight Risk Management The risk and management supports the Board of Directors in maintaining effective and transparent systems of risk management Remuneration and Ethics The Remuneration and Ethics committee has an independent role, operating as an overseer and a market of recommendations to the Board for its consideration and final approval about the company remunerates directors and executives fairly and responsibly and the disclosure of director remuneration is accurate, complete and transparent. Operations and Human Resource and ICT The Operation, Human resource and ICT committee support the Board of Directors in overseeing operations, human resource and ICT functions T B Municipality APPENDICES 64

65 APPENDIX C THIRD TIER ADMINISTRATIVE STRUCTURE Directorate Third Tier Structure Director/Manager (State title and name) Use as a spill-over schedule if top 3 tiers cannot be accomodated in chapter 2 (T2.2.2). T C Municipality APPENDICES 65

66 APPENDIX D FUNCTIONS OF MUNICIPALITY / ENTITY MUNICIPAL FUNCTIONS Municipal / Entity Functions Constitution Schedule 4, Part B functions: Air pollution Building regulations Child care facilities Electricity and gas reticulation Firefighting services Local tourism Municipal airports Municipal planning Municipal health services Municipal public transport Municipal public works only in respect of the needs of municipalities in the discharge of their responsibilities to administer functions specifically assigned to them under this Constitution or any other law Pontoons, ferries, jetties, piers and harbours, excluding the regulation of international and national shipping and matters related thereto Stormwater management systems in built-up areas Trading regulations Water and sanitation services limited to potable water supply systems and domestic waste-water and sewage disposal systems Beaches and amusement facilities Billboards and the display of advertisements in public places Cemeteries, funeral parlours and crematoria Cleansing Control of public nuisances Control of undertakings that sell liquor to the public Facilities for the accommodation, care and burial of animals Fencing and fences Licensing of dogs Licensing and control of undertakings that sell food to the public Local amenities Local sport facilities Markets Municipal abattoirs Municipal parks and recreation Municipal roads Noise pollution Pounds Public places Refuse removal, refuse dumps and solid waste disposal Street trading Street lighting Traffic and parking * If municipality: indicate (yes or No); * If entity: Provide name of entity Function Applicable to Municipality (Yes / No)* Function Applicable to Entity (Yes / No) T D Municipality APPENDICES 66

67 APPENDIX E W ARD REPORTING Ward Name (Number) Name of Ward Councillor and elected Ward committee members Functionality of Ward Committees Committee established (Yes / No) Number of monthly Committee meetings held during the year Number of monthly reports submitted to Speakers Office on time Number of quarterly public ward meetings held during year T E Municipality APPENDICES 67

68 APPENDIX F W ARD INFORMATION Ward Title: Ward Name (Number) Capital Projects: Seven Largest in Year 0 (Full List at Appendix O) R' 000 No. Project Name and detail Start Date End Date Total Value T F.1 Detail Water Sanitation Electricity Refuse Housing Households with minimum service delivery Households without minimum service delivery Total Households* Houses completed in year Shortfall in Housing units *Including informal settlements Basic Service Provision T F.2 Top Four Service Delivery Priorities for Ward (Highest Priority First) No. Priority Name and Detail Progress During Year 0 T F.3 ELECTED WARD MEMBERS (STATING NUMBER OF MEETING ATTENDED MAXIMUM 12 MEETINGS) Names: xxx (8); xxx (7) T F.3 Municipality APPENDICES 68

69 APPENDIX G RECOMMENDATIONS OF THE MUNICIPAL AUDIT COMMITTEE YEAR 0 Municipal Audit Committee Recommendations Date of Committee Committee recommendations during Year 0 Recommendations adopted (enter Yes) If not adopted (provide explanation) T G Municipality APPENDICES 69

70 APPENDIX H LONG TERM CONTRACTS AND PUBLIC PRIVATE PARTNERSHIPS Long Term Contracts (20 Largest Contracts Entered into during Year 0) Name of Service Provider (Entity or Municipal Department) Description of Services Rendered by the Service Provider Start Date of Contract Expiry date of Contract Project manager R' 000 Contract Value T H.1 Public Private Partnerships Entered into during Year 0 R' 000 Name and Description of Project Name of Partner(s) Initiation Date Expiry date Project manager Value 2008/09 T H.2 Municipality APPENDICES 70

71 APPENDIX I MUNICIPAL ENTITY/ SERVICE PROVIDER PERFORMANCE SCHEDULE Municipality APPENDICES