Independent Development Trust Presentation to Portfolio Committee for Public Works: 200809 Annual Re

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Independent Development TrustPresentation
toPortfolio Committee for Public Works2008/09
Annual ReportOctober 2009
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Content of Presentation

• Compliance Statement
• Opening Remarks
• Statements Minister Chairperson
• Trustees Report
• Performance Report
• Annual Financial Statements
• Concluding Comments

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Compliance Statement

• In terms of Section 55 (1) (b) of the
  Constitution, the National Assembly must provide
  mechanisms to effect oversight of among other
  any organ of state.
• Hence this account to the Portfolio Committee on
  the performance over the 2008/09 financial year
  and application of public resources with which
  the IDT has been entrusted, is being presented in
  respect of the Committee's oversight
  responsibility and to enable the Committee to
  recommend the IDTs Annual Report to Parliament

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Statement Executive Authority

• Expectation that public institutions have
  mastered and institutionalised the PFMA
• Extremely proud of the IDT achieving 7th
  successive unqualified audit which sets the IDT
  apart and a leader.
• Endorse the IDT Annual Report rooted in
• Quarterly reports accountability tracking
• Witnessed the impact of the IDTs performance and
  the impact thereof on peoples lives
• Confidence in the value of the IDT as a
  development agency in advancing the national
  social policy agenda

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Statement Chairperson

• IDT operates in a dynamic changing
  environment.
• Noted key changes which impacted over the
  reporting period, e.g., Executive Authority
  changes in the Board
• Board approved the IDTs 1st long term Strategic
  Vision
• Performance challenges, largely out of the
  organisations control, were timeously reported
  to the Board and corrective actions put in place
• Confidently present the 2008/09 results

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Trustees Report
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Trustees Report

• Compliance Statement Page 9
• Mandate of the IDT (Page 9-10)
• Retained primary mandate to support government
  with the eradication of poverty despite changes
  of focus and interpretation
• In 2008/09 the IDT introduced a focus on women
  in recognition of the increasing feminisation of
  poverty and the effectiveness of women as change
  agents
• Corporate Governance (Page 10) sound corporate
  governance is integral to the IDTs business
  enterprise and ethics
• Executive Authority Complied with provisions of
  the Shareholder Compact.
• Reporting to Parliament Presented 2009/11
  Corporate Plan

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Corporate Governance Board of Trustees

• Board Structure (page 11-12)
• 12 independent, non-executive Trustees, 10 by
  public nomination 2 by Minister
• Assumed office 1 October 2007
• Names of Trustees
• Responsibilities (page 13)
• facilitated by Board Committees.
• Board Charter
• Reserved specific matters and other delegated to
  CEO
• Functioning of Board (page 15) Attendance

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Board Committees Page (17-23)

• Outline of functions of Committees, main
  achievements, dates of meetings and membership
• Audit Committee Same members
• Finance Committee
• Strategic Planning and Programmes Committee
• Human Resources and Corporate Services Committee
• Remuneration Committee

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Financial Overview (Page 25-29)

• Financial Performance Information
• Sound financial management which emphasises
  internal controls and assures stakeholders that
  assets are safeguarded and transactions executed
  according to generally accepted business
  practices and adopted policies
• Resources strictly applied in accordance with
  budget allocations approved by the Board
• Actual overhead expenditure was R 332.3 m
  representing a variance of 0.85 under-spending
  for the reporting period
• R150m of IDTs funds approved for poverty
  eradication programmes (Mud Schools programme
  in particular). R 94m was spent and the rest will
  be spent/concluded in 2009/10
• Renewed focus on cost containment, improving
  efficiencies, working capital improvement and
  managing capital expenditure

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Financial Overview (Page 25-29)

• Undertook a comprehensive review of programme
  recoverables
• Strict verification and ageing of all programme
  related transactions up to an including the
  2005/06 financial year.
• Results tested against strict criteria to
  determine reasonable expectations to recover such
  costs from clients
• Based on this evaluation, the Board approved an
  amount of R57.7m to be written off in order to
  appropriately restate the balance sheet item in
  respect of total programme expenditure of R 3
  billion over the period (2005-2009)
• Does not represent wasted or lost resources as
  contracts were delivered to the satisfaction of
  clients
• Exposure of this nature is unlikely to recur as,
  since 2008, payments for services are drawn down
  directly from dedicated client-contract bank
  accounts

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Financial Overview (Page 25-29)

• Investment of main fund and other sources of
  income
• Main source of funding income from investment
  of main fund. Income partially applied to fund
  operations
• Capital applied in poverty eradication projects
  and thus gradually diminishing
• At 31-Mar-09 balance R 948m
• Uncertainty in global markets, results in high
  volatility
• Fund performance monitored by an Investment
  Committee which contributed to revenue receipts
  exceeding budget targets by 48 notwithstanding
  market fluctuations
• Increased capacity and commitment to recover
  costs from public sector (and few private sector)
  programmes
• Developed a Costing Model to identify cost
  drivers, have a sound basis for determining
  management fees and baselines for future
  financial planning

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Financial Performance
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Financial Overview (Page 25-29)

• Long-Term Sustainability
• IDT established with a R 2bn government grant in
  1990
• Until 2005, investment income from the balance of
  this grant covered operational expenses
• Growth in business and volatility in market
  impacting on interest rates has resulted in a
  growing margin between expenditure applied and
  revenue since 2006
• Capital base is depleting challenging the
  financial sustainability of the IDT post the
  2011/12 financial year
• IDTs long-term Strategic Vision is aligned to
  social policy agenda (MTSF) as the development
  agency of choice.
• Thus IDT has recorded its future funding
  requirements with National Treasury

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Risk Management (Page 29-31)

• Risks Management embedded in IDT's business
  processes
• Key players
• Accounting Authority Audit Committee in
  particular
• Executive Management
• Risk Champions
• See Risk Management Infrastructure on Page 31

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Performance Report
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CEOs Report (Page 35-45)

• 2008/09 Coincided with the end of the CEOs 1st
  five-year term and start of 2nd term
• IDT able to effectively balance remaining focused
  on what has been planned with being responsive
  within a changing environment
• 2008/09 Scorecard represents a combinations of
  KPIs and targets completely in the control of the
  IDT and those which are integrated with and
  dependent on inputs and cooperation of client
  departments
• Summary
• Achieved 11 (73.4) of 15 KPI and targets, of
  which 10 (66.7) were exceeded
• Underachieved 4 (26.6) all of which were not in
  IDTs control

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CEOs Report (Page 35-45)

• Development Impact accounted through 3 examples
• Social Infrastructure Delivery
• Empowerment of Women
• Knowledge production
• New Opportunities responsive and flexible
  development agency, e.g., Xenophobia and
  intolerance Project Re Tlisa Diphetoho EPWP2
• Looking ahead 2010/30 Strategic Vision which
  positions the IDT as the as the development
  agency which will drive transformation and
  innovation in supporting government with the
  design and implementation of a long-term
  comprehensive integrated anti poverty strategy.
  IDT funds will be solely invested in
  community-based sustainable development and anti
  poverty programmes, and the public-mandated work,
  such as the social infrastructure and social
  development programmes, will be delivered on a
  full cost recovery basis.
• IDT Team
• ..\..\..\BOARD\2009\MAY 2009\2008-09 PERFORMANCE
  SUMMARY DRAFT 6.doc

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CEOs Report (Page 35-45)

• Social Infrastructure Delivery
• 83 of Turnover Social infrastructure delivery,
  largely delivered in rural South Africa, e.g., EC
  39.6 KZN 22.8. Thus supported government
  with the reduction of infrastructure backlogs in
  historically marginalised areas.
•  Concluded and handed over eight (8) schools
  (Eastern Cape, Mpumalanga and Kwazulu-Natal)
  which were constructed with IDT funds as part of
  the Eradication of Mud Schools and Undesirable
  Structures Programme. Other outcomes of this
  specific programme
• 24 contractors engaged on the projects, 21 (88)
  were women contractors.
• Constructed 116 classrooms providing learners
  with first-time access to decent facilities.
• All schools were provided with computer
  laboratories furniture and solar power where
  there no electricity is available and pre-school
  facilities at the primary schools. Such
  facilities are not typically provided at state
  schools thus these rural learners have the access
  to the infrastructure for optimal learning and
  growth.

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CEOs Report (Page 35-45)

• Social Infrastructure Delivery cont.
• The IDT did not fully meet its programme
  expenditure targets because we were not provided
  with the funds to do so. Notwithstanding this
  challenge the IDT achieved R1.313 billion (88)
  against a targeted R1.5 billion, which in real
  terms represents a 13 increase on the previous
  years achievement of R1.167bn. The development
  impact of this programme expenditure includes
• R632.5m of programme expenditure was spent on
  local contractors and labour, which includes
  R450m on women contractors
• 53 581 job opportunities created of which 71
  were women and,
• 2 195 persons received technical training and a
  further 13 259 basic life skills.
•  Thus the IDTs model of social infrastructure
  delivery, which is grounded in labour intensive
  methodologies and the empowerment of local labor
  and contractors, has meaningfully impacted the
  individuals who participated in the programme as
  well as their households.

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CEOs Report (Page 35-45)

• Empowerment of Women
• Introduced a Contractor Development Programme
  with the objective to meaningfully contribute
  towards the advancement and empowerment of
  disadvantaged communities, and women in
  particular, by
• providing opportunities to existing contractors,
  as well as emerging entrepreneurs in the building
  and construction industries
• developing a pool of capable, highly skilled
  contractors, and women in particular, able to
  compete with the best in sector and to benefit
  from the substantial budget available for
  infrastructure development and,
• Creating sustainable and self-sufficient
  contractors able to run profitable businesses.
•  Target 45 women contractors but registered 59
  participants
•  25 women contractors were up-scaled on grading
  system of the Construction Industry Development
  Board as a result of contract values of the work
  they were awarded by the IDT.

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Structure and Business Practice (page 53-59)

• Structure
• Operational model combines centralised systems,
  process, policies and functions with
  decentralised operations, which informs the
  structure
• Innovations and operations of the four (4)
  Business Units
• Office of the CEO
• Development Programmes Services
• Corporate Services
• Financial Services
• Human Resources Management Report (Appendix 1)
  Page 109-117)

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Annual Financial StatementsPage 61-106
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Auditor Generals Report (Page 65-68)

• The IDT received its seventh consecutive
  unqualified audit report for the year ended 31
  March 2009.
• In my opinion, the financial statements present
  fairly, in all material aspects, the financial
  position of the IDT as at 31 March 2009 and its
  statement of comprehensive income and its cash
  flows for the year then ended, in accordance with
  the Statement of Generally Accepted Accounting
  Practice and in a manner required by the PFMA.
  Without qualifying my opinion, I draw attention
  to the following matter
• The impairment of programme recoverable was
  highlighted as an Emphasis of Matter due to its
  value
• Material amendments resulting from the audit were
  reflected as an Other Matter

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Financial Overview

• The financial statements fully compliant with SA
  GAAP (IFRS).
• Expenditure base exceeds revenue generation
  capacity.
• Revenue generating capacity volatile due to bonds
  in investment portfolio.
• Deliberate thrust to increase cost recoveries on
  managed infrastructure programmes.

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Concluding Remarks

• Proudly and confidently present the 2008/09
  year-end results to the Portfolio Committee.
• Aware of the fact that the Committee might not
  have had the chance to witness the IDT at work
  during its Oversight visits
• As is evident from the map at the front of the
  report, the IDT has clear and definite footprint
  in all provinces. Hence, we would like to invite
  the Committee to
• Visit the IDT projects during the current year,
  and
• Join us with the public presentation of the
  2008/09 Annual Report in Tzaneen on 26 October
  2009

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Thank youThembi Nwedamutswu Chief Executive
Officerthembin_at_idt.org.za
www.idt.org.za