2014-2015 financial year 3 rd quarter finance report finance report q3 2014/15 year 1

2014-2015 Financial year

3rd Quarter Finance Report

Finance report – Q3 2014/15 year1

Contents1. Introduction2. Budget overview3. Financial performance4. Financial position5. Cashflow6. Other financial management matters


IntroductionThis presentation seeks to summarize financial management activities undertaken by the Commission during the financial year to 31 December2014, particularly focussing on the third quarter of the financial period. The events and matters reported are in the main for accountability to Parliament on performance for the period against the Annual Performance Plan, Appropriation Act and other obligations advanced by the Committee from time to time. Additional information is provided in this presentation in the interest of openness, transparency and completeness in reporting.


Budget overview per program & economic classification


•Funds available for the financial year were as follows;

•Allocation from NT

R67, 2 m•Internal sources (Interest )

R2, 7 m•Total adjusted budget= R69, 9 million

•58% 58% set aside for the main service delivery program

•COE key driver of expenditure (68%). CGE is a service organisation

Itemised budget over MTEF period

5

Cls 2013/14 2014/15 2015/16 2016/17 2017/18 Bank Charges 51 600 54 690 57 971 61 449 64 706 CAPEX - - - - Compensation of Employees 44 479 979 47 717 258 50 581 597 53 110 677 55 766 211 Computer Servicing, Internet & Website 639 900 671 908 703 726 745 945 785 448 Courier Services 127 800 135 452 143 579 152 194 160 258 Employee Assistance Program 300 000 317 962 337 040 357 262 376 197 Media Outreach 888 000 941 168 997 638 1 057 497 1 110 372 Office Cleaning, Maintenance, Plants & Security 1 615 821 1 712 567 1 815 321 1 924 240 2 024 510 Office Consumables 35 700 37 838 40 108 42 514 44 767 Printing & Stationery 904 800 958 974 1 016 513 1 077 503 1 134 604 Professional Services 3 144 200 3 332 457 3 532 404 3 744 348 3 940 294 Report writing & Printing Materials 1 310 000 1 388 435 1 471 741 1 560 046 1 638 060 Telecommunication Expenses 2 142 000 2 270 251 2 406 466 2 550 854 2 683 427 Travel, Accomodation and Related Expenditure 4 796 000 4 893 522 4 712 226 4 994 960 5 258 693 Venues, Catering & Event Management 1 994 200 2 113 601 2 240 417 2 374 842 2 495 653 Training and development 650 000 688 918 730 253 774 069 812 772 Grand Total 63 080 000 67 235 000 70 787 000 74 528 400 78 295 972

5 Finance report – Q3 2014/15 year

2014/2015 figures

Overview – financial performanceTotal Income for the year to December 2014 : R52,

3 million Transfer were R50, 4 million, year to December 2014 and

R16,8 million for quarters 3 – therefore year to date share of 75% was duly transferred

Interest income of R198, 531 earned in the 3rd quarter (YTD ; R610, 630).whilst R21, 061 was received from other sundry sources(SETA, etc)

Cumulative donor income arose from Gender summit activities during the first quarter – R1,2 m in Q1 and none in recorded in Q3

Total cumulative spending was R55, 8 m (or 80% of the annual budget) was incurred as at 31 December 2014, signalling around 5% overall spending pressure (over R3m).


General Budget & Expenditure overview


Cls Adjusted Annual budget - 2015

YT December Actuals

Revised 1st semester budget

Q3 -2015 Budget Q4 -2015 Budget YTD actual as % of Annual Budget

Bad debts - - - - Bank Charges 57 334 41 012 28 667 14 333 14 333 72%CAPEX - - - - Compensation of Employees 46 372 207 35 553 609 24 675 921 10 848 143 10 820 143 77%Computer Servicing, Internet & Website 850 363 547 161 425 181 128 228 296 953 64%Courier Services 154 332 163 222 77 166 83 583 21 583 106%Depreciation & Amortisation 1 290 462 679 394 330 231 384 116 576 116 53%Employee Assistance Program - - - - Interest Paid on Bank overdraft 9 1 826 722 9 0 0 Media Outreach - - - - Office Cleaning, Maintenance, Plants & Security 1 515 351 1 056 601 658 848 428 251 428 251 70%Office Consumables 183 050 127 877 91 525 45 763 45 763 70%Others - - - - Printing & Stationery 489 594 384 667 244 797 157 398 337 398 79%Professional Services 4 327 635 3 640 049 2 699 660 763 987 863 987 84%Report writing,Printing & Publishing 2 440 749 906 178 539 456 340 646 1 310 646 37%Subscriptions 280 978 236 011 233 663 23 658 23 658 84%Telecommunication Expenses 2 369 671 1 815 619 1 184 835 592 418 592 418 77%Training and Development 1 231 365 529 679 215 683 507 841 507 841 43%Travel, Accomodation and Related Expenditure 4 951 942 4 899 698 3 094 964 928 489 928 489 99%Vehicle expenses, maint, fuel and other 1 002 614 811 866 501 307 250 653 250 653 81%Venues, Catering & Event Management 2 428 584 2 584 131 1 805 284 311 650 311 650 106%Grand Total 69 946 239 55 803 496 36 807 196 15 809 159 17 329 884 80%

Cumulative outlook -Spending pressures and Key Drivers

Salaries within budget but material at R35, 5 m (YTD) against an annual budget of R46,4 m

Travel and Accommodation exceeds budget by 22% during the quarter and already equals the annual allocation by 31 December 2014. Stringent measures necessary in order to stem the spending pressure

Venues and Catering also overspends by 22% and already above the annual allocation by 6%

Telecommunication, and Professional services although within budget but respectively accounted for R1, 8 m & R3, 6 m (YTD)

Interest and penalties paid to SARS at R1, 8 mFinance report – Q3 2014/15 year8

Q3 spending variance per programme

SARS, Travel, Accommodation and Event management are key drivers across programmes


Programme Q3 -2015 Actuals

Q3 -2015 Budget

Spending variance

% Var

COMMISSIONERS: GOVERNANCE & SUPPORT 3 108 593 2 982 965 -125 628 -4%CORPORATE SUPPORT SERVICES 6 834 627 4 588 506 -2 246 122 -49%SERVICE DELIVERY PROGRAM 9 053 079 8 237 688 -815 391 -10%Grand Total 18 996 299 15 809 159 -3 187 140 -20%

Quarter 3 – Oct to Dec 2014 spending variances

•Quarter 3 spending deviations the primary reason for the cumulative year to date over-expenditure (R 3 m)

•Overall spending gap was 20% above budget

•Interest and penalties – R1,8 m•Travel and venues - exceeded budget by a combined R1, 3 m


Cls

Q3 -2014/15 Actuals

Q3 -2014/15 Budget

Spending variance

% Var

Bad debts - - - Bank Charges 12 345 14 333 1 988 14%CAPEX - - - Compensation of Employees 10 877 689 10 848 143 -29 545 0%Computer Servicing, Internet & Website 121 980 128 228 6 248 5%Courier Services 86 056 83 583 -2 473 -3%Depreciation & Amortisation 349 163 384 116 34 952 9%Employee Assistance Program - - - Interest Paid on Bank overdraft 1 826 713 0 -1 826 713 -100%Media Outreach - - - Office Cleaning, Maintenance, Plants & Security 397 753 428 251 30 499 7%Office Consumables 36 352 45 763 9 411 21%Others - - - Printing & Stationery 139 871 157 398 17 528 11%Professional Services 940 388 763 987 -176 401 -23%Report writing,Printing & Publishing 366 722 340 646 -26 075 -8%Subscriptions 2 348 23 658 21 309 90%Telecommunication Expenses 630 783 592 418 -38 366 -6%Training and Development 313 996 507 841 193 845 38%Travel, Accomodation and Related Expenditure 1 804 735 928 489 -876 245 -94%Vehicle expenses, maint, fuel and other 310 560 250 653 -59 906 -24%Venues, Catering & Event Management 778 847 311 650 -467 197 -150%Grand Total 18 996 299 15 809 159 -3 187 140 -20%

Cumulative spending against budget


Cls Adjusted Annual budget - 2015

Year To December 2014 Actuals

Year to December 2014 Budget

Spending variance

% Var

Bad debts - - - Bank Charges 57 334 41 012 43 000 1 988 5%CAPEX - - - Compensation of Employees 46 372 207 35 553 609 35 524 064 -29 545 0%Computer Servicing, Internet & Website 850 363 547 161 553 410 6 248 1%Courier Services 154 332 163 222 160 749 -2 473 -2%Depreciation & Amortisation 1 290 462 679 394 714 347 34 952 5%Employee Assistance Program - - - Interest Paid on Bank overdraft 9 1 826 722 9 -1 826 713 -100%Media Outreach - - - Office Cleaning, Maintenance, Plants & Security 1 515 351 1 056 601 1 087 099 30 499 3%Office Consumables 183 050 127 877 137 288 9 411 7%Others - - - Printing & Stationery 489 594 384 667 402 195 17 528 4%Professional Services 4 327 635 3 640 049 3 463 648 -176 401 -5%Report writing,Printing & Publishing 2 440 749 906 178 880 103 -26 075 -3%Subscriptions 280 978 236 011 257 321 21 309 8%Telecommunication Expenses 2 369 671 1 815 619 1 777 253 -38 366 -2%Training and Development 1 231 365 529 679 723 524 193 845 27%Travel, Accomodation and Related Expenditure 4 951 942 4 899 698 4 023 453 -876 245 -22%Vehicle expenses, maint, fuel and other 1 002 614 811 866 751 960 -59 906 -8%Venues, Catering & Event Management 2 428 584 2 584 131 2 116 934 -467 197 -22%Grand Total 69 946 239 55 803 496 52 616 355 -3 187 140 -6%

Extra- ordinary transactions, contingencies, Litigation and other significant developments

Donor Income at R1, 2 million emanating from contributions by partners to the Gender Summit that was held in April of 2014.

Grant income conditionally received from National Treasury for the purchase of vehicles at R4, 3 million. Spent (Conditions met )

Penalties and interest charged by the South African revenue Services for a combined figure of R1, 8 million. Consequence management being implemented against liable officials

Litigations – (CGE v Gasa and Axolute v CGE). For the latter matter, an application made to court for the dismissal of claim by plaintiff following expiry of notice (not acted upon by plaintiff).

No fraud or related incidents whatsoever were reported in the period, either through fraud line or internal whistle blowing procedures during the period and the year long

12 Finance report – Q2 2014/15 year

Overview financial position The health of the CGE finances is sound. The going

concern assumption is still valid but for funding threads going forward (critical to follow through mitigation tactics : review funding model, operating model, cost control, fund raising)

Fixed assets increasing by R4,3 m due to acquisition of vehicles in the main – this exchanges cash for non-current assets thus diminishing liquidity. Cash at hand reducing dramatically

Receivables insignificant but linked to matters under litigation (Gasa – R271k) and SAPS investigation (PAL & Assoc – R135K). There is a corresponding impairment/provision for doubtful collectability

Liabilities largely provision for staff – leave, 13th and performance bonus overlapping the two financial years


Cash flowFor the same period in the previous year, cash & cash

equivalents were R22, 2 million compared to R12, 4 million the current year

Cash balances movements accounted for in the main by:Cash utilised for investment in non-current assets – R4,6 m

(vehicle purchase in the main)Cash utilised to pay suppliers and other payables – R4, 2 m

( bal. was R16,1 m in 2013/14 compared to R11,9 min 2014/15)R1 million attributable to outflows from operating activities

mainly due to increased expenditureLiquidity remain sound but comparably reduced between

the two periods mainly as a result of CAPEX spending and increased spending on goods and services


Other Financial management matters.....1Risk management Risk Mitigating action plans being regularly implemented by

management Regular Committee meetings held where oversight is exercised.

The 3rd quarterly meeting was held on 29 January 2015 All top risks were reviewed and discussed in-depth by the

Committee in each meeting Emerging and critical risks identified and/or updated are;

◦ BCP especially as is affected by electricity blackouts – the area ranked high

◦ Funding – owing to the budget cut, the risk is directly impacted (likelihood certain with significant impact) – high

◦ Accommodation condition and availability – moderate to high on reassessment

Insurance RFQ to be evaluated during the fourth quarter of current year, to cover office content and vehicles


Other Financial management matters.....2Supply Chain managementTenders and RFQ were issued in December 2014

to fulfil the Procurement plan as well as the ICT infrastructure project needs. These are been evaluated and set to finalize adjudication in the latter quarter for implementation ASAP at commencement of the 2015/2016 period. Investment estimated at R4m

Audit IssuesAll Audit action plans previously committed by

management were implemented with success


end

▫Thank you

17


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2014-2015 financial year 3 rd quarter finance report finance report q3 2014/15 year 1

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