1. Annual Report 2011/12 2011/12 Financial Year
Presentation to Portfolio Committee on Communications
Annual Report 2011/12
2011/12 Financial Year

2. Introducing the Team Ms. Pumla Radebe (Chairperson) Mr. Sam Ledwaba
Board Members
Ms. Pumla Radebe (Chairperson)
Mr. Sam Ledwaba
Ms. Seadimo Chaba
Mr. Raj Lalbahadur
Ms. Charlotte Mampane
Mr. Kenosi Moroka
Appointed as from 01 September 2012

3. Presentation Overview
Team Introduction
Performance on Key Targets
Summary of Financial Targets
Summary of Audit Matters
Rollover Request & Other
Q1 2012/13 Progress & Expenditure Report

4. Performance on Key Targets

5. Performance against key targets
Corporate Strategy / Theme: Make ICTs available, accessible and affordable to all South Africans
Strategically Linked Objectives
Initiatives to enable measurement and tracking of progress:
Poor TV-owning households with access to Digital Broadcasting Services
STBs subsidised for poor TV-owning households
Unit Sub-Objectives
(in line with Target)
April 2011 – March 2012
Milestones
Actual Performance Against Business Plan
Plan and design Broadcasting Digital Migration Programme
Q1:
Establish partnership with public and private sectors.
Design systems and processes for subsidies.
Achieved.
Q2:
Implement a pilot for systems and processes for subsidy applications.
 Not Achieved due to institution of forensic investigations
Q3:
Implementation of STB scheme-of-ownership model.
Not Achieved:
All projects were placed on hold pending the conclusion of the forensic Investigation.
Q4:
Project launch was moved by the Minister to the third quarter of 2012/2013.
Work has focused on readying the transaction platform through which subsidies will be issued in using SAPO’s infrastructure.

6. Performance against key targets
Corporate Strategy / Theme: Make ICTs available, accessible and affordable to all South Africans
Strategically Linked Objectives
Name of the Objective:
Facilitate interventions in ensuring affordable and equitable access and usage
2011/12 Target:
One Under-serviced areas with BB infrastructure
KPI
April 2011 – March 2012
Milestones
Actual Performance Against Business Plan
Limpopo: Meraka Institute (CSIR) – Greater Tzaneen Broadband network.
Q1:
Requirements gathering
Consolidation of business case
Appointment of service provider for network design
Achieved.
Q2:
Network design and specification
Approval of subsidy model and funding
Engagement with stakeholders and ICT players
Not Achieved.
Project placed on hold as a consequence of the institution of a forensic audit on the Agency.
Q3:
Tender process for appointment of operator.
Implementation
Not Achieved:
All projects were placed on hold pending the conclusion of the forensic audit.
Q4:
Monitoring and Evaluation
Recent 3G coverage has disqualified Tzaneen as an underserviced area.

7. Performance against key targets
Corporate Strategy / Theme: Make ICTs available, accessible and affordable to all South Africans
Strategically Linked Objectives
Name of the Objective:
Facilitate interventions in ensuring affordable and equitable access and usage
2011/12 Target:
44 Access Centres
Sub-Objectives
(in line with Target)
April 2011 – March 2012
Milestones
Actual Performance Against Business Plan
Implementation of rapid deployment strategy:
Establishment of access centres
Q1:
Establishment of 20 Access Centres
Not Achieved.
Project placed on hold as a consequence of the institution of a forensic audit
Q2:
Establishment of 24 Access Centres
Q3:
Monitoring and evaluation
Not Achieved:
All projects were placed on hold pending conclusion of the forensic audit.
Q4:

8. Performance against key targets
Corporate Strategy / Theme: Monitor and evaluate the extent to which universal access and services have been achieved
Strategically Linked Objectives
Name of the Objective:
Monitor and evaluate effective use and social appropriation
2011/12 Target:
GIS Map of public access facilities
Audit of all public access ICT centre
Development of measurable ICT access and impact indicators
Implementation of a monitoring and evaluation tool

9. Performance against key targets
Corporate Strategy / Theme: Undertake continuous research to promote, encourage, facilitate and offer guidance regarding universal service and access
Strategically Linked Objectives
Name of the Objective:
Offer guidance regarding universal service and access, in view to inform policy and regulatory processes
2011/12 Target:
Feasibility Study on national Broadband
Sub-Objectives
(in line with Target)
April 2011 – March 2012
Milestones
Actual Performance Against Business Plan
Feasibility study for National Broadband, (Orchestrating the Backbone infrastructure with current players) : Feasibility study for achieving 25% of universal access to broadband for the period
Q1:
Different technologies, services, market drivers and market structure that should drive universal access
Not Achieved. Project placed on hold as a consequence of the institution of a forensic audit. Department of Communications undertook same project therefore need negated.
Q2:
This feasibility study output
Reporting and Recommendation
Presentation of recommendation to shareholders for approval   
Q3:
Consultation and implementation
Not Achieved:
All projects were placed on hold pending conclusion of forensic Investigation.
Q4:
Not achieved. All projects were placed on hold pending conclusion of forensic Investigation.

10. Summary of Financial Performance

11. Summary of financial performance
USAASA
The Agency had a budget of R83.2 m of which 92% was spent during the financial year. The budget was spent as follows:
43% was spent on compensation of employees
2% on Capital Expenditure
47% on operational expenditure
8% was not spent, i.e. approx. R7m
The R7mil surplus was due to an unspent portion of the budget that was allocated to the Broadcasting Digital Migration project for capacity building. A roll over was requested in this regard. The Agency had net cash flows of R15.6 m in the bank.

12. Summary of financial performance, cont…
USAF
The fund was allocated a total budget of R260.9 m approximately 98% was unspent. The projects that were budgeted for during the financial year were:
Broadband digital migration, 84% of the entire budget
Rapid deployment
Handover project
Broadband infrastructure
None of the projects could get off the ground due to instability that was experienced at senior management as well as at the board level. The cash reserves were a total of R255.3 m at year-end.
The entire budget has been the subject of a roll over request that was presented to the National treasury.

13. Summary of Audit Matters

14. Summary of Audit Matters
USAASA
The Agency obtained an unqualified audit opinion with several emphasis of matters as reflected below:-
Fruitless and wasteful expenditure - R1,032m (77% due to rental of offices not occupied; 20% due to penalties & interest for late payments to SARS; remainder due to an amount paid for utilization of venue for cancelled workshop).
Irregular Expenditure - R42,161m (91% due to non-compliance with bidding processes as reported by forensic audit; 58% of total relates to incidents from 2010/11 but only reported in 2011/12).
Other matters relating to the audit of performance information as a result of SMART criteria non-compliance i.e. targets not specific, not measurable, not achievable, not realistic, not timely.

15. Summary of Audit Matters…
USAF
The Fund also obtained an unqualified audit opinion with the following emphasis of matter:-
Material under spending of grant - R220m
Fruitless and wasteful expenditure - R3,712m (relates to amounts paid to Telkom & Sentech for internet connectivity while computers were not connected)
Irregular expenditure - R19,458m (76% of total amount relates to procurement during 2010/11 but discovered during 2011/12; 24% due to unauthorised fund transfer from USAF to USAASA)

16. Rollover Request & Other

17. Rollover Requested Budget Rollover USAASA budget R 8,122, 000
USAF budget
R 258,667,000
Total Rollover Request
R 266,789,000
* The amount includes the R220 million that was set aside for set top boxes subsidy that is also unspent.

18. Challenges CEO Suspensions
CEO resigned during March 2012 and there is no replacement as yet
Suspensions
3 Executive managers are on suspension and one (Executive Manager: Business Development Services) has since resigned
1 Senior Manager: Supply Chain Manager
1 Senior Manager: ICT (resigned)
Delivery on projects needs to be accelerated
Please note annexure and changes made to the business plan as per previous recommendations

19. Update on Disciplinary Processes
Disciplinary process began in December 2011 and has experienced legal delays.
Process currently on recess (adjourned) due to unavailability of Chairman
Will resume once more in November, 2012
Anticipated completion is year-end

20. Way Forward

21. Way forward Appoint Board Committees within the current quarter
The newly appointed board intends to implement the following:
Appoint Board Committees within the current quarter
Appoint a CEO by November 2012
Appoint the Board Secretary
Speed up the process of finalising the disciplinary hearings
Enhance and tighten corporate governance measures
Review the organisation
- Audit skills
- Review organogram
- Re-align existing skills

22. Q1 2012/13 – Progress as at end of June 2012

23. Q1 Core Project Progress
Projects
Q1 Target
Progress as at Q1
Expenditure R
Rapid Deployment
Preferred entities appointed.
Achieved. Two entities to roll-out total of 65 sites.
564, 623
Fund Manual & Standard Operating Procedures
Design and develop draft operating guidelines.
Report on Standard Manual for accessing funding from the Fund.
Achieved. Draft manual complete and undergoing internal consultation. -
UA & S Strategy
Service provider appointed.
Not Achieved. Terms of reference reviewed. Scope totally revised to provide for ICT national strategy & organizational repositioning of Agency in support of strategy.
DTT
Customization & testing of SAPO processing & transacting platform
Achieved. Partnership formalities complete. Technical collaboration underway. Final costing pending.

24. Q1 Core Project Progress
Q1 Target
Progress as at Q1
Expenditure
Connectivity Upgrade
Audit & agreements signed with identified sites.
Not Achieved. Terms of reference approved. Centre audit took longer than anticipated.

25. USAF VARIANCE REPORT FOR FIRST QUARTER 2012-13
Q1 Expenditure Report
USAF VARIANCE REPORT FOR FIRST QUARTER
YEAR-TO-DATE
Expenditure Item
Annual Budget 2011/12
Q Budget
Q1 Actuals
% Variance
Comments
Income
DOC Appropriated Income
273,977,000
4,486,000
0.00%
Total Income
Expenditure
Project costs
2,053,000
513,250
303,174
40.93%
Project costs are directly related to the level of activity in projects, they are expected to pick up once implementation begins in earnest in the next two quarters
Strategy document and Usaf Manual
2,850,000
285,000 -
100.00%
Tender advertised ,appointment has not happened yet, the process of evaluating and adjudicating will soon begin.
STB Subsidies for BDM
230,000,000
Agreement to customise technical transacting platform in place with SAPO.
Platform complete and undergoing testing.
Rapid Deployment
31,285,000
1,240,000
261,450
78.92%
Two entities awarded to roll out 65 centres. The 2nd invitation for subsidies to roll out the balance of 135 centres for the year .
Connectivity
7,000,000
2,250,000
5,448
99.76%
Audit of existing connectivity at the existing centres has been completed. A process of engaging Sentech to come up with the best solution is underway.
Bank charges & Audit fees
789,000
197,250
195,542
0.87%
Total expenditure
4,485,500
765,613
Surplus for the first quarter.
3,720,387
82.94% 

26. THANK YOU !