1. VOTE 30: ENVIRONMENTAL AFFAIRS Portfolio Committee Briefing Annual Financial Statement for 2011/12 16 – 17 October 2012 1

2. Presentation Outline -Auditor- General report on the Financial Statements (Annexure A) -Irregular expenditure -Expenditure for 2011/12 -Detail on current expenditure -Detail other operating expenditure -Transfers on EPWP -Transfers to Public Entities -Transfers to non-profit and other institutions -Capital Expenditure -Departmental expenditure trend 2

3. Continued Presentation Outline -Auditor-General’s opinion on Public Entities -Public Entities source of revenue -Internal versus external revenue -Public Entities expenditure -Total revenue versus total expenditure -Surplus -Challenges experienced for period under review 3

4. Auditor-General Report on the Financial Statements (Refer Annexure A) Unqualified Audit Donor funding audit for 2011/12 in progress to be finalized by end of October 2012 Unauthorized and irregular expenditure: Irregular expenditure was incurred in the current year and condoned by National Treasury during the 2012/13 financial year. Disclosure items in the financial statements The department complied with all disclosure requirements, classifications and policy frameworks as prescribed by Treasury. Transfers to agencies and other organizations All transfers made are per prior management and Treasury approval as well as within disclosure requirements. 4

5. Irregular expenditure condoned by National Treasury Bid Number Amount Rand ReasonActions E 1168 549 457 No tax clearance certificates for sub- contractor  Terms of reference updated  Controls reviewed  Training to Bid committee members  Condoned by National Treasury E 11811 848 028 5 Irregular expenditure identified during the audit All bids for the financial year were audited

6. Expenditure for the 2011/12 Financial Year per Programme ProgrammeFinal appropriation R’000 Expendi- ture R’000 Expenditure as % of final appropriation R’000 Variance R’000 1. Administration293 995 100.0%- 2. Environmental quality and protection308 614298 01696.6%10 598 3. Oceans and coasts876 337 100.0%- 4. Climate change137 163 100.0%- 5. Biodiversity and conservation456 577 100.0%- 6. Sector services, coordination and information management and internal relations2 128 9302 046 46196.1%82 469 Total4 201 6164 108 54997.8%93 067 6

7. Expenditure per Economical Classification Economical classificationFinal appropriation R’000 Expenditure R’000 Variance R’000 Current Payments1 443 0631 432 17010 893 - Compensation of employees (Variance due to time lag in process of filling posts) - Goods and services (Variance mainly due to accruals)* - Interest 479 891 962 929 243 471 649 960 278 243 8 242 2 651 - Transfers and Subsidies2 078 8902 002 08276 808 - Households: Expanded Public Works Programme (Variance – incentive funds surrendered)* - Departmental entities* - Non-profit institutions* -Other transfers:* Global Environmental Fund Households: Social benefits (leave gratification) North West University Vehicle licenses 1 377 874 658 655 25 653 12 890 2 838 968 5 1 301 074 658 655 25 653 12 890 2 838 967 5 76 807 - 1 - Sub total3 521 9533 434 25287 701 7

8. Continued Expenditure per Economical Classification Economical classificationFinal appropriation R’000 Expenditure R’000 Variance R’000 Payment for capital assets*679 552674 1865 366 -Machinery and equipment (New polar vessel R640 795 000) -Software 679 037 515 673 671 515 5 366 - Payments for financial assets111 - Sub total679 663674 2975 366 TOTAL4 201 6164 108 54993 067 8

9. Detail Current Expenditure * NotesExpenditure Goods and services2011/12 R’000 2010/11 R’000 Consultants, contractors and agency/ outsourced services (Annexure B) Travel and subsistence (Annexure C) Other operating expenditure (refer to next slide) * Operating leases (include accommodation, car rentals and Nestle machines rentals; transfer to DAFF) Inventory (Including stores for Antarctica) – Herbicides purchased for eradication of alien invasion species: NRM, computer consumables for tracking oceanographic research items. Computer services (Increase in computer service, Microsoft Enterprise upgrade and licensing) Advertising (increase in marketing: COP 17, promotional items and recruitments costs) Venues and facilities (Cop 17 events, communication projects and meeting to facilitate the transfer of NRM) Owned and leasehold property expenditure (Include building maintenance and repairs) Training and staff development (NRM Implementing Agencies & pilot youth programmes — R10,1 million; Training to employees — R5,9 million) Communication (Installation of data lines, telephone & conference facilities in regions/Cape Town) Audit cost - external Assets less than R5 000 Catering Rental and hiring (Hire and service for hosting of 4th Transition Committee meeting, World Environmental day, launch of hotel at SANParks) Bursaries employees Administrative fees (increase in personnel agency and travel agency fees) Entertainment Transport provided as part of the departmental activities Fleet services 556 692 96 910 63 748 58 068 50 248 28 905 24 134 21 507 16 781 16 043 10 978 4 434 4 156 3 065 2 428 1 210 765 136 69 1 185 543 70 227 34 885 78 968 33 617 16 478 16 347 15 052 14 498 6 402 6 253 4 542 7 702 2 537 - 1 258 338 108 - TOTAL960 278494 755 9

10. Detail Current Other Operating Expenditure * NotesExpenditure Other Operating Expenditure * 2011/12 R’000 2010/11 R’000 Air charter services & landing rights (services related to the voyages to Islands; extra voyage to Marion Island for the opening of the new base as well as oil spill control on the coasts) Harbour, dock fees (Buoy, ocean surveyor & systems) Professional bodies, membership and subscription fees (annual membership contributions) Printing & publications services Resettlement costs Courier & Delivery services Freight services transport goods Other: Car valet & wash services/Laundry services/Gifts/Nonlife insurance/Drivers licenses & permits/Achievements and awards/Storage of assets & goods 25 293 14 989 14 385 4 684 3 293 805 204 95 20 855 190 6 550 3 044 3 311 643 279 13 TOTAL63 74834 885 10

11. Transfer on Expanded Public Works Projects 2011/12 * InstitutionsExpenditure R’000 2011/12 Sustainable land base livelihoods245 454 Working for waste177 021 People and parks128 770 Working for the coast76 384 Beneficiary training23 869 Working for Fire351 996 Working for Water297 572 Total1 301 066 11

12. Transfer to Public Entities * InstitutionsExpenditure R’000 2011/12 South African National Parks222 014 South African Biodiversity Institute220 387 South African Weather Services148 407 iSimangaliso Wetland Park of Authority67 847 Total658 655 12

13. Transfer to Non-Profit Institutions * Public Entity/InstitutionExpenditure R’000 Buyisa-e-Bag16 050 Wildlife and Environmental Society of South Africa4 000 African World Heritage Fund3 000 National Association for Clean Air1 400 Maloti Drakensberg1 203 Total25 653 13

14. 14 InstitutionExpenditure R’000 Global Environmental Fund12 890 Social Benefit2 838 North West University967 Municipalities (various)5 Total16 700 Other Transfers *

15. Payment for Capital Assets * NotesExpenditure Machinery and equipmentR’000 Ship & marine equipment (Final payment SA Agulhas II) Computer hardware & systems Expenditure for capital assets; Good and services Audio visual equipment Office furniture Finance fee lease Office equipment Photographic equipment Motor vehicle Software and other intangible assets Medical and allied equipment Lifting & handling equipment Transport accessories & trailers Radio equipment Security equipment, systems, material: movable Workshop equipment Gardening equipment Kitchen appliances Telecommunication equipment Bags Survey equipment Domestic equipment 645 701 9 137 6 073 4 424 2 357 2 100 1 365 627 698 515 369 213 147 118 79 70 69 44 38 24 11 7 Total673 726 15

16. Departmental Expenditure Trend YearBudget R’000 Actual R’000 % Expenditure 2004/20051 652 2681 633 88298.9% 2005/20061 753 3071 746 15499.6% 2006/20072 061 8042 059 66499.9% 2007/20082 790 5212 788 75799.9% 2008/20093 206 5573 198 87899.8% 2009/20103 510 6413 503 33899.8% 2010/20112 488 5142 390 02396.0% 2011/20124 201 6164 108 54997.8% 16

17. Auditor-General’s Opinion on Public Entities Audit Opinion EntityUnqualifiedEmphasis of matter ReasonAction SANParksYesNone-- SANBIYes Under spending Grant received on shortfall Projects initially postponed as part of saving measures Surplus will be applied to continue projects in 2012/13 SAWSYesNone-- iSimangalisoYesNone-- 17

18. 18 RevenueSANParks R’000 SANBI R’000 SAWS R’000 iSiman- galiso R’000 Government Grant716 881220 387162 476113 636 Transfer: Environmental Affairs Other transfers from departments 222 014 494 867 220 387 - 148 407 14 069 67 847 45 789 Own revenue984 756177 449104 45426 425 Revenue from operating activities/Admission fees/Aviation income/Park revenue Other income Sales Investment income Donations Fair value gain Non-regulated commercial income Penalties 897 408 21 536 45 098 20 212 502 - 30 149 12 214 1 359 2 455 129 793 1 479 - 80 417 3 331 - 5 217 - 15 489 - 9 066 5 046 - 331 - 11 982 Total1 701 637397 836266 930140 061 Public Entities source of revenue

19. Internal versus external revenue The relationship between the revenue generated from external sources (i.e. grants) and internal sources (i.e. fees, donations, interest, etc.) as a percentage of total revenue as demonstrated above. 19

20. 20 ExpenditureSANParks R’000 SANBI R’000 SAWS R’000 iSimangaliso R’000 Compensation of employees584 373137 876138 0668 675 Operating expenses497 18455 40289 91528 700 Administration expenditure67 29714 6446 56524 988 Projects551 958124 617-26 312 Total1 700 812332 539234 54688 675 Public Entities expenditure

21. Total revenue versus total expenditure This chart demonstrates the relationship between the total revenue and expenditure, therefore the net surplus position of the entities for the year ended 31 March 2012. 21

22. 22 SANParks R’000 SANBI R’000 SAWS R’000 iSimangaliso R’000 Surplus82565 00032 00051 000 Reason Improved revenue collection. Better cost management. Park develop- ment fund. Sales of fauna and flora. Land acqui- sition grant. Allocation of additional funds for commitments to projects. Decrease in the liability for post retirement medical benefits. Increase aviation tariff charges, web sales. Rental of equipment lease of aircraft in India. Sales from portal subscription and mobile sales. Increase of grants. Levying of penalties against contractors failure to meet their contractual undertakings. Growth in gate revenue. Public Entities expenditure

23. Challenges experienced by the department during 2011/2012 -Timely updating of asset movements in asset register -Compliance in tender verification requirements -Consultation of policies via the departmental bargaining council -Reliance and clear reporting on performance information and availability of supporting documents -Disclosure note verification 23