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City Power: Mid-Year Report 2015/16 Final

CITY POWER JOHANNESBURG (STATE OWNED COMPANY) LIMITED

Registration No: 2000/030051/30

2015/16 Mid-Year Report

July-December

Final


CITY POWER JOHANNESBURG (SOC)LIMITED

COMPANY INFORMATION: Registration number : 2000/030051/30 Registered address : 40 Heronmere Road Reuven Booysens Postal address : PO Box 38766 Booysens 2016 Telephone number : (011) 490-7000 Fax number : (011) 490-7377 Website : www.citypower.co.za Bankers : Standard Bank of SA Limited Auditors : Auditor-General

Vision

To be a world-class electricity distributor

Mission The mission of City Power is to meet the expectations of its customers and stakeholders by:

Providing a sustainable, affordable, safe and reliable electricity supply Providing prompt and efficient customer services Developing and incentivizing its employees Being the preferred equal opportunity employer Undertaking its business in an environmentally acceptable manner

Aspired values

City Power aspires to be:

Resourceful Resilient Reliable Respectful

And to always act with integrity.

http://www.citypower.co.za/


Approval Confirmation of receipt


TABLE OF CONTENTS

CHAPTER ONE: LEADERSHIP & CORPORATE PROFILE ......................................................................................... 6

Section 1: Corporate Profile and Overview of the entity .................................................................................... 6

Section 2: Strategic Objectives ............................................................................................................................ 7

Section 3: Salient Features ................................................................................................................................ 10

Section 4: High-level organisational structure .................................................................................................. 11

Section 5: Foreword: Chairperson of the Board of City Power Rev. Frank Chikane ......................................... 12

Section 6: Foreword: Managing Director of City Power, Mr. Sicelo Xulu ........................................................ 14

CHAPTER TWO GOVERNANCE............................................................................................................................... 15

Section 1: Board of Directors ............................................................................................................................ 15

Section 2: Board Committees ........................................................................................................................... 16

Section 3: Director’s & Prescribed Officers Remuneration. .............................................................................. 18

Section 4: Company Secretarial Function ......................................................................................................... 21

Section 5: Risk Management (Including Strategic & Operational Risk Management ....................................... 21

Section 6: Internal Audit Function (Focus on Independence & Objectivity & Relations to Audit Committee) 22

Section 7: Corporate Ethics and Organisational Integrity ................................................................................. 22

Section 8: Sustainability Report ........................................................................................................................ 22

Section 9: Anticorruption and Fraud ................................................................................................................. 25

Section 10: ICT Governance .............................................................................................................................. 25

Section 11: Compliance with Laws & Regulations ............................................................................................ 26

CHAPTER THREE SERVICE DELIVERY PERFORMANCE ............................................................................................ 29

Section 1: Highlights and Achievements ........................................................................................................... 29

Section 2: Service Delivery Challenges .............................................................................................................. 29

Section 3: “Game Changers” Programmes ....................................................................................................... 29

Section 4: Capital Projects & Expenditure ........................................................................................................ 30

Section 5: Performance of Revenue Recovery Project – Milestone 2 .............................................................. 34

Section 6: Performance against Institutional IDP ............................................................................................. 38

Section 7: Supply Chain Management and Black Economic Empowerment .................................................... 43

Section 8: Statement on Amounts Owed By and To (-) Government Departments and Public Entities .......... 50

CHAPTER FOUR HUMAN RESOURCES & ORGANISATIONAL MANAGEMENT ....................................................... 56

Section 1: Human Resource Management ....................................................................................................... 56

Section 2: Employee Remuneration.................................................................................................................. 60


Section 3: Key Vacancies ................................................................................................................................... 60

Section 4: Employment Equity .......................................................................................................................... 60

Section 5: Skills Development and Training ...................................................................................................... 61

Section 6: Performance Management & Succession Planning ......................................................................... 64

Section 7: Change Management ....................................................................................................................... 64

Section 8: Disciplinary Matters and Outcomes ................................................................................................. 65

Section 9: Leave & Productivity Management .................................................................................................. 65

Section 10: Employee Benefits ......................................................................................................................... 66

Section 11: Occupational Health & Safety Programmes................................................................................... 66

CHAPTER FIVE FINANCIAL PERFORMANCE & EXPOSURE ..................................................................................... 68

Section 1: Statement of Financial Performance and high-level notes .............................................................. 68

Section 3: Cash Flow Statement ....................................................................................................................... 75

Section 4: Ratio Analysis ................................................................................................................................... 75

Section 5: Report on Irregular, Fruitless and Wasteful Expenditure and Due Processes ................................. 75

Section 6: Pending Litigations and Possible Liabilities ...................................................................................... 75

Section 7: Insurance Claims against/to MOE .................................................................................................... 75

CHAPTER SIX INTERNAL & EXTERNAL AUDIT FINDINGS ........................................................................................ 76

Section 1: Results of Internal Audits ................................................................................................................. 76

Section 2: Progress on Resolution of Internal Audit Findings ........................................................................... 77

Section 3: Progress on Resolution of External Audit Findings .......................................................................... 79

Section 4: State of Internal Controls ................................................................................................................. 79


CHAPTER ONE: LEADERSHIP & CORPORATE PROFILE

Section 1: Corporate Profile and Overview of the entity

City Power Johannesburg (SOC) Ltd (City Power) is accountable for providing electricity services to all its customers. As the electricity distribution service provider of the City of Johannesburg, City Power’s core competency is to purchase, distribute and sell electricity within its geographical footprint.

City Power was established in 2000 as an independent municipal entity, wholly owned by the City of Johannesburg. The National Energy Regulator of South Africa (NERSA) granted City Power a license to trade on 19 December 2001. Today, City Power has approximately 410 000 customers; ranging from domestic to commercial and industrial properties.

The City, by means of a Service Delivery Agreement, regulates the service provided by City Power in respect of financial issues (such as tariffs and capital expenditure), human resource issues (such as skills development), delivery targets (maintenance of assets and addressing assets) and standards of customer care. City Power is accountable to provide network services to all its customers, which include:

the purchasing and distribution and sale of electricity

constructing networks

connecting customers

repair and maintenance of networks

installation and maintenance of public lighting. City Power is not the sole provider of electricity services for the City. The areas not covered by City Power (predominantly Soweto and Sandton), are serviced by Eskom. City Power is currently reviewing its business model, moving towards being an energy company. The drive for the change is:

• Increasing and securing the supply of energy • Acquiring electricity from renewable and alternative sources • Reducing greenhouse gas emissions • Strategic use of a mix of technologies and energy sources to achieve goals

The above have to be done whilst: • Reducing the burden of cost on the consumer • Balancing the financial sustainability of the business, delivery of services and Shareholder goals • Moving to the “Smart City” concept via a Smart Grid and integration with other City initiatives (e.g.

transport) .


Section 2: Strategic Objectives

THE FOCUS AREAS In the midterm review of the IDP 2011-16 the following Strategic focus areas until 2016 were agreed on:

The 5 year IDP is translated into one year plans which are called the Service Delivery Budget Implementation Plan (SDBIP). City Power’s is aligned to programmes that ensure attainment of the SDBIP.


Focus Areas COJ Program City Power

Programme City Power Projects

Game Changer

Communications & Stakeholder Management

Stakeholder Engagement

City Power therefore needs to: 1.Communicate, promote and profile capital projects that the company is doing. 2.Communicate the value of smart meter projects in line with the development of a smart city 3.Inform customers about planned and unplanned power interruptions (through alerts) 4.Educate customers about the value of taking ownership of the electricity network within their communities. 5.Inform customers about the dates and times during which City Power will read or audit electricity meters. 6.Educate customers about the importance of paying for their services 7.Profile service delivery projects of the city within specific local areas. 8.Inform customer about community empowerment projects such as Jozi@work as well as community investment projects.

Flagship Programme

Corridors of Freedom

Infrastructure Plan & maintenance: COF

Hursthill Sub Station Upgrade Sandringham Sub Station Perth Empire Corridor Distribution Networks Phase 1 Turfontein Corridor Distribution Networks Phase 1 Wemmer and Industria Feeder Boards Replacement

Smart City Infrastructure Plan & maintenance: Smart Grid

Smart meter roll out ICT Network Upgrade to Telco Grade Last Mile Network Outage Management and Network Automation (ADMS) SAP HANA Upgrade with ISU

Green/ Blue economy

DSM Energy Management (Including DSM And SSM)

Core Mandate

Service Delivery Elevation

Revenue Recovery Project

Improve Service Charge Improve Meter Reading performance Reduce Non-Technical Losses

Outage Management

Network conditioning of Transmission networks, MV networks, LV networks and OHL’s, Street lighting and Secondary Plant Roll out of ABC

Electrification of informal settlement

Programme 1: Electrification of informal settlements 2014/15/16 Financial Year is in Setjwetla, Princess Transit Camp, Lawley Station, Northern Farm, Vukani Informal Settlement ( Near Helen Joseph Women Hostel), M1 Informal Settlement (near Madala Hostel), Elias Motsoaledi and Thembelihle.

Security of Supply Projects

Ripple Control

Smart Meter - Load limiting

Solar Water Heaters

Demand Response - Large Customer Participation

Domestic TOU Tariff

Virtual Power Station: Photovoltaic Generation (IPP), Photovoltaic Generation (Own), Stand-by Diesel Generators, Co/Tri-Generation, Waste to Energy, Solar Water Heating & Battery Storage


BUSINESS MODEL REVIEW The City of Johannesburg has embarked upon journey to become a sustainable and smart City of the future in line with the principles of the Growth and Development Strategy 2040. Energy will be a critical component in realising this aspiration. Whilst energy is key to unlocking the economic and socio-economic development objectives, unchecked consumption of coal-based power will increase carbon and energy intensity, threaten economic and environmental sustainability and the quality of living within the City. The shareholder and the Board have mandated City Power to relook their business model and consider options with regard to a wider energy portfolio, particularly with regard to inclusion of renewables and gas. The table below shows the project progress:

Ref Deliverable/milestones Objective/ definition Completion Comment

1a Environmental scan Get an understanding of the current environment and possible industry direction

100 Automotive fuels have been added

1b. Energy plan Base on the above what are the possible energy requirements for COJ

100 Report has been shared with EISD

3 Business case review

Which energies are the best options for the COJ to get into? What is best for COJ citizens and viability?

100 Included in the report

2 Business Model options/ scenarios

Based on these energies what is the best way for the City to structure its energy business

100 Included in the report

Stakeholder engagement

Meet with different stakeholder to get inputs, buying and /or approval

70 Board and EISD approval done. Need to get political input

GO-NO-GO

Roadmap/implementation plan for the approved energies

Based on the approve energies and structure including predicted energy availability and constrains when is the best time for COJ to implement what, for cost effective value add to the citizens

95 To be finalised with stakeholder inputs

The report has been presented to the board and EISD STRATEGY MAP City Power strategic direction that is highlighted below is aligned to the GDS 2040 which is aligned to the National Development Plan (NDP) and the Gauteng 2055. The picture below shows the vision, mission, values, and business operating principles of City Power.

Vision

To be a world-class energy utility

Mission

The mission of City Power Johannesburg SOC is to meet the expectations of our customers and

stakeholders by:

• Providing a sustainable, affordable, safe and reliable energy supply

• Providing prompt and efficient customer services

• Being the preferred equal opportunity employer by developing and incentivising our employees

• Undertaking our business in an environmentally acceptable manner

What Business Are We In?

We are in the business of producing and distributing energy.

Business Operating Principles

• Customer-centric organisation

• Seamless value chain driven organisation

• Zero tolerance for poor performance

• Doing business in an ethical manner, zero tolerance for fraud and

corruption

Aspired Values

• Resourceful

• Resilient

• Reliable

• Respectful

• Always with


Section 3: Salient Features

Below are some of the organisation’s major achievements for the mid-year.

Financial: See chapter five

Non-Financial: CP IDP

Programme KPI Unit Actual

2014/15 Plan Midyear 2015/16

Actual Midyear 2015/16

Active engaged citizenry:

Communication & Stakeholder Management

Communication & Stakeholder Management

Customer satisfaction survey

Index 66 70 47.7

Achievement of SLA % 80 53.96

Street lights TAT Days 20 2 12

Outage reduction MV (All)

Number 2 756 1 224 1 616

Outage reduction HV (All)

Number 173 64 85

HV Outages: NPR Number 72 36 21

NRS 048 Compliance % 98.90 95 98.89

NRS 047 Compliance: % 58.61 93 59.60

Restoration time: 1.5 hours

% 16.7 30 16.5

Restoration time: 3.5 hours

% 51.6 60 59.3

Restoration time: 7 hours

% 79.9 90 86.8

Restoration time: 24 hours

% 95.4 98 97.2

Expansion and strengthening of electricity

network

Provision of public Lights

Number 4 737 450 316

Flagship: Corridors of Freedom

Electrification Number 2 238 750 1 162

Flagship: Green/Blue Economy

Security of supply/Demand Side

Management

Reduction in GHG t CO2e/MWh Not measured 380 232

Energy Mix MWh Not measured 338 125 206 256

Solar water heaters Number 19 043 1 000 610

Ripple relay roll out Number Not measured 4 800 5 912

Flagship: Smart City Smart Grid Meter Rollout Number 72 858 20 435 26 293

Jozi@work

Jozi@work

R&M spent on J@W % 10 0

Capital spent on J@W % 5 6.76

Socioeconomic Development

EPWP Number 5 003 2 500 771

50% Black owned companies

% 14.58 12 38.19

30% women owned company

% 6.88 10 14.98

Payment Levels ( Current consumption)

% 95.66 98 95.01

Meter Reading performance

% 67.47 98 58.9

Losses

Technical

Non-Technical

% 23.83 13.5 27.27

% of ESP customers with FBE provided

% 100 97 100

Resource sustainability, safer

city, governance

Business efficiency and effectiveness

ISO accreditation Audit Report Unqualified audit with minor findings per accreditation

Clean audit report

Not started

Attainment of an unqualified audit report

Audit Report Unqualified with matter of emphasis

Clean audit report

Not started

DIFR Ratio 0,.45 <1 0.35


Section 4: High-level organisational structure

BOARD

Sicelo XuluManaging Director

Lebo MaroaneExecutive PA

Mark SmithCompany Secretary

Stuart WebbActing Director: Engineering

Operations

Tshidiso NkgoediDirector: Retail Services

Quentin GreenDirector: Finance

Mdu NzimandeDirector: Engineering

Services

Felicia MsizaDirector: Risk Assurance &

Compliance

VacantDirector: Human Resources

Lungi MbewuGM: Strategy

Louis PieterseStrategic

Excecutive

Yumna Sheik

GM: Aide-de-Camp

Sol MasoloGM: Relationship

Management


Section 5: Foreword: Chairperson of the Board of City Power Rev. Frank Chikane

____________________________________________________________________ Over the last the last six months or so City Power has focused on the Business Model Review and notable progress has been made. City Power will shortly be in a position to present proposals to the shareholder for implementation. The strategic priorities of the City of Johannesburg, as the sole shareholder of City Power, drive strategic plans of the Company and significant attention is given to ensure that these priorities are implemented in the form of measurable targets and deliverables. The strategic priorities of the City of Johannesburg are contained in the Growth and Development Strategy (GDS) and in the Integrated Development Plan (IDP) of the City of Johannesburg and have also been reduced to a signed Shareholder’s Compact. City Power has incorporated these performance measurements into this report. City Power has performed relatively well on its financial ratios, however, the mid-year of the 2015/16 financial year reflect a negative surplus before taxation. The reported level of Capital expenditure against target for the mid-year is below target, however it is anticipated that this will be “caught up” in the subsequent quarters as has happened in previous financial years. The Board remains concerned about the progress on revenue as well as the high level of losses. The Board is advised that the current spike in increase in the level of losses for the mid-year relates primarily to synchronisation issues between the billings received from ESKOM and the date at which City Power invoices its domestic customers. The Revenue Recovery project is continuing in its efforts to improve meter reading performance and have advised the Board that the second quarter of 2015/16 should reflect a substantial improvement in this regard with concomitant improvements in revenue and losses. The overall mid-year performance has been marked with several achievements on our sustainability journey. City Power has exceeded the percentage spend to Black Owned Companies and Black Woman Owned Companies, and the disabling injury frequency rate remains consistently below the acceptable target level of 1. In addition, it is also encouraging that HV NPR outages and maintenance of a high quality of supply (NRS 048) objectives have been met. The maintenance of street lighting remain a challenge, despite a small improvement in performance during the quarter. The Board and Management remain resolute to attaining continuous improvement in achieving strong financial and operational results and contributing to the vision of a world-class electricity distributor. The strategic priorities of the shareholder, as always, drive our tactical plans. City Power has regrettably, during the period under review, been confronted with a demand by the SAMWU Leadership for the suspension of the Managing Director. The Board, including the Board Chairperson, has given repeated undertakings to address any issues of corruption at every level within the Company, provided that such allegations are substantiated. The Board and the Chairperson invited SAMWU to present any evidence to substantiate its allegations and up to date no evidence was submitted. The Board had in the interim concluded its own investigation into the allegations. At a meeting held on 30 October 2015, a full report, which cleared the MD of corruption in any of the matters alleged by SAMWU, was tabled before Board and Board agreed that based on its own findings, there was no indication of corruption on the side of the MD as alleged by SAMWU. However in the interest of resolving the strained relationship between Management and SAMWU it was also agreed that a relationship facilitator be engaged to assist with smoothing out the relationship between the parties. That has been done and the Facilitator has already commenced with the process. City Power has a zero tolerance of any form of corruption and remains committed to addressing any substantiated issues of corruption in a transparent and fair manner.


The governance processes of the Board are designed to ensure that the Board and its sub-committees carry out their responsibilities effectively. The attendance at Board and sub-committee meetings is a reflection of the strong commitment of the Members and the Chairperson is pleased with the robust participation of all the Members. The Board and Management are committed to ensuring good corporate governance, sound business practices and transparent compliance to legislation while delivering and improving, sustainable and reliable service. _____________________________________ Rev. Frank Chikane Chairperson of the Board City Power Johannesburg


Section 6: Foreword: Managing Director of City Power, Mr. Sicelo Xulu The mid-year of 2015/16 financial year results of City Power shows an effort of the company to meet and exceed the expectations of our shareholder as reflected in the service delivery objectives in our company scorecard. City Power is currently reviewing its business model, in preparation for moving towards being an energy company. The drivers for the change are:

• Increasing and securing the supply of energy • Acquiring electricity from renewable and alternative sources • Reducing greenhouse gas emissions • Strategic use of a mix of technologies and energy sources to achieve goals

The strategic priorities of the City of Johannesburg, as the sole shareholder of City Power, drive strategic plans of the company and significant attention is given to ensure that these priorities are implemented in the form of measurable targets and deliverables. The strategic priorities of the City of Johannesburg are contained in the Growth and Development Strategy (GDS) and in the Integrated Development Plan (IDP) of the City of Johannesburg. In the midterm review of the IDP 2011-16, the following Strategic focus areas were agreed upon and the game changers are Communication and Stakeholder Management. Flagship programmes consist of Corridors of Freedom, Jozi@work, Green and blue economy and Smart City. Our core mandate continues to focus on elevating service delivery to meet new prescribed standards. The financial performance of City Power remains a challenge during the mid-year under review, however the team is working hard to turn the current situation around. South Africans are pressured by electricity price increases, which translate into lower electricity consumption by consumers. Whilst this results in reduced revenue for City Power, it is important for the country’s electricity supply stability and helps to meet the goals of a lower carbon economy. We have viewed lower consumption as a call to find more innovative and cost effective ways of achieving service delivery. The mid-year has been marked with only achieving 37% of the IDP key performance indicators An improvement in service delivery has been seen through the reduction of network performance related outages at the High Voltage level. This can be attributed to the preventative maintenance strategy which involves the purchase and utilisation of various types of test instruments, to detect early signs of equipment breakdown. Compliance to the NRS048 has been achieved as well. The number of households with access to basic electricity services is 469 073 – an increase on last year’s performance. The maintenance of street lighting however remain a challenge resulting in an average of 12 days to repair public lights against a target of 2 days. Expansion and strengthening of the network targets were not met due to the slow progress in building houses. Electrification and provision of public lights goes hand in hand with the building of houses. Management remain committed to continuous improvement in attaining strong financial and operational results and contributing to the vision of a world-class electricity distributor. The strategic priorities of the shareholder, as always, drive our tactical plans. _________________________ Mr. Sicelo Xulu Managing Director City Power Johannesburg


CHAPTER TWO GOVERNANCE

Section 1: Board of Directors

City Power has a unitary Board, which consists of Executive and Non-Executive Directors. During the year under review one Non-Executive Directors and one Independent Audit Committee Member resigned. During the year under review, the Board was chaired by a Non-Executive Director, Rev Frank Chikane. The Board meets regularly (at least quarterly) and retains full control over the Company. The Board remains accountable to the City of Johannesburg Metropolitan Municipality (the Company’s sole shareholder) and its stakeholders, the citizens of Johannesburg. A Service Delivery Agreement (SDA), concluded in accordance with the provisions of the Municipal Systems Act (MSA) governs the Company’s relationship with the City of Johannesburg. The Board provides monthly, quarterly, bi-annual and annual reports on its performance and service delivery to its parent municipality as prescribed in the SDA, the MFMA and the MSA. Such reports are submitted within the stipulated timeframes. Non-Executive Directors contribute an independent view to matters under consideration and add to the depth of experience of the Board. The roles of Chairperson and Managing Director of the Company are separated, with responsibilities divided between them. The Chairperson has no executive functions. Members of the Board have unlimited access to the Company Secretary, who acts as an advisor to the Board and its committees on matters including compliance with Company rules and procedures, statutory regulations and best corporate practices. The Board or any of its Members may, in appropriate circumstances and at the expense of the Company, obtain the advice of independent professionals. A director and peer review as well as a Board evaluation are undertaken on an annual basis. The Memorandum of Incorporation provides that the Directors of the Company will be elected by the Shareholder and appointed by the Board of Directors. The Managing Director is appointed by the Board in consultation with the Shareholder. Attendance at meetings held during the year was as follows:

Directors Board HR Risk,

Assurance & Compliance

Social & Ethics

Quarterly Review

Audit Ad Hoc - RRP

NR OF MEETINGS HELD FOR THE FINANCIAL YEAR

7 3 3 2 2 4 5

Rev. F Chikane 6 - - 2 2 - 2

Mr. NE Galawe (resigned – 31 Oct ’15) 5 of 5 - - 1 of 1 2 of 2 - 4 of 4

Mr. QB Green

6 2 3 2 2 4 3

Mr. NSA Hlubi 6 - 2 - 1 4 -

Mr. VG Lukhele 6 3 3 1 - - -

Ms. SK Makotoko 5 2 2 - - - 4

Ms. NP Mohlala

7 3 - 2 2 - -

Mr. DR Mokhobo

5 - - - 1 2 5

Mr. D Naidu

7 - 3 - 2 - 5

Mr. TI Sithole

6 3 2 - - 3 -

Mr. SG Xulu 5 1 3 1 2 2 5

Independent Audit Committee

Ms. LJ Fosu (resigned 13 Jul 2015) - - - - - - -

Mr. W Hattingh 1 - - - - 4 -

Ms ML Shongwe - - - - - 1 -

DATES OF MEETINGS :


Section 2: Board Committees

The Board has the following Committees and working groups to assist it in carrying out its responsibilities. Each committee is chaired by a Non-Executive Director.

Audit Committee

Human Resources Committee

Risk, Assurance & Compliance Committee

Social and Ethics Committee

Quarterly Review Committee

Special Ad Hoc Committee – Revenue Recovery Project 2.1 Audit Committee The Audit Committee consists of the following Non-Executive Directors and Independent Audit Committee Members:

Nhlanhla Hlubi (Chairperson)

Khati Mokhobo

Thulani Sithole

Linky Fosu (resigned – 13 Jul 2015)

Waldo Hattingh

Matseliso Shongwe The Committee met four times during the period under review. The role of the Audit Committee is to assist the Board by performing an objective and independent review of the functioning of the Company’s finance, accounting and risk control mechanisms. It exercises its functions through close liaison and communication with senior management and the internal and external auditors. The Audit Committee operates in accordance with a written Terms of Reference authorised by the Board, and provides assistance to the Board with regards to:

o Ensuring compliance with applicable legislation and the requirements of regulatory authorities o Matters relating to financial accounting, accounting policies, reporting and disclosures o Matters relating to risk management o Internal and external audit policy; o Activities, scope, adequacy and effectiveness of the internal audit function and audit plans o Reviewing and recommending the approval of external audit plans, findings, reports and fees o Reviewing and recommending the approval of strategic risks and mitigating strategies o Compliance with the Code of Corporate Practices and Conduct o Compliance with the Code of Ethics; and o Recommend and provide input into the multi-year Business Plan

The Audit Committee adequately addressed its responsibilities in terms of the Committee’s Terms of Reference during the period. 2.2 Human Resources Committee The Human Resources Committee consist of the following Non-Executive and Executive Directors:

Nomaswazi Mohlala (Chairperson)

Quentin Green

Vusi Lukhele

Shiva Makotoko

Thulani Sithole

Sicelo Xulu The Committee met three times during the period under review. The Human Resources Committee advises the Board on remuneration policies, remuneration packages and other terms of employment for employees including all Directors and senior Management. Its specific Terms of Reference also include recommendations to the Board on matters relating to general staff policy, remuneration, performance bonuses, executive remuneration, Director Remuneration, fees and service


contracts, performance compact, and compliance with relevant legislation and strategic alignment with the objectives of the Company. 2.3 Risk, Assurance & Compliance Committee The Risk, Assurance & Compliance Committee consists of the following Non-Executive and Executive Directors:

Dayalan Naidu (Chairperson)

Nhlanhla Hlubi

Vusi Lukhele

Shiva Makotoko

Thulani Sithole

Sicelo Xulu

The Committee met three times during the period under review. The Committee assists the Board in exercising oversight over regulatory and legislative compliance. The Committee also maintains oversight over the implementation of the Company’s Supply Chain Management Policy in terms of the Local Government: Municipal Finance Management Act (56/2003): Municipal Supply Chain Management Regulations (Gazette no. 27636/ 30 May 2005), Section 6(a). The Risk, Assurance & Compliance Committee adequately addressed its responsibilities in terms of Enterprise Risk Management and Safety, Health & Quality Assurance as per the Committee’s Terms of Reference during the period. 2.4 Social and Ethics Committee The Social and Ethics Committee consists of the following Non-Executive and Executive Directors: Nceba Galawe (Chairperson) (resigned on 31 Oct 2015)

Frank Chikane

Quentin Green

Vusi Lukhele

Nomaswazi Mohlala

Sicelo Xulu The Committee met twice during the period under review. The Social and Ethics Committee advises the Board on the institutionalisation of ethics in the internal structures, systems and processes of the company. The Social and Ethics Committee ensures that there is strong emphasis on the responsibility of the Company towards the communities in which the company operates, social transformation within the workplace, and the protection of the safety, health and dignity of employees. The Social and Ethics Committee adequately addressed its responsibilities in terms of the Committee’s Terms of Reference during the period. 2.5 Quarterly Review Committee The Quarterly Review Committee consists of the following Non-Executive Directors:

Frank Chikane (Chairperson) Nceba Galawe (resigned on 31 Oct 2015)

Nhlanhla Hlubi

Nomaswazi Mohlala

Khati Mokhobo

Dayalan Naidu The Committee met twice during the period under review. The Committee exercised oversight over the Company’s performance on a quarterly basis and reviews the Quarterly Reports and Mid-year Report prior to submission to the MMC: Environment, Infrastructure and Services Delivery. These reports are used for the purpose of evaluating the performance of the Company


on a quarterly basis by the Shareholder. The Performance of the Company is measured in terms of predetermined goals and strategies as set out in the Company’s Business Plan. 2.6 Special Ad Hoc Committee – Revenue Recovery Project

The Special Ad Hoc Committee – Revenue Recover Project consists of the following Non-Executive and Executive Directors:

Khati Mokhobo (Chairperson)

Nceba Galawe (resigned on 31 Oct 2015)

Dayalan Naidu

Shiva Makotoko Quentin Green Sicelo Xulu

The Committee met five times during the period under review.

The purpose of the Committee is to exercise effective oversight and monitoring of the Revenue Recovery Project. The main objectives of the Revenue Recovery Project are to reduce non-technical losses by accurately measuring and recording consumption of customers, ensure accurate monthly billing for customers, and to improve revenue performance and to recover losses. The main role of the Committee is to monitor City Power and the City of Johannesburg’s plan to manage Revenue in a sustainable manner and to report to the Board and the Shareholder on the performance of the Revenue Recovery Project.

Section 3: Director’s & Prescribed Officers Remuneration.

Non-Executive Directors' Remuneration In terms of the provisions of the Remuneration Policy adopted by the Mayoral Committee, Group Governance is required, at least annually, to make recommendations on the fees payable to the Non-Executive Directors of the City of Johannesburg’s municipal entities. In line with this requirement, Group Governance produces a report on the remuneration of Non-Executive Directors and Independent Audit Committee Members which is in line with the provisions of the Municipal Finance Management Act, 2003 (MFMA) and Municipal Systems Act, 2000 (as amended). The attendance and annual retainer fees for Non-Executive Directors and Independent Audit Committee Members of City Power are determined by the Shareholder. The rates applicable for financial year was determined by the Mayoral Committee resolution passed on 05 March 2015, effective from 03 February 2015, and will remain in force until amended by Group Governance, or the Mayoral Committee, as the case may be. An annual retainer fee is payable to Non-Executive Directors and Independent Audit Committee Members, where they qualify for the retainer to be paid (e.g. 60% or more attendance of all required meetings). Non-Executive Directors’ and Independent Audit Committee Members’ fees are only paid in accordance with City Power’s approved budget.

Executive Director’s

Name Position TOTAL R'000

Mr. S Xulu Managing Director 1 584

Mr. Q B Green

Director: Finance 1 319

Total 2 903


Non-Executive Directors: Current


Rev. F Chikane Chairperson 264

Mr. NE Galawe (resigned – 31 Oct 2015) Board Member 132

Mr. NSA Hlubi Board Member 163

Ms. Z Hlatshwayo (retired –03 Feb 2015) Board Member 1*

Mr. VG Lukhele Board Member 116

Ms. SK Makotoko Board Member 115

Ms. NP Mohlala Board Member 155

Mr. DR Mokhobo Board Member 160

Mr. D Naidu Board Member 186

Dr. Y Ndema (Resigned – 30 Sep 2014) Board Member 7*

Mr. TI Sithole Board Member 150

Total

1 449

(*Note: The Annual Retainer Fee for 2014/2015 FY was paid to NEDs at end of Jul 2015.)

Independent Audit Committee Members

Name TOTAL R'000

Ms. L J Fosu (resigned – 13 Jul 2015) Independent Audit Committee Member 1*

Mr. W Hattingh Independent Audit Committee Member 71

Mr. H Moolla (Retired – 03 Feb 2015) Independent Audit Committee Member 17*

Ms. ML Shongwe Independent Audit Committee Member 22

Total 111

(*Note: The Annual Retain Fee for 2014/2015 FY was paid to IACs at end of Jul 2015.) (The vacancy left by Ms LJ Fosu has not been filled.)

Executive Committee Members (as at 31 December 2015)


Ms. MS Mafora (Contract ended 31 Dec 2015) Director: Human Resources 501

Ms. NF Msiza Director: Risk, Assurance & Compliance 1 159

Mr. TG Nkgoedi Director: Retail Services 944

Mr. TM Nzimande Director: Engineering Services 978

Mr. DL Pieterse Strategic Executive 926

Mr. GS Webb (Acting from 10 Nov 2014) Acting Director: Engineering Operations 683

Mr. MJ Smith Company Secretary 655

Mr R Smith Project Director: RRP 877

Total 6 723

City Power: Quarterly Report 2015/16 Final

SENIOR MANAGEMENT REMUNERATION

SURN

AM

E

INIT

S

POSI

TIO

N

SALA

RY

RETI

REM

ENT

FUN

D

MED

AID

UIF

TRA

VEL

ALL

OW

AN

CES

REIM

-TRA

VEL

& S

UBS

IST

GLA

SDL

PERF

BO

NU

S

TOTA

L

Gamede SE General Manager: Field Services PP South 543 74 - 1 41 8 - 37 7 72 783

Golden RA General Manager: HR Business Support 531 80 22 1 51 8 - 41 8 128 869

Govender J General Manager: Engineering Workshop 535 82 43 1 74 8 - 42 8 129 922

Hlatshwayo TG General Manager: Nerve Centre 530 70 - 1 - 8 - 36 7 116 768

Hlongwa NP General Manager: Capital Programme Exec. 393 68 65 1 57 8 - 35 8 95 729

Hlubi NR General Manager: OE 521 83 29 1 77 8 - 42 8 138 906

Lembede XP General Manager: Infrastructure Planning 473 75 31 1 65 8 5 38 7 124 827

Magida LV General Manager: Energy Management 448 75 56 1 58 51 3 38 6 - 736

Maropefela K General Manager: Employee Relations 146 23 16 0 18 3 - 16 4 - 227

Masolo CS General Manager: Relationship Management 202 30 11 0 11 3 - 18 5 -25 254

Matsheketsheke LD General Manager: Bus. Financial Support 427 69 34 1 57 8 - 35 7 117 753

Mazibuko RHB General Manager: Field Serv. Sec Plant 427 63 - 1 45 8 - 32 6 67 648

Mbewu NS General Manager: Strategy 457 70 40 1 31 8 - 35 6 18 666

Mochela A General Manager: ICT 407 66 39 1 48 8 14 33 6 103 725

Mphahlele MP General Manager: Metering Field Services 512 74 - 1 42 8 - 37 7 73 754

Msomi NW General Manager: Field Services PP North 462 73 31 1 55 8 - 37 6 66 739

Nakeng B General Manager: Talent Management 455 73 31 1 60 8 - 37 7 117 789

Nsele NP General Manager: Assets Management 520 78 69 1 - 8 - 40 7 126 848

Pienaar N General Manager: Management Accounting 497 66 - 1 - 8 - 33 6 111 723

Pillay L General Manager: Financial Reporting 474 78 43 1 74 8 - 40 7 133 858

Ramagaga IM General Manager: Availability of Supply 451 62 15 1 - 8 - 31 6 61 634

Seabela RM General Manager: Data & Process Govern. 491 73 15 1 45 8 - 37 7 121 798

Setshedi L General Manager: Technology Services 471 73 21 1 55 8 - 37 7 101 774

Sheik Y General Manager: Aide-de-Camp 532 75 - 1 60 8 - 38 6 5 725

Tefu JL General Manager: SHEQ 352 63 73 1 47 8 - 32 6 97 678

Truter TL General Manager: Security Risk Mgmnt 398 58 - 1 49 8 - 30 6 90 639

Ngubane NN General Manager: RAC 584 81 - 1 24 22 - 41 8 108 868

TOTAL 12 239 1 854 683 23 1 143 265 21 945 175 2 291 19 640


Section 4: Company Secretarial Function

The Company Secretary is responsible for providing guidance to the Board collectively and to the Directors individually. The Directors have unlimited access to the Company Secretary who advises the Members, the Board and the Sub-Committees regarding their duties and responsibilities. The Company Secretary in conjunction with the Risk, Assurance and Compliance Group, is responsible for advising the Board of applicable legislation and regulations and ensuring the Board acts in compliance therewith including with the Company’s policies and procedures. The Company Secretary is also responsible for the proper administration and good corporate governance of the Board proceedings and all matters relating to the Board.

Section 5: Risk Management (Including Strategic & Operational Risk Management

Background

Enterprise Risk Management (ERM) is the holistic management of all risks. It is a structured, consistent and continuous process across the whole of City Power for risk identification, assessment, decision making and reporting. The Enterprise Risk Management Framework is the set of components for designing, implementing, monitoring, reviewing and continually improving risk management throughout City Power. ERM is a process, effected by City Power’s Board of Directors, management and other personnel, applied in strategy setting and across the business aimed at identifying potential events that may affect the company and manage risk to be within the approved Risk Appetite and to provide reasonable assurance regarding the achievement of City Power’s objectives. The Risk Management Policy, Strategy and Methodology were developed and approved by the Board in January 2014. The Policy, Strategy and Methodology are in line with:

Municipal Finance Management Act 56 of 2003;

ISO 31000:2009;

King III report on Corporate Governance;

Enterprise Risk Management and Control Framework – COSO;

CoJ Group Risk Management Framework;

City Power Leadership Charter; and

National Treasury Risk Management Framework.

STRATEGIC RISKS

Top 10 Risks The Revised Risk Register was developed with the Revised Top 10 risks are listed below and a brief summary of the Revised Top 10 risks. Risk 1: Excessive Non- Technical losses and declining revenues Risk 2: Inability of the Capital Programme to respond to the strategic requirements, further exacerbated by

poor execution or failure to deliver Risk 3: Inadequate network maintenance planning or execution Risk 4: Poor Project/Programme Management (New Risk) Risk 5: Fragmented and outdated ICT platforms which fail to support wither the strategic or operational

requirements Risk 6: Lack of capacity and capability (inadequate /insufficient skills) for both current and future business

needs Risk 7: Excessive use of Contractors (New Risk) Risk 8: Failure to modify the business model to changing environment and customer requirements Risk 9: Non-compliance to key legislation and regulations and in particular supply chain practices .

(Fraud and Corruption) Risk 10: Non-compliance to key legislation and regulations


Section 6: Internal Audit Function (Focus on Independence & Objectivity & Relations to Audit Committee)

The City Power’ internal audit function is mandated by the audit committee to provide independent, objective assurance and consulting services designed to add value and improve the organisation’s management, administration and operations. In accordance with the approval of the audit committee, the Internal Audit three year audit plan is based on the key company strategic risks to evaluate and improve the effectiveness of risk management, control and governance processes within the organisation. The annual plan covered various reviews across the company’s divisions and departments. This ensures that the audit coverage is focused on and identifies areas of high risk. The audit committee reviews the Internal Audit’s performance on a quarterly basis regarding the reviews conducted on the company’s system of internal control, risk management and governance processes. The Internal Audit authority is derived from the Internal Audit Charter which is reviewed on an annual basis and approved by the audit committee.

The Internal Audit function reports administratively to the Managing Director and functionally to the Audit Committee and has direct access to the chairperson of the audit committee.

Section 7: Corporate Ethics and Organisational Integrity

The Company has a Code of Conduct (‘the Code”) which has been fully endorsed by the Board and applies to all Directors and employees. The Code is regularly reviewed and updated as necessary to ensure it reflects the highest standards of behaviour and professionalism. In summary the Code requires that at all times, all company personnel act with utmost integrity and objectivity and in compliance with the letter and spirit of both the law and company policies. Failure by employees to act in terms of the Code results in disciplinary action. The Code is discussed with each new employee as part of his or her induction training and all employees are asked to sign an annual declaration confirming their compliance with the Code. A copy of the Code is available to interested parties upon request. A toll-free anonymous telephone facility exists for reporting of non-adherence to the Code or ethic related matters. Furthermore, any breach of the Code is considered a serious offence and is dealt with accordingly; as a result, this acts as a deterrent. The directors believe that ethical standards are being met and fully supported by the ethics programme.

Section 8: Sustainability Report

8.1 Safety and Quality

Employee Safety

The SHEQ department is the custodian of Integrated SHEQ Management System based on ISO Standard requirements comprising of ISO 9001 (Quality Management), 14001 (Environmental Management) and OHSAS 18001 (Health and Safety Management) Systems has proven record for continuously improvement regarding Safety, Health, Environment and Quality. The DIFR has continued to remain below the international threshold of <1. Disabling Injury Frequency Rate (DIFR) is currently at 0.58. During this period under review City Power did not experience any employee fatality. Public Safety

The risk of theft and vandalism, tempering and illegal connection on the City Power network remains a greater challenge resulting in permanent and or partial and temporary disability, sometimes into fatalities. For the period under review there has been 3 public fatalities recorded (Controllable - 1 and Non-Controllable 2). The Public Fatalities: Controllable KPI refers to the number of public fatalities due to electricity related incidents caused by City Power. In an effort to maintain low controllable public fatalities, Public Fatalities: Non-controllable KPI refers to the number of public fatalities that are mainly due to electrocution as a result of various factors such as customer negligence, tampering with electricity installations, attempted theft and vandalism of infrastructure, etc.


Intervention measures

In an endeavour to educate our customers and communities, City Power conducts staff and contractor training and awareness campaigns to ensure greater awareness within communities of the danger of electricity.

Joint operations on illegal connections conducted by City Power, Transnet, JMPD forms an integral part of an effective safety campaigns.

Our integrated program ensures compliance to the relevant legal, regulatory and standard requirement.

City Power continuously monitors the effectiveness of its safety programs to protect and safe guard against all risks and impact related to its activities.

8.2 Environmental Management (ISO 14001:2004)

City Power is certified by the South African Bureau of Standards (SABS) in addressing all environmental management challenges. In ensuring that the business remains committed to undertaking its processes in an environmentally acceptable manner without compromising quality. The system is effectively monitored and managed. For the period under review, City Power and other key stakeholders is in the process of reviewing the impact of the Ferndalespruit whereby sleeve pipes were installed below the stream. This activity normally triggers the Environmental Impact Assessment (EIA) and the Basic Assessment Process (BA) in terms of 2010 Regulations. Based on this section, City Power is in the process of addressing the non-conformance with the relevant governmental institutions (Gauteng Department of Agriculture and Rural Development, Water Affairs, CoJ, Environmental Affairs) to rehabilitate the Ferndalespruit and get the authorisation as stipulated by the National Environmental National Act (NEMA). Conceited 8.3 Occupational Health (OHSAS 18001:2007)

City Power considers its employees, customers, contractors and members of the public to be its most valuable assets. The Occupational Health Department continues to periodically assess the health of exposed population. For the period under review in line with the CoJ’s 2040 GDS, a number of activities and programs were successfully achieved:

Cancer Awareness Campaign was conducted on the 13th October 2015. This was in partnership

with the Department of Health (Region F), Wits Health Institute and Moso consultants. Out of

20% uptake of employees 76% were male participants and 24% female participants. All

abnormal results were referred to external Practitioners by the company Doctor. The prevalence

of cancer amongst City Power employees remain a concern.

Successful procurement of services of a Gym Instructor (freelancers) as part of the gym

turnaround strategy.

COID Process:

o Noticeable improvement in terms of the late reporting of COID claims which carries a fine of

R700.00 per late claim.

o Successful rehabilitation and reintegration of an employee who sustained severe burn

injuries whilst working on the network.

o Maintained reportable work related diseases at zero (0)

8.4 Employee Assistance Program (EAP)

EAP is designed to timeously identify and assist with the recovery of those employees whose personal

problems may adversely affect their job performance to the detriment of business productivity.

For this reporting period the following programs were provided and implemented:

8.4.1 Therapeutic Program

Professional counselling

Crisis intervention


Critical incidence stress debriefing

Personal debt and financial management

Substance abuse and addiction

Stress and psychological disorder

Marital, family relationships and domestic violence

8.4.2 Preventative and Awareness Program

EAP creates awareness and empowers employees regarding work and personal challenges that

impairs employee’s performance. Below are the programs that EAP embarked on:

A successful 16 Days of Activism against Gender Based Violence program was conducted for

City Power female and male employees respectively on the 4th and 8th December 2015.

Donated 100 blankets and snacks at Soweto Old Age Home.

Donated 60 blankets and snacks at Carl Sithole Childrens Home at Pimville, Soweto.

Participated on World AIDS Day Commemoration which was held on the 1st December 2015

8.5 HIV Management

HIV/AIDS continues to be a major contributor of the burden of disease in South Africa. The main aim of this health profile is to highlight the impact of the HIV epidemic on the organization and continue with the mitigating interventions that are in place. City Power aligns itself with the South African National AIDS Council (SANAC), the National Health Policy, HIV risk management programme, chronic health management programme, and it associates with HIV experienced interventionists, pharmaceutical expects and others thus :

Improving the quality of life

Increasing individual life expectancy

Improving and increasing ART compliance and adherence

Reduce opportunistic infections and co- infections

Reduce absenteeism

Increase productivity

Improve the general wellbeing of clients and employees

The in house HIV programme registered eighty six (86) clients who are on the Disease Management

Programme

Seventy one (71) are on ART

Fifteen (15) are on pre ART or prophylactic therapy

Family members on supportive therapy ten - (10)

Contractors on supportive therapy – ten (10)

Clinic transfers – two(2) due to retirement

Deaths - two (2) due to complicated diabetes and pneumonia respectively

The World AIDS Day Commemoration (01 December 2015)

Three hundred and seventy (370) clients were tested for HIV and six (6) tested POSITIVE.

Further pathological investigations are conducted on the six

Other screening which were available included – blood grouping and iron levels

The massage therapist recorded 400 clients who participated on that day.

Sustainability risks The Board acknowledges its overall accountability for ensuring an effective results-driven integrated risk management process. Exco has implemented a risk control system to enable management to respond appropriately to significant risks that could impact negatively or positively on business objectives. Risk reviews are conducted with input from divisional and functional areas. Risks are identified and ranked by


divisions and groups, reviewed, and then assessed by Exco, the Audit Committee, and the Board to determine the major operational, strategic and business continuity risks. The ratings of the risks are finalized after considering the mitigation plans, and executive accountability is assigned for each of the risks.

Section 9: Anticorruption and Fraud

The company has adopted a zero tolerance towards fraud and corruption. The Anticorruption and fraud policy is reviewed on an annual basis and is approved by the Audit Committee. Various anti-corruption and fraud campaigns have been conducted during the period under review, which focused on preventative measures pertaining to fraud and corruption as well as the importance of whistle blowing. On the 9th of December 2015, a very successful commemoration of the annual World Anti-Corruption day was held at City Power where more than 300 employees attended. Key members of management took to the podium to share with fellow colleagues challenges that corruption and fraud possess to City Power and South Africa as a whole. A whistle blow policy is also in place to encourage both employees and members of the public to report any fraud and corrupt activity to an independent dedicated tip off anonymous communication channel. Quarterly reports have been made to the Audit Committee regarding issues pertaining to fraud and corruption as well as resolution thereof. Reports indicating quarterly resolution of tip offs are presented to the Audit Committee on a quarterly basis.

Section 10: ICT Governance

ICT Governance is defined as 'specifying the decision rights and accountability framework to encourage desirable behaviour in the use of Information Communications Technology (ICT). Corporate Governance of ICT (CGICT) encompasses two levels of decision-making, authority and accountability to satisfy the expectations of all stakeholders:

(a) Facilitating the achievement of a department’s strategic goals - CGICT; and (b) The efficient and effective management of ICT service delivery - Governance of ICT (GICT).

In order to align ICT with its direct and indirect customers, Engineering Services: ICT embarked on a project to establish the ICT strategy which encompassed two main facets:

1) ICT Governance Framework 2) ICT Policy Landscape

The project addressed each of the above facets individually while capturing the logical interface / interaction points between them.

This is intended to ensure that the ICT direction is in alignment with the City Power’s Core Business road map and to effectively support the Enterprise Architecture. The aforementioned will set the tone to expand the ICT capability to support future business requirements and will serve as a platform for planning and envisioning future projects.

The Department of Public Service and Administration (DPSA) has developed a Corporate Governance of Information Communications Technology Policy Framework (CGICTPF) for all government departments and state owned companies (SOC). Over and above the DPSA CGICTPF, South African Local Government Association (SALGA) has also developed the “Municipal Guide / Roadmap to Successful ICT Governance” which incorporates the DPSA CGICTPF.


10.1 Value Realisation

Investment Investm

ent

Benefit ROI

1. SAP Mobility R5mil Ability to transact faster and reduce long turnaround

times in releasing Service Requests, POs, and Service Entries. Work Force management and staff location for

improved service delivery and efficiency by

electronically capturing work orders and locating the position of the engineer

Project is still in

rollout phase but

we expect this to

increase image of

City Power on

turnaround times

2. SharePoint R5mil Reduction of disk space due to duplication, security of

files and ability to search enabling corporate knowledge

management. Re-use of existing information saving on consulting cost.

R 10 mil and more

3. Microsoft

Infrastructure

R5mil Stabilisation of the ICT platform result in availability of

email, and other systems dependent on the platform R 10 mil and more

4. Datacentre R1mil Stabilisation of the power and air-conditioning to avoid

disaster and also comply to audit requirements R 10 mil and more

5. Force Link R5mil Replacement of eResponse which was unstable and problematic resulting in incorrect stats thereby impact

image of City Power

R 10 mil and more

6. Enterprise

Service

Management

R3mil Accountability from all business units, ICT and Service Providers resulting in value for money and improved

service delivery internally and externally

R 10 mil and more

7. ICT Governance R5mil Creating a stable and world class digital City Power

company with Enterprise Architecture standards and

related governance artefacts resulting in City Power good performance services that are predictable and repeatable

R 10 mil and more

10.2 ICT Business Cases

Business Area Business Case Required

Status Indicator

Top management laptops compiled

A Business Case has been prepared

Approved

Electronic Board

system. A Business Case has

been prepared

Approved

Infrastructure

Optimisation A Business Case has

been prepared

Approved

Enterprise Project

Management A Business Case has

been prepared

Approved

LoadShedding

Mobile App A Business Case has

been prepared

Approved

SharePoint

(LoadShedding Enhancement)


Approved

Business Process Automation


Approved


10.3 ICT Strategy (Status on Implementation of the Strategy)

Strategy Item ICT Area Initiative Milestone Indicator

Project Status

ICT Governance Institutionalization

Governance Enhancement of governance structure and reporting;

Review ICT Governance framework to ensure that it complies to DPSA and SALGA terms of reference regarding Governance of ICT - Review the Alignment of Corporate Governance of ICT Policies Framework to City Power

81%

Infrastructure Optimisation; SAP Optimisation & Institutionalisation

Operations Active Directory, Exchange, SharePoint, System Centre VM Manager, SQL, Skype, Security, Software

95%

Active Directory Penetration Test & Vulnerability Assessment and APN Penetration Test & Vulnerability Assessment

95%

AP Workforce Design, SAP ABAP, SAP EHB Upgrade, SAP HCM Design & Blueprint, SAP Institutionalisation Resources

10%

SharePoint – Load shedding Enhancement, Change Management, SharePoint Support Services

90%

Enterprise Architecture

Architecture Review ICT Architecture and provide in-depth analysis & mapping, as well as provide

85%


the final enterprise architecture plan covering:

o Strategic applications;

o Selected core applications (Metering, Outage Management/ADMS, Integrated Smart Grid Security); and

o Collaboration applications (VoIP, Lync, SharePoint, Programme / Project / Activity Management from collaboration perspective)

Enterprise Service Management

ICT Service Management

Implementation of Service Management Solution

0%

10.4 ICT Governance, Audit, Risk & Compliance ICT Governance

Development of Governance Framework Good

Development of proposed policies

Development of the ICT Charter

Development of the ICT Steering Committee through NACVC

Development of the ICT Strategy

Implementation of Risk Management

Development of ICT Continuity Plan

Implementation of Information Security Management

Section 11: Compliance with Laws & Regulations

As a first level assurance to the board our intervention in monitoring compliance has increased the level of awareness and importance of compliance within City Power. Our intervention is done through conducting compliance audits. During the mid-year we have conducted audits in the Engineering Operations and Retail Services Departments.


CHAPTER THREE SERVICE DELIVERY PERFORMANCE

Section 1: Highlights and Achievements

Joint operations with other law enforcement agencies(SAPS/HAWKS) and the operation has led to the arrest and closure of one big syndicate group which was operating in the Midrand area

6 high risk areas on theft and vandalism of electrical network infrastructure has been neutralised by intelligence teams and other interventions implemented.

The number of HV (NPR) outages were below the target threshold of 36, with an actual of 21 outages.

The Workplace Skills Plan was approved by the EWSETA on 18 August 2015

76% of learners registered for Electrician’s trade tests have been declared competent

Graduates, Technicians and Engineers-in-training who have been trained through City Power Learning programs were interviewed and are ready to be appointed through the normal recruitment process.

Load Limiting: Implementation of Load Limiting has improved the service delivery and reduced impact of Load Shedding during the winter period and was positively accepted.

Procurement spend on companies that are 50% black owned exceeded. 33.47% against a target of 12%.

Procurement spend on companies that are 30% black woman owned has been achieved. 11.8% against a target of 10%.

Payment of creditors within 15 days

The successful implementation of Pay Progression in October 2015, for the second year in a row without major hassles. A total of 1276 eligible employees benefitted from this exercise.

A total of 59 positions have been advertised from July 2015 to December 2015 (interviews are on-going).

The finalisation of the City Power Strategic Workforce Plan for 2015 – 2019.

A successful two-day LLF workshop was held on 18/19 November 2015 to review the Rules of Engagement which governs the relationship between Management and Organised Labour.

The approval of the TASK Grades report by the HR Committee on 3 November 2015.

First organization in South Africa to receive SABS ISO 31000:2009 compliance.

Section 2: Service Delivery Challenges

The previous method of measuring the meter disconnections and reconnection performance was imprecise. A new system, using the Forcelink suite, is in the process of being implemented which will provide accurate performance data in future.

Section 3: “Game Changers” Programmes

Progress on stakeholder engagement plan The 2015/16 tariff books were designed, printed and distributed to City Power depots, COJ regional centres and published on City Power internet. 62 planned outages affecting 128 761 customers were communicated through electronic screens. Participated at the hostels forum meeting in region F, the purpose of this meeting was to debrief on education the residence of the services offered by the MoE’s, as championed by Department of Human Settlement. Customer educational campaigns focussing on topic such as load shedding, electricity safety, saving energy, illegal connections and vandalism, how to use prepaid meters, pre-paid tariffs, ESP and other energy matters were held in the following areas:

Freedom Park,

Narens Farm

Lehae

Leratong

Alexandra

Lufhereng

Tshepisong


Devland A community education workshop were held in Jeppe and George Goch hostels educating the community on safety of electricity and how to stop illegal connections. Key customer Golf day was also held to improve customer relations.

Section 4: Capital Projects & Expenditure

The approved City Power Capital budget for the 2015/16 financial year is R 1.7 billion. This approved budget is inclusive of loans, own funding, DSM funding, and grants and public contributions The expenditure for year to date is R670m, as outlined on the table below.


ACTUAL VS PROJECTIONS:

All projects have forecasts for expenditure and progress. These will be used to report and track progress in

order to ensure successful execution of the capital programme. The graph below depicts the recovery path in

expenditure. The figures shown are based on individual projects which are then rolled up to categories. The

graph below indicates actual spend against the base projections, including the variance between Actual and

Budget:


CAPITAL EXPENDITURE DETAILS

CONTROLLABLE CAPEX The expenditure for the financial year on Controllable capital projects, which are projects funded from COJ

loans, DSM levy, Grant funding, Own cash and Adopt a light funding amounted to R635 m year to date.

Table on Controllable Capex

NON CONTROLLABLE CAPEX The non-controllable capital projects are projects which are funded by public contributions. The expenditure for the mid-year amounted to R35m year to date, against a mid-year budget of R30m.


Table on Non – Controllable Capex

Section 5: Performance of Revenue Recovery Project – Milestone 2

All initiatives, projects and programmes that directly relate to completing AMR conversions, including replacement of obsolete AMR meters, ensuring that all AMR installations are functional, ensuring all meter readings are delivered by means of AMR technology to SAP ISU and ensuring that mission critical Operating Unit Enablers are build, operationalise and transferred to normal business. Other in-scope elements are:

Resolving AG Audit findings;

Post-paid AMR conversion to Prepaid AMR (same Smart Meter)

AMR Conversion query resolution;

SAP Fixit;

Ghost finding; and

Protective structures as part of the conversion process.

5.1 Out of Scope

The following is out of scope of the RRP and Milestone 2:

New connections and upgrades;

Disconnections and reconnections;

Prepaid non-technical losses recovery;

Pre-paid customer data improvement;

NRS Reporting;

Invoice reconciliation and tracking; and

Invoice calculations.


5.2 Milestone 2 Business Case

Strategy Business Case

1. Resolve all AG Issues.

2. Fix all meter reading upload fails.

3. Complete AMR conversions.

By executing this strategy the following will be prevented:

Fruitless and wasteful expenditure.

Audit Findings.

Non-compliance with regulations.

Increasing customer queries.

Shareholder dissatisfaction.

Survival of City Power

4. Set-up interim capabilities to sustain

AMI performance.

By executing this strategy the following benefits will be derived:

Issues fixed will be sustained.

Meter performance monitoring will pro-actively take place.

Work dispatch will be coordinated, optimised and

measured.

Escalated customer queries resolution time will decrease.

Customer satisfaction will increase.

Revenue recovery will continue.

Improved quality control on new LPU installations.

5. Develop and establish the future

state Smart Meter Operating Model.


Business goals will be achieved.

Maximizing the return on the value proposition offered by

the introduction of Smart Metering Technology.

Benefits realisation as per the investment business case.

6. Improve Meter-to-Cash business

processes


Improved end-to-end device management process.

Improve effectiveness in organisation to execute on end-to-

end processes.

Improved Master Data.

Improves segregation of duties.

Updated systems and technology.

Business Case

5.3 Stakeholder Expectations: Milestone 2

The following Stakeholder requirements are to be met:

Put ‘business as usual functions’ currently residing in RPP back in line as soon as possible.

Diligently apply the lessons learned during Milestone 1.

Use accredited OEM service providers for installations and maintenance.

Take into account City of Johannesburg’s political intent.

“Cannot fail” on Milestone 2.

Address competency gaps identified during Milestone 1.


5.4 Milestone 2 Progress as at 30 November 2015.

AG Issues - Unread

Meters

30 September

2015

31 December

2015%

4 to 6 months 11 021 14 440 31%

7 to 9 months 5 176 6 890 33%

10 to 12 months 3 361 3 257 -3%

>3<12 months 19 558 24 587 26%

13 to 18 months 3 502 3 633 4%

19 to 24 months 1 788 486 -73%

25 to 36 months 1 530 491 -68%

37 to 48 months 266 117 -56%

49 to 60 months 169 55 -67%

61 to 72 months 480 141 -71%

73 months and longer 476 131 -72%

AG >12 Months 8 211 5 054 -38%

Total 27 769 29 641 7%


Smart meter conversion and maintenance of smart meters has stopped due to expiry of the contract and

insufficient capital and operational budgets.

Losses

The total losses amounted to 27.27% due to the following, the total purchases are below budget by 2% due to reduction in demand and though the losses are budgeted to be at 13.5% but City Power has reviewed this target to 22% as part of mid-year budget review due to the budget constraints. The reporting of the losses in the short term also need to be reviewed to 12 months moving average due to the industry standard, if the 12 months moving average is implemented in the current performance quarter 2 losses would amount to 22,75%. Though the losses remain stable but the 22% total losses remain high and there is a high need to fast track the revenue recovery project so as to reduce the losses.

By applying a 12 month moving average the effect of reversals and out-of-synch issues are smoothed out.

Smart Meter - Data

Mismatches

Percentage

Change

Total FDM/x 6%

Total Meters Not on MDC/x

113%

Total Meters not on MDM 13%

Total Meters not on SAP ISU

-12%

11386 10119

16194 18474

Dec-15 Oct-15

112020 105825

6032 2828

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

12 months Moving Average Losses


Section 6: Performance against Institutional IDP

Within the strategy map, value propositions are linked to key balanced scorecard perspectives. This section outlines these value propositions, key performance areas, indicators and actual performance for the financial year 2015/16 from financial, customer, internal and learning and growth perspectives.

The report analyses the performance of the entity in terms of the SDBIP scorecard, measuring performance in terms of both the entity’s impact and its financial and resource management. Performance that met or exceeded target is highlighted green and below target performance is highlighted in red.

High voltage (HV) outages refer to the number of outages experience on the high voltage network, which is at voltages about 33kV. Outages on these networks generally affect large areas. Medium voltage (MV) outages are outages experienced on the medium voltage network, which is at voltages between 1kV and 33kV. Outages on this network are more localised, and therefore generally affect smaller areas. And as a result are less severe than HV outages. The number of HV outages and MV outages exceeded the target. There has been a significant increase in HV and MV (all) outages as a result of escalating theft and vandalism of copper components, particularly cables that have a negative effect on this KPI. Damage by third parties has also contributed to the increased number. Improving security measures are being rolled out to manage this situation.

Restoration times form part of the NRS 047 standard. The restoration times refer to the amount of time it takes for customers to have their power restored after an outage occurs. Although there has been an improvement in

Target Actual Target Actual Target Actual

Customer Satisfaction

SurveyIndex 67 47.70 67.00 47.70 67.00 47.70

Achievement of SLA % 80 53.96 80 53.96 80 53.96

Street Lights TAT Days 2.00 8.60 2.00 7.70 2.00 12.00

Outage reduction MV

(All)Number 612.00 738.00 612.00 869.00 1 224.00 1 616.00

Outage reduction HV

(All)Number 32.00 34.00 32.00 49.00 64.00 85.00

HV Outages: NPR Number 18 8.00 18 11.00 36.00 21.00

Restoration time: 1.5

hours% 30.00 20.74 30.00 13.62 30.00 16.53

Restoration time: 3.5

hours% 60.00 54.83 60.00 62.67 60.00 59.31

Restoration time: 7

hours% 90.00 81.26 90.00 85.74 90.00 86.88

Restoration time: 24

hours% 98.00 97.32 98.00 97.15 98.00 97.24

NRS 047 Compliance % 93.00 64.27 93.00 62.04 93.00 59.60

NRS 048 Compliance % 95.00 98.51 95.00 99.07 95.00 98.89

PIPImpact on

CommunityKPI Unit

CP IDP

Programme

Core Mandate:

Sustainable

Human

Settlement

Service Delivery

Improvement

Improved

Service Delivery

Quarter 1 Quarter 2 YTD

Active engaged

citizenry:

Communication

& Stakeholder

Management

Communication

& Stakeholder

Management

Improve

customer and

stakeholder

experience


performance when compared to mid-year in 2014/15, the targets were not met during the mid-year. City Power is currently introducing newer and enhanced outage dispatching protocol to replace the existing obsolete system. The obsolete outage management system has now been discontinued and a new modern system, including MDT communication, will be introduced in the 3rd quarter. A gradual improvement in outage times is expected as a result. Furthermore, the training of resources to undertake network switching is at an advanced stage and the authorisation of additional Operators will be completed in the next few months.

Public lighting turnaround time refers to the time it takes for a street light to be repaired after it has been reported to City Power by the public. The turnaround time target was originally 10 days, but was subsequently reduced to 2 days. The Street Lighting Policy is currently under review and improvement initiatives will be identified and implemented. There is also a Street lighting Maintenance Strategy in the process of being formulated based on best practice. This will be introduced in the early part of 2016. NRS047 is a regulatory standard used for the monitoring of quality of service in the South African electricity industry. Meeting and reporting on these targets is imperative for the well-being of City Power’s license. The following KPI’s are managed by RSSC as an agent for City Power and have not been met for mid-year performance:

Call Centre related KPI’s,

Query resolution related KPI’s. Poor meter reading performance also contribute to low performance on NRS 047. City Power is working closely with RSSC to attain performance improvement on these KPIS. NRS048 is a regulatory standard used for the monitoring of quality of supply in the South African electricity industry. This standard acknowledges that quality of supply requirements differ between customer categories and per network type. City Power has attained these KPIs.

Electrification target for the mid-year has been exceeded as electrification was done as houses were completed.

Public Lighting target for the mid-year was not achieved because bulk of the lighting installation are done hand in hand with the housing development and electrification projects. Any delay there will impact on the roll-out of public lighting. Ripple Control Relays installation contractors have been appointed and installation exceeded the target. Solar Water Heaters’ budget for the mid-year was 1 000, with a total of 20 000 planned for the year. The project is still in planning and will commence once all the internal processes have been completed and installation contractor appointed. The total of 610 that was installed relates to the contracts from the previous financial year, and was installed early July. Energy mix’ target was not met due to less solar water heaters against plan. This also affect the reduction in greenhouse emissions.


Electrification Number 750 347 250 815 1 000 1 162

Provision of public

LightsNumber 450 213 450 451 900 664

Reduction in GHG t CO2e/MWh - 0.00 380 232 380 232

Improve Energy Mix

(MW)MWh 2 704 0 2 704 0.00 2 704 0

Ripple relay roll out Number 2 400 0.00 2 400 5 912 4 800 5 912

Solar Water Heaters Number - 610 1 000 - 1 000 610

Expansion and

Strengthening

of Network

More people

with access to

electricity,

Economic

growth

Flagship:

Green/Blue

Economy

Security of

supply/Demand

side

management

Improved

security of

supply

Quarter 1 Quarter 2 YTD KPI Unit

Impact on

CommunityPIP

CP IDP

Programme


Non-Technical Losses Refer to page 49 above on losses. Meter Reading performance

- Manual Meter Reading – Performance has been around 59%. - AMR Performance – 19% drop of AMR performance was due to audit files for manually read that could

not be uploaded as the MRQC system was not available. Smart Meter Roll-Out The number for meter roll-out is based on meters successfully uploaded on SAP for billing in the quarter. 53% of the meters updated during the mid-year on SAP are collecting readings as intended. Payment Level Contract at RSSC for delivery of notices expired in August 2015, as a result there were no pre-termination notices issued affecting cut-offs and collection levels.

Job opportunities created as per EPWP (Expanded Public Works Program) have not been exceeded. The company has a plan in place to ensure the attainment of an unqualified audit report. The creation of jobs in this category is directly linked to the project that are being rolled out, and that impacts on the rate at which jobs are being created. Targets for J@W R&M spent for the mid-year was 10%, and the Capital Spent of J@W quarterly target is 5 %, the reason for slow performance on this is that the YTD Expenditure on the projects is very low, and that impacts on % spent on these initiatives. The company has not attained the targets on all of the KPIs that are information technology related, (except DIFR), Contact with electrical network often results in serious incidents, resulting in permanent and or partial and temporary disability, sometimes into fatalities. For the period under review there has been no employee fatality and 11 public fatalities recorded (Controllable - 0 and Non-Controllable 11). The Public Fatalities: Controllable KPI refers to the number of public fatalities due to electricity related incidents caused by City Power. In an effort to maintain low controllable public fatalities, City Power conducts staff and contractor training and awareness campaigns. On the 29th April 2014 the business celebrated the Worker`s Day event as an integral part of the awareness campaign, supported by EXCO, Department of Labour and all relevant departments. Public


Flagship:

Smart CitySmart Grid

Improved

customer and

stakeholder

experience

Meter Roll Out Number 10 535 17 183 9 900 9 110 20 435 26 293

Payment Levels

(Current consumption)% 98.00 96.09 98.00 93.83 98.00 95.01

Meter Reading

performance% 98 66.08 98 58.90 98 58.90

Losses (Technical/ &

Non-Technical)% 13.50 27.58 14.26 26.48 14.26 27.27

KPI UnitPIPCP IDP

Programme

Impact on

Community

YTD Quarter 1 Quarter 2

Core Mandate:

Financial

resikience and

sustainability

Revenue

Revenue

Recovery

Program

Improved

customer and

stakeholder

experience


R&M spent on J@W % 10 0.00 10 0.00 10 0.00

Capital spent on J@W % 5 0.00 5 6.76 5 6.76

EPWP Number 1 250 771 1 250 204 2 500 771

50% black owned

companies% 12 68.54 12 44.13 12 38.19

30% black woman

owned company% 10 26.89 10 18.99 10 14.98

DIFR Ratio 1 0.63 1 0.35 1 0.35

ISO accreditation Audit report3 = Unqualif ied

Audit reportNot Started

3 =

Unqualif ied

Audit report

Not Started

3 =

Unqualif ied

Audit report

Not Started

Attainment of an Clean

audit reportAudit report 3 Pending 3

3 =

Unqualif ied

audit w ith

matters of

emphasis

3

3 =

Unqualif ied

audit w ith

matters of

emphasis

PIPCP IDP

Programme

Impact on

CommunityKPI Unit

YTD Quarter 1 Quarter 2

Resource

sustainability,

safer city,

governance

Job creation,

Poverty

reduction

Jozi@work

Socioeconomic

Development

Jozi@work

Business

efficiency and

effectiveness


Fatalities: Non-controllable KPI refers to the number of public fatalities that are mainly due to electrocution as a result of various factors such as customer negligence, tampering with electricity installations, attempted theft and vandalism of infrastructure, etc. In an endeavour to educate our customers and communities, City Power is conducting awareness campaigns to ensure greater within communities of the danger of electricity. Joint operations on illegal connections conducted by City Power, Transnet, JMPD forms an integral part of an effective safety campaigns. KPI’s for monitoring purposes

BOARD BALANCED SCORECARD WITH KEY PERFORMANCE AREAS AND INDICATORS


Core Mandate:

Sustainable

Human

Settlement

Service Delivery

Improvement

Improved

Service Delivery

Number of households

with access to basic

electricity

Number 415 518 469 073 418 326 469 073 418 326 469 073

Flagship:

Corridors of

Freedom

Refurbishment

of ageing

infrastructure

Improved

network

performance and

quality of supply

Average age of

infrastructure (HV)Years 39 37 39 37 39 37

Number of prepaid

customers Number 252 893 255 081 255 701 258 620 255 701 258 620

% of ESP customers

with FBE provided % 97.00 100.00 97.00 100.00 97.00 100.00

YTD

Core Mandate:

Financial

resikience and

sustainability

Revenue

Revenue

Recovery

Program

Improved

customer and

stakeholder

experience

Quarter 1 Quarter 2PIP

CP IDP

Programme

Impact on

CommunityKPI Unit


Financial Perspective

Customer Perspective

Internal Perspective


Revenue step

change

programme

Reduce Losses Total Losses %Reduce Total

Losses% 13.50 27.58 13.50 26.48 13.50 27.27

Optimise Capex

Spend

Total Capex

Spend as % of

Targeted Capex

Spend

Total Capex Spend

as % of Targeted

Capex Spend

% 100 154.64 100.00 122.89 100 77.32

PIP Align-ment CP IDP

Programme

Value Propositions Key Performance

Area

Unit

Financial

Resilience and

Sustainability

Key Performance

Indicator

Quarter 1 Quarter 2 Year to Date


Street Lights TAT Days2 9 2 8 2 12

Outage reduction

MV (All)

Number612 738 612 869 1224 1 616

Outage reduction

HV (All)

Number32 34 32 49 64 85

Restoration time:

1.5 hours

%30 20.74 17.5 13.62 36 16.53

Restoration time:

3.5 hours

%60 54.83 60.00 62.67 60.00 59.31

Restoration time: 7

hours

%90 81.26 90.00 81.26 90.00 81.26

Restoration time: 24

hours

%98 97.32 98.00 97.32 98.00 97.32

Promote Energy

Efficiency

Reduction in

Green House

Gases

GHG % 0 0.0 380 231.6 380 231.6

Green

Economy

Demand Side

Management

Promote Energy

Efficiency

Improve Energy

Mix (MW)

Improve Energy Mix

(MW)MW 0 206 256.3 338 125 0.0 338 125 206 256.3

Active Engaged

Citizenry

Improve

Customer

Centricity and

people

development

Improved Customer

/ Stakeholder

Experience

Improve

Customer /

Stakeholder

Satisfaction

Satisfaction Index

%% 75 60.52 75 59.35 75 59.94

NRS 047

Compliance% 93.00 64.27 93.00 62.04 93.00 59.60

NRS 048

Compliance% 95.00 98.51 95.00 99.07 95.00 98.89

SMME &

Entrepreneur

Development &

Support

Improve

Customer

Centricity and

people

development

Socioeconomic

Development

Socioeconomic

Development

Socioeconomic

Development Index# 56 69.47 56 27.54 56 37.75

Maintain High

Quality of Service

Levels

Quality Supply and

Availability

Sustainable

Human

Settlements

Improve Network

performance and

quality of supply

Year to DateKey Performance

Indicator

Value Propositions Key Performance

Area

Quarter 1 Quarter 2UnitPIP Align-ment CP IDP

Programme


Resource

Sustainability

Continuous

Improvement of

the business

Manage Core Value

Chains

Monitor and

Improve

Compliance and

Assurance

Compliance and

Assurance Index Status 3.0 3.0 3.0 2.0 3.0 5.0

Key Performance

Area

PIP Align-ment CP IDP

Programme

Unit Year to DateQuarter 1 Quarter 2Key Performance

Indicator

Value Propositions


Learning & Growth Perspective

Section 7: Supply Chain Management and Black Economic Empowerment

On the 1st October 2005, City Power Johannesburg adopted Supply Chain Management systems in compliance with the provisions of the MFMA and the National Treasury: Municipal Supply Chain Management Regulations. The entity fully complies with the provisions of SCM Policy, MFMA, B-BBEE, CIDB, PPPFA and all other related regulations. The SCM Unit continuously monitors the implementation of SCM policies and provides quarterly reports to the relevant governing structures. The Supply Chain Policy is amended annually and all updated National Treasury’s Practice Notes are incorporated into the updated SCM Policy to align the entity with the best practices of the industry. During the 1st quarter the SCM revised Policy was approved by the Board. The entity has implemented the three–stage bidding processes with separate Bid specification, Bid evaluation and Bid Adjudication committees. During the financial year 2014/15 the entity made 102 awards to the value of approximately R4,6 billion in value. Out of the 102 awards, 55 of them went to Black Owned Companies and 32 went to Black Women Owned companies. All awards in excess of R40 million, are referred to an independent external review panel at the discretion of the Accounting Officer, to review the validity of the entire Bid process for assurance. All other awards made through Regulation 36 of the MFMA, are continuously reported to the relevant governing structures for notification. No unsolicited bids were approved by the entity during this period. Accreditation of Black Economic Empowerment in respect to both the supplier and contractor

Accreditation of suppliers and contractors is completed on an on-going basis by the BEE unit and reviewed

regularly to ensure validity and correctness of information on the database. Suppliers and contractors are

required to submit BEE certificates which will show their contribution levels, thus enabling reporting on BEE

spend.

BEE spend in respect of suppliers and contractors

The mid-year spend on 50% Black Owned companies amounted to R1 504m which is 38.19% of the procurement spend and is above the set target of 12%. Procurement spend on 30% Black Women Owned companies amounted to R610m which equates to 14.98% of the total procurement spend and is above the set target of 10%.

Below is the table that indicates the expenditure and BEE representations for the entity during the mid-year of the financial year 2015/16.


Resource

Sustainability0

High Performing

Teams

Improve Team

Performance

High Performance

Team Index% 70 72.5 70 52.7 70 55.5

CP IDP

Programme

Key Performance

Area

PIP Align-ment Unit Year to DateQuarter 1 Quarter 2Key Performance

Indicator

Value Propositions


City Power was compliant with all relevant legislation pertaining to procurement and is aligned with City of Johannesburg Supply Chain Management policy.

Contract Management during the mid-year Contracts are monitored on a regular basis by both the end user and supply chain in order to ensure that there is full compliance with the scope of work and that spend is within the approved budget. This ensures that supplier performance is closely monitored in order to identify areas of poor performance or non-performance so that corrective measures can be put in place and implemented as early as possible.

Enforced penalties on contractors

None for the mid-year. Reports on unsatisfactory work

None reported for the mid-year.

Target Quarter 1 Quarter 2 YTD

Procurement spend from suppliers

that are 50% black ownedR000's 10% 995 217 509 164 1 504 382

% Spend % 68.5 44.1 38.19

Procurement spend from suppliers

that are 30% black women ownedR000's 8% 390 433 219 144 609 577

% Spend % 26.9 19.0 14.98


Bid Status Report at Mid-year

No. Bid description Tender Bulletin Number

Date of Advertisemen

t

Closing date

Status Budget CAPEX/

R’000 OPEX

1

(Re-advert) Maintenance of fire-fighting equipment

2099GS 17/07/2015 21/08/2015 Awarded

R 1 000 OPEX

2

Repairs and maintenance of Ripple Control Transmitter Equipment

2135S 03/07/2015 17/07/2015 Awarded

R 3 000 OPEX

3

Supply and delivery of cleaning detergents

2136G 07/08/2015 21/08/2015 Evaluation Stage

Stock item

STORES

4 Provision of Physical Security to City Power

2144S 17/07/2015 21/08/2015 Evaluation Stage

R 148 000

R50 m (CAPEX) R98m (OPEX)

5

Provision of crime Intelligence services to City Power


R 150 000

OPEX

6

Provision of Physical Security to City Power (National Key Point)

2146S 17/07/2015 21/08/2015 Evaluation stage

R 16 000

OPEX

7 Repairs and Calibration of Equipment


R 18 000

OPEX

8 (Re-advert) Internet and VPNS Solution

2149S 14/08/2015 04/09/2015 Awarded

R 7 200 OPEX

9

RFP on Generation Solution for City Power (Gas Turbines)

2150S 30/10/2015 29/01/2015 Still advertised

RFP CAPEX / OPEX

10 Provision of gym Freelancers

2151S 24/07/2015 07/08/2015 Awarded

R 792 OPEX

11 Supply and delivery of LV and MV Fuses


Stock item

STORES




t

Closing date


R’000 OPEX

12 Supply and delivery of discharge Lamps


Stock item

STORES

13 Public Lighting Steel Masts

2156G 13/11/2015 14/12/2015 Bid Closed

Stock item

STORES

14

Repairs, Maintenance, Transportation and Installation of Transformers


R 300 000

R150 m (CAPEX) R150m (OPEX

15 Provision of Last Mile Communication

2158S 18/09/2015 02/11/2015 Bid Closed

RFP OPEX

16

Provision of Advanced Data Management Systems

2159S 18/09/2015 30/10/2015 Bid Closed

RFP OPEX

17 Cable Fault Location

2161S 23/10/2015 23/11/2015 Bid Closed

R 30 000

18 Provision of printing solution to City Power

2162S 30/10/2015 04/12/2015 Bid Closed

R 18 000

OPEX

19

Supply, Installation and Commissioning of Substation Battery Charger

2163GS 28/09/2015 09/10/2015 BEC Stage

R 7 000 CAPEX

20 Final and Check Meter Reading

2164S 02/11/2015 02/12/2015 BEC Stage

R 42 116

OPEX

21 Painting of Bolck E&F

2166S 13/11/2015 27/11/2015 Bid Closed

R 1 200 OPEX

22 Transformer and Switchgear Testing

2168S 23/10/2015 23/11/2015 BEC Stage

R 54 000

OPEX

23 Contact Centre 2173S 13/11/2015 27/11/2015 Bid Closed

R 9 000 OPEX

24 Secondary Plant Testing

2175S 16/10/2015 20/11/2015 BEC Stage

R 60 000

OPEX

25 Supply and delivery of PPE

2176G 07/12/2015 29/01/2015 Bid still advertised

Stock item

STORES

26 Roosevelt Park Substation

2179GS 30/11/2015 22/01/2016 Bid still advertised

R 65 000

CAPEX

27 Waterval SWS Feeder board Replacement


R 25 000

CAPEX




t

Closing date


R’000 OPEX

28 Hopefield Substation


R 35 000

CAPEX

29 Upgrade of Hursthill Substation


R 40 000

CAPEX

Bids/Contracts approved during the mid-year

Tender Number

Contractor Name Description Period Budget Vote R’000

Award Value R’000

2121G Mndhabazi Trading Cc Miye Pattie Trading Enterprise

Supply and Delivery of Canteen Groceries and Perishables

2 Years R14 000 R7 669 R6 331 R14 000

2108G Nothani Engineering Supply and Delivery of Concrete Plinths

3 Years R10 000 R10 000

2111G Imbawula Supply and Delivery of Concrete Poles for LV & MV Overhead Distribution Systems

3 Years R20 000 R20 000

2112G Intelligence Electric Solution

24/7 Specialised Office Chairs

Once-off purchase

R1 400 R1 350

2116G Dodwana Construction cc Supply and Delivery of 25kV Pressure Test Sets

Once-off purchase

R2 000 R1 926

2100GS Shorts Lifts (Pty) Ltd Platform Lifts for Disabled people

Once-off service

R3 000 R1 550

2135S Farad (Pty) Ltd Repair and Maintenance of Ripple Control Transmitter Equipment

3 Years

R3 000

R3 000

2113GS Phola Airconditioning Air – Conditioning Maintenance

3 Years R2 985 R2 985

2088S Wolters Kluwer Mindex Agilebridge Landis & Gyr (SUPTALK) Landis & Gyr (SUPRIMA)

Annual Software Licences for City Power

3 Years R8 016 R 330 R 392 R3 255 R1 350 R2 689 R8 016

2151S Inside Active Gym Freelancers (Locums) Services

12 Months R300 R300

2149S Vodacom Internet and VPNS 3 Years R7 200 R3 676

2099GS Phola Airconditioning Fire Fighting Equipment Maintenance

3 Years R1 000 R1 000

2126S EOH Symantec Netbackup Support

12 Months R2 100 R2 058

2093G CBI: African Cables M-Tec

Supply and Delivery of Various

3 Years R1 200 000 R736 670 R349 330


Tender Number


Award Value R’000

Aberdare Electrical Cables to City Power

R114 000 R1 200 000

2101S Ampcor Khanyisa Jolobe Trading Maziya general services Powerminster Pty Bash Electrical Tshepang electrical F + J electrical Devinity trading Nothani engineering Canaan electrical contractors Karliff Designs CC W N S Projects Mandewo Inv Projects TNJ Project Solutions K Mphaks Electrical Construction Twoline Trading 135 Pty t/a Marang corporation BBP Project cc Forsai electrical Pty Lefhumo Lwa Barema Trading Enterprise Leoka investments CC Lengwati electrical Umbutho civil + electrical CC Zizwe general services Schick services CC Lephata La Basha Trading + Projects QT Electrical Zero defact trading Infinite blue trading 29 CC Enliven electrical solutions Machite engineering George Stott + company Pty Musi electrical engineering Soccer scene t/a scene electrical Amaya group holdings Cambridge energy efficiency solutions Kent electrical services LNL electrical Pty Isidingo Electrical Nkateko business enterprise Imbawula electrical services + suppliers group Colsta projets Felo-Finance + projects Wandies technical services Mveledziso Engineering Tamibuzz

Labour Contracts for the Installation and Maintenance of Medium and Low Voltage infrastructure including Public Lighting and Major Capex Projects

3 Years R1 960 000 R1 960 000


Tender Number


Award Value R’000

Sinotho Electrical + Civil engineering services 115 electrical solutions PSK construction GMHM construction + projects Sunrise electrical wholesalers Deep Blue Investments Philcorn Business Enterprises Sopityo Engineering & Civils Ndidzulaphi Projects Lermat construction + projects Setheo investments

TOTAL R3 235 001 R3 229 861


Deviation/exception procurement for the period

Item Procurement Type

Date Description Amount R’000

1 Emergency Procurement

21/08/2015 Emergency upgrade of Oil Circuit Breakers at Kelvin 88kV switchyard

R8 500

TOTAL R8 500

Section 8: Statement on Amounts Owed By and To (-) Government Departments and Public Entities

Account Number

Name Balance

220092430 7TH DIV HEADQUARTERS PWD 110 824.87

220093794 ALEXANDRIA POLICE STATION 3 013.98

220048689 ASTERI PRIMARY SCHOOL 196 988.09

220065035 ATHLONE BOYS HIGH SCHOOL 36 681.15

220028474 BARAGWANATH HOSPITAL 11 479 298.36

400735708 BATHO PELE PROJECTS CC -179.00

220088177 BEREA PRIMARY SCHOOL 22 859.11

220002412 BRAMLEY POLICE STATION

-

201001221 CARTER HP SCHOOL 93 483.61

501603722 CAVENDISH STR PRIMARY SCHOOL 20 424.11

403313542 CENTRAL GOVERNMENT 39 761.58



220056947 CENTRAL GOVERNMENT

179.00

220062250 CLEVELAND POLICE STATION 100 022.97

220065596 CYRILDENE PRIMARY SCHOOL 6 301.00

220055541 DAXINA PRIMARY 340 335.24

501428284 DELRADO PRIMARY SCHOOL 3 373.46

221211024 DEPT OF ROADS AND TRANSPORT 1 126 965.05

221211031 DEPT OF ROADS AND TRANSPORT 2 743 337.27

221283101 DEPT OF ROADS AND TRANSPORT 177 002.20



220027079 DEPT OF COMM DEV. 6109/2461/1

0.39

500107866 DEPT OF COMMUNITY DEV 183 822.06

205957376 DEPT OF COMMUNITY DEV

0.89

220008118 DEPT OF JUSTICE 1 478.34

205103222 DEPT OF PUBLIC WORKS -6 106.00

900010629 DEPT OPENBARE WERKE 30 112.87

206126649 DEPT PUB WORKS & LAND AFFAIRS -25 161.00


Account Number

Name Balance

206218656 DEPT PUBLIC WORKS -25 639.00

500143335 DEPT PUBLIC WORKS

59.41

206116288 DEPT PUBLIC WORKS AND LAND AFF -29 369.00

403305774 DEPT PUBLIC WORKS&LAND AFFAIRS 2 572.30

403305580 DEPT PUBLIC WORKS&LAND AFFAIRS -2.57









400902370 DEPT VAN PLAASLIKE BESTUUR 152 380.93

221167015 DEPT. OF PUBLIC TRANSPORT/ ROADS & WORKS

170 203.20

220003751 DEPT. PUBLIC WORKS & LAND AFFAIRS

25.30

220903752 DEPT. PUBLIC WORKS & LAND AFFAIRS

13.62

220061009 DEPT.HOUSING AND LOCAL GOVT. 1 927 310.23

220008816 DIE HOOFDIREKTEUR/ Stella 49 855.15

220022970 DIE STREEKSVERTEENWOORDIGER 58 906.00

220009104 DIE STREEKSVERTEENWOORDIGER 72 893.38

220028410 DIEPKLOOF MILITARY CAMP

0.01

220028442 DIEPKLOOF PRISON P W D 198 362.00

220030804 DISCOVERERS CHC-A 368 380.60

206153177 EASTGATE PRIMARY SCHOOL 8 346.81

221038725 EDENVALE HOSPITAL 2 797 323.77

220010501 EDUCATION MODEL C SCHOOLS 87369371

1 117 010.76

201001283 EKUKHANYISWENI LP SCHOOL -92 018.05

501518851 ELDRIDGE PRIMARY 30 116.96

206564794 FAIRSAND PRIMARY SCHOOL 28 575.40

220024991 FOREST HIGH SCHOOL 37 920.54

220032569 GAUTENG LEGISLATURE -20 102.00

501683132 GAUTENG PROV HOUSING ADV BOARD 69 809.42

220032583 GAUTENG PROV. LEGISLATOR

255.48

501236783 GAUTENG PROVINCE-HOUSING DEV BRD 267 381.70

505717061 GAUTENG PROVINCIAL GOVERMENT 260 526.96

221276007 GAUTENG PROVINCIAL GOVERMENT 234 286.67

221192163 GAUTENG PROVINCIAL GOVERNMENT 168 369.85


Account Number

Name Balance

221283117 GAUTENG PROVINCIAL GOVERNMENT 12 164.47

502046030 GAUTENG PROVINCIAL HOUSING ADV BOARD

7.99

500306004 GAUTENG PROVINCIAL HOUSING ADV BOARD

405.48

220032576 GAUTENG PROVINCIAL LEGISLATURE 766 416.24

221087497 Gauteng Shared Service Centre 1 163 396.00

220078676 GEN.CHRISTIAAN DE WET SKOOL 24 083.49

220057299 GREYVILLE PRIMARY SCHOOL 57 819.77

220052090 HIGHLANDS NORTH BOYS HIGH 20 337.33

221087257 HILLBROW HOSP.(OLD GENERAL) 1 855 177.56

220025000 HOERSKOOL DIE FAKKEL 577 710.94

220056954 HOSPITAL HILL POLICE STATION -200 215.73

205336033 HOUGHTON SCHOOL 226 464.44

205758275 I H HARRIS PRIMARY SCHOOL 50 001.60

221141121 IGUGULETHU PRIMARY SCHOOL 24 446.36

220058944 IMPALA CRESCENT PRIMARY -140 624.00

201001325 ITHUTE PRIMARY SCHOOL -6 567.00

206609716 JEPPE HIGH SCHOOL FOR BOYS

377.96

205597123 JEPPE HIGH SCHOOL FOR BOYS -930.24

206693447 JEPPE HIGH SCHOOL FOR BOYS ORIBI 21 594.41

205766396 JEPPE HIGH SCHOOL-SABLE HOUSE 6 038.55

220069512 JEPPE POLICE STATION 127 710.00

206059255 JHB GIRLS PREP GIRLS 8 265.36

206152550 JHB GIRLS PREPARATORY SCHOOL 20 857.81

220068100 JHB HOSPITAL 362 179.26

220067096 JOHN MITCHELL SCHOOL 3 193.87

400417818 KAMMALAND KLEUTERSKOOL -18 990.77

220091356 KENSINGTON SECONDARY SCHOOL 87 005.77

220048713 KING EDWARD VII SCHOOL 63 094.00

220048706 KING EDWARD VII SCHOOL 10 163.00

501725641 KLIPTOWN HIGH 26 236.57

220061954 KLIPTOWN REGIONAL COURT PWD

87.18

206152494 LAERSKOOL KENSINGTON 22 367.54

221085179 LAERSKOOL PIET VAN VUUREN -1 551.00

220055559 LANCASTER PRIMARY 51 521.15

501669836 LANCEAVALE SEKONDERE SKOOL 19 375.51

220055245 LIBRA PRIMARY SCHOOL -4 995.28

220056986 LS MODISE 1 336.40

220092173 MALVERN HIGH SCHOOL 131 476.07

206042195 MALVERN LAERSKOOL DISTR 3 2 250.92


Account Number

Name Balance

201001702 MC WEILER PRIMARY SCHOOL 221 782.58

220086395 MELPARK PRIMARY

0.14

220058479 MYNTERING BURO PWD

885.16

221317084 National Department of Public Works

16.03

221515061 NATIONAL DEPARTMENT OF PUBLIC WORKS

63 682.02


329 463.22


29 363.00

221387003 NATIONAL DEPT OF PUBLIC WORKS 177 902.61

501727439 NATIONAL GOVERNMENT OF THE REPUBLIC OF S

276 783.10

220078034 NORTHCLIFF PRIMARY SCHOOL -3 878.00

205276975 NORWOOD PRIMARY SCHOOL -18 059.08

220004811 NUWE LANDROS GEBOU 30 646.83

220017433 NUWE REKENINGS GEBOU-SARS

96.01

500439460 OAKDALE SECONDARY -28 478.00

205772914 OBSERVATORY GIRLS PRIM SCHOOL 6 511.66

205494155 OBSERVATORY GIRLS PRIM SCHOOL

0.34

501995519 ONDERWYS HULP SENTRUM SUIDRAND -18 543.44

220093787 OPENBARE WERKE EN GRONDSAKE 24 592.00

220006865 P W D WERKSWINKEL & STORE -60 005.00

502245364 PARKDALE LAERSKOOL -2 580.46

220028700 PHILIP KUSHLICK SCHOOL 20 129.09

220058550 PNEUMOCONIOSIS RESEARCH PWD 196 686.16

220025018 PREPRIMERE SKOOL DIE MOSSIE -7 876.67

300084594 PRIMERE SKOOL ROODEPOORT 60 501.67

400358552 PROVINCIAL GOVERNMENT 18 168.91

551735058 PROVINCIAL GOVERNMENT OF THE PROVINCE OF

199 653.87


767.27


474 600.29


49 841.61

205226111 PUBLIC WORKS DEPARTMENT 22 320.94

207068076 PUBLIC WORKS DEPARTMENT 190 173.13

220004970 PWD

800.80

220069777 QUEENS HIGH SCHOOL HOSTEL 23 060.63

201079836 R S A -4 165.00

220079334 R S A DEPT OF PUBLIC ROADS ATT: STELLA 56 545.18

401917933 R S A HOOFDIREKTORAAT WERKE 23 543.16


Account Number

Name Balance


403314345 R S A HOOFDIREKTORAAT WERKE

60.94



403314352 R S A OPENBAREWERKE&GRONDSAKE

616.67

220078845 R S A OPENBAREWERKE&GRONDSAKE 268 951.00

220042510 R S A PUBLIC WORKS 669 867.18

220035859 R S A PUBLIC WORKS & LAND

7.88

401808758 R S A PUBLIC WORKS & LAND 32 729.83

401886160 R S A PUBLIC WORKS & LAND 280 078.56

221085411 R S A TOD SENTRAAL RAND STRE 1 020 047.25

500279826 RAAD VAN VERTEENWOORDIGERS 60 566.07

220079398 Randburg Home Affairs 36 497.39

403304386 REPUBLIC OF SOUTH AFRICA 38 565.41







502211799 REPUBLIC OF SOUTH AFRICA

112.18









401762454 REPUBLIEK VAN SUID-AFRIKA 49 570.07



206530918 ROSEBANK PRIMARY SCHOOL 89 389.49

220028957 S A POLICE STATION HONEYDEW

0.23

220091388 SA DEFENCE QUEENS HIGH

46.08

220057098 SA NEVHUHULWI 1 615.53

220080386 SA POLICE FLATS (TRIOMF)

15.34

221087401 SA.POLICE ELDORADO PARK

17.67


Account Number

Name Balance

220007153 SAP BARRAKKE MAINWEG 1 061 837.00

220072040 SAP BRIXTON (MOORD / ROOF AFD) 11 391.00

220062242 SAP CLEVELAND P W D 13 266.98

220059120 SAP DODEHUIS EN KWARTIERE PWD 18 808.36

220059151 SAP DODEHUIS EN KWARTIERE PWD 477 958.26

501416419 SAP MONDEOR 5 472.34

220028435 SAP MOTOR WERKWINKEL

256.15

220078806 SAP RADIO STATION

12.08

206516039 SAP ROSEBANK 13 445.41

220057010 SAP SAM HANCOCK

823.57

220057027 SAP SAM HANCOCK

3.05

220057002 SAP SAM HANCOCK STR -779.00

220056993 SAP SAM HANCOCK STR

672.50

220057066 SAP SAM HANCOCK STR (PWD) 1 076.80

220057080 SAP SAM HANCOCK STR (PWD) 368 322.23

220033682 SAP STATION BOOYSENS 136 234.00

220933683 SAP STATION BOOYSENS -76.02

220093804 SAP WYNBERG 35 422.90

206037653 SAP YEOVILLE 83 764.34

205950853 SAPS -65 730.76

206379784 SAPS -21 699.48

900204430 SAPS SATELIET STASIE 4 129.04

206152254 SIR EDMUND HILLARY PRIM SCHOOL -15 912.00

221092105 SIZWE TROPICAL DISEASE HOSPITAL 1 243 526.51

201001212 SKEEN LP SCHOOL 1 626.60

505294698 SOMELUWAZI PRIMARY SCHOOL -40 771.00

220079197 SOPHIATOWN S.A.P.S

77.80

220017137 SOUTH RAND HOSPITAL 2 939 755.34

220055421 SOUTHVIEW SECONDARY SCHOOL 1 355 749.03

500315344 SPEKTRUM LAERSKOOL X 5 65 220.99

220052276 ST MARYS SCHOOL FOR GIRLS 73 402.00

220044959 TANDHEELKUNDIGEDIENS -27 881.00

220058937 TRINITY SECONDARY SCHOOL 4 256 135.02

301121811 UNIFIED PRIMARY SCHOOL 34 735.26

501918419 WEMMER PAN COMMANDO PWD 330 631.06

400605890 WILHELMINA HOSKINS LAERSKOOL 11 985.63

220061023 WILLOW CRESCENT HOERSKOOL 16 991.92

51 412 696.68


CHAPTER FOUR HUMAN RESOURCES & ORGANISATIONAL MANAGEMENT

Section 1: Human Resource Management

Human Resources’ overall objective as set out in its policies is to ensure that the Company’s employment practices and remuneration policies motivate and retain talented employees and create an attractive environment for all employees. The Human Resources policies are periodically reviewed to ensure that it remains relevant and practical for the changing needs of current and potential employees. Resulting from strategic introspection sessions and the recognition that City Power is at a strategic inflection point, several bold decisions were made by the business which culminated in the decision to re-design the business in its entirety. This was a purposeful effort to align the organisational structure and processes so as to make City Power more effective. This initiative is referred to as the Structural Alignment Programme. The Structural Alignment Programme is a planned change from a deliberate decision to alter the current state, improve business performance and enhance service delivery. The organization re-design initiative (structural alignment) which began to be visible with effect from 1 December 2012 broadly covered the following key aspects as depicted in the framework below:

During the 2012/2013 financial year, the strategic partner role of HR was to focus on aligning the organisation structure to the organisation strategy as outlined in the following action plan which was put in place.


During the 2013/2014 financial year, the Company’s Local Labour Forum adopted an agreement entered into between Management and Samwu, as the majority Union. This agreement entailed the following matters:

Travel Allowance

Cell phone Allowance

Data Card Allowance

Hot Skills Allowance

Structural Re-Alignment

Acting Allowance

50th Percentile / Pay Progression

Essential Services / Rules of Engagement

Shift Policy / Overtime

Annual Leave

Gratuity / Performance Management

The Local Labour Forum Agreement sought to address the inconsistencies and unfairness that existed in the Company with regard to the implementation of benefits, allowances and compliance with Conditions of Service and related legislation.

As is status within City Power :

Issue Status

Allowances (Travel, Cell phone, Data Card, Hot Skills) Resolved

Structural Re-Alignment Resolved

Acting Allowance Resolved


Issue Status

50th Percentile / Pay Progression Resolved

Shift Policy / Overtime

Resolved

Gratuity / Performance Management Resolved

Annual Leave Resolved. A decision was taken to extend the grace period to utilize accumulated leave up to 30 June 2016, after which date, any accumulated leave not taken will be forfeited.

Essential Services / Rules of Engagement A decision was taken at the LLF and HR Steercom that the Rules of Engagement and the Essential Services Agreement be signed in tandem. In respect of the Essential Services agreement, discussions with Organised Labour to look at the revised documents (and numbers) will be resumed in due course. The Rules of Engagement document was reviewed by the LLF (Management and Organised Labour) at a LLF Workshop held on 18 – 19 November 2015. The LLF resolved to refer one section, dealing with representation, for mediation.

HR Policies HR commits to ensure that all HR related policies are regularly reviewed and approved by the Board thus ensuring fairness, compliance and consistent application. All approved policies are available on City Power’s Sharepoint / Intranet. The following policies / processes are currently under review and / or in the development stage:

NO POLICY / PROCESS WHEN

APPROVED

REVIEW PROCESS

1 Integrated Performance

Management Policy (IPMP)

Board -

24/2/2014

Reviewed by HR as part of annual

review process. To be presented to

Organised Labour

2 Training & Development of

Engineers-in-training and

Engineering Technicians-in-

training Policy

Board -

24/2/2014

To be reviewed as part of annual

review process

3 Talent Acquisition Policy Board -

24/2/2014



Organised Labour

4 Apprenticeship,

Experiential Learning, Internship

and Learnership Policy &

Procedural Guidelines

Board -

24/2/2014


review process

5 Employee Educational

Assistance Policy and Procedure

for Under- and Post Graduate

HR Committee -

20/5/2014 –

mandated by



Organised Labour



APPROVED

REVIEW PROCESS

Studies and Scholarships Board of

24/2/2014

6 Bursary Policy Board -

27/6/2014


review process. Presented to

Organised Labour on 20/8/2015

7 Sexual Harassment Policy Board -

27/6/2014


review process

8 Mentoring Planning Policy Board -

27/6/2014


review process

9 Employee Re-assignment Policy Board -

27/6/2014


review process. Presented to


10 Travel, Accommodation and

Subsistence Policy

Board -

27/6/2014


review process

11 Remuneration, Benefits and

Recognition Policy

Board –

19/9/2014



Organised Labour

12 Employment Equity Policy Board –

19/9/2014

Due for review as part of annual

review process

13 Knowledge Management Policy Board –

19/9/2014

Due for review as part of annual

review process

14 Incapacity Policy Board - 2002 Reviewed by HR as part of annual


Organised Labour

15 Special Dispensation Sick Leave

Policy

Board - 2003 To be reviewed as part of annual

review process

16 Community Social Responsibility

Policy

Proposed New

Policy

Presented to

EXCO - referred

back

Developed by HR. Require input from

Relationship Management. To be

presented to Organised Labour

17 Organisational Structure and

Maintenance Policy

Proposed New

Policy

Developed by HR. To be presented to

Organised Labour

18 AET Policy (Adult Education) Proposed New

Policy


Organised Labour

19 Training, Learning and

development

Proposed New

Policy

Presented to

EXCO – referred

back

Reviewed by HR. Presented to




APPROVED

REVIEW PROCESS

20 Records and Archives Policy Proposed New

Policy


Organised Labour

In the event that there is a need for additional policies in future due to strategic changes within the Business, HR will develop the policy accordingly and follow the required approval process.

Section 2: Employee Remuneration

A total of 1276 eligible employees benefitted from the Pay Progression exercise that was successfully implemented in October 2015.

Section 3: Key Vacancies

Three Executive positions were vacated during the reporting period, namely:

GM: Employee Relations. The position will not be filled in the current financial year. The functions of this position has temporarily been split between the GM: Organisational Effectiveness (Discipline, grievance and suspension matters) and the GM: Talent Management (Employer/Employee relationships)

GM: Relations Management. The GM: Aide-de-Camp was appointed to act in this position.

Director: Human Resources. The Director: Finance was appointed to act in this position.

Progress on recruitment process:

GM: Supply Chain Management. Interviews have been scheduled for 19/20 January 2016.

GM: Learning Academy. Position advertised and interviews conducted.

Director: Engineering Operations. Position advertised and shortlisting in progress.

GM: Legal and Compliance. Position advertised and interviews conducted.

GM: Enterprise Risk Management. Position advertised and interviews conducted.

GM: Stakeholder Management. Position advertised.

GM: Revenue Management. Position advertised and interviews conducted.

Section 4: Employment Equity

HR endorses the four key areas of employment equity identified by the Employment Equity Act:

elimination of discrimination in decision-making;

promotion of employee diversity;

reduction of barriers to advancement of the disadvantaged; and

introduction of measures and procedures for transformation.

The Employment Equity Committee is currently in the process of reviewing the Employment Equity Report for the 2014/15 financial year which is due for electronic submission to the Department of Labour on 15 January 2016.

Statistics :

The staff complement for the reporting period is 1 795 which includes permanent and contract employees.

The Company’s target for Affirmative Action is 85%. The Company achieved 91.25% for all levels and 82.17% for Supervisory and above levels.

The Company’s target for Gender Equity is 26%. The Company achieved 25.85% for all levels and 32.62% for Supervisory and above levels.

The Company’s target for People with Disabilities is 2%. 42 employees have voluntarily declared their disability. This amounts to 2.34% of the total workforce. This compares favourably to the Government and Private Sector figures of 0.6% and 1% respectively according to the DOL report. City Power Staff Complement


City Power fosters effective human resources practices with a view to contributing to the organisation’s goals. The Company’s staff complement is 1 795 which includes permanent and contract employees.

Section 5: Skills Development and Training

The entity is committed to the maintenance of standards by supporting and training staff through its world-class skills development programme. This programme aims to develop both technical and people skills required for the company to conduct its business on an effective basis. Our skills development programmes are in line with the requirements of the Skills Development Act and our workplace plan (WSP) is aligned to our business plan and focus is placed on occupational specific programmes, management development and legally required training.

Bursars

City Power currently has 37 bursars, as detailed below:

No. Race Gender Field of Study Background info : Area/School

1 African Male BSc Electrical Engineering Pro Arte Alphen Park (Menlo Park)

2 African Male BSc Electrical Engineering Dendron High School (Limpopo)

3 African Male B Eng (Electrical & Electronic) Florida Park (Florida)

4 African Male B Eng (Electrical & Electronic)

Vaal Reefs Technical High School

(Orkney)

5 African Male National Diploma Electrical Engineering

St Martin De Porres High School

(Orlando Soweto)

6 African Female Bachelor of Accounting Sciences

Bhukulani Secondary School

(Soweto Zondi)

7 African Male B Eng Electrical Engineering The Hill High School (Rosettenville)

8 African Male B Eng Electrical Engineering

Fons Luminis Secondary School

(Diepkloof)

9 African Female

Advance Diploma Financial

Management

Northmead Secondary School

(Phoenix Durban)


Diamona Secondary School

(Limpopo)

11 African Male National Diploma Electrical Engineering Julius Secondary School (Hasani

African Coloured Indian White African Coloured Indian White

Top Management

(Executives)3 - - 3 6 1 - - - 1 7

Senior Management 13 1 2 3 19 6 - 1 1 8 27

Professionally qualified

and experienced

specialists and mid-

management Managers

and Professionals

167 10 4 64 245 123 3 - 10 136 381

Skilled technical and

academically qualified

workers, junior

management, supervisors

and Technicians

61 16 1 30 108 26 2 2 8 38 146

Artisans (All types) 279 15 3 53 350 47 1 - - 48 398

Administrative 57 1 1 1 60 103 6 - 16 125 185

Semi-skilled and

discretionary decision

making

517 8 - 3 528 62 - - 1 63 591

Elementary positions 15 - - - 15 43 2 - - 45 60

Total (Permanent and

Contract)1 112 51 11 157 1 331 411 14 3 36 464 1 795

Categories Male Male

Total

Female Female

Total

TOTAL


No. Race Gender Field of Study Background info : Area/School

Dakari, Malamulele)

12 African Male B Eng Electrical Engineering

Bokamoso Secondary School

(Makhulong Tembisa)

13 African Female BCom in Financial Accountancy

Sediba-Thuto Secondary School

(Free State)

14 African Male National Diploma Electrical Engineering Xolani High School (Newcastle)


Randfontein High School

(Randfontein JHB)

16 African Male BSc Electrical Engineering

Fons Luminis Secondary School

(Diepkloof)

17 African Male BSc Electrical Engineering

Kensington Secondary School

(Kensington East JHB)


Forte Secondary School

(Dobsonville)

19 African Female BCom Accounting

Pietermaritzburg Girls High School

(Scottsville KZN)

20 Indian Male

Computer Science and Information

Technology Degree

Northmead Secondary School

(Phoenix Durban)

21 African Male National Diploma Electrical Engineering Lwamondo High School (Limpopo)

22 African Male National Diploma Electrical Engineering Zonkizizwe Secondary School


SJ Van der Merve THS.

(Lebowakgomo)

24 African Female National Diploma Electrical Engineering Thengwe High School (Limpopo)

25 African Female BTech Logistic Management

Tshehlo Secondary School (Ga-

Chuene Marulaneng Limpopo)

26 African Male

National Diploma Information

Technology

Qoqolosing Private High School(

Leribe Kingdom Lesotho)

27 African Male B Eng (Electrical & Electronic) Waterval High School (Elim)

28 African Male National Diploma Electrical Engineering Forte High School (Dobsonville)


Executive High School (Idutywa

Eastern Cape

30 African Female National Diploma Electrical Engineering

Khatisa High School (Gumbani

Village, Malamulele)


Mahashe Secondary School

(Bushbuckridge Mpumalanga)

32 African Female Bachelor of Accounting

Erasmus Monareng High School

(Vosloorus)

33 African Female BSc Electrical Engineering

Orlando West Secondary School

(Soweto)

34 African Female BCom Accounting

Sir John Adamson High School

(Winchester Hill)

35 African Female BSc Electrical Engineering Greenside High School

36 African Male National Diploma Electrical Engineering Forte High School (Soweto)


St Martin De Porres High School

(Soweto)


Integrated Skills Development Grant

During the mid-year, HR submitted a business case to the Department of National Treasury to access their funds to enable the Company to train interns (already qualified academically) on a full time basis in City Power. The Department of National Treasury subsequently awarded a R7.7 million grant to City Power.

City Power is currently mentoring 4 Engineering Technicians on a three year contract to be mentored towards professional registration with ECSA (Engineering Council of SA).

A successful mentorship rotational program is currently in place.

City Power In-house Apprenticeship training Centre

Upon completion of the renovation of the Training Centre and with the appointment of Technical Instructors, City Power will be in a position to start a training program for apprentices.

The long-term plan is to have a Training Centre with at least 15 electrical apprentices per year appointed and being trained in the Centre and on the job until they pass their trade test.

There should be on average 45 electrical apprentices being trained at any given time.

The apprentice training center is currently still being occupied by the Revenue Recovery Project (RRP) team which is delaying training.

EWSETA (Energy and Water Sector Education and Training Authority) Accreditation

City Power currently has two accredited training facilities, namely the (Medium Voltage) Simulator in Roodepoort and the Cable School at Reuven.

Training in Electrical Safety, Safe Operating Procedures and Electrical Switching is done on a continuous basis for internal staff and external companies at the Roodepoort Training Centre.

Training in cable terminations and cable jointing is done at the Cable School at Reuven.

The plan is to also build a HV (High Voltage) simulator at Roodepoort.

A draft HV simulator design has been developed. Work Place Skills Plan (WSP)

An application for the WSP grant was finally approved by the EWSETA on 18 August 2015. Mentorship-ECSA registration

HR has applied to SAIEE (South African Institute for Electrical Engineers) and SAICE (South African Institute for Civil Engineers) for a mentorship program to enable the Company’s Bursars and Diploma

students to become professionally registered with ECSA (Engineering Council of South Africa). Ten candidates were approved to take part in the Mentorship Program and are being mentored

by the South African Institute for Electrical Engineers (SAIEE). This program will enable them to register as Professional Engineers, Technicians and Technologists.

These candidates were visited by SAIEE mentors in September 2015 to monitor their progress and the submission on their quarterly reports.

Two candidates have subsequently withdrawn from the program.

The Learning Academy is in the process of introducing a rotational programme to ensure maximum exposure to benefit the learners.

ELCONOP and Workshop Practice

During the mid-year, fourteen employees attended the Workshop Practice in relation to RPL (Recognition of Prior Learning) and ELCONOP (Electrician Construction Operator) Level 3 with an external contracted training service provider. Four employees were declared competent.

The remaining 10 employees are still in the process of gaining the relevant knowledge in order to prepare them for Trade Test Preparation and Assessment.

In the 2nd Quarter an additional six learners joined the ELCONOP training and an additional twelve learners joined the Workshop Practice training.

Trade Test Preparation and Assessment

A total of 13 learners completed their trade test preparation and were declared competent and have received their Electricians Trade Test Certificates.

No additional learners completed this training during the 2nd Quarter.

Amount spent on Training


To date a total amount of R3 409 866.14 was spent on Technical, Non-Technical and Mandatory Training.

Amount spent on Employee Educational Assistance

To date a total amount of R722 712.40 was spent on Employee Educational Assistance.

Amount spent on Bursaries

To date a total amount of R681 344.15 was spent on Bursaries.

Section 6: Performance Management & Succession Planning

In preparation for the submission of the December 2015 performance scores, the following deliverables took place:

Briefing session done with the Business Performance Managers (BPMs) to clarify the RACI between HR, Strategy & Performance Monitoring departments / value chain.

Company-wide communication and reminders on Performance Management cycles in relation to Performance Management.

Input into Pay Progression automation requirement (for Performance Management Scores & Grades).

Section 7: Change Management

Continuous support given to identified Management who planned to get authorization to change their organizational structures.

Company-wide communication on acting appointments procedure.


Section 8: Disciplinary Matters and Outcomes

As at the end of December 2015, 11 disciplinary matters had been finalised:

Month Group Charges / Nature of Offences Outcome / Sanction

July 2015 RAC Insubordination Dismissal 23/09/2015

RAC Insubordination Found not guilty/ matter dismissed

OPS Failure to obey lawful instruction Written Warning

Aug 2015 OPS Unlawful misappropriation of company property

Charges Withdrawn

Sept 2015 OPS Unlawful misappropriation of company property

Dismissal

RAC Theft and dishonesty Resigned

HR Gross insubordination, Dereliction of duty and bringing the Company’s name into disrepute

Settlement

OMD Failure to obey lawful instruction Dismissed

Oct 2015

OPS Alleged misappropriation of company property, Insubordination, Harassment, Negligence

Written Warning

HR Alleged fraud Final Written Warning, Reduction of Rank and Recovery of Losses

Nov 2015 None

Dec 2015 OPS Fraud Dismissal

As at the end of December 2015, there are 7 employees on precautionary suspensions (with full pay):

Group Number of suspensions

Date of Suspension

Engineering Operations

1 14/8/2014

1 14/8/2014

1 4/5/2015

RAC

1 12/8/2015

1 5/11/2015

Finance 1 8/4/2015

1 25/6/2015

Total 7

Section 9: Leave & Productivity Management

The LLF Agreement of 30 May 2013, inter alia, included a two year grace period in which all employees with accumulated leave were to utilize accumulated leave by 30 June 2015. If employees, for valid reasons which were to be properly motivated, were unable to reduce the level of their accumulated leave, the encashment thereof would be under exceptional circumstances be permitted. The original grace period expired on 30 June 2015.

Line managers are continually urged to have leave plans in place for all employees and manage the normalization of leave balances.

A report is released each month to the business, giving the status of the utilization of accumulated leave and the balances remaining.

A decision was taken to extend the grace period to utilize accumulated leave up to 30 June 2016, after which date, any accumulated leave not taken will be forfeited.


Based on the leave report received from Payroll as at 31 December 2015, it is becoming unlikely that employees with accumulated leave will have exhausted this type of leave by 30 June 2016. However, more accurate information will be confirmed after all December 2015 / January 2016 leave has been processed.

Section 10: Employee Benefits

The Company is a participating employer in the various retirement benefit schemes through which the City of Johannesburg Metropolitan Municipality and its associated Utilities, Agencies and Companies (UACs) provide employment benefits to all their permanent employees through the following four (4) Defined Contribution Funds and one (1) Defined Benefit Fund:

E-Joburg Retirement Fund

City Power Retirement Fund

Municipal Gratuity Fund

City of Johannesburg Pension Fund

Municipal Employees Pension Fund

Each of these funds utilises the services of actuaries to give credibility to the information and to assess the levels of funding as required.

City Power employees can also belong to any of the following five (5) company-approved medical aids:

Bonitas

Discovery

LA Health

Key Health

SAMWUMED

Section 11: Occupational Health & Safety Programmes

HIV/AIDS on the Workplace The management of HIV epidemic is a challenge facing every organisation in our country. City Power is aligning itself with the National Strategic Plan NSP 2014 – 2019, health protocols and it is in the process of implementing SANS 16001: 2013. The entity has determined that HIV will have an impact on the following risk areas: operations, target market risk, supplier risk, legal risk and health risk. Whilst all these risks are under further investigation, and has adopted the following core principles as a basis for its HIV policy:

COMPREHENSIVE DISEASE MANAGEMENT PROGRAMME

HIV Diagnosis Rapid test done at the Wellness Centre.

Efficient provision of ARV’s Most of the employees are registered on the medical aid for chronic disease management.

Reduce the number of new infections and their partners

Health education and Awareness done on a continuous basis and during one on one consultation.

Reduce and monitor HIV co-infections e.g. TB

Employees who presents with co-infections gets referred to the local clinic and to the specialist for further management.

Employee is continuously made aware of the HIV rights and that their rights are respected and protected.

Currently during consultations employee is informed about the HIV rights.

Challenge: Currently the policy has not been reviewed. Interventions:

Review of the HIV policy and communicate to the CP employees.


Counseling is provided for employees and their nuclear families

During case management (HIV Coordinator, OH team and EAP consultants) on employees and their nuclear families counseling services is provided.

INFORMATION, EDUCATION and COMMUNICATION.

Prevention programmes,

health campaigns and

screening are conducted

according to the

International and National

Health calendar e.g.

WORLD AIDS DAY

commemoration.

On annual basis the WORLD AIDS DAY is commemorated

and awareness is conducted. During health campaigns such as

cancers awareness, employees with co-infections are followed

up and managed accordingly as part of the HIV programme.

Employees are kept abreast

with the latest health matters

Health talks are communicated on a monthly basis which may

be associated with HIV and other lifestyle diseases.

Employees are encouraged

to conduct their lifestyle

audit e.g. KABP analysis

Employees are given health education about opportunistic

infections and encouraged to disclose to their partners.

Including supportive counselling.

Communication is done via

the internal communications

department targeting all

employees

Education and information is communicated during one-on –

one consultation, case management and also via internal

communications department targeting all employees

EVALUATION and MONITORING

Identification of gaps is done for continual improvement.

Operational plans, targets, objectives and indicators are evaluated on quarterly basis or as and when.


CHAPTER FIVE FINANCIAL PERFORMANCE & EXPOSURE

Section 1: Statement of Financial Performance and high-level notes

Surplus The surplus before tax translates a negative variance of R382m for the quarter and negative variance of R617m against the budget for YTD. However there is a improvement on the performance of the second quarter against the first quarter. During the first quarter the variance against the surplus was a negative 207%, while the negative variance in the second quarter is 56%. The reasons for the variances are set out below:

Service Charges Service charge for mid-year is less than budget by R1 097m YTD due to a decrease in purchases volumes, unbilled customers, and bypasses prepaid meters.

Figures in Rand thousand Variance Variance Variance Variance Variance

Actual Budget % Actual Budget % Forecast Budget %

Revenue 3 185 751 3 902 536 -716 785 -18% 7 388 660 8 507 981 -1 119 321 -13% 14 521 115 16 548 278 -12%

Service charges 2 845 963 3 521 927 -675 964 -19% 6 643 494 7 740 827 -1 097 333 -14% 12 887 116 15 015 735 -14%

Sales to Eskom 218 111 247 125 -29 014 -12% 493 272 494 250 -978 0% 1 132 245 988 500 15%

Other income 73 917 50 253 23 664 47% 122 737 106 441 16 296 15% 243 439 211 116 15%

Government grants 7 800 43 954 -36 154 -82% 49 675 87 908 -38 233 -43% 99 349 175 815 -43%

Interest revenue 40 032 35 997 4 035 11% 77 671 71 993 5 678 8% 155 341 143 986 8%

Fees earned -119 3 191 -3 309 -104% 1 719 6 381 -4 662 -73% 3 438 12 762 -73%

Rental income 47 91 -44 100% 93 182 -89 -49% 187 364 -49%

Expenditure 2 883 247 3 218 225 -334 978 -10% 7 434 458 7 937 264 -502 806 -6% 13 994 666 14 961 969 -6%

Bulk purchases Eskom 1 790 608 1 869 022 -78 414 -4% 4 933 793 5 168 369 -234 575 -5% 9 066 152 9 497 198 -5%

Bulk purchases Kelvin 252 677 209 033 43 644 21% 622 971 554 520 68 452 12% 1 238 017 1 101 985 12%

Debt impairment 4 144 125 156 -121 012 -97% 250 311 250 311 -0 0% 500 621 500 622 0%

General expenses 172 334 306 921 -134 587 -44% 322 728 611 092 -288 363 -47% 646 909 1 224 933 -47%

Personnel costs 236 299 275 973 -39 675 -14% 468 852 485 982 -17 130 -4% 874 065 906 000 -4%

Finance costs 89 991 87 914 2 077 2% 179 156 175 828 3 329 2% 358 313 351 655 2%

Repairs & maintenance 190 013 204 958 -14 945 -7% 362 123 409 915 -47 792 -12% 724 247 819 830 -12%

Administration 42 707 42 211 496 1% 85 653 87 172 -1 519 -2% 168 605 171 594 -2%

Depreciation & amortisation 104 476 97 038 7 438 8% 208 869 194 076 14 793 8% 417 738 388 152 8%

Surplus before taxation 302 504 684 311 -381 808 -56% -45 798 570 717 -616 516 -108% 526 449 1 586 308 -67%

YTD Jun '16Quarter 2


Quantification of R1 097m is as follows:

- Decrease in purchases volumes impact R160m - Prepaid not buying R203m (Only considered 40% of the total population due to data discrepancies.) - Other R682m

o Decline in billable customers o Unknown customers

Variance increase from R421m in quarter 1 to R676m in quarter 2.

Sales to Eskom: Sales to Eskom are less than budget by R29m for the quarter and R1m against the budget for YTD.

Other Income Other Income for the quarter is R24m more against the budget and R16m more against the budget for YTD due to the following:

DSM Levy is more than R29m against the budget for the quarter and R40m against the budget for YTD. The DSM Levy was reviewed from 1c/kWh to 2c/kWh in the financial year 2015/2016 and the review will be done during mid-term budget review.

Service Charges: 2014/15 and 2015/16 comparative performance (R'000)

Description Jul 15 Aug 15 Sep 15 Oct 15 Nov 15 Dec 15 YTD

Actual 1 140 311 1 272 412 1 384 807 1 095 916 741 283 1 008 764 6 643 494

Budget 1 457 244 1 473 059 1 288 597 1 211 362 1 196 767 1 113 797 7 740 827


Actual 1 145 433 1 151 532 926 881 1 051 659 917 097 964 248 6 156 849

Budget 1 240 629 1 521 603 1 117 109 1 035 667 1 018 022 1 003 091 6 936 120

Sales to Eskom: 2014/15 and 2015/16 comparative performance (R'000)


Actual 86 106 93 617 95 438 96 556 80 267 41 288 493 272

Budget 82 375 82 375 82 375 82 375 82 375 82 375 494 250


Actual 110 832 146 916 133 209 106 643 72 644 120 652 690 896

Budget - - - - - - -


This was partially offset by: New Connections that are less than the budget by R10m for YTD respectively due to the increases in request by customers for new connections and

upgrades. New connections are a non-controllable budget item as the number of new applications or upgrades cannot be determined during the budget process and is based on the prior year requests.

Street pole ads is less than the budget by R2m for the quarter and R5m for YTD as revenue has been re directed to JPC.

Sundry revenue is less than budget by R2m for the quarter and R7m less than budget for YTD due to the decrease in insurance claims.

Government Grants Grants are less than the budget by R36m for the quarter and R38m for YTD as less grants were received for the period July to December than budgeted. Interest revenue is more than the budget by R4m for the quarter and R6m for YTD. This is mainly due to the interest on debtors that exceeds the budget as a result of the debtors outstanding are higher than budget, this is offset by the interest on cash being less as the cash balance being less than the budgeted cash balance by for the period July to December. OPERATING OVERHEADS: ARE LESS THAN BUDGET BY R168M FOR THE QUARTER AND R336M FOR YTD. The reasons for the variances are set out below: Bulk Purchases

Bulk purchases from Eskom is R78m less than budget for the quarter and R235m less for YTD, Kelvin is R44m more than the budget for the quarter and R68m more for YTD. Eskom is less than budget as a result of a decrease in units purchased. Kelvin bulk purchases exceed the budget due to the Eskom agreement and contract.

Eskom Purchases: 2014/15 and 2015/16 comparative performance (R'000)


Actual 1 201 541 1 165 540 776 105 565 567 641 305 583 736 4 933 793

Budget 1 251 786 1 253 080 794 481 661 837 644 507 562 677 5 168 369


Actual 1 202 030 1 062 070 733 611 520 492 577 685 503 732 4 599 621

Budget 1 052 032 1 090 994 685 009 620 072 581 178 579 595 4 608 881


General Expenses are R135m less than budget for the quarter and R288m less than the budget for YTD:

Stores and materials are R55m less than budget for the quarter and R106m less than the YTD budget due the delay in the installation of solar water heaters during the period.

Telecommunications is R28m less than the budget for the quarter and R56m less than the YTD budget due to a software licenses not paid yet. Software licences are only paid annually.

Professional fees and Consultant fees are less than the budget by R33m for the quarter and R71m less than the YTD budget. There were less consultants utilized during the period under revision.

Staff cost is R8m less than the budget for the quarter and R16m less than the YTD budget as a result of training and subsidised education being underspent.

Final readings & cut off fees are R6m less than the budget for the quarter and R11m less against the YTD budget due to the implementation of smart meters.

Security cost is R2m less than budget for the quarter and R7m less against the YTD budget due to less guards being utilised during the mid-year.

Advertising is also R3m less than the budget for the quarter and R7m less than the YTD budget due to less adverts being placed in the newspapers than expected.

This was been partially offset by:

Fleet costs exceed the budget by R39m for the quarter and R86m for YTD due to an increase in additional vehicles utilised and additional vehicles (generators) that were needed.

Personnel cost Personnel cost is R40m less than the budget for the quarter and R17m less against the YTD budget due to the following:

Incentive bonus are less than the budget for the quarter by R37m and R28m less than the YTD budget as the budget for the payment of bonuses were made in October, however the actual provision is spread on a monthly basis.

Basic Salaries are less than the budget by R6m for the quarter and R15m against the YTD budget due to the slow filling of vacancies

Kelvin Purchases: 2014/15 and 2015/16 comparative performance (R'000)


Actual 139 261 133 035 97 999 92 850 77 104 82 723 622 971

Budget 130 839 131 163 83 484 81 339 62 671 65 023 554 520


Actual 126 377 94 660 79 481 66 847 6 570 21 822 395 758

Budget 145 920 151 447 77 716 43 088 40 042 38 413 496 625


Offset by:

Overtime exceed the budget by R3m for the quarter and R9m for YTD due to high number of vacancies that results in employees working overtime.

Salary recoveries of R14m against capex has not been re-allocated for the quarter and R27m for YTD. Repairs and Maintenance Repairs and Maintenance is less than the budget by R15m for the quarter and R48m less than YTD budget. This is as a result of the slow start of the Jozi@work project, as well as a saving on tree pruning of R20m and Streetlight maintenance of R12m for the half-year. Up keep of yard has also been underspent by R10m, as well as maintenance on software, system integration and data capture. Depreciation & amortisation Depreciation is more than the budget for the quarter by R7m and R15m for YTD due to the capitalization of assets.


Section 2: Statement of Financial Position and high-level notes

Inventories Inventories are less than budget due the decrease in stock levels. Loans to Shareholder Loans to shareholder are less than the budget due to the following:

The amount for post-retirement benefits is less than the budget due to actuarial valuation being less than the budget.

Trade and other receivables Trade and other receivables exceed the budget by R323m predominately due to the contract with Eskom.

Figures in Rand thousand Jun '15 YTD Jun '16

Actual Actual Budget Budget

Current assets 5 195 183 3 703 474 4 283 642 5 569 583

Inventories 142 209 73 046 106 717 86 717

Loan to shareholder - 113 251 152 628 181 542

Trade and other receivables 885 994 441 970 118 223 121 390

Consumer receivables 2 309 778 1 793 212 1 447 867 1 447 867

Cash and cash equivalents 1 857 202 1 281 995 2 458 208 3 732 066

Non-current assets 11 745 277 12 354 987 11 735 282 12 762 418

Property, plant and equipment 11 455 567 12 087 330 11 588 287 12 618 951

Intangible assets 289 710 267 657 146 995 143 468

Total Assets 16 940 460 16 058 461 16 018 925 18 332 001

Current liabilities 4 295 029 3 800 111 2 452 693 3 615 265

Loans from shareholders (ST) 419 062 1 372 567 496 603 496 603

Trade and other payables 3 678 170 2 212 968 1 539 723 2 704 571

VAT payable 144 454 90 492 237 450 256 607

Provisions 53 343 124 085 178 918 157 484

Non-current liabilities 4 875 349 4 627 284 4 519 696 4 345 649

Loans from shareholders 2 697 165 2 482 632 2 707 331 2 479 358

Retirement benefit obligation 12 818 12 818 0 27 595

Deferred income 25 596 28 320 0 -

Deferred tax 1 737 732 1 701 476 1 472 094 1 472 094

Consumer deposits 402 038 402 038 340 271 366 602

Total Liabililties 9 170 378 8 427 395 6 972 389 7 960 915

Share capital and premium 112 466 112 466 112 466 112 466

Accumulated surplus 7 657 616 7 518 599 8 934 069 10 258 620

Total Net Assets 7 770 082 7 631 065 9 046 535 10 371 086

Total Liabilities and Net Assets 16 940 460 16 058 461 16 018 925 18 332 001


Cash and Cash Equivalents Less cash was received during the period under review as the payment levels are less than budget.

Loans from Shareholders (Short term) The amount is more than budget due to cash owned to COJ to an amount of R954m. Trade and other payables are more than budget due to more supplier invoices being outstanding than budgeted. Accrual for Eskom is more than budget due to the increase in demand and unit price. Vat Payable Due to the decrease in revenue vat payable is less than budget. City Power pays VAT on a cash basis; therefore VAT is only paid over to SARS if the cash is actually received from the customers. Provisions Provisions are less than the budget due to a decrease in the performance bonus and leave liability provision. Loans from Shareholders (Long term) The decrease is due to a delay in loan repayments from the City. Deferred income Deferred income relates to connection fees received. The fees are recognised as deferred income until such time as the connection is made, at which stage the income is recognised in the statement of financial performance. The budget is based on the principle that all connections have been completed at period end. Deferred Tax The increase in deferred tax is due to an increase in the temporary differences on fixed assets and the provision for bad debts.

Cash: 2014/15 and 2015/16 comparative performance (R'000)


Actual 2 030 343 1 699 935 1 165 749 1 285 684 1 437 206 1 281 995 1 281 995

Budget 2 763 012 2 643 964 2 221 442 2 311 327 2 482 902 2 458 208 2 458 208


Actual 1 913 848 1 316 537 512 551 1 075 229 1 420 122 1 553 389 1 553 389

Budget 2 157 360 2 261 543 1 652 697 1 619 980 1 686 259 1 538 314 1 538 314


Section 3: Cash Flow Statement

Section 4: Ratio Analysis

Section 5: Report on Irregular, Fruitless and Wasteful Expenditure and Due Processes

None

Section 6: Pending Litigations and Possible Liabilities

There are 2 summons relating to fibre cable damaged by our contractor received during the mid-year which are having settlement negotiation relating to quantum with the plaintiff. There are 6 application for relating to Billing that the City Of Johannesburg is attending to on our behalf as they

are responsible for billing matters in terms of our Agency Agreement.

Section 7: Insurance Claims against/to MOE

There are 12 assets insurance claim which in total amount to R1 044m received during the mid-year. None of these claims has been settled as we are still attending to them together with the loss adjusters.

Sources of funding

Loss after tax -45 787

Less Depreciation 208 869

Cash deficit from trading 163 082

Increase in shareholder loans 625 721

Decrease in trade receivables 444 024

Decrease in intangible assets -

Decrease in consumer receivable 387 126

Decrease in inventory 69 163

Decrease in cash 572 904

Increase in deferred tax

2 262 020

Application of funding

Decrease in trade payables 1 392 212

Increase in fixed assets 840 630

Decrease in other liabilities 29 178

2 262 020

RATIOS Jun '15 Dec'15 Dec'15 Jun '15

Actual Actual Budget Budget Benchmark

Current ratio (times) 1.21 0.97 1.75 1.54 1.00

Solvency ratio (times) 1.85 1.91 2.30 2.30 2.00

Debt:Revenue (%) 24% 27% 19% 17% 45%

Remuneration:Expenditure (%) 20% 25% 22% 23% 30%

Maintenance:Net assets (%) 5% 3% 4% 5% 7%

Interest:Expenditure (%) 3% 2% 2% 2% 5%

Net operating margin (%) 5% -1% 5% 10% 10%

Cash cover (days) 55 66 119 96 50

Creditors days 10 15 30 30 30

Debt impairment as % of revenue (%) 5% 4% 3% 4% 3.5%

Debtors days (days) 63 47 33 33 55


CHAPTER SIX INTERNAL & EXTERNAL AUDIT FINDINGS

Section 1: Results of Internal Audits

Internal Audit commenced the audits listed below during the second quarter. These audits are still in progress and therefore no conclusions are being reported:

RISK DESCRIPTION RISK RATING

AUDIT PROJECT AUDIT SCOPE

Inability of the Capital Programme to respond to the strategic requirements, further exacerbated by poor execution or failure to deliver, resulting in: Inadequate capacity, Service delivery failure, Increased unplanned outages and Operational failure.

Medium 1. Performance Audit for the Capital Programme and related processed.

1. Performance audit for the capital programme including the execution thereof which will provide a conclusion on effectiveness, efficiency and economics of the programme.

Network deterioration resulting in increasing unplanned outages, reputation failure and financial loss.

High 1. Performance Audit for the Maintenance and related processed. 2. Determination of completeness of network database (GIS) and the network maintenance plan.

1.1 Performance audit for network maintenance and related processes (including the execution thereof) which will provide a conclusion on effectiveness, efficiency and economics of the programme. 1.2 Technical review of adequately of the maintenance plan strategy vs. best practice. 2.1 Verify completeness of network on GIS and maintenance planning systems.

Poor Project/programme management resulting in failure to deliver agreed Project outcomes/benefits at the agreed quality or within the timeframe, resulting in excessive costs (financial losses), perception of management failure, and failure to implement sustainable solutions.

High 1. Review/Advisory on project/programme management underway in 2015/16. 2. Performance audits for key projects/programmes.

1. Review/Advisory on project management methodology, project monitoring and reporting. 2. Performance audit on some key projects in order to determine efficiency, effectiveness and the economics of the project.

Excessive use and dependence on contractors diminishes the ability of CP to deliver on its mandate, and results in loss of intellectual knowledge and skills, resulting in the inability to build a sustainable business.

High 1. Review of management’s strategy to limit consultants reliance going forward as well monitoring of verifiable skills transfer.

2. Performance Audits on use of consultants.

1. Review the projects/programmes performed by consultants and ascertain the following: 1.1 Reasons for inability to perform the tasks

in-house.

1.2 Skills transfer during the project.

1.3 Future plans to limit reliance on consultants for same or similar projects in the future. 2. Perform performance audits to determine effectiveness, efficiency and economics for projects where consultants we engaged.


Section 2: Progress on Resolution of Internal Audit Findings

Progress with regards to resolution of findings as at 31 December 2015 is as follows:

Matters raised in financial year 2013/14

Internal Audit Findings for 2013/14

Internal Audit

Assessment

Rating of unresolved findings

Number of

items to be

resolved

Currently

being

reviewed

Reviewed by Internal Audit

Unresolved High Medium

Low

Finance 24 2 19 3 2 3 0

Human

Resources 13 1

10

2 3 0

0

Retail 9 3 4 2 4 1 0

Engineering

Services 31 9

20 2 6 5

0

RAC 0 0 0 0 0 0 0

Engineering

Operations 10 2

3 5 5 2

0

Total IA Findings 87 17** 56 14 20 11 0


Matters raised in financial year 2014/15

EXCO is receiving continuous feedback with regards to resolution of both internal and external audit findings. Internal Audit has been given a mandate to follow up all matters resolved by management within the second quarter of the 2015/16 financial year. Retail Services acknowledges 13 items on 2014/15 Internal Audit however 8 items should be under review and 2 items be removed from Retail Services. The remaining 3 items are still unresolved as they relate to estimations, revenue and call centre performance.

Internal Audit Findings for 2014/15

Internal Audit

Assessment

Rating of unresolved findings

Number of

items to be

resolved

Currently

being

reviewed

Reviewed by Internal Audit

Unresolved High Medium

Low

Finance 13 5 4 9 7 2 0

Human

Resources 14 1

3 10 8 2

0

Retail 13 6 0 13 9 3 1

Engineering

Services 20 5

11

9 7 2

0

RAC 17 8 4 13 9 2 2

Engineering

Operations 12 1

2 9 6 3

0

OMD 8 1

0 7 5 1

1

Various 6 2

0 4 2 1

1

Total IA Findings 103* 29** 24 74 53 16 5


Section 3: Progress on Resolution of External Audit Findings

Management Self-Assessment

Detail to unresolved

Number of items

to be resolved

Resolved Unresolved In Agreement Under review

Finance 25 24 1 23 1

Human Resources 7 7 0 7 0

Retail (1 old finding)

2 0 2 0 0

Engineering Services

7 5 2 5 0

RAC 2 2 0 2 0

Company secretary 1 1 0 1 0

Engineering Operations

0 0 0 0 0

Total AG Findings 44 39 5 38 1

Section 4: State of Internal Controls

As audits that were commenced during the first half of the year are still in progress, there is no opinion on the state of controls for the period under review.

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