PRESENTATION TO PORTFOLIO COMMITTEE OF DMR 2011 / 12

ANNUAL REPORT

17 OCTOBER 2012

1

Presentation Outline 1. Financial performance

- Annual Financial Statements

2. Auditor General’s Report

- 2011/12 Audit Findings

3. Section 32 Report

2

APPROPRIATION STATEMENT FOR 2011/2012

PROGRAMME

2011/12Final Budget

R'000

2011/12ActualR'000

VarianceR'000

2010/11Actual R’000

1. ADMIN 265,940 257,600 8,340 226,727

2. MHS 141,419 141,252 167 137,092

3. MR 184,396 184,396 0 188,608

4. MPP 447,210

446,187 1,023 442,270

Total 1,038,965 1,029,435 9,530 994,697

3

Analysis of variances • The overall under spending by the Department was

R9,530 million which is 0.92 % of the budget

• The main reason for the under spending relates to the procurement of Goods and Services and operating lease contracts whereby orders were raised during the 2011/2012 financial year but delivery thereof and processing of invoices and payments happened subsequent to that. ICT projects which were not completed on time also contributed to the under spending as payment could not be processed during the financial year as planned. This was mainly on Programme 1: Administration.

4

Analysis of variances

• Mine Health and Safety Branch reflected 99.88% spending. An amount of R6.1 million was re-allocated to other Branches to cater for over expenditure

• Although Mineral Regulation Branch reflected 100% spending, an amount of R22.2 million was re-allocated to this Branch from other Branches to cater for higher than anticipated expenditure

• Mineral Policy and Promotion Branch reflected 99.77% spending. An amount of R16.2 million was re-allocated to other Branches for higher than anticipated expenditure

5

TREND ON UTILISATION OF FUNDS

 EconomicClassification

2011/12R’000

2010/11R’000

2009/10R’000

Compensation of Employees 364,562 326,457 403,323

Goods and Services 222,639 200,013 263,475

Payment for Capex 18,558 28,347 48,690

Transfer and subsidy 420,837 438,120 3,828,303

Payments for financial assets 209 50 925

Interest and rent on land2,630 1,710 0

Unspent 9,530 1,145 137,288

TOTAL (BUDGET) 1,038,965 995,842 4,682,004

% Under Spending 0.92% 0.11% 2.90%

6

Analysis of Unspent Funds

• Under spending has been consistently below 3% for the last three years

• For the year under review, the unspent funds of 0.92% is as indicated on slide 5

7

Analysis of major variance in Statement of Financial Performance (Actual expenditure)

8

Items 2011/12 2010/11 Variance % varianceR’000 R’000 R’000 %

Compensation of employees

Basic salary 248,912

217,268

31,644

14.56

Periodic payments 39

187

(148)

(79.14)

Pension 32,936

28,875

4,061

14.06

Goods and services

Advertising 1,387

1,661

(274)

(16.50)

Communication 14,408

11,181

3,227 28.86

Analysis of major variance in Statement of Financial Performance (Actual expenditure)…cont

Items2011/12 2010/11 Variance

% variance

R’000 R’000 R’000 %Audit Cost 4,838

3,740

1,098 29.35

Operating leases82,271 64,147

18,124

28.25 Transactions in financial assets and liabilities

209

50

159

318

Tangible capital assets

Buildings and other fixed structures 864 17,059 (16,195) (94.93)

Machinery and equipment 17,064

10,148 6,916

68.15

Software and other intangible assets

630

1,140 (510)

(44.74)

9

Statement of Financial Performance: Variance analysis

• The staff cost increased by 14.56%

• Highest cost drivers on Goods and Service are Audit cost, Communication and Operating Leases.

• There was a decrease in software costs due to the purchase of less software in comparison to previous years.

10

Analysis of variances: Statement of Financial Position

Items2011/12 2010/11 Variance %variance

R’000 R’000 R’000 %

Current Assets        Cash and cash equivalents 9,383 37,493 (28,110)

(74.97)

Prepayments and Advances 89 40 49 122.5

Receivables 18,984 20,663 (1,679)(8.13)

Current Liabilities        Voted Funds to be surrendered 9,530 1,145 8,385

732.3

Revenue to be surrendered 3,097 44,180 (41,083) (92.9)

11

Analysis of variances: Statement of Financial Position

Item 2011/12 2010/11 Variance %variance

R’000 R’000 R’000 %

Net Assets        Recoverable Revenue 2,129 1,052 1,077

102.4

12

Transfers and Subsidies to associated institutions

Recipient

2011/12

Purpose of transfer payment

Actual transfer

R'000

Council for Geoscience 154,405

Core funding in terms of establishing act and research to prevent ingress of water into underground holdings.

Council for Mineral Technology Research 196,956

R166.9 million -Core funding in terms of establishing act and R30 million - Mine Rehabilitation projects

South African Diamond and Precious Metals Regulator 39,374

Core funding in terms of establishing act

Mine Health and Safety Council 5,288

Core funding in terms of establishing act

13

Auditor General’s Report

• The Department obtained unqualified audit report for 2011/12

• Department’s goal is a “clean report” and will continue putting process and procedures in place to ensure the achievement of this goal by 2014

14

Auditor General’s Report (2011/2012)

15

No AG finding Action Plan

1. The corresponding figures for 31 March 2011 have been restated as a result of an error discovered during the audit of 31 March 2012 financial statements of the Department.

Review, monitor and enhance the newly implemented revenue system and the calculation of environmental liability.

Emphasis of Matter

Auditor General’s Report (2011/2012)…cont

16

No AG finding Action Plan

1. The financial statements submitted for auditing were not prepared in all material respects in accordance with the requirements of section 40(1) of the PFMA. Material misstatements of disclosure items identified by the auditors were subsequently corrected.

Manual and electronic systems in place to ensure proper reconciliation

2. Money owing by the department was not always paid within 30 days of receiving an invoice or statement, as required by section 38(1)(f) of the PFMA and TR 8.2.3.

Monitoring system in place and reported on a monthly basis.To date 96% paid within 30 days.

3. Revenue Management Review, monitor and enhance the newly implemented the revenue system

Compliance with laws and regulations

SECTION 32 REPORT: EXPENDITURE AND REVENUE SECTION 32 REPORT: EXPENDITURE AND REVENUE ANALYSIS AS AT 30 SEPTEMBER 2012ANALYSIS AS AT 30 SEPTEMBER 2012

 

Year to date analysis (per economic classification)

17

Economic Classification

Year to Date

% Variance

Projected Expenditure

R’000

Actual Expenditure

R’000

Variance on Projected vs.

Actual Expenditure

R’000

Compensation of employees

202,883

199,524 3,359 1.66%

Goods and Services 97,751

128,774 (31,023) (31.74%)

Capital payments

12,007 10,772 1,235 10.29%

Financial Transactions

-

164 164 0.00%

Transfer Payments 334,913 301,730 33,183 9.91%

Interest and rent on land 49 553 (504) (396%)

TOTALS 647,603 641,517 6,414 0.99%

SECTION 32 REPORT: REVENUE ANALYSISSECTION 32 REPORT: REVENUE ANALYSIS

• Year to date analysis

18

ITEM DESCRIPTION

Projected Revenue

R’000

Revenue collection as at 30/09/2012

R’000

Variance on projected vs

Revenue collected

R’000

% Variance

DEPARTMENTAL REVENUE

13,764 77,518 63,754 463.19%

19

THANK YOU