Chairpersons Mid-Term Report to the MMC EISD Mid-year report … Reports... · 2014-11-03 · Sales. • Revenue collection target has been exceeded for Mid-Year to 96.45%. • Though

Chairpersons Mid-Term Report to the MMC EISD

Mid-year report 2013/2014

City Power Mid-Year Report – July to December 2013

16 January Page 2 of 82

Table of Contents

1. CHAIRPERSON’S SUMMARY ................................................................................................................... 3

2. EXECUTIVE SUMMARY ........................................................................................................................... 4

HIGHLIGHTS AND ACHIEVEMENTS ................................................................................................................................... 4 CHALLENGES ............................................................................................................................................................ 5 RISKS AND MITIGATIONS .............................................................................................................................................. 6 GROUP / DIVISION PERFORMANCE OVERVIEW .................................................................................................................. 7

3. PERFORMANCE MONITORING .............................................................................................................. 16

ALIGNMENT TO MAYORAL PRIORITY IMPLEMENTATION PLAN (PIP) AND SERVICE DELIVERY BUDGET IMPLEMENTATION PLAN

(SDBIP) .......................................................................................................................................................... 16 GROWTH AND DEVELOPMENT STRATEGY-INTEGRATED DEVELOPMENT PLAN REPORT (IDP) .................................................... 23 BALANCED SCORECARD WITH KEY PERFORMANCE AREAS AND INDICATORS .......................................................................... 28

4. SERVICE DELIVERY REPORT ................................................................................................................... 31

ANALYSIS OF THE MASTER CAPITAL PROGRAMME ........................................................................................................... 31 SPECIFIC SERVICE DELIVERY PROGRAMMES ........................................................................................................ 35 INFRASTRUCTURE MAINTENANCE ................................................................................................................................. 36 .RETAIL SERVICES ...................................................................................................................................................... 38

5. FINANCIAL MANAGEMENT ................................................................................................................... 44

FINANCIAL ASSESSMENT ............................................................................................................................................. 44 STATEMENT OF FINANCIAL PERFORMANCE ..................................................................................................................... 44 STATEMENT OF FINANCIAL POSITION ............................................................................................................................ 49 CASH FLOW STATEMENT ............................................................................................................................................ 51 SUPPLY CHAIN MANAGEMENT ..................................................................................................................................... 53 FLEET MANAGEMENT ................................................................................................................................................ 57 AUDIT FINDINGS ....................................................................................................................................................... 58

6. HUMAN RESOURCES MANAGEMENT ................................................................................................... 64

TALENT PLANNING .................................................................................................................................................... 64 SKILLS DEVELOPMENT AND TRAINING............................................................................................................................ 65 TRAINING OF EXTERNAL DELEGATES:............................................................................................................................. 67 REMUNERATION MANAGEMENT .................................................................................................................................. 67 POLICY REVIEW ........................................................................................................................................................ 67 PERFORMANCE MANAGEMENT .................................................................................................................................... 68 CHANGE MANAGEMENT ............................................................................................................................................. 68 ER REPORTING ......................................................................................................................................................... 68

7. RISK, ASSURANCE AND COMPLIANCE ................................................................................................... 70

RISK MANAGEMENT .................................................................................................................................................. 70 UPDATE ON RISK MANAGEMENT PROCESS ..................................................................................................................... 71 STRATEGIC RISKS REPORT .......................................................................................................................................... 74

8. GOVERNANCE ...................................................................................................................................... 78

BOARD MEETINGS..................................................................................................................................................... 78 DIRECTORS AND TOP MANAGEMENT REMUNERATION ...................................................................................................... 79 BOARD FUNCTIONING AND FINANCIAL MANAGEMENT ..................................................................................................... 80

Page 3 of 82 14 January Draft 3

1. CHAIRPERSON’S SUMMARY City Power is a municipal entity wholly owned by the City of Johannesburg. The performance targets are agreed with the shareholder and captured in the business plan before the start of the financial year. This report reflects the performance for the mid-year for the 2013/14 financial year. In my view the Board is well balanced, with a broad range of skills and experience which has been augmented by the appointment on 25 July 2013 of Mr D Naidu and the reappointment of Dr Y Ndema to the Board. The Chairperson is also pleased to announce that Mr K Mokhobo has taken up his appointment with effect from 19 July 2013. Both Mr K Mokhobo and Mr T Sithole had been appointed to the Audit Committee during the 2

nd Quarter.

The governance report under section 12 of this report describes the work of the Board and its sub-committees over the first six months. 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 Chairperson is also pleased with the participation of the Members in the Senior Management recruitment process which resulted in the finalisation of the recruitment of the Director: Engineering Services, Director: Retail and Director: Risk, Assurance and Compliance. These appointments became effective in the second quarter. The appointment of a Director: Finance must still be finalised. The Board met six times during the two quarters which is more often than normal, however, pressing events demanded the Board’s attention. Besides the ordinary scheduled meetings three special meetings were held to deal with urgent matters including the unprotected strike action which took place on 4 September 2013 to 9 September 2013 and budget matters which had to be finalised early in December 2013. Of great concern to the Board, was the emergence of criminal acts which accompanied the unprotected strike action. While the Board fully respects the rights of employees to lawfully withhold their labour, the Board strongly condemns all criminal activity especially acts of sabotage to the network and the quality of supply. The Board and Management together with the Shareholder have escalated this type of behaviour to Provincial and National level. The Company is working together with all relevant agencies to ensure that the responsible individuals are held accountable both within the Company and within the criminal justice process. The Company is also working together with the relevant agencies to ensure that there are proper mechanisms in place to manage this risk. The Chairperson of the Board and the Chairperson of the Audit Committee also had a number of engagements with the Shareholder during the year. These interactions address a number of issues including the unlawful strike action mentioned above as well as the Company’s audit readiness. The Chairperson of the Board would like to draw your attention to two areas of particular concern to the Board; these are losses and the Company’s failure to achieve the targeted surplus for the mid-year. The revenue target was not met for the mid-year due to Bulk Purchases volumes reduction and unbilled accounts for the period under review. The unbilled accounts also contributed to the increase in non-technical losses. Overall, for the first half of the year the Company has continued to improve on last year’s performance. The Company has achieved some of the targets, but Management has assured the Board that they are taking the necessary action to ensure the achievement of the annual targets.



2. EXECUTIVE SUMMARY This report presents the performance of City Power for mid-year (July to December 2013). The report is divided into sections that cover all operational functions of the Company in line with the strategic objectives. The sections that are covered by the report include the following:

• Performance Monitoring • Service Delivery Report • Financial Management • Human Resources Management • Risk, Assurance and Compliance • Governance

Highlights and Achievements

Below are some of the Company’s major highlights, achievements and challenges for the first half of the year.

• There were successful Stakeholder engagements of 14 434 customers held in Devland, Alexandra and River Park. These engagements facilitated successful installation of Prepaid Meters, resulting in the increase in prepaid revenue collected in these areas by 73% (R8m) in comparison with the same period last financial year.

• There is a reduction in the average cost per kWh which has led to R79.5m savings on Cost of Sales.

• Revenue collection target has been exceeded for Mid-Year to 96.45%.

• Though City Power has experienced low revenue, prepaid sales have increased by 10% (R31 m) in comparison with the same period in the last financial year.

• The process of automation of Business Reports to improve Data Integrity and Governance Processes has begun.

• Arrests were made on Scrap Metal Dealers for buying City Power cables and other assets.

• City Power received ISO 9001 Re-certification by SABS.

• DIFR for the period under review is below threshold of less than 1.

• The vendor portal component of the SCM automation project is fully implemented.

• Procurement spend on companies that are 50% black owned has been exceeded for the period (10% actual vs 8% target).

• A BEE supplier summit was successfully hosted.

• Board approval of 2013/14 adjustment budget and 2014/15 full year budget, both of which have been submitted to the shareholder for final approval.

• More than 17 472 meters have been installed including prepaid and smart meters.

• Naren’s Farm informal settlement has been electrified as part of the service delivery programme within non-proclaimed areas.

• Continuous supply of power to the FNB Stadium for the late Nelson Mandela’s memorial service as well as all the public mourning sites that were erected around Johannesburg.

• Agreement was reached between management and organised labour that the two twelve hour shift system for field services will be implemented with effect from 1 February 2014. In addition the work and pay rules were also agreed upon.



Challenges

The challenges facing the organisation include:

Challenges Intervention

Surplus being less than budget by R607m Decrease losses by correcting unbilled customers Monitor and investigate prepaid error reports Control expenditure by implementing budget control Transfer capex expenditure from repairs and maintenance to capex

Procurement spend on companies that are 30% black women owned has not been achieved for the period (3% vs 5%)

Utilise contracts with 30% black women to increase procurement

Slow progress on planned capital expenditure.

A recovery plan has been drawn up covering risks (material, suppliers, contractors, community unrest) and mitigation actions. A strategy has been designed to eliminate the current “hockey stick” effect on capital expenditure

Unprotected strike action in relation to the implementation of a shift system

The change management program in relation to the shift implementation was intensified Resolute action was taken against those who embarked on the strike action.

The high rate of theft and vandalism of infrastructure

A phased approach for the installation of modern security measures at its installations has been introduced City Power is also investigating other security measures to secure its underground cables and overhead systems. Casting of concrete over cable trenches where cables are regularly stolen has begun Installation of vibration alarms on transmission lines pylons has commenced Installation of load centre alarms has commenced Installation of electronically controlled man-hole covers has commenced Communication and awareness as well as public engagement is ongoing

The high number of MV outages A network criticality study has started to create a complete reliability model of the City Power Operating Networks. This will help City Power to create and establish network performance targets, as well as aid in operational decision making. A network performance risk register has been created to identify areas on the network that need urgent maintenance, refurbishment or replacement to prevent



Challenges Intervention potential outages. Root cause analysis of faults that have occurred are investigated to determine what action needs to be taken and to prevent repeat trips.

Corrected and cleaned data not adequately updated on relevant source systems.

The establishment of the metering and meter data committee will keep track and ensure that the appropriate data is updated on the relevant systems

Increased non-technical losses affecting revenue Auditing of businesses converted to prepaid metering has commenced City Power is in the process of clearing the unbilled accounts and investigating accounts with large credit balances. Normalisation of the non-vending meters is in place, prioritizing the high LSM areas.

City Power is currently auditing stands that have Rates Accounts but are not being billed for electricity services. Priority will be on business zoned properties.

Risks and Mitigations

Risks Mitigations

Delays in finalization of land purchases for servitudes Engage with Johannesburg Property Company to finalize a binding Service Level Agreement that will fast-track land acquisition and transfer

Possibility of not realizing planned expenditure due to procurement delays.

Examine expedited procurement methods.

Overtime Expenditure Management and control of overtime. Cap overtime to align with labour legislation and to ensure the wellbeing of City Power staff Introduction of a shift system for field services planned for 1 February 2014.

Infrastructure theft and Vandalism Phased installation of modern security systems. Laying of concrete over cable trenches where there has been repeated cable theft. Continued engagement of the community including communication and awareness.

Inadequate ability to provide auditability of reported data

Through audits, Implement and enforce data policies, standards and procedures for all data domains Automation of report generation to minimize human intervention and ensure auditability of reported data.

Staff expectations of salary increases through Pay Progression

Robust communication to manage the expectations



Group / Division Performance Overview

RETAIL SERVICES

Highlights and Achievement • There was a Successful Resellers Forum discussing issues of tariffs, billing and collections.

• There were successful Stakeholder engagements affecting 14 434 customers in Devland, Greater Alexandra and River Park which facilitated the successful installation of Prepaid Meters. This resulted in increased prepaid revenue by 73% (R8 million).

• There is a reduction in the average cost price per kWh which has led to R79.5 million savings on Cost of Sales.

• Revenue collection target has been exceeded for the first half of the year to 96.45%.

• Obtaining an Unqualified Audit.

• 12 1-on-1 sessions were held with Time Of Use (Key) Customers to obtain insight into challenges faced by TOU customers in relation to electricity provision. These outcomes can be used to influence the future design and setting of tariffs with a view to ensuring competitiveness in City Power’s tariffs.

Challenges

Challenges Interventions

• Poor Meter Reading Performance • Intensification of disconnecting inaccessible meters in the short term.

• Segment areas with low meter reading performance and prioritise these for installation of smart meters.

• Improve turnaround time on replacement of faulty meters, provision of changed meter information and updating of the billing system.

• Reduction in Revenue • Auditing of businesses converted to prepaid metering.

• Clear the unbilled accounts and investigate the accounts with large credit balances.

• Normalise the non-vending meters prioritizing the high LSM areas.

• Review revenue budget due to 3.8% reduction in bulk purchases.

• Increase in Non-Technical Losses • City Power is currently auditing stands that have Rates Accounts but are not being billed for electricity services. Priority will be on business zoned properties.

Risks and Mitigations Risks Mitigations

AG Audit Risk • Resolving the unresolved AG issues for all findings related to Meter Reading and Vending customers by March 2014.



ENGINEERING SERVICES

Highlights and Achievement • Commencement of construction of two major substations (Longlake and Lufhereng) that will

create capacity and allow for downstream electrification projects.

• Rotable process to refurbish transformers and switchgear continues to provide readily available equipment especially for emergencies breakdowns.

• All major substations & bulk intake points have been inspected and tested and programmes developed to deal with high risk equipment.

• Installation and configuration of Mediant 1000 Gateway completed in October 2013, for PABX and MS Exchange integration. This will enable voicemail functionality through Outlook.

Challenges Item Challenge Interventions

1 Stability of ICT environment, full compliance to statutory requirements and disaster recovery.

Engineering Services commissioned full compliance audit on systems, infrastructure and governance to identify areas of vulnerability.

2 Limited technical capability which results in over-reliance on external service providers.

Engineering Services is investing in capability building to develop and retain core competencies.

3 Incomplete and inaccurate plant data to allow for fully functional asset management programmes.

A three (3) year programme is being launched to physically collect plant data at different voltage levels of the network.

4 Network outages due to aging infrastructure, theft and vandalism.

An increase in capital investment targeting the affected areas is required. Programmes also need to be developed for high risk equipment such as aging transformers.

5 Slow progress on planned capital expenditure.

Recovery plan has been drawn up covering risks (material, suppliers, contractors, community unrest) and mitigation actions. A strategy has been designed to eliminate the current “hockey stick” effect on capital expenditure



Risks and Mitigations Item Risk Mitigation

1 Public injuries and fatalities due to unauthorized access to live equipment

Educate the general public on the dangers of live electrical equipment. Improve security measures at high risk sites

2 Fraud and corruption Exercise vigilance in investigating and dealing with any suspected acts of fraud and corruption. Monitor expenditure patterns and scope creep on all contractors and consultants

3 Delays in finalization of land purchases for servitudes

Engage with Johannesburg Property Company to finalize a binding Service Level Agreement that will fast-track land acquisition and transfer

4 Community unrest in the build-up towards election, which may delay projects in communities

Intensive communication campaigns prior and during project roll-out. Utilize resources who understand local dynamics and consult with community leadership

Trends • Theft and vandalism.

• Electricity supply constraints

• Developments around Kelvin power station

• Electrification of informal settlements

ENGINEERING OPERATIONS

Highlights and Achievement • Engineering Operations participated in ensuring the continuous supply of power to the FNB

Stadium for the late Nelson Mandela’s memorial service as well as all the public mourning sites that were erected around Johannesburg.

• There has been a general improvement in employee safety standards and no serious or fatal incidents have been reported. Several depots have achieved notable injury free man hour milestones.

• There has been steady improvement in the public lighting resolution turnaround time from 5.1 days in quarter one to 3.3 days in quarter two.

• City Power’s ISO 14001 and OHSA 18001 licences were audited and recertified.

• Normalisation of 10 000 prepaid meters and 98% of key customer meter installations.

• Agreement was reached between Management and organised labour that the two twelve hour shift system for field services will be implemented with effect from 1 February 2014. In addition the work and pay rules were also agreed upon.

Challenges



Challenges Interventions

1 The high rate of theft and vandalism of infrastructure

A phased approach has been introduced for the installation of modern security measures. City Power is also investigating other security measures to secure its underground cables and overhead systems. Casting of concrete over cable trenches where cables are regularly stolen has begun Installation of vibration alarms on transmission lines pylons has commenced Installation of load centre alarms has commenced Installation of electronically controlled man-hole covers has commenced Communication and awareness as well as public engagement is ongoing

2 The high number of MV outages A network criticality study has started to create a complete a reliability model of the City Power Operating Networks. This will help City Power to create and establish network performance targets, as well as aid in operational decision making. A network performance risk register has been created to identify areas on the network that needs urgent maintenance, refurbishment or replacement to prevent potential outages. Root cause analysis of faults that have occurred are investigated to determine what action needs to be taken and to prevent repeat trips.

3 The limited SCADA coverage An assessment of City Power’s SCADA master stations has begun with a benchmarking exercise against other electricity utilities. This will feed into the plans to upgrade the existing master stations as well as the full SCADA rollout.

4 Faulty and inaccessible LPU meters

A comprehensive technical audit of LPU customers was introduced and is due for completion at the end of February 2014. The audit seeks to ensure that all LPU meters are fully functioning and that consumption is accurately recorded.

5 The high number of bypassed or faulty prepaid meters

A technical audit on prepaid meters was introduced in an attempt to ensure that all meters are fully functional.

Trends • The on-going prevalence of infrastructure theft and vandalism continues and this results in

unplanned outages, customer dissatisfaction and unsustainable repair/replacement expenditure.

• Illegal connections continue to be a challenge. In many instances, illegal connections are re-instated soon after being removed.


Risks Mitigations

1 Overtime Expenditure Management and control of overtime. Cap overtime to align with labour legislation and to ensure the wellbeing of City Power staff. Introduction of a shift system for field services planned for 1 February 2014.



2 Infrastructure theft and vandalism Phased installation of modern security systems. Laying of concrete over cable trenches where there has been repeated cable theft. Engagement of the community. Communication and awareness.

3 Obsolete low voltage overhead mains

Phased replacement program to install ABC



FINANCE

Highlights and Achievement • The vendor portal component of the SCM automation project is fully implemented.

• Procurement spend on companies that are 50% black owned has been exceeded for Quarter 2 (10% actual against a target of 8%).

• A supplier BEE summit was successfully hosted

• City Power achieved a Level 4 BBBEE certificate which is an acceptable level for municipalities.

• Board approval of 2013/14 adjustment budget and 2014/15 full year budget, submitted to the Shareholder for final approval.

Challenges Item Challenges Intervention

1 Surplus being less than budget by R607m

Decrease losses by correcting unbilled customers Monitor prepaid error reports and investigate Control expenditure by implementing budget control Transfer capex expenditure from repairs and maintenance to capex

2 Equipment such as busses and generators are old and have become very expensive to maintain

Funding is made available for the replacement of generators, and will be replaced during the financial period. The replacement of busses is to be included in 2014/15 budget.

3 Procurement spend on companies that are 30% black women owned has not been achieved for the period (3% vs 5%)

Utilise contracts with 30% black women to increase procurement


Risk Mitigation

Fleet cannot service all depots fully on a shift system due to staff shortage. Only 3 transport operators currently provide service to City Power

Filling of additional operator vacancies to be approved; and recruitment to commence thereafter



HUMAN RESOURCES

Highlights and Achievement • The South African Institute for Electrical Engineers (SAIEE) in conjunction with the South

African Institute for Civil Engineers (SAICE) awarded 12 of the Company’s graduates with training and mentorship programs. This is in alignment with the creation of employment opportunities for the youth.

• The Workplace Skills Plan 2011-2012 was approved by the EWSETA on 27 September 2013.

• An enhanced bonus formula, that takes into account the Company’s gatekeepers, i.e. Clean Audit and Company Score was developed and approved by the Board on 19 October 2013.

• As part of the revamping of the Training Centre, a public auction to dispose obsolete equipment took place on 28 November 2013. This process raised R371 000.

• A total of 350 bursary applications for 2014 were received of which 12 candidates are recommended to be awarded with full bursaries to study Accounting or Electrical Engineering. Of these 12 candidates, 5 are black females and 7 are black males.

• The positions of Director: Retail, Engineering Services and Risk, Assurance and Compliance were filled in the months of September, October and November 2013, respectively in an effort to stabilize the structure at the leadership level.

Challenges Challenges Intervention

Delayed implementation of Shift Work

Agreement was reached at LLF for the implementation of Shift Work on 1 February 2014

Employees accumulating excessive annual leave due to exigencies of service eg: the 2010 Soccer World Cup and as a result annual leave has accumulated over the years in contravention of our conditions of service.

A normalisation period from June 2013 to June 2015 was granted within which period all accumulated leave must be utilised.

Unprotected strike action in relation to the implementation of a shift system

The change management program in relation to shift implementation was intensified Resolute action is being taken against those who embarked on the unprotected strike action.

Risks and Mitigations Risk Mitigation

Staff expectations of salary increases through Pay Progression

Robust communication to manage the expectations

Trends

• A total 11 appointments were confirmed between July 2013 and December 2013, compared to 3 in the same time period of the previous financial year.

• A total of 11 resignations were received between July 2013 and December 2013 as compared to 3 received in the same time period of the previous financial year. 6 Of these resignations were from the Engineering Operations Group.

• A total number of 13 employees retired between July 2013 and December 2013 as compared to 7 that retired in the same time period of the previous financial year

• At the end of the 2012/2013 financial year a total of 95.2% performance compacts and scores were received as compared to 95% received at the end of the 2011/2012 financial year.



Risk, Assurance and Compliance

Highlights and Achievement

• The draft smart metering processes have been documented to enable the system integration and functional alignment to CoJ billing processes. Metering and billing business rules have been reviewed with CoJ and aligned to the smart metering programme.

• The automation of the current business reports using Microsoft Power Pivot has begun. This will improve data integrity and governance as business intelligent reporting and enforcing data governance and auditability of the performance data.

• The Anti-Fraud and Anti-Corruption Policy has been reviewed and approved.

• All City Power employees have been issued with new access cards for the phase 1 -

integrated security systems project.

• In line with the key components of the Security Strategy which are technology, intelligence

and physical security, the following projects were executed in high risk areas which lead to

reduction in cable theft.

- Deployment of intelligence resources in hot spot areas e.g. Austin View, Turfontein,

Chrisville and Eickenhof.

- Visible patrolling in Emmarentia, Hursthill, Kensington, Kensington B and Bryanston

in partnership with the South African Police Service and other security stakeholders.

- Deployment of security guards at all our major substations which are Prospect, Delta,

Fordsburg, Orlando and Roodetown, as a result there was no theft and vandalism

reported at these substations.

- Responding to alarms and use of armed response vehicles.

• Arrest made on Scrap metal dealers for buying City Power cables and other assets, fines

were also issued for non-compliance to Second hand goods.

• City Power DIFR ration for the month under review is below threshold of less than 1 (actual

0.35).

• ISO 9001 Re-certification by SABS.

• ISO 14001 & OHSAS 18001 Surveillance audit – 14/15 October 2013 by SABS.

• Conducted EAP shift preparatory workshop to ensure readiness of staff for the proposed shift

cycles.

Lowlights

• For the period under review we had two public fatalities (controllable) in the Randburg and

Siemert areas respectively.

Challenges Challenge Intervention

1 Corrected and cleaned data not adequately updated on relevant source systems.

The establishment of the metering and meter data committee will keep track and ensure that the appropriate data is updated on the relevant systems

2 Delays in the execution and finalisation of internal audits due non- availability of the officials from various departments.

Distribute audit plan to clients once the audit plan has been approved. Continuous engagement with audit clients Escalation of delays to EXCO




Risks Mitigations

Inadequate ability to provide auditability of

reported data

Implement and enforce compliance through data

audit policies, standards and procedures for all

data domains

Automation of report generation to minimize

human intervention and ensure auditability of

reported data.

Delays in executing internal audits as per

the annual audit plan due to departmental

delays

Escalation of delays to EXCO

Increased medical costs. Increase and maximise Education and

Awareness by 10% Absenteeism.

On the job productivity impairment.

Public fatalities Training and Awareness Campaigns to inform all

parties/persons exposed.

Compliance to policies, standards, procedures,

Ensure the implementation of Root Cause

Analysis

Increase in theft and vandalism on

electrical network infrastructure

Deployment of intelligence in hot-spot areas and

syndicates have been identified

Intervention through SAP and other external

stakeholders (Eskom, Transnet, etc)

Roll out of alarm system on the network

Deployment of physical security on major sub-

stations – this intervention has reduced previous

theft and vandalism

Replacing overhead copper cables with Aerial

Bundle cable (ABC) and covering underground

cable with concrete (both on-going) – This

intervention has reduced the number of incidents

in hotspot areas.

Trends Increasing number of public liability claims due to theft and vandalism.


3. PERFORMANCE MONITORING

Alignment to Mayoral Priority Implementation Plan (PIP) and Service Delivery Budget Implementation Plan (SDBIP)

COJ Key Priorities

BSC Perspective

Intervention Name

Group Responsible

City Power Initiatives

Status Expected Outcomes

Sustainable Human Settlements Resource Sustainability

Customer Accelerated Visible Service Delivery (Demand Plan)

ES Electrification: programme Electrification programmes comprising bulk infrastructure and low voltage networks

Construction of the new substation in Lufhereng has commenced. Electrification projects are now being rolled out in other areas including unproclaimed areas.

Access to electricity to improve quality of life.


Customer Accelerated Visible Service Delivery (Public Lighting)

ES Provision of Public Lights

Installation of public lights is currently underway in Slovoville, Naledi, Protea Glen and Nomzamo.

Improving quality of life and contributing to safety of communities.


Customer Accelerated Visible Service Delivery (Demand & Acquisition Plan)

ES Development of Demand & Acquisition Plan

The Demand & Acquisition Plan has been approved by the Board.

Roll out of infrastructure programmes to stimulate economy, improve network reliability, reduce unplanned outages and refurbish equipment prone to failure. Maintain compliance to NRS 048 and NRS 047.



COJ Key Priorities

BSC Perspective

Intervention Name

Group Responsible




Customer Accelerated Visible Service Delivery (Stakeholder Plan)

RS Development of Stakeholder Plan Implementation of Customer Services Charter and the Service Level Agreement

There were successful Stakeholder engagements affecting 14 434 customers in Devland, Greater Alexandra and River Park which facilitated the successful installation of Prepaid Meter. Engagements will continue in all areas identified for projects.

Accelerated Visible Service Delivery (eg.100% compliance to the SLA, electrification, PL)

Active Engaged Citizenry SMME and Entrepreneur Development And Support

Customer Developmental Service Delivery (Developmental Service Delivery Plan)

ES Develop Developmental Service Delivery plan

This is currently in the planning phase.

Sustainable job opportunities.

Financial Resilience and Sustainability, Smart City Resource Sustainability

Financial Revenue War Plan

RS Improve metering data accuracy and completeness Deployment of statistical and check metering Deployment of smart meters Deployment of prepaid meters, Remote Access Terminal system (RATS) and protective structures

Process for collecting accurate data is ongoing as part of prepaid projects in Tshepisong, Devland and Greater Alexandra.

Achieve 90% data accuracy by 2015 Attaining an unqualified audit in a sustainable manner Achieving 100% payment level for key and LPU customer by June 2013 Reduce losses to 10% by 2015 Achieving 98% meter reading by June 2013 (100% Compliance to the by-law)



COJ Key Priorities

BSC Perspective

Intervention Name

Group Responsible



Conversion of LPU to AMR


Internal Asset Management (Including PL Maintenance)

EO Monitoring of Public Lighting performance (5 days turnaround time) through the PL War Plan. Root cause analysis on faults to reduce repeated outages. Additional security measures to reduce the number of outages. Re-instatement of MDT.

The PL turnaround time achieved in quarter two was 3.3 days. Three of the four network performance indicators (SAIDI, SAIFI, CAIFI), were met.

Accelerated Visible Service Delivery (eg.100% compliance to the SLA, electrification, PL) Attaining an Unqualified audit in a sustainable manner Achieving full compliance to NRS 047 and 048 immediately

Resource Sustainability Green Economy

Internal Asset Management (Energy Plan)

RS Development of Energy Plan Introduction of Domestic Time of Use (TOU) and Green Tariffs by 2015

Energy Plan has been drafted, a workshop had been held with relevant groups. Follow up workshop will be held next quarter.

2013/14: Energy Plan



COJ Key Priorities

BSC Perspective

Intervention Name

Group Responsible



Use of distribution system costs

Retail Services is gathering data and researching has commenced for the introduction of TOU tariffs

Resource Sustainability Green Economy

Internal Asset Management (Energy Efficiency Programmes)

ES Roll out of solar water heaters for domestic customers. Retrofitting of energy efficient technologies in municipal owned buildings. Proposal for tariffs enabling full integration of PV installations. programme

The Building Retrofit project is at the procurement stage. The Low pressure solar water heater programme is currently underway. Submission for a new tariff regime has been made to NERSA.

Installing 110 000 solar water heaters by December 2016. Roll out of building retrofit programme in 2013/14 financial year. Enabling tariff environment by December 2015.

Smart City Green Economy Resource Sustainability

Internal Asset Management (Smart Grid)

ES Development of Smart Grid Plan Ripple control and smart meters AMI

The City Power smart grid plan will be finalized by end of Q4 2014. Roll out of meters to commence in Jan 2014 in 52 suburbs.

Reduce losses to 10% by 2015. Achieving 98% meter reading by June 2013 (100% Compliance to the by-law). Platform will integrate with other streams within the City (water, electricity, sanitation and waste).



COJ Key Priorities

BSC Perspective

Intervention Name

Group Responsible




Internal Asset Management (Data and Process Management)

RAC Improve network data accuracy and completeness Review and implement core and support value chains

Developed a web based tool that will be used to update network data remotely through –out the business.

Achieve 90% data accuracy by 2015 Accelerated Visible Service Delivery (eg.100% compliance to the SLA, electrification, PL)


Internal Asset Management Plan (Asset Management Plan)

ES Deploy best practices in the management of assets.

High risk power transformers identified and plans in place to reduce risk. Master planning is now entrenched as a practice. Maintenance plans developed.

Achieve ISO 55001 in 2016.

Resource Sustainability

Internal Risk Management

RAC Review Business Continuity Plan (BCP) and Disaster Recovery Plan (DRM)

Consultants have been appointed to review the current BCP & DRM plans and implement the recommendations

Business Continuity and Disaster Recovery Plan


Learning & Growth

LLF Agreement HR Allowances (Travel, Cellphone, Data Card, Hot Skills)

Travel Top-up, Cellphone and Data Card Allowances were implemented with effect from June 2013. Hot Skills Allowance was discontinued

Consistent implementation of Allowances and compliance to the Remunerations Policy



COJ Key Priorities

BSC Perspective

Intervention Name

Group Responsible



Structural Re-Alignment

All structures - related deliverables were achieved as mapped in the HR Journey Map as at 31 July 2013

Right people in the right place

Acting Allowance Organised Labour to submit a signed off agreement

Compliance to existing acting provisions

50th Percentile / Pay

Progression The framework, principles, criteria, methodology have been finalised with all key stakeholders HR in partnership with Deloitte is currently in the process of finalizing the job profiles, job evaluation, job grading and moderation

Retention of key skills

Essential Services / Rules of Engagement

Organised Labour to submit a signed off Essential Services proposal

Availability of essential service staff in event of labour unrest

Shift Policy / Overtime

Shift Work will be implemented on 1 February 2014

Accelerated Service Delivery



COJ Key Priorities

BSC Perspective

Intervention Name

Group Responsible



Annual Leave Leave plans are being managed by Line Managers to ensure the control of accumulated leave

Reduction of accumulated leave to ensure compliance with the Conditions of Service

Gratuity / Performance Management

Gratuity as a once off incentive was discontinued. An enhanced bonus formula, that takes into account the Company’s gatekeepers, ie. Clean Audit and Company Score was developed, approved and successfully implemented

High Performing Culture


Growth and Development Strategy-Integrated Development Plan Report (IDP)

The NRS047 index was impacted by the 1.5 hour, 7.5 hour and 24 hour restoration times KPI’s required by NERSA. The actual restoration times versus the targets are reflected in the table below. The unauthorised work stoppage had an adverse impact on the KPI as all the outages could not be restored timeously.

Restoration Time Actual Performance (Mid Year) NERSA Target

Within 1,5 hours 27.3% 30%



Within 24 hours 96.3% 98%

The planned vs. unplanned maintenance target of 70% was not achieved. The mid-year performance was 67.2%. During October and November, the planned vs unplanned maintenance reduced due to the high number of outages from adverse weather conditions and the high rate of theft and vandalism. In December, the majority of staff were on leave. Although the target was met in the first quarter, the impact of the performance in the second quarter reduced the overall mid-term performance.

Target Actual Target Actual Target Actual

Improve

Network

performance

and quality of

supply

Improved

restoration

times, reduction

in unplanned

Outages,

improved

network health

CAIDI Minutes 279.71 279.71 308.40 279.71 504.27 279.71 413.97

CAIFI Number 5.65 5.65 2.73 5.65 2.26 5.65 3.27

SAIDI Minutes 1 337.00 1 337.00 352.80 1 337 621.22 1 337 974.32

SAIFI Number 5 5 1.14 5 1.23 5 2.35

Planned: Unplanned

Maintenance% 70.00 70.00 75.05 70.00 62.63 70.00 67.16

HV Outages: NPR Number 66.00 16.00 17.00 15.00 11.00 24.00 28.00

Maintain High Quality

of Service Levels

(NRS 047 Index %)

% 89.30 79.80 35.14 79.80 34.36 89.30 34.96

Maintain High Quality

of Supply Levels

(NRS 048 Index %)

% 95.00 95.00 66.11 95.00 99.33 95.00 100.09

PIPImpact on

CommunityKPI Unit

CP IDP

ProgrammeTotal Target

Sustainable

Human

Settlements

Smart City

Resource

Sustainability

Investment

attraction,

retention and

expansion

Green

Economy

Quarter 1 Quarter 2 YTD



The target for NRS 048 is 95% consisting of LV, MV & HV KPI’s. For the October and November month, there were no measuring instruments on the LV category due to recorders being faulty. However, NRS 048 Compliance for LV for the month of December was recorded at 100%.

142 houses were electrified during Quarter 2. Increased electrification numbers are reliant upon existing network capacity and related infrastructure. Therefore, Eskom supply constraints must be taken into account. The Additional Capacity has not changed from the previous reporting period since no bulk substation was commissioned in the reporting period. The After Diversity Maximum Demand also remains unchanged. The solar water heater (SWH) is a flagship project that has economic benefits to domestic customers and contributes to energy efficiency. A total of 8516 units were installed during Quarter 2 against a target of 7500. A total of 10 271 solar water heaters have been installed thus far, representing Year to Date figures. This is against a target of 15 000 units for the Mid-Term reporting period.


Refurbishment

of ageing

infrastructure

Improved

restoration

times, reduction

in unplanned

Outages,

improved

network health

Average age of

infrastructure (HV)Years 39 39 39 39 39 39 39

Additional Capacity MW - - - - - - 0

Electrification Number 2 000 700 800 433 142 1 133 942

Provision of public

LightsNumber 7 000 1 100 458 1 967 326 3 067 784

Improve After Diversity

Maximum DemandKvA 0.3 0.3 0.0 0.3 0.0 0.3 0.0

Improve Energy Mix

(MW)% New New 0.00 New 0.00 New 0.00

Solar Water Heaters Number 15 000 7 500 1 755 7 500 8 516 15 000 10 271

Reduction in Green

House Gases% - - 0.00 - 0.00 - 0.00

Impact on

CommunityPIP

CP IDP

ProgrammeKPI

Sustainable

Human

Settlements

Smart City

Resource

Sustainability

Investment

attraction,

retention and

expansion

Green

Economy

Unit Total Target

Expansion and

Strengthening

of Network

More people

with access to

electricity,

Economic

Demand Side

Management

Climate Change

& Energy

Diversification

Quarter 1 Quarter 2 YTD



Overall meter reading performance has slightly decrease to 82.03% Different metering categories movements are as follows from July to December 2013:

• Manually read LPU moved from 68.08% to 58.58%

• LPU AMR 64.8%

• Domestic AMR moved from 85.98% to 83.73%

• Manually read Domestic moved from 86% to 85.39%

The factor influencing meter installations is customer buy-in. The engagement with the customers has improved and hence the much improved Meter Roll Out numbers, specifically the Automatic Meter Reader (AMR) as well as the Pre-paid Meter installations. A total of 17 472 meters were installed during Quarter 2 (12 200 Pre-paid, 5 772 AMR). The total numbers of meters installed for the Mid-Term period is 29 183.


Payment Levels % 96.00 96.00 89.30 96.00 105.01 96.00 96.45

Meter Reading

performance% 96.00 96.00 85.06 96.00 82.03 96.00 82.03

Meter Roll Out Number 100 000 10 400 11 711 9770 17 472 20 170 29 183

Losses (Technical/ &

Non-Technical)% 9.00 9.20 38.43 16.70 19.96 12.68 30.03

% of ESP customers

with FBE provided % 100.00 100.00 57.34 100.00 100.00 100.00 100.00

KPI Unit

Sustainable

Human

Settlements

Active

engaged

citizenry

Resource

Sustainability

YTD Total Target

Quarter 1 Quarter 2

Revenue step

change

programme

Relief in Tariffs,

Smart City,

reduction in

accounted for

electricity

PIPCP IDP

Programme

Impact on

Community




EPWP Number 3 000 750 215 750 340 1 500 555

50% black owned

companies% 5.00 8.00 9.78 8.00 10.62 8.00 10.09

30% black woman

owned company% 8.00 5.00 3.06 5.00 4.14 5.00 3.46

Customer / stakeholder

satisfaction index% 60.00 60.00 56.60 60.00 56.60 60.00 56.60

Filling of vacancies

aligned to agreed

Affirmative Action (AA)

targets

% 85.00 85.00 89.03 85.00 89.10 85.00 89.10


aligned to agreed

Gender Equity (GE)

targets

% 24.00 24.00 23.31 24.00 23.36 24.00 23.36


aligned to agreed

People with Disabilities

(PWD) targets

% 2.00 2.00 2.98 2.00 2.88 2.00 2.88

DIFR Ratio 1.00 1.00 0.35 1.00 0.35 1.00 0.35

ISO accreditation Audit report Keep certif icate w ith

minor f indings

Keep certif icate

w ith minor findingsIn Progress

Keep

certif icate

w ith minor

findings

Keep

certif icate

w ith minor

f indings

Keep

certif icate

w ith minor

f indings

Keep

certif icate

w ith minor

f indings

Unqualified Audit Audit report #N/A

Unqualif ied audit

w ith matters of

emphasis

In Progress

Unqualif ied

audit w ith

matters of

emphasis

Unqualif ied

audit w ith

matter of

emphasis and

other matters

Unqualified

audit w ith

matters of

emphasis

Unqualif ied

audit w ith

matter of

emphasis

and other

matters

Financial

resilience and

sustainability

Smart City

Resource

Sustainability

Improve

Customer

Centricity and

people

development

Development

Service Delivery

Improved

services

Continuous

Improvement of

the business

Improved

services

PIPCP IDP

Programme

Impact on

CommunityKPI Unit

YTD Total Target

Quarter 1 Quarter 2



The Satisfaction performance is based on the last financial years Survey; new Customer Satisfaction Survey will be conducted in the last quarter. The Expanded Public Works Programme (EPWP) delivered a total of 340 jobs in Quarter 2. A total of 555 jobs were created during Quarter 1 and Quarter 2, against a target of 1500. Construction of bulk projects will commence in Quarter 3 which will significantly improve the number of jobs created.



Balanced Scorecard with Key Performance Areas and Indicators

Financial Perspective

Gross profit is less than budget due to decrease in revenue and increase in non-technical losses.

The Total Capex Spend (quarterly spend vs. quarterly target) improved from 49% in Quarter 1 to 76% in Quarter 2.The details of the Capex Spend are discussed in Section 4 of this report.

2012/13

Actual Baseline Target Actual Target Actual Target Actual

Optimise Profit

Margin

Gross Profit %:

Sales/Cost of

Sales

Gross Profit %:

Sales/Cost of Sales % 25.80 17.22 2.09 38.55 36.75 26.62 18.95

Sustainable Value

Creation

Improve Net

Cash Generated

from Operating

Activities

Improve Net Cash

Generated from

Operating Activities

Rbn 2.48 1.49 -1.09 1.49 -0.17 1.49 -0.17

Reduce Losses Total Losses %Reduce Total

Losses% 30.13 14.50 38.43 14.50 21.32 14.50 30.57

Optimise Capex

Spend

Total Capex

Spend as % of

Targeted Capex

Spend

Total Capex Spend

as % of Targeted

Capex Spend

% 100.00 100.00 48.59 100.00 75.92 100.00 65.22

(a) Financial

PIP Align-ment Value Propositions Key Performance

Area

Unit

Financial

Resilience and

Sustainability

Key Performance

Indicator

Quarter 1 Quarter 2 Year to Date



Customer Perspective

Internal Perspective

Learning and Growth

2012/13


Promote Energy

Efficiency

Reduction in

Green House

Gases

GHG % New 0 0.0 0 0.0 0 0.0

Green

Economy

Promote Energy

Efficiency

Improve Energy

Mix (MW)

Improve Energy Mix

(MW)MW TBR New 0.0 New 0.0 New 0.0

Active Engaged

Citizenry

Improved Customer

/ Stakeholder

Experience

Improve

Customer /

Stakeholder

Satisfaction

Satisfaction Index

%% 67.22 69.90 50.42 69.90 52.22 69.90 51.32

Maintain High

Quality of Service

Levels

(NRS 047 Index %)

% 80.69 79.80 35.14 79.80 34.36 89.30 34.96

Maintain High

Quality of Supply

Levels

(NRS 048 Index %)

% 99.82 95.00 66.11 95.00 99.33 95.00 100.09

SMME &

Entrepreneur

Development &

Support

Socioeconomic

Development

Socioeconomic

Development

Socioeconomic

Development Index# 46.45 46.45 22.14 46.45 24.93 46.45 23.50

Value Propositions Key Performance

Area

Quarter 1 Quarter 2UnitPIP Align-ment Year to DateKey Performance

Indicator

Maintain High

Quality of Service

Levels

Quality Supply and

Availability

Sustainable

Human

Settlements

2012/13


Resource

Sustainability

Manage Core Value

Chains

Monitor and

Improve

Compliance and

Assurance

Compliance and

Assurance Index Status 1.5 3.0 0.0 3.0 1.0 3.0 1.0

Key Performance

Area

PIP Align-ment Unit

(c) Internal

Year to DateQuarter 1 Quarter 2Key Performance

Indicator

Value Propositions



• The staff complement for the reporting period is 1 597 which includes permanent and contract employees.

• The Company’s target for Affirmative Action is 83%. The Company achieved 89.10% for all levels and 76.49% for Supervisory and above levels.

• The Company’s target for Gender Equity 24%. The Company achieved 23.36% for all levels and 29.85% for Supervisory and above levels.

• The Company’s target for People with Disabilities is 2%. 46 employees have voluntarily declared their disability. This amounts to 2.88% of the total workforce.

Although there are various KPI targets not met, the following interventions have been implemented:

• Establish Exco bi-weekly meetings where all the non-performance KPI’s are discussed

• Develop interventions for the KPI’s not met

2012/13


Resource

Sustainability

High Performing

Teams

Improve Team

Performance

High Performance

Team Index% 73.0 73.5 42.5 73.5 33.8 73.5 43.8

Key Performance

Area

(d) Learning and Growth

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

Indicator

Value Propositions



4. SERVICE DELIVERY REPORT

Analysis of the Master Capital Programme

The original approved City Power Capital budget for the 2013/14 financial year is R1,7 billion. This approved budget is inclusive of R57 million worth of loans, R1,1 billion own funding, R60 million DSM funding, R200 million Engineering services contribution and the remaining R164 million is The made up of grants and public contributions. The mid-year expenditure is as shown in the table below:

The expenditure for Quarter 2 amounted to R296m compared to the quarterly budget of R390m. The year to date amounted to R418m compared to the year to date budget of R642m. The first four months of the financial year have been taken up by activities to finalize designs and commence with supply chain procurement processes.

Project Detail

(By Project)

Total

Budget for

the year

YTD

budget

YTD

Actual

YTD

Variance

YTD Actual

vs YTD

Budget

YTD Actual

vs YE

Budget

Committed

YTD Actual +

Committed vs

YE Budget

R'000 R'000 R'000 (%) (%) R'000 (%)

Electrification 61380 26147 25458 689 97% 41% 11 816 61%

Service

Connections 120730 47795 30400 17395 64% 25% 3 216 28%

Township

Reticulation 0 0 570 -570 - - 72 -

Upgrading of

Electrical

Network

128861 51224 61782 -10558 121% 48%8 941

55%

Network

Development 6000 2350 1126 1224 48% 19% 4 544 95%

Building

Alterations/

Construction

60220 17270 161 17109 1% 0755

2%

Office

Equipment/Comp

uters

4067 1870 1846 24 99% 45%69

47%

Computer

Software 41000 15000 266 14734 2% 1% 299 1%

Tools and Loose

Gear 9488 3530 1062 2468 30% 11% 2 092 33%

Plant and

Machinery 59110 27000 1876 25124 7% 3% 3 637 9%

Meters and Load

Man 625800 225950 201534 24416 89% 32% 183 569 62%

Scada 10000 4500 0 4500 0% 0% 0 0%

Protection 28221 11300 5524 5776 49% 20% 2 044 27%

Furniture 1775 840 365 475 43% 21% 59 24%

Public Lighting 27715 10173 8720 1453 86% 31% 2 816 42%

Refurbish of Bulk

Infrastructure 542691 196651 77579 119072 39% 14% 120 985 37%

Insurance 0 0 212 -212 - - 436 -

TOTAL 1 727 058 641 600 418 481 223 119 65% 24% 345 350 44%



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 table below shows monthly recovery projections for the remaining two quarters of the current

financial year. The figures on the table were projected based on the risk assessment covering the

suppliers; contractors; material availability and communities in areas where projects are undertaken.

26,630,000

133,370,000

251,176,000

371,179,000

508,043,000

641,600,000

822,508,701

1,003,417,403

1,184,326,104

1,365,234,806

1,546,143,507

1,727,052,209

7,388,000

82,921,000122,058,000

219,958,690

348,231,456

417,700,136

495,442,195

740,519,699

1,083,768,356

1,469,496,347

1,636,772,476

1,727,077,325

0

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

1,800,000,000

2,000,000,000

Base Projections

Revised Projections



CONTROLLABLE CAPEX The expenditure for the second quarter on Controllable capital projects, which are projects funded from COJ loans, DSM levy, Grant funding, Own cash and Adopt a light funding amounted to R281m compared to the quarterly budget of R367m which is R86m below the target as a result of the execution plans and acquisition plans being finalised while some of the projects had to go out on tender to start the procurement process. A noticeable expenditure recovery will be realised in the third quarter. The year to date expenditure amounted to R387m compared to the year to date budget of R594m.

( Controllable) Project Detail (By Project)

Budget for

Quarter 2

Actual for

Quarter 2

Var for the

Quarter

Total Budget for the year

YTD Budget

YTD Actual

YTD Variance

R'000 R'000 R'000 R'000 R'000 R'000 R'000

Electrification 16,369 24,579 -8,210 26,147 26,147 25,458 689

Public Lighting 6,064 7,117 -1,053 10,173 10,173 8,673 1,500

Electrical

Infrastructure 193,545 169,434 24,111 312,024 312,024 265,363 46,661

Power Systems 6,968 5,524 1,444 11,300 11,300 5,524 5,776

Other Capex &

asset purchases 39,466 3,963 35,503 65,510 65,510 5,577 59,933

Refurbish of Bulk

Infrastructure 104,417 70,387 34,030 168,651 168,651 76,658 91,993

TOTAL 366,829 281,005 85,824 593,805 593,805 387,254 206,551

Electrical Infrastructure Electrical infrastructure comprises of Upgrade of Electrical Networks, Network development, Meters and Load management. The second quarter expenditure amounted to R169 million which is R25m below the budget of R194m. The year to date expenditure amounted to R265m compared to the year

to date budget of R312m.

AVAILABLE BUDGETJan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14

BULK INFRASTRUCTURE R 416 771 380 R 77 578 720 R 339 192 660 R 19 318 204 R 74 483 373 R 101 093 905 R 137 153 524 R 40 595 241 R 20 467 876

DSM EE R 0 R 0 R 0

DSM/ LOAD MANAGEMENT R 5 400 000 R 4 344 160 R 1 055 840 R 0 R 0 R 1 055 839 R 0 R 0 R 0

ELECTRIFICATION R 46 380 000 R 25 458 026 R 20 921 974 R 1 172 105 R 5 475 000 R 7 894 800 R 6 000 000 R 380 000 R 0

FIRE & SECURITY R 80 000 000 R 0 R 80 000 000 R 10 000 000 R 30 000 000 R 25 000 000 R 10 000 000 R 5 000 000

INFORMATION TECHNOLOGY R 51 000 000 R 265 833 R 50 734 167 R 0 R 0 R 20 734 000 R 20 000 000 R 5 000 166 R 5 000 000

METERS R 700 000 000 R 197 190 143 R 502 809 857 R 39 853 806 R 103 073 407 R 119 155 877 R 130 805 474 R 63 494 783 R 46 426 511

NETWORK DEVELOPMENT R 6 000 000 R 1 126 499 R 4 873 501 R 0 R 4 873 501 R 0 R 0 R 0 R 0

OPERATING CAPITAL R 21 660 000 R 5 310 690 R 16 349 310 R 100 000 R 5 765 000 R 5 460 000 R 2 924 305 R 1 300 000 R 800 000

PROTECTION R 28 221 157 R 5 524 263 R 22 696 894 R 617 490 R 3 855 736 R 5 738 869 R 7 657 864 R 2 826 939 R 2 000 000

PUBLIC LIGHTING R 79 234 463 R 8 720 356 R 70 514 107 R 1 610 454 R 5 847 000 R 14 800 366 R 25 736 825 R 21 519 000 R 1 000 462

SERVICE CONNECTIONS R 120 730 000 R 30 399 512 R 90 330 488 R 6 190 000 R 8 095 488 R 8 075 000 R 7 890 000 R 3 090 000 R 3 090 000

TELECOMMUNICATIONS R 15 000 000 R 0 R 15 000 000 R 0 R 4 000 000 R 5 500 000 R 2 500 000 R 2 000 000 R 1 000 000

UPGRADE OF ELECTRICAL NETWORKR 138 661 000 R 61 781 934 R 76 879 066 R 8 880 000 R 18 609 000 R 21 740 000 R 16 060 000 R 10 070 000 R 1 520 000

SCADA R 10 000 000 R 0 R 10 000 000 R 0 R 2 000 000 R 5 000 000 R 3 000 000

TRAINING R 8 000 000 R 0 R 8 000 000 R 1 000 000 R 2 000 000 R 2 000 000 R 2 000 000 R 1 000 000

TOTAL R 1 727 058 000 R 417 700 136 R 1 309 357 864 R 77 742 059 R 245 077 505 R 343 248 656 R 385 727 991 R 167 276 129 R 90 304 849

PROJECTIONS

FINANCIAL

PROJECTIONS

FINANCIAL

PROJECT CATEGORIESTOTAL APPROVED

BUDGET

ACTUAL

EXPENDITURE (Total Budget -

Actual Exp.)

PROJECTIONS

FINANCIAL

PROJECTIONS

FINANCIAL

PROJECTIONS

FINANCIAL

PROJECTIONS

FINANCIAL



Power Systems Power Systems comprises of Protection. The expenditure for the second quarter is R6m compared to the quarterly budget of R7m which is R1m below Budget. The year to date expenditure amounted to R6m compared to the year to date budget of R11m.

Public Lighting The expenditure for the quarter amounted to R7m compared to the quarterly budget of R6m which is R1m above the target. The year to date expenditure amounted to R9m compared to the year to date budget of R10m.

Electrification The expenditure for the second quarter amounted to R25m compared to the quarterly budget of R16m which is R9m above the quarterly budget. This is a result of fast tracking the expenditure that was not spent in the first quarter. The year to date expenditure amounted to R25m compared to the year to date budget of R26m.

Bulk Infrastructure The expenditure for the second quarter amounted to R70m compared to the quarterly budget of R104m. This reflects a negative variance of R34m as result of the delays in commencing with the Sebenza Substation project due to a legal challenge by one of the tenderers; this the biggest substation project in the current and next three financial years. The category includes projects such as Cydna Substation, Transformer replacement programme and Eskom payments for Strengthening of Network. The year to date expenditure amounted to R77m compared to the year to date budget of R169m.

Non Controllable Capex The non-controllable capital projects are projects which are funded by public contributions. The expenditure for the quarter amounted to R15m compared to the quarterly budget of R24m and this reflects a negative variance of R9m as a result of low levels of service connection applications. The year to date expenditure amounted R31m compared to the year to date budget of R48m.

(Non - Controllable)

Project Detail (By

Project)

Budget for

Quarter 2

Actual for

Quarter 2

Var for the

Quarter

Total Budget for the year

Ytd budget

YTD Actual

YTD Variance

R'000 R'000 R'000 R'000 R'000 R'000 R'000

Electrification 0 0 0 0 0 0 0

Public Lighting 0 20 -20 0 0 47 -47

Electrical

Infrastructure 0 0 0 0 0 0 0

Service

Connections 96,530 14,871 81,659 120,730 47,795 30,400 17,395

Township

Reticulation 0 429 -429 0 0 570 -570

Refurbish of

Bulk

Infrastructure 0 0 0 0 0 0 0

Insurance 0 100 -100 0 0 212 -212

TOTAL 96,530 15,420 81,110 120,730 47,795 31,229 16,566



PUBLIC LIGHTING The expenditure for the quarter amounted to R20 thousand which is as a result of funds received from developers for service connections. The year to date expenditure amounted to R47 thousand.

SERVICE CONNECTION The expenditure for the quarter amounted to R15m compared to the quarterly budget of R24m. The funds are received from the public for service connections. The year to date expenditure amounted to R30m compared to the estimated budget of R48m.

TOWNSHIP RETICULATION The expenditure for the quarter amounted to R429 thousand as a result of funds received from the developers for connections. The year to date expenditure amounted to R570 thousand. Capex claims are claims done on the loans granted by COJ to City Power as we spend on the loan funding. The Capex claims for the quarter amounted to R12m and to date R16m has been claimed. Funding claims

Project Detail (By Project)

Quarter 1 Quarter 2 TOTAL

R'000 R'000 R'000

Network development

229 249 478

Refurbish of bulk infrastructure - loans

4,342 11,322 15,664

TOTAL 4,571 11,571 16,142

SPECIFIC SERVICE DELIVERY PROGRAMMES

Supply and Demand Side Management (SSM and DSM) A number of renewable energy and DSM initiatives have been developed to align the city with the

international requirement to reduce carbon emissions.

The status of the SSM and DSM projects which City Power has undertaken is listed and explained

below:

• Installation of Solar Water Heaters – this project is on-going, 10 271 SWHs have been

installed for the reporting period.

• Installation of Energy Efficient Lighting – 80% of the projects are in the execution phase,

which is being driven with energy efficient lighting. City Power is continuously researching

lighting technologies which is a variable that affects installations & their associated lead

times.

• Energy Efficient Building Retrofits – this project is currently in the procurement stage.

Electrification

A total of 942 connections have been completed during the reporting period against a target of 1133

connections.



Public Lighting

This KPI shows the level of public lighting for USDG Funded projects in the City. For the Quarter, a

total of 326 lights have been installed. A total of 784 public lights have been installed during the

Quarter 1 and Quarter 2 period, against a target of 3067.

Expanded Public Works Programme (EPWP)

One of the City Power strategies in addressing unemployment and ensuring maximization of job

creation has always been to minimize the use of excavating machinery and only use manual labour

on all our CAPEX (Capital Expenditure) projects. During project implementation phase, City Power

approaches the political heads (Councillors) in the area or political wards where these projects are

being implemented.

A list of candidates is therefore submitted to City Power’s contractors as part of employment and

selection process. The successful candidates are then temporarily employed by the contractors who

give on job training and report on monthly basis as part of City Power’s EPWP contribution.

The total number of jobs created for the Mid-Term reporting period is 555 against the year-to-date target of 1500.

Infrastructure Maintenance

Power Outage Management

An outage is defined as a complete loss of electricity supply and arises due to a variety of reasons some of which are outlined below:

• Network performance related (NPR) e.g. overloading, cable faults, equipment failure etc

• External causes which are mainly due to third party activities e.g. tampering, theft, damage by civil contractors etc.

The duration and frequency of outages impact customers differently depending on the type of consumer (domestic, commercial, industrial), therefore, interruptions need to be properly managed as they are an inconvenience and sometimes lead to huge financial losses to customers. As a result, the provision of electricity within the City is closely monitored to ensure that the quality of supply (QoS) provided meets acceptable standards. In terms of reporting, outages are classed as HV (High Voltage) or MV (Medium Voltage). Only outages which are network performance related (see definition above) are reported on in terms of this document.

High Voltage (Bulk) This KPI shows the number of outages experienced on the high voltage network (HV) which is at voltages above 33kV. Outages on these networks generally affect large areas and as a result the maintenance of these networks and capital investment into these networks are always prioritized as to ensure that interruptions are kept to a minimum Total number of HV NPR outages (July – December 2014): 28. This is within the target of 31.



Medium Voltage

This KPI refers to the outages experienced on the medium voltage network (MV) which is at voltages between 1kV and 33kV. Outages on this network are more localized and, therefore, generally affect smaller areas and as a result are less severe than HV outages. However, due to the size and extent of the network, higher number of customers connected to the MV network normally experience more outages. Total number of NPR outages recorded is 557. The main reasons for these outages include equipment failure, cable insulation failure and theft and vandalism. The mitigating actions in place to reduce these outages relate mainly to security and measures to reduce theft and vandalism. Equipment failures and insulation failures are as a result of aging equipment and cables.

Network Performance Indicator (SAIDI) reporting

Over the last couple of years, a new system to report network performance has been under development. This system will ensure that there is direct linkage between interruptions and the number of customers affected thus enabling City Power to report supply reliability more accurately. Reporting on this new system is based on internationally recognised KPI’s such as SAIDI (System Average Interruption Duration Index). Additionally, City Power has started the network criticality study to create a complete reliability model of the City Power Operating networks. This will allow the organisation to set targets based on the performance of the network and will also aid in operational decision making.

City Power performed well in CAIFI, SAIDI and SAIFI.

Public Lighting Maintenance Through continuous performance monitoring and improvement in execution, the public lighting turnaround time (TAT) has dropped from 5.1 days in quarter 1 to 3.3 days in quarter 2.



Retail Services

Tariff Proposal 2014/15

In terms of the updated (draft) on our tariff position, restructuring and rationalizing City Power tariffs is

still considered key. This includes but is not limited to the following;

• The introduction of Network access as well as Maximum Demand charges.

• Normalization of Cross-subsidies (Commercial / Business contributing the most).

• Alignment of TOU tariffs to Demand tariffs.

• Introduction of a Reseller tariff.

• Introduction of a tariff to that supports Photovoltaic installations, etc.

We continue to work around these in line with the NERSA guidelines’ and continue to observe the set

timelines around the approval processes ahead of the implementation in July 2014.

Cost of Sales

Bulk purchases have consistently shown a declining trend in the initial half of 2013/14. Current

volumes are at 3.8% below budget

Jul Aug Sep Oct Nov Dec TOTAL

Budget 1,249.58 1,279.03 1,110.84 1,038.54 1,093.63 990.95 6,762.57

Actual 1,225.07 1,238.36 1,083.29 1,018.36 1,006.09 936.34 6,507.51

0.00

500.00

1,000.00

1,500.00

2,000.00

13/14 Bulk Purchases - GWh



Bulk Purchases (R’000)

There is a saving of R271 million on bulk purchases mainly due to reduction in volumes.

Meter Reading Performance

Meter Reading Performance

June July August September October November December

Manual LPU 57.29% 61.26% 63.64% 68.08% 70.67% 62.38% 58.58%

Manual

Domestic 84.19% 82.71% 86.06% 86.43% 85.79% 86.09% 85.39%

Domestic AMR 80.24% 81.61% 85.01% 85.98% 85.15% 84.28% 83.73%

LPU AMR 65.08% 63.80% 64.51% 61.33% 60.86% 59.42% 64.79%

Overall

Performance 80.59% 79.45% 82.48% 82.74% 82.39% 82.08% 82.03%

Below are the reasons for not achieving the meter reading performance target:

LPU numbers are based on billing registers and the ratio is 1:3 per meter.

Customer Categories

Unread Inacces-

sible Faulty

Incorrect Addres-

ses

System Updates

Illegal connec-

tions Totals

Manual LPU - 166 505 - 189 674 1 534

LPU AMR - 0 8 073 - - - 8 073

Manual Domestic 7 800 1 464 1 241 4 532 617 957 16 611

Domestic AMR - - 707 - 533 - 1 240

TOTAL 7 800 1 630 10 526 4532 1339 1631 27 458

Jul Aug Sep Oct Nov Dec TOTAL

Budget 1,191.33 1,218.26 793.52 625.11 646.05 606.84 5,081.11

Actual 1,148.0 1,177.0 715.0 614.5 594.6 561.0 4,809.96

0.00

500.00

1,000.00

1,500.00

2,000.00

13/14 YTD Bulk Purchases - R'millions



RAT (Remote Access Terminal) System-

Non-visibility of meters in the Lehae area is being investigated with the supplier to resolve the problem. Alexandra and Far East Bank number of visible meters is low because the meter installation is still in progress.

AREA NO OF RATS INSTALLED NO OF METERED STANDS NO OF METERS

VISIBLE ON RATS VARIANCE

LEHAE 7 3,108 620 2,488

RIVERPARK 12 773 773 0

ALEXANDRA 17 7,161 853 6,308

FAR EAST BANK 58 4,174 1,886 2,288

TOTAL 93 15,216 4,127 11,084

One of the challenges experienced is that not all meters are visible through the RAT System.

Energy Management Plan Progress

A draft Plan has been developed and is undergoing further consultation. The intent of the plan is to highlight to the business, areas of leverage that the business has in ensuring the provision of sustainable electricity. The plan is also intended to highlight ways in which to reduce Johannesburg’s carbon footprint in a cost effective and efficient manner. The first round of consultation took place on 24 October 2013. This was the first opportunity to encourage the relevant stakeholders participate in shaping this document. It also includes Key milestones as well as targets upon which the success of the plan will be benchmarked. The intent is now to consolidate final inputs and follow the relevant governance processes to obtain

approval.

Payment Levels

Details 1st Quarter 2nd Quarter

YTD

Total Collection for the quarter 89.3% 105.0%

96.4%

July August September October November December

72%

115%

88%

108%

95%

111%

Payment LevelPayment LevelPayment LevelPayment Level



Revenue

The reduction of revenue is attributable to the following:

• Reduction of bulk purchases

• Increase in prepaid customers not buying

• Uncleared billing exceptions and unbilled customers

-

500,000

1,000,000

1,500,000

July August September October November December

Budget Sales 1,213,442 1,488,259 1,092,629 1,012,972 995,713 981,109

Actual Sales 952,018 1,089,943 978,207 914,951 899,869 996,061

BUDGET vs. ACTUAL REVENUE

26%

13%61%

Contribution to Low Revenue (Rands)

Attributable toreduction PurchaseVolume

Attributable to PrepaidLosses

Attributable toConventional Losses



Debtors Age Analysis

Description <= 30 Days <= 60 Days <= 90 Days 90 Days and

Above

Total

Current Quarter

1 109 300 348 443 286 264 3 161 773 4 905 781

23% 6% 5% 66% 100%

Last Quarter

1 312 835 315 322 268 054 3 141 144 5 037 355

26% 6% 5% 62% 100%

Stakeholder Management

Resellers Forum

As an electricity supplier to the residents of Johannesburg, the tariffs as approved by NERSA are passed through to the customers through billing done by the City of Joburg. In the event where there is a block of flats with only one bulk point of supply, City Power would supply and bill at a bulk meter (i.e. the body corporate). The body corporate is then expected to apportion and charge for the consumption to all users within the establishment. This would be properly achieved through the installation of check meters (pre-paid or conventional meters) by the body corporate. Due to inconsistencies in practice by resellers coupled with the fact that this practice is not regulated, this has resulted in both the body corporates and the tenants lodging complaints to either City Power or to NERSA for various reasons including:

• Body Corporates complain about the sustainability of their business.

• Tenants complain about inconsistencies or lack of transparency on the charges by body corporates (especially if these charges are not in line with the bylaw )

Due to the resellers business not being regulated, City Power has opted to develop a resellers’ tariff to attempt to mitigate the above complaints. As part of developing the Resellers Tariff, City Power invited electricity resellers in Johannesburg into a session which has enabled City Power to communicate its intention. Through this City Power has obtained insight into their business dealings. This engagement has also allowed resellers to influence the design of the Resellers Tariff, ahead of the 2014/15 tariff approval process. Over and above that, the resellers are expected to assist City Power in identifying the unbilled, unmetered and incorrectly billed customers which may be contributing to the losses and revenue loss.

Compliance with NRS 047 Metering Requirements Performance on overall meters read that are within the By-Law compliance has improved to 89.11%. Although there is improvement from the previous quarter on meter reading rate, the minimum

compliance standard is still not achieved.

Query Management There is non-compliance with NRS 047 on query resolution. The total number of queries has reduced as compared to the 1

st quarter. It should be noted that the numbers reported below are as at end of

November 2013.



Electricity related queries

Quarter no date 180 +days 180 days 150 days

1 12 518 612 901

2 9 292 255 417

Call Centre Requirement Call Centre standards have not been met due to disruption of service by the labour unrest at R&CRM. Performance was also impacted by City Power’s staff being on strike. As indicated above in the report, non-meeting the restoration times also increase repeat calls.



5. FINANCIAL MANAGEMENT

Financial Assessment

Statement of Financial Performance

As at 31 December 2013

Overall Financial Performance

Surplus The surplus translates a negative variance of R35m and R607m against the budget for the quarter and YTD respectively. However there is a big improvement on the performance of the second quarter against the first quarter. During the first quarter the variance against the surplus was a negative 656%, while the negative variance in the second quarter is 6%. The reasons for the variances are set out below:

Service Charges Service charges for the quarter and YTD are less than budget by R163m and R937m respectively due to a decrease in volumes, unbilled customers, and bypasses prepaid meters.

Description % Contribution R'000

Total Revenue Shortfall 100% 937,000

Attributable to reduction Purchase Volume 27% 249,000

Attributable to Prepaid Losses 13% 120,045

Attributable to Conventional Losses 61% 567,955

Figures in Rand thousand Trend Variance Trend Variance

Actual Budget % Actual Budget %

Revenue 3 186 530 3 237 956 -2% 6 581 747 7 334 310 -10%

Service charges 2 827 005 2 989 755 -5% 5 847 495 6 784 139 -14%

Other income 312 038 190 520 64% 607 257 433 460 40%

Government grants 6 497 32 000 -80% 44 497 61 500 -28%

Interest revenue 34 984 20 216 73% 71 440 44 283 61%

Fees earned 4 941 4 215 17% 8 992 8 429 7%

Rental income 75 424 100% 143 847 -83%

Canteen revenue 989 826 20% 1 923 1 652 16%

Expenditure 2 634 610 2 650 705 -1% 6 514 452 6 659 858 -2%

Bulk purchases 1 690 483 1 788 003 -5% 4 642 833 4 901 105 -5%

Debt impairment 163 647 111 696 47% 338 127 256 139 32%

General expenses 258 073 236 183 9% 516 017 472 365 9%

Personnel costs 184 578 198 360 -7% 372 815 396 719 -6%

Finance costs 88 679 99 281 -11% 179 410 200 146 -10%

Repairs & maintenance 162 783 118 162 38% 288 115 236 323 22%

Administration 27 479 35 192 -22% 59 415 70 384 -16%

Depreciation & amortisation 58 888 63 830 -8% 117 718 126 676 -7%

Surplus before taxation 551 920 587 250 -6% 67 295 674 453 -90%

Taxation 0 0 0% 0 0 0%

Surplus 551 920 587 250 -6% 67 295 674 453 -90%

Quarter 2 YTD



Other Income Other Income for the quarter and YTD is R121m and R174m more than budget respectively, due to the following:

• New Connections exceed the budget by R20m and R41m for the quarter and 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.

• Sales to Eskom: While current performance is better than previous year, the current performance is below budget by R60 million. Sales to Eskom are based on Kelvin’s ability to generate.

• Sales to Eskom- R'Million Jul Aug Sep Oct Nov Dec YTD

2013/14 Actual 66.600 106.260 70.690 87.145 89.964 88.356 509.015

Budget 95.785 95.785 92.695 95.785 92.695 95.785 568.529

2012/13 Actual 46.315 56.648 61.451 85.015 68.044 48.335 365.807

Budget 46.315 56.648 61.451 85.015 59.937 60.378 369.743

This was partially offset by: DSM Levy that is less than budget by R7m and R25m for the quarter and YTD respectively. DSM levy is calculated based on the units sold. The units sold are less than budget resulting in a decrease in DSM Levy. The DSM Levy was reviewed from 2c/kWh to 1c/kWh in the financial year 2013/2014 and the review will be done during mid-term budget review.

• Engineering Contributions are less than budget by R18m and R44m for the quarter and YTD respectively. There were fewer requests received for development site connections than estimated/budgeted for.

• Sundry Revenue is less than budget by R8,6m and R14,8m for the quarter and YTD respectively as there were less insurance claims registered than reported.

• Sale of obsolete material is R2m and R4m less than the budget for the quarter and YTD respectively as no sale of obsolete material has taken place to date.

Government Grants Grants are less than the budget by R26m and R17m for the quarter and YTD respectively as grants were only received for the month of July and December. Interest revenue exceeds the budget by R15m and R27m for the quarter and YTD respectively. This is mainly due to the increase in interest on the bank account, as the cash balance exceeds the budgeted cash balance by R1bn.

Service Charges: 2012/13 and 2013/14 comparative performance (R'000)

Description Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 YTD

Actual 952 107 1 090 052 978 332 930 894 899 955 996 156 5 847 495

Budget 1 213 529 1 488 240 1 092 615 1 012 959 995 700 981 096 6 784 139


Actual 1 239 812 1 224 341 1 184 965 846 326 782 661 977 080 6 255 185

Budget 1 154 703 1 416 217 1 039 738 963 937 947 514 933 617 6 455 726



OPERATING OVERHEADS: FOR THE MID-YEAR ARE LESS THAN BUDGET BY R145m The reasons for the variances are set out below: Bulk Purchases Bulk purchases are R98m and R258m less than the budget for the quarter and YTD respectively due to the kWh purchased which is less than the budget by 3%, and the average purchase price is also 6% less than the budget. It should be noted that the Eskom agreement has come to an end at the end of December. This agreement was signed to cover the cost on Kelvin. This will have a major impact on the availability charge that needs to be paid to Kelvin.

The table below shows Availability Payments paid up to December as well as budgeted Availability going forward

2013/14 Kelvin Availability Payments

R'million Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June TOTAL

Original Budget 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 360.0

Revised Availability 51.1 46.8 18.0 19.5 17.7 19.1 11.5 9.2 11.8 14.0 16.4 46.5 281.6

*Note: January – June 2014 reflects the projected availability payments Debt Impairment Debt Impairment exceeds the budget by R52m and R82m for the quarter and YTD respectively. The current budget for debt impairment was reduced during the budget process, as the City expected a better collection level and therefore it is not in line with the current level of debt. The provision for bad debts is calculated as per SAP CoJ system. City Power recalculates the provision for bad debts at year end using the final age analysis and the collection level.

Bulk Purchases: 2012/13 and 2013/14 comparative performance (R'000)


Actual 1 134 405 1 132 551 685 395 577 165 582 076 531 241 4 642 833

Budget 1 161 330 1 188 256 763 517 595 109 616 052 576 841 4 901 105


Actual 1 081 052 1 121 978 698 060 572 162 516 279 520 962 4 510 492

Budget 1 146 190 1 241 733 659 705 558 738 582 080 723 455 4 911 900

Debt impairment: 2012/13 and 2013/14 comparative performance (R'000)


Actual 54 880 62 837 56 763 53 307 52 326 58 014 338 127

Budget 46 061 57 241 41 140 37 898 37 196 36 602 256 139


Actual 73 193 70 314 70 251 52 677 46 273 58 019 370 727

Budget 34 518 40 865 35 542 32 458 31 789 41 224 216 397



General Expenses are R22m and R44m more than the budget for the quarter and YTD respectively mainly due to the following:

• Fleet costs exceed the budget by R13m and R26m for the quarter and YTD respectively due to an increase in petrol prices and additional vehicles utilised and additional vehicles (generators) that were needed.

• Commission paid exceeds the budget by R2m due to the increase in transactions by customers utilising vending machines and other third parties for payments at the Post Office & Pick & Pay.

• Professional fees are more than the budget by R13m and R7,7m for the quarter and YTD respectively. There were more consultants utilized during the second quarter of the financial year.

• Security is R8,3m and R4,7m more than the budget due to the strike when additional security had to be arranged to protect infrastructure.

• Stores and materials are R4,4m and R39m more than budget for the quarter and YTD respectively due the installation of solar water heaters during the period.

• Assessment rates are R3,8m and R5m more than the budget for the quarter and YTD respectively due to in appropriate budgeting.

• Legal expenses are more than the YTD budget by R4,2m due to inaccurate budgeting and additional attorneys used to attend to legal matters.

This was been partially offset by:

• Demand side management is less than budget by R15m and R30m for the quarter and YTD respectively as the capitalisation of projects have not started yet.

• Final check readings are less than budget by R1,9m and R3,9m for the quarter and YTD respectively. Fewer check readings were done to date due to the increase in correct readings received.

• Telecommunications is R4m and R6m less for the quarter and YTD respectively due to software licenses which were not paid during the months under review. The software payments are made annually. The budget is however spread over a 12 month period.

• Meter reading is R3,7m less than the YTD budget as fewer meters were read as at December.

Personnel cost Personnel cost is R13,7m and R24m less than budget for the quarter and YTD due to the following:

• Basic salaries are R15,6m and R31m less than the budget for the quarter and YTD respectively due to the non – filling of vacant positions.

• Car allowance is R3m and R6m less than budget for the quarter and YTD respectively due to the signing of the LLF agreement. The LLF stated that the first 1 200km travelled will not be claimed.

• Leave provision is less than the budget by R4m and R6,8m for the quarter and YTD respectively due to the budget being spread equally throughout the year while actual leave fluctuates depending on the seasons.

• Standby allowance is less than the budget by R2m and R3,7m for the quarter and YTD

respectively due to shortage of staff as a result of vacant positions. • Hot Skill allowance is R3,5m and R7m less than budget for the quarter and YTD

respectively due to the termination of the allowance.



Offset by:

• Overtime exceeds the budget by R9m and R25m for the quarter and YTD respectively. Cable theft resulted in extensive overtime worked to restore power outages. Additionally, the overtime budget for the year was based on the implementation of shifts which resulted in the overtime budget being reduced. Due to the delays in implementing shifts, the overtime budget was exceeded

• Insurance WCA exceeds the budget R4,8m for both the quarter and YTD respectively due to non-payment of the expense in the month of December.

• Acting allowance exceeds the budget by R1,5m and R2m for the quarter and YTD respectively due to inaccurate budgeting while there are more people acting in vacant positions due to restructuring.

Finance Cost Finance cost is less than the budget by R10,6m and R20,7m for the quarter and YTD respectively due to interest payable on Capex loans which is less than budget. This was predominately due to the outstanding Capex claims and therefore a lower loan balance. Interest on loans is only payable when the funds are deposited into the bank account. Repairs and Maintenance Repairs and Maintenance is more than the budget by R44,6m and R51,7m for the quarter and YTD respectively due to excessive theft and vandalism. Emergency capital work was done on Repairs and Maintenance budget and needs to be journalised to CAPEX. Administration Administration costs are less than budget by R7,7m and R10,9m for the month and YTD respectively due to COJ fleet lease costs being less than the budget. Depreciation & amortisation Depreciation has decreased by R4,9m and R8,9m during the quarter and YTD respectively due to the non capitalisation of projects as these projects are not completed yet.



Statement of Financial Position

Inventories Inventories exceed the budget as the purchase of smart meters are included in stock, this was however not budgeted for. Loans to Shareholder Loans to shareholder are less than the budget due to the following:

• An amount of R90m for customers deposits has been reversed as no proof was submitted by COJ to support the amount which resulted in a decrease in loans to shareholder as well as less work which was done for COJ. Cash received from COJ on customers was duplicated resulting in a liability. The budget was based on the assumption that COJ would own City Power's cash for the last days of the month and pay it in the next month.

Variance

Figures in Rand thousand Actual Budget %

Current assets 4 290 299 4 593 706 -7%

Inventories 143 454 98 733 45%

Loan to shareholder 96 789 529 794 -82%

Trade and other receivables 87 163 71 919 21%

Consumer receivables 1 581 648 3 018 186 -48%

Cash and cash equivalents 2 381 246 875 074 172%

Non-current assets 8 437 800 8 359 591 1%

Property, plant and equipment 8 211 977 8 209 637 0%

Intangible assets 225 823 149 954 51%

Total Assets 12 728 099 12 953 297 -2%

Current liabilities 2 008 275 2 675 073 -25%

Loans from shareholders 428 960 470 792 -9%

Trade and other payables 1 208 728 1 218 567 -1%

VAT payable 269 106 869 630 -69%

Provisions 101 481 116 084 -13%

Non-current liabilities 4 324 579 3 821 865 13%

Loans from shareholders 2 974 736 2 368 736 26%

Retirement benefit obligation 27 595 37 156 -26%

Deferred income 24 813 - 100%

Deferred tax 1 109 213 1 115 601 -1%

Consumer deposits 188 221 300 372 -37%

Total Liabilities 6 332 853 6 496 938 -3%

Share capital and premium 112 466 112 466 0%

Accumulated surplus 6 282 780 6 343 893 -1%

Total Net Assets 6 395 246 6 456 359 -1%

Total Liabilities and Net Assets 12 728 099 12 953 297 -2%

TrendYTD



Trade and other receivables Trade and other receivables exceed the budget by R15m predominately due to the increase in sales to Eskom and an increase in capacity from Kelvin. Consumer receivables Consumer receivables are less than the budget by 48%. Contributing factors are:

• Revenue initiatives (Revenue Step Change and Zero Tolerance Project) resulted in accounts being corrected.

• Decrease in units sold to customers as well as an increase in the provision for bad debts.

Cash and Cash Equivalents The opening balance on cash and cash equivalents was R1,3 billion more than budget due to an increase in payment levels during 2012/13 financial period, which resulted in an increase in the closing balance during 2012/13 financial year. Less cash was received during the period under review as the payment levels are below budget.

Intangible assets During the 2012/2013 financial year unbudgeted additional capacity was purchased from Eskom resulting in the amount carried in intangible assets in the current year exceeding the budget. Loans from Shareholders (Short term) The amount is less than budget due to capital claims not yet received. The budget assumed that no capital claims would be outstanding. The short term portion of loans from the shareholder is only calculated based on actual loan funding received. 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 budget due to the payment of bonuses during the month of December. Loans from Shareholders (Long term) The increase is due to an increase in the amount owned to COJ regarding cash received from customers that was duplicate (R302m). This is partially offset by capital claims that is still outstanding Retirement benefit obligation A lower number of employees qualified for retirement resulting in a decrease in the liability. 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.

Cash: 2012/13 and 2013/14 comparative performance (R'000)


Actual 2 673 068 2 399 196 1 803 672 2 201 495 2 169 414 2 381 246 2 381 246

Budget 973 551 1 306 022 797 665 826 385 987 988 875 074 875 074


Actual 1 122 056 1 325 902 913 808 1 084 419 1 377 088 1 494 738 1 494 738

Budget 2 449 517 2 664 790 1 980 385 2 014 067 2 132 009 2 041 750 2 041 750



Consumer deposits The decrease in consumer deposits is as a result of more refunds of deposits than anticipated.

Cash Flow Statement

For the period ending 31 December 2013

The net closing cash position as at December 2013 amounts to R2,3bn compared to the budget of R875m. This reflects a positive variance of R1,4bn. The net movement in cash shows an outflow of R324m compared to a budgeted outflow of R691m. The positive variance of R367m is explained as follows:

Cash generated from operating activities is R1,6bn less than the budget mainly as a result of the increase in payment to suppliers regarding outstanding invoices from June to December as well as the decrease in cash received due to low payment levels. The cash impact from investing activities is R48m more than budgeted outflow due to an increase in PPE spend, this was partially offset by the decrease in finance cost.

Variance

Figures in Rand thousand Actual Budget %

Cash flows from operating activities -173 031 1 485 751 -112%

Receipts 6 973 576 7 181 981 -3%

Sale of goods and services 6 929 079 7 120 481 -3%

Grants 44 497 61 500 -28%

Payments -7 146 607 -5 696 230 25%

Suppliers -7 146 607 -5 696 230 25%

Cash flows from investing activities -637 100 -588 958 -8%

(Purchases)/disposal of property, plant and equipment -532 270 -351 095 52%

Proceeds from sale of property, plant and equipment - - 0%

(Purchases)/disposal of intangible assets 3 140 -82 000 104%

Interest income 71 440 44 283 61%

Finance costs -179 410 -200 146 -10%

Cash flows from financing activities 486 009 -1 588 124 131%

Movement in consumer deposits -0 20 924 -100%

Repayments of shareholder loan -386 210 -350 867 -10%

Increase/(decrease) in shareholder loan 872 219 -1 258 181 169%

Finance lease payments - - 0%

Net increase / (decrease) in cash and cash equivalents -324 123 -691 330 53%

Cash and cash equivalents at the beginning of period 2 705 369 1 566 405 73%

Cash and cash equivalents at the end of the period 2 381 246 875 074 172%

TrendYTD



Cash flow from financing activities is R2bn more than budget due to the delay in COJ refunding the loan portion of capital expenditure, as well as the overpayment of cash received from CoJ.

Financial Ratios

Percentage of Salary to Total Opex

Cash: 2012/13 and 2013/14 comparative performance (R'000)


Actual 2 673 068 2 399 196 1 803 672 2 201 495 2 169 414 2 381 246 2 381 246

Budget 973 551 1 306 022 797 665 826 385 987 988 875 074 875 074


Actual 1 122 056 1 325 902 913 808 1 084 419 1 377 088 1 494 738 1 494 738

Budget 2 449 517 2 664 790 1 980 385 2 014 067 2 132 009 2 041 750 2 041 750

Key Performance Area Key Performance TargetActual Actual Comments

2012-13 2013-14

Current ratio Above 1:1 2.04 2.14

Solvency ratio Above 2:1 1.92 2.01

Due to decrease in cash balance and

increase in consumer debtors

Debt to Revenue ratio Below 45% 24% 30%

Remuneration to

Expenditure ratio Below 30% 21% 20%

Maintenance to

Expenditure ratio 7% 11% 15%

Interest to Expenditure

ratio Below 30% 7% 6%

Net Operating Ratio Above 15% 4.24% -7%

Due to decrease in revenue and a slight

increase in operating expenditure

Cash cover 45 Days 106 165

Days in debtors 55 Days 96 49

1st Quarter

R'000

2nd Quarter

R'000

YTD

R'000

Total Staff Costs 188 237 184 578 372 815

Total Opex 927 491 944 127 1 871 618

% of Salary to Opex 20% 20% 20%



Supply Chain Management

Procurement Policies and Practices

Accreditation of Black Economic Empowerment in respect to both the supplier and contractor.

Accreditation of suppliers and contractors is done on an ongoing basis by the BEE unit and reviewed

regularly to ensure validity and correctness of information on the database. Supply Chain

Management Policy is in line with COJ Integrated Supply Chain Management Policy.

Procurement/BEE Spend

Category Unit Quarter 1 Quarter 2 YTD

Procurement spend from suppliers that are 50% black owned

R000's 466 861 301 579 768 440

% Spend % 9.8 10 9.82

Procurement spend from suppliers that are 30% black women owned

R000's 145 943 117 535 263 478

% Spend % 3.1 4.1 3.24

Contract Management

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 period.

Reports on unsatisfactory work

None reported for the period.



Bids advertised during the period under review.

No. Bid description Closing date

1. Testing on Power Cables and fault location on

cable

29/07/2013

2. Transformer & Switchgear Testing service during

commissioning and maintenance

29/07/2013

3. HV & MV Switchgear maintenance 30/09/2013

4. Provision of Medical and Pharmaceutical

Suppliers for Occupational Health Clinic

27/09/2013

5. Implementation of SharePoint 04/10/2013

6. Appointment of Various Strategic Partner

Consultants to assist City Power (SOC) LTD in

the Project Proposals, Detail Designs, EIA’s and

Master Plans

11/10/2013

7. Mandatory and Apprentice Training 14/10/2013

8. Specialist Consulting Services Around Shift Model

Implementation

30/09/2013

9. Replacement of the Existing Feederboard with the

New 17 Panel Feederboard at Industria

Substation

18/10/2013

10. Manufacture, Supply, Delivery and Installation

and Cold Commissioning of 11/6.6Kv

Transformers

14/10/2013

11. Call Centre Solution 11/10/2013

12. ICT Network Management and Monitoring Tool 11/10/2013

13. Tetra Support and Maintenance 11/10/2013

14 Upgrade of the Virtual Infrastructure and Storage

Environment

11/10/2013

15. Upgrade of Existing 88/11Kv Nirvana Substation 21/10/2013

16. Security Services for Electrical Infrastructure 21/10/2013

17. Security Services for National Key Point 21/10/2013

18. Crime Intelligence Services 21/10/2013

19. Battery and Charger (DC) Maintenance 21/10/2013

20. Construction of 90MVA Firm Capacity 88/11kV

New Roodetown Substation

08/11/2013

21. Designing and Printing of Diaries, Wall Calendars

and Desk Pads

01/11/2013

22. Replacement of Old Feederboard and Installation

of new 17 Feederboard

18/10/2013

23. Decommissioning and Removal of Two Lattice

Towers and construction of Two Lattice Towers at

Cydna Substation

04/11/2013



Bids/Contracts approved during the mid-year

Contractor Name Description Period Budget Vote R’000

Award Value R’000

Ndozi Multi Projects Flo Trading Enterprise Unapfano Building and Project

Supply and Delivery of Hardware and Plumbing Material

3 Years R18 000 R9 900

Bidmark Holding (Pty) Ltd

Supply and Delivery of Forklift - Diesel

Once off purchase

R900 R627

CBI – Electric: African Cables

Maintenance of High Voltage (33kV – 132kV) Cable Networks

3 Years R20 000 R20 000

Mafoko Security GNG Security Linda Security Collett Security

Security services of electrical infrastructure

3 Years R111 000 R111 000

Collett Security Security services of National Key Points

3 Years R12 000 R12 000

Alectrix (Pty) Ltd Portable three phase test for protection relays and measurement transducers.

Once off purchase

R1 234 R1 234

Blue Media

Provision of a photographer

3 Years

R350

R350

Pacinamic (Pty) Ltd Design, printing and delivery of diaries, wall calendars and desk pads

3 Years R1 800 R1 800

HNS Design layout and printing of brochures

3 Years R2 000 R2 000

NV Financial Supply and 2 Years R9 000 R5 000

No. Bid description Closing date

24. RTU ROLLOUT (SCADA) 26/11/2013

25. Appointment of an Architect to Design and Project

Manage Alterations at City Power Basic Training

Centre in Reuven Johannesburg

29/11/2013



Contractor Name Description Period Budget Vote R’000

Award Value R’000

Solutions Mndhavazi Trading

Delivery of Canteen Groceries and Meat

R4 000

Garona Communications and Projects

Provision of Corporate Gifts and Clothing

3 Years R2 500 R1 500

LX Printing Printing and Distribution of Notices to Customers

3 Years R4 000 R3 000

Black Box Entertainers

Provision of Industrial Theatre

3 Years R3 000 R2 500

Origin Consulting ICT Network Monitoring and Management Tool

3 Years R8 500 R8 421

TOTAL R194 284 R 183 332

Deviation/exception procurement for the period

Item ProcurementType

Date Description Amount Reason for deviation

1 Emergency Procurement

02/07/13 Emergency replacement of cable in Nick Toomey Street

R55 295 Emergency repair to avoid a total loss of supply to Penny Street substation.


10/07/13 Emergency replacement of cable in Nick Toomey Street

R47 015 Emergency repair to avoid a total loss of supply to Penny Street substation.


12/07/13 Emergency repair / replacement of air conditioners

R30 000 The room is overheating and this could cause major damage to the equipment to the value of R1m.


21/07/13 Emergency repairs to feeder cable supplying Roodepoort substation

R70 000 Roodetown / Roodepoort No 2 33kV feeder was stolen and this is the only feeder cable supplying Roodepoort substation.


14/08/13 Emergency repair to a 88kV cable fault between San Souci / Ridge Substation

R682 155 This was an emergency procurement where power had to be restored and CBI African Cables are the OEM.


04/09/13 Production of a dvd covering strike activities

R32 000 Management directive


09/09/13 Emergency cable repairs at Penny Street Substation

R1 010 259 Cable stolen leaving the whole of Penny Street substation without power.


09/09/13 Additional security resources to secure substations and other hotspots for 2 months.

R9 011 569 Unexpected unprotected strike by City Power employees


17/09/13 Cable fault on the Cydna / Rosebank

R1 100 000 Quick repair to ensure the stability of the two stations


21/09/13 Loss of supply from tripped cable

R120 000 To restore supply at Roodepoort substation.



Item Procurement/Order

Number

Date Description Amount Reason for deviation


07/10/13 Emergency repair of cable in the Westgate Shopping Centre area

R120 000 33Kv cable between Roodetown and Manufacture stolen


21/10/2013 Emergency repairs to restore supply to Robertville substation.

R15 000 000 Tower vandalised on the Sentraal / Robertville number 1 & 2 88kV overhead transmission lines


23/10/2013 Emergency outage notices

R22 395 Loose connection on the 88Kv Bus Bars at Nursery substation had to be repaired urgently to avoid unplanned loss of supply.


29/10/2013 Emergency repair of transformers and cable at Ridge Sub Station

R600 000 Cable repairs to ensure stability of supply to Ridge substation as there are a numerous hospitals feeding from the station.


18/11/2013 Emergency repair of the cable at Florida substation

R700 000 There are only 2 feeders to Lea Glen substation; there is a risk if the number 1 feeder faults. This is an industrial area and it also feeds Rand Water Board.

16 Newspaper Adverts - BDFM

Jul – Dec 2013

Publishing of newspaper articles

R645 373 Contract process concluded only in December 2013

17 Newspaper Adverts - Sowetan

Jul – Dec 2013

Publishing of newspaper articles

R963 249 Contract process concluded only in December 2013

TOTAL R30 209 314

Fruitless and wasteful expenditure

No irregular, fruitless and wasteful expenditure were discovered during the period under review.

Fleet Management

Fleet availability

• 97.94% availability was recorded for category A vehicles ( light duty vehicles e.g. LDV, Sedan’s, Hatch back’s, Panel Vans )

• 85.97% availability was recorded for category B vehicles (Heavy duty Vehicles e.g. Aerial platforms & Crane trucks)

The current fleet is sufficient to service City Power areas of supply. Any additional vehicles are hired

on an ad hoc basis as and when the vehicles are required.



City Power owned Generators

Registration number KVA 1

st year of

registration Comment Managed by Intervention

SRT 767 GP 630 2005 Engine Failure EQSTRA We hire generators sets on request via external service provider (Avis) so that service delivery is not hindered.

Plan is to purchase additional new generators in order to replace old generators which are always failing due to their conditions

FYW 589 GP 200 2002 Engine Failure EQSTRA

SRT 770 GP 630 2005 In for repairs EQSTRA

SRT 219 GP 630 2005 Engine Failure EQSTRA

JFK 612 GP 200 1980 Working EQSTRA

SGH 082 GP 275 1980 Working EQSTRA

FZJ 152 GP 500 1994 Engine Failure EQSTRA

NXW 771 GP 630 UNKNOWN Engine Failure N/A

FYW 609 GP 50 UNKNOWN Engine Failure N/A

Annual budget for vehicle related costs

• The budget for fleet for the year is R78.2m; actual cost as at end of December is approximately R58m

Accident Costs

These costs are covered within our insurance policy.

For the year the costs associated with accident repairs were as follows: Month No. of accidents Cost of Accidents

July 44 R382 285

August 19 R322 638

September 25 R156 775

October 17 R119 708

November 17 R61 838

December 6 R23 857

Audit findings

The table below is an extract of the findings as reflected in the Auditor-General’s Management letter. Management is currently in a process of implementing action plans in addressing findings raised and Internal Audit will be giving assurance on an ongoing basis on the effectiveness of action items implemented.



Finding Classification Rating Number of times reported in previous 3 years

Status of implementation of previous year(s) recommendation

Mis

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nc

y

Se

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M

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ep

ort

Oth

er

imp

ort

an

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att

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A

dm

inis

tra

tiv

e

ma

tte

rs

Financial Annual financial statements

Misstatements in annual financial statements

� � � 3 In progress

Consumer debtors Consumer debtors: Possible misstatement of City Power’s provision for bad debts

� � 0 Not reported in previous years

Consumer debtors: Understatement of bad debts write off


Validity of credit balances � � 0 Not reported in previous years

Consumer debtors: Valuation of consumer debtors


Credit control and provision for bad debts policies not approved


Consumer deposit Customers billing without deposit


Consumer deposits in the TB/AFS do not agree to the supporting Schedule


Understatement of credit balances disclosed in the AFS and TB


Leases

Insufficient disclosure in terms of GRAP 13


Understatement of operating lease commitments


Service level agreement not signed

� � � 0 Not reported in previous years

Provisions



Employee benefit obligations

Insufficient disclosure in terms � � 0 Not reported





Mis

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en

ts

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ina

nc

ial

sta

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Mis

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No

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M

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an

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A

dm

inis

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tte

rs

of GRAP 25 in previous years

GRAP disclosure requirements

GRAP disclosure requirements


Incorrect disclosure of budget information


VAT

Incorrect disclosure in accordance to GRAP


VAT not disclosed in accordance with GRAP disclosure requirements


Misstatement identified in the testing of VAT output transactions


Receivables

Misstatement of trade and other receivables


Consumer deposits not recorded


Incorrect classification of related party receivables and sundry receivables


Incorrect classification – Income received in advance


Non-compliance to general provisioning policy in calculating the provision for bad debt at year end


Payables



Differences in goods received not yet invoiced (GR/IR)


Leave accrual incorrectly calculated






Mis

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en

ts

in f

ina

nc

ial

sta

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Mis

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y

Se

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de

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M

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th

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Oth

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an

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A

dm

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ma

tte

rs

Fair value adjustment incorrectly calculated


Completeness of trade and other payables


Taxation

Differences in taxation schedules


Misstatements in income tax and deferred tax


Non-compliance with disclosure requirements


Property, plant and equipment

Non-disclosure of Depreciation method for Leased assets


Non-disclosure of change in useful life of assets in the financial statements


The excel spread sheet system used to maintain asset registers for the entity is not adequate


Network assets are not tagged/bar coded

� � 3 In progress

Complex/Grouped assets – Assets not adequately verifiable


Employee cost

Positions vacant for a period longer than 12 months


Minimum competency levels for Senior Managers and SCM officials


Employee file – All employee information not on file


Expenditure

Incorrect accrual raised for bulk purchases






Mis

sta

tem

en

ts

in f

ina

nc

ial

sta

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Mis

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Se

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de

liv

ery

M

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a

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th

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Oth

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A

dm

inis

tra

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ma

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Contingent liabilities

Overstatement of contingent liabilities


Irregular expenditure

Differences identified � � 0 Not reported in previous years

Related parties

Amounts not in agreement with related party confirmations

� 0 Not reported in previous years

Predetermined Objectives (PDO)

No policy in place for responsibilities relating to collecting, coordinating and compiling of performance information


No policy for roles and responsibilities for ensuring data integrity and quality assurance


Jobs reported for Expanded Public Works Program differ with evidence provided

� 0 Not reported in previous years

Key performance indicators not measurable


Compliance

Procurement and contract management

Supply and installation of low pressure SWH – Bid No: 1883 GS


Internal control deficiencies relating to procurement and supply chain management


Employee and supplier did not declare interest


Awards made to persons in service of the state – Non-compliance to SCM regulation 44


SCM Deviations not disclosed – Awards below R200 000


SCM Deviations not disclosed – Awards above R200 000






Mis

sta

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ts

in f

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Mis

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M

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Oth

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imp

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an

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A

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inis

tra

tiv

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ma

tte

rs

Revenue

Disregarded meter readings and unreasonable estimates – City Power


No controls in place to ensure revenue from street pole adverts are complete and accurate


Policies and procedures

Policies and procedures not reviewed


Budgets

Overspending of capital budget


Information Technology (IT)

Information System Audit � � 3 In progress

User access control � � 3 In progress



6. HUMAN RESOURCES MANAGEMENT

Talent Planning

As a result of organisational re-alignment, the Recruitment Department has been strategically elevated to the Talent Management Department.

To respond on time and appropriately to the need for talent, City Power has taken a conscious and strategic decision to introduce strategic workforce planning – which is a management process that will be used to plan for future talent needs, shortages, developmental interventions, changes and related challenges.

Finding the right people for the right roles is always going to be a delicate balance of strategic foresight and planning. It is against this background that engagement with line management is on-going.

The Human Resources Group is in the process of finalising the alignment of the strategic workforce planning process with the Company’s strategic direction. As part of the planning process, HR has gathered and analysed people related data and information which will facilitate the development of the Strategic Workforce Plan for the next five years.

The process of identifying critical vacancies (both shift and non-shift related) has been finalised.

In order to capacitate shift work implementation, a total of 37 positions have been advertised. These appointments will increase the staff complement by 340 employees.

It is anticipated that the majority of new recruits will resume duties during the month of February 2014.

Staff complement

The staff complements for the reporting period is 1597 which includes permanent and contract employees.

The Company’s target for Affirmative Action is 83%. The Company achieved 89.10% for all levels and 76.49% for Supervisory and above levels.

African Coloured Indian White African Coloured Indian White

Top Management

(Directors)3 - - 1 4 2 - - - 2 6

Senior Management 11 1 2 4 18 3 - - 1 4 22

Professionally qualified

and experienced

specialists and mid-

management Managers

and Professionals

159 11 5 73 248 110 3 2 7 122 370

Skilled technical and

academically qualified

workers, junior

management, supervisors

and Technicians

58 14 3 31 106 20 2 1 9 32 138

Artisans (All types) 224 15 3 59 301 24 1 - - 25 326

Administrative 37 1 1 2 41 77 4 1 22 104 145

Semi-skilled and

discretionary decision

making

479 7 - 4 490 33 2 - 1 36 526

Elementary positions 16 - - - 16 46 2 - - 48 64

Total (Permanent and

Contract)987 49 14 174 1 224 315 14 4 40 373 1 597

Categories Male Male

Total

Female Female

Total

TOTAL



The Company’s target for Gender Equity is 24%. The Company achieved 23.36% for all levels and 29.85% for Supervisory and above levels.

People with Disabilities

The Company’s target for People with Disabilities is 2%. 46 Employees have voluntarily declared their disability. This amounts to 2.88% of the total workforce. .

Staff Movements

Skills Development and Training

The on-going development of employees in the workplace is a priority for City Power. Attendance of technical and non-technical training interventions are monitored and assessed regularly.

African Colored Indian White African Colored Indian White Male Female

Top Management

(Executives)- - - - - - - - - - -

Senior Management - - - - - - - - - - -

Professionally qualified

and experienced

specialists and mid-

management Managers

and Professionals

2 1 - 3 1 - - 1 - - 8

Skilled technical and

academically qualified

workers, junior

management, supervisors

and Technicians

8 2 1 8 - - - - - - 19

Semi-skilled and

discretionary decision

making

8 1 - 2 3 1 - 3 - - 18

Unskilled and defined

decision making- - - - - 1 - - - - 1

Total Permanent 18 4 1 13 4 2 - 4 - - 46

Temporary employees - - - - - - - - - - -

Total (Permanent and

Contract)18 4 1 13 4 2 - 4 - - 46

Female TOTALForeign NationalsCategories Male

Male Female Male Female Male Female Male Female

Recruitment 0

Appointments 8 2 10

Promotion 2 1 3

Transfer 1 1

Resignation 4 3 1 2 1 11

Early Retirement 2 2

Retirement 7 2 9

Retrenchment 0

Medical Boarding 0

Dismissal 0

Demotion 0

Deceased 5 3 1 9

Termination of Contract 7 1 1 1 10

Total Movements 35 9 1 0 0 1 7 2 55

Staff Movement TOTAL

African Coloured Indian White



Bursars:

• A total of 350 bursary applications for 2014 were received of which 12 candidates are recommended to be awarded with full bursaries to study Accounting or Electrical Engineering. Of these 12 candidates, 5 are black females and 7 are black males

• Currently 9 Bursars are enrolled with the Company. This total is made up of 9 black males.

• Details of the current bursars and their fields of study:

Gender Race Learning Institution Qualification

enrolled for

M A University of KZN ND Electrical

Engineering

M A Wits University BSc Electrical

Engineering

M A University of JHB BSc Electrical

Engineering

M A University of JHB BSc Electrical

Engineering

M A DBN University of

Tech.

ND Electrical

engineering


Engineering

M A University of PTA BEng

Electrical

Engineering


Engineering

M A Vaal University of

Tech.

BSc Electrical

Engineering

Learners:

• There are currently 8 learners with the Company. This is made up of 7 black males and 1 black female.

Mentorship programme:

• The South African Institute for Electrical Engineers (SAIEE) in conjunction with the South African Institute for Civil Engineers (SAICE) awarded 12 of the Company’s graduates with training and mentorship programs. This is in alignment with the creation of employment opportunities for the youth.

Integrated Skills Development Programme:

• HR submitted a business case to the Department of National Treasury to access funds so as to enable City Power to train interns (already qualified academically) on a full time basis.

• The request made was R3,6m. It is envisaged that the National Treasury will respond to HR by no later than February 2014.

Training Centre Upgrade:

• HR is in the process of upgrading and renovating the Training Centre to upskill internal and external staff in new technologies.

• The Training Centre upgrade comprises the following:

• Relocation of the Library

• Removal of all the outdated mechanical equipment



• Building of new offices, lecture rooms and store rooms

• Replacement of the electrical training equipment.

• Pictures of before and after the public auction to sell off redundant mechanical equipment:

Before After

• The end state is to obtain approval from SETA to operate the Training Centre as a fully accredited Academy.

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

Social Responsibility Programme:

• HR has finalised a Social Responsibility Policy for City Power. The aim of this policy is to identify young learners (grade 3) from disadvantaged communities within the municipal boundary of Johannesburg to be trained up to and including university level.

• City Power will then offer financial support for this period and should a position at completion of the study period be available, the person would be appointed.

Amount spent on training employees:

• An amount of R3,02 million was spent on training for the period July 2013 to December 2013.

Training of External Delegates:

• 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.

• Average income generated is R1m per annum on average.

• A significant amount more income can be generated once the training facilities are fully renovated and built.

Remuneration Management

• A Pay Progression Framework was approved by the Board and implementation is dependent on the conclusion of the job evaluation and grading process.

Policy Review

The following policies were recently reviewed by HR in consultation with Organised Labour. These policies will be submitted to EXCO for approval. These policies are:

• Talent Acquisition and Selection Policy and Procedure.



• Bursary Policy.

• Employee Educational Assistance Policy and Procedures for Under- and Post Graduate Studies and Scholarships.

• Apprenticeship, Experiential Learning, Internship and Learnership Policy and Procedural Guidelines.

• Sexual Harassment Policy.

• Job Evaluation Policy.

• HR Business Support Policy.

• Integrated Performance Management System Policy (IPMS).

Performance Management

The Integrated Performance Management System Policy has been reviewed so that performance can align to the Company Strategy and the balanced scorecard i.e. Financial, Customer, Internal Processes and Learning & Growth Perspectives. The alignment supports performance of individuals, Groups and the Company. The revised policy includes the Group and Central Moderation Committees for quality assurance. HR performed quality assurance through the practical audits in all depots following the submission of performance scores. The purpose of these practical audits is also to ensure the availability of individual compacts and the correctness of performance scores.

Change Management

Since inception of the December 2012 structural re-alignment programme, which amongst others led to the approval and implementation of the 30 May 2013 LLF Agreement, the following projects and initiatives were undertaken by HR with company-wide communication of changes in order to:

• Create change awareness post the 30 May 2013 LLF Agreement by reaching out to the different segments of the population

• Firm up the change network structures (Agents, Champions, Leaders) from all depots for capacity building and sustainability

• Empower the affected population (Travel Top-up recipients, Electricians, Trade Workers, Finance Group, Engineering Operations Group)

• Approval of responses to the Frequently asked Questions to ensure consistency in communication

ER Reporting

A total of 70 disciplinary cases were concluded between July 2013 to December 2013. The outcome of these cases is depicted in the table below:



Month

Written

Warning

Final

Written

warning

Suspension

without pay

Other

Sanctions Dismissals

Not

Guilty Withdrawn TOTAL

Jul-13 0 0 0 0 0 0 0 0

Aug-13 0 1 0 0 0 0 0 1

Sep-13 0 0 0 0 0 0 0 0

Oct-13 0 51 0 0 0 0 0 51

Nov-13 0 0 0 0 0 0 0 0

Dec-13 0 8 9 0 0 1 0 18

Total - YTD

0 60 9 0 0 1 0 70

Precautionary Suspensions: The precautionary suspensions reduced from 6 to 5. Investigations on the outstanding cases are still underway.

Strike management: From 4 to 6 September 2013, a total of 437 employees participated in an unprotected strike action in relation to the implementation of a 3-shift system. The principle of no work no pay was applied and employees were issued with Final Written Warnings, valid for 12 months. Employees, who opted not to accept the Final Written Warnings, were subjected to a formal disciplinary hearing. Shift Work will be implemented on 1 February 2014.



7. Risk, Assurance and Compliance

Risk Management

Risk Management Process Background Enterprise Risk Management 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. The City of Johannesburg (CoJ) has established the Group Risk Advisory Services unit within the Group Assurance Services Department. The Group Risk Advisory Unit is responsible for the enterprise risk management process and operates in accordance with the approved Group Governance Framework and Policy, which are also applicable to all Departments and Entities. City Power is continuously ensuring alignment and compliance to CoJ requirements such that its Risk Management Process is aligned and adopted to the City`s Enterprise Risk Management Process as depicted by the diagram below: RISK MANAGEMENT PROCESS

Mo

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an

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an

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on

sult

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Risk Treatment

Risk Evaluation

Risk Analysis

Risk Identification

Risk Assessment

Establishing the context



Update on Risk Management Process

The City Power Board now has a Risk, Assurance & Compliance Committee. The main role of the Committee is to:

• Assist the Board in fulfilling its responsibility of ensuring that there is an effective and embedded risk management process in place throughout the Company.

• Make recommendations to the Board concerning the levels of risk tolerance and the risk appetite of the Company.

• Ensuring that Management has effective policies and plans for risk and compliance management that will enhance the Company’s ability to achieve its strategic objectives.

• Ensuring that Management has effective processes that identifies and monitors the management of legislative and regulatory compliance together with the key risks facing the Company in an integrated and timely manner.

• Ensuring that Management has a comprehensive, timely and effective process for the disclosure of Risks and legislative and regulatory compliance. The Committee does not assume the functions of Management, which remain the responsibility of the Accounting Officer/ Accounting Authority.

Risk identification The City Power risk identification process is aligned to the COJ framework. The Company Risks are identified annually and they form part of the risk register. These risks are influenced by the executive committee, taken to the Audit Committee of the Board and then approved by the Board. The approved risks are then incorporate into the business plan. Risk Assessment and Treatment Once risks have been identified, they must then be subjected to a consistent assessment process to ensure that City Power achieves an objective and holistic result that can inform its risk profile. Risk is measured in two ways:

By the likelihood or frequency of the risk occurring By the severity / impact on City Power of the risk occurring

The City of Johannesburg has developed a two-stage assessment process to assess and quantify the identified risks. Stage One – Impact and likelihood The first stage involves an assessment of the potential impact (or severity) of each risk, and then the likelihood of the event actually occurring. Each risk is scored on a scale of one to five. The Table below shows the criteria used to assess the potential Impact / Severity of each risk occurring. THE CRITERIA USED TO ASSESS THE POTENTIAL IMPACT / SEVERITY OF EACH RISK OCCURRING

Assessment of impact / severity Financial Reputation Stakeholders Customers

1

No

t sig

nific

an

t

Event would have little financial impact on either income or budget

Contained within individual service area. From a regulatory perspective, minor fines or penalties may have been suffered.

Employees may have suffered minor first aid injuries. Event may have resulted in localised staff morale problems.

Customers may have been minimally impacted. Event may impact minimally on achieving a performance target.



Assessment of impact / severity

Financial Reputation Stakeholders Customers

2

Min

or

Event would have moderate financial impact (>2% on budget/income or >2%) on either income or budget.

Affects significant number of service areas but with likely short-term impact on public memory. From a regulatory perspective, fines or penalties >R50k may have been suffered. Customers may have been impacted resulting in complaints with media coverage (suburban newspaper).

Employees may have suffered temporary disabling injuries. Event may have resulted in staff loss causing minor to moderate consequences.

Event may impact on achieving a performance target where a major milestone was missed by more than 1 month, impacting on a client segment.

3

Mo

de

rate

Event would have serious financial impact (>4 -6% on budget/income or >4%) on either income or budget.

Regulator inquiry with medium-term impact on public memory. From a regulatory perspective, fines or penalties >R100k may have been suffered. Customers may have been impacted resulting in complaints with media coverage (local newspaper not front page).

Employees may have suffered multiple temporary disabling injuries. Event may have resulted in staff loss, causing serious consequences.

Event may impact on achieving a performance target where a major milestone was missed by more than 3 months and subsequent interruption over several days to customers.

4

Ma

jor

Event would have very serious financial impact (>8% on budget/ income or >8%) on either income or budget.

Medium-term public impact with minor political implications. From a regulatory perspective, fines or penalties >R150k may have been suffered. Customers may have been impacted resulting in complaints with media coverage (national TV headlines) and loss of service >1 month.

Employees may have suffered multiple permanent disabling injuries. Event may have resulted in staff loss, causing very serious consequences.

Event may impact on achieving a performance target where a major milestone was missed by more than 6 months, resulting in a major customer impact.

5

Ca

tastr

op

hic

Event would have catastrophic financial impact (>15-25% on budget/income or >15%) on either income or budget.

Long-term impact on public memory and major political implications. From a regulatory perspective, fines or penalties >R500k may have been suffered. Customers may have been impacted resulting in complaints with media coverage (national TV headlines) and loss of service >6 months.

Employees may have suffered fatalities. Event may have resulted in staff loss, causing catastrophic consequences.

Event may impact on a performance target, where a major milestone was missed by more than 8 months to over 1 year.

Table below shows the criteria used to assess the likelihood of the risk occurring:

Likelihood Descriptor

Description Probability

Almost Certain – 8-9

Event has occurred within the last year repeatedly. The event is certain to occur within this financial year.

Likely – 6-7 Event has occurred within the last financial year. The event is likely to occur within this financial year.

Possible – 4-5 The event has a probability of occurring at some time, in the next year.

Event has been recorded within organization as well as within the sector in the last 2 years.

Unlikely – 2-3 Very few recorded or known incidents. Reasonable opportunity to occur or has occurred within other organizations within sector.

The event may occur at some time, within the next 2 years.

Rare - 1 Event may occur in exceptional circumstances. No recorded incidents or little opportunity for occurrence.

No event recorded in the last 3 years.



The product of this Stage One assessment of impact and likelihood is an "Inherent Risk Score", which can range from a minimum of 1 to a maximum of 25, by multiplying the frequency and impact scores. Stage Two – Development of Risk Drivers and Risk Casual Model Risk drivers are those elements which tend to be the cause of the risk occurring. Risk drivers are a key process in risk management as they provide an in-depth understanding of the risk. Analysis of the drivers’ lead to the effective monitoring of the risk as well as the development of control measures to mitigate or manage the risk. These will be measured and monitored as per the next phase of this project. The formulation of risk drivers is to assist with the understanding of the risk (i.e. make the risk more tangible) and in the formulation of controls, both pre- and post and to manage / minimise the risk drivers, which in turn reduces the overall headline risk. If the drivers are not identified, then the process only provides a snapshot of the risks at a point in time. Monitoring and reporting Both the Strategic and Operational risks of the Company are monitored on a monthly and quarterly basis and the Strategic Risk Register of the Company forms part of the Risk, Assurance & Compliance Committee’s standing agenda items Auditing The monitoring and reporting process will be audited continuously.



Strategic Risks Report

TOP 13 STRATEGIC RISKS STATUS REPORT

Objec-tives

Risk Description

Background to the risk

Risk Consequence Residual Risk

Current controls Q2 Mitigation Actions

1 Revenue Collection

Poor Revenue Collection

1. Inadequate credit control measures 2. Billing not correct/ complete

Poor cash flow and liquidity problems.

Orange 1. Conversion from conventional to prepaid 2. Manage the Service Level Agreement with the City. 3. Advised the City to segment customer as required by accounting standards and NERSA. 4. Advised the City to re-introduce key customer executives.

The relationship with CoJ is yielding results (refer to 2 Quarter report), the current challenge is speed of prepaid conversion. The country will be going through elections next year and collection on domestic customers might be a problem, thus prepaid conversion would have assisted in this regard.

2 Improve Asset manage-ment

Cable theft Increase in copper price led to increase in network tempering and vandalism

1. Power interruptions. 2. Company image. 3. High insurance claims. 4. Loss of revenue. 5. Increase in operational expenditure.

Red 1. Improved security in hot spot areas. 2. Implemented Crime Intelligence systems. 3. Crime prevention strategy in place. 4. Implementation of crime prevention technologies.

1. Review current strategy. 2. Research to be done into new crime prevention technologies. 3. Community involvement and awareness to be addressed.

3 Customer Satisfaction

Customer dissatisfaction.

Causes include: outages, capacity demand, billing, etc. *Low level of positive public opinion (company image) Poor performing Call Centre

1. Low payment level. 2. Poor company image. 3. Loss of NERSA License 4. Loss of Customer Satisfaction

Orange 1. Manage SLA with the City. 2. Working with City to improve processes. 3. Internet faults logging system. 4. SMS messaging system for planned outages.

Value chains are still being updated and will be complete by 30 June 2013. Call centre need to receive more focus.

4 Energy Manage-ment

Inadequate supply of electricity

Inadequate capacity nationally will result in the starting up of the gas turbines and looking for alternative supply of energy.

Inadequate supply of electricity.

Orange 1. PPA agreement with Kelvin has expired where Eskom was giving CP price concessions. 2. Currently no control as all energy is purchased from Eskom.

Alternative sources of energy supply are being considered taking into account the budget constraints. This relates especially to the use of gas turbines where no budget has been allocated. Due to the PPA with Kelvin expiring with the advantages of the Eskom concessions given in that contract no energy is being acquired from Kelvin



Objec-tives

Risk Description




currently. All energy is being acquired from Eskom and costs will be monitored.

5 Funding requirements

Business's inability to fund high capital and operational requirements out of current cash flows nor future tariff applications

Lack of funding. Company not able to obtain own funding.

1. Unable to meet the GDS, IDP, and Business Plan targets including electrification, inner-city project, public light, SHEQ etc. 2. Unable to refurbish the aging network at an acceptable rate *Not enough funds to upgrade the network e.g. 4th and 5th intake points 3. Compliance to MFMA Requirements.

Orange 1. Revenue Generating projects 2. PPP initiatives 3.Sourcing additional Grant Funding

Places to allocate the current year’s surplus will be analysed with the City. This will include looking into off balance sheet financing and obtaining additional grants from Treasury.

6 IT infrastrucutre

Non availability and reliability of Information & communication technology (ICT).

1. Extensive reliance on ICT 2. Lack of investment in ICT due to competing business priorities

1. Low productivity 2. Negative company image 3. Poor business performance

Red Currently reviewing and updating the Information security policies and the Disaster recovery strategy

1.Additional spending to be made on CAPEX for the current IT backbone. 2. Actions to address data management and what is handed over to the business.

7 Human Capital

Fraud & Corruption

Any form of Fraud & Corruption taken place, including financial, asset, gift, collusion, etc. Conflict of interest

Loss of assets and funds. Entity image is tarnished.

Orange 1. A fraud Policy has been introduced. 2. A fraud & corruption prevention plan is in place. 3. An illustrative list of strategic fraud risks is in place.

Presentations have been made to the audit committee and the next action is to conduct road shows to the business.

8 Obtain Unquali-fied Audit Opinion.

Qualified audit report.

Inadequate internal controls. Insufficient Financial Staff. Non-compliance to GRAP standards.

Weak Internal Controls. Non Compliance to GRAP Non-compliance to MFMA Improper Reporting

Red 1. Practicing good governance 2. Actively addressing all issues raised in the previous year's Management Report.

Further war plans for the future to be introduced. Monitoring by Internal Audit on an ongoing basis.



Objec-tives

Risk Description




9 Revenue maximisation

Increase in non-technical losses

1. Meter tampering. Illegal Connections.2. Faulty Meters and no-access unable to bill customers 3. No meters at all

Loss of revenue and or cash NERSA Licence

Red 1. Installation of semi AMR, Tamper proof meters and pre-paid meters with protective structures; 2. Removal of illegal Connections and replaced with tamper proof meters with protective structures. 3. Currently utilising JMPD & SAPS to enforce by-laws. 4. Continuous installation audits; 5. Customer education programmes;

1, LPU ( large power users) will be audited to identify faults 2.Public awareness is to be increased. 3. More electrification will assist in bringing down illegal connections.

10 Improve

Asset management

Network interruptions

1. Age of the network 2. Uncontrollable events such as insufficient capital for upgrading and refurbishment of MV and LV network. 3. Theft & vandalism of infrastructure.

Low productivity Negative company image Poor business performance

Orange 1. Maintenance & Capital Investment programme in place. 2. Asset Management system in place. 3. Crime prevention strategy in place.

Introduction of condition monitoring group and continue to review crime prevention strategies.

11 Energy management

Inadequate capacity to meet the demand. (Eskom & Kelvin)

1. Eskom's failure to supply (generation and transmission) 2. Ability of the Eskom network to sustain the new capacity demand. Inability of Kelvin Power Station to supply at the required level in terms of the PPA.

Load Shedding. Red 1. City Power has applied for increased capacity from Eskom. 2. Investigating distributed generation options. Implementing DSM Programme. Resuscitate Gas Turbines.

Alternative energy sources are to be used. E.g: solar water geysers and solar powered street lights.

12 Human Capital Invest-ment

Potential impact of HIV and Aids on the workplace and the Business

World-wide pandemic. Impact on the organisation is linked to available skills and competencies

Reduced productivity Amber 1. On-going awareness and education 2. Roll out of planned interventions to address the areas identified e.g. Prevalence study, Cost impact analysis, etc

Action plans to address the following:

1. Ongoing HCTs.( HIV,counselling and testing).

2. Cost impact analysis.

3. Stringent



Objec-tives

Risk Description




disease management.

4. Intervention projects for education and awareness.

5. Enhanced HIV/Aids Policy.

13 Human Capital Invest-ment

Lack of focused development of key skills

Process to identify training needs and focused process to address them are not 100% in place

Low productivity Amber 1. Focused and targeted skills development interventions. 2. Increase the number of workplace coaches

The following initiatives will be taken: 1. BTC training facility is being upgraded. 2. Reporting measures include reports on skills development undertaken in the business.

The above risk profile is subject to be audited to determine the effectiveness of control measures and such will form an integral part of the next report. STATUS OF RISK REGISTER City Power has identified 13 Strategic Risks for the current Financial Year but these risks may increase due to the continuous monitoring of the Framework and Business Operations. The key new risks recently identified emanated from the following streams:

• Fraud and Corruption per Department/Group

• Recent Unprotected Strike which resulted in sabotage activities

• National Key Point declaration This process is receiving urgent attention and the RAC Department (under the newly appointed Director) has prioritised some of the challenges facing the organisation and commits to addressing such in due course.



8. GOVERNANCE

Board Meetings

ALL BOARD & COMMITTEE MEETINGS FOR THE 1

st & 2

nd QUARTERS OF THE FINANCIAL

YEAR Directors

&

Independent Audit Committee

Members

Board HR Risk,

Assurance

&

Compliance

Social

&

Ethics

Quarterly

Review

Audit

NO OF MEETINGS HELD IN

QUARTER 6 3 2 2 2 4

Directors

Rev F Chikane 6 of 6 - - 2 of 2 2 of 2 -

Mr N Galawe 6 of 6 - 2 of 2 2 of 2 - -

Ms Z Hlatshwayo 5 of 6 - - 2 of 2 2 of 2 -

Mr N Hlubi 6 of 6 - - - 2 of 2 4 of 4

Ms N Mohlala 6 of 6 3 of 3 - 1 of 1 0 of 0 -

Mr K Mokhobo (*see note below) 4 of 5 1 of 2 - 1 of 1 - 0 of 0

Mr D Naidu (*see note below) 3 of 3 2 of 2 1 of 1 - - -

Dr Y Ndema (*see note below) 3 of 3 - 1 of 1 - 0 of 0

Mr T Sithole (*see note below) 6 of 6 2 of 3 2 of 2 - - 2 of 2

Mr S Xulu 6 of 6 2 of 3 2 of 2 2 of 2 2 of 2 4 of 4

Independent Audit Committee

Ms L Fosu 0 of 0 - - - - 3 of 4

Mr W Hattingh 1 of 1 - - - - 4 of 4

Mr H Moolla 2 of 2 - - - - 4 of 4

DATES OF MEETINGS :

21 Aug ‘13

30 Aug ‘13

07 Sep ‘13

19 Oct ‘13

29 Nov ‘13

06 Dec ‘13

14 Aug ‘13

21 Nov ‘13

09 Dec ‘13

15 Aug ‘13

25 Nov ‘13

20 Aug ‘13

26 Nov ‘13

15 Jul ‘13

15 Oct ‘13

23 Aug ‘13

28 Aug ‘13

25 Nov ‘13

04 Dec ‘13

*Please see comment below under “Any director movements in that quarter including resignations, new appointments, reshuffling of Board Members in Board committees”.



Directors and Top Management remuneration

Report on amounts of expenditure on directors’ remuneration per director during the mid-year. Executive Director

Surname Position Total (ZAR)

Mr S Xulu Managing Director (Appointed on 1 September 2012) 1 233 620

1 233 620

Non-Executive Directors


Rev F Chikane Chairperson 246 014

Adv G Badela Board Member (**see note below) 17 810

Mr N Galawe Board Member 108 925

Ms Z Hlatshwayo Board Member 110 620

Mr N Hlubi Board Member 195 918

Mr B Mofokeng Board Member (**see note below) 17 810

Ms N Mohlala Board Member 109 510

Mr K Mokhobo Board Member (*see note below) 40 513

Dr M Motebang Board Member (**see note below) 8 905

Mr D Naidu Board Member (*see note below) 30 230

Dr Y Ndema Board Member (*see note below) 50 517

Mr T Sithole Board Member (*see note below) 114 832

1 051 607

*Please see comment below under “Any director movements in that quarter including resignations, new appointments, reshuffling of Board Members in Board committees”. **Payments reflected are for Annual Retainer Fees for the 2012/2013 financial year paid at end of July 2013.

Independent Audit Committee Members


Ms L Fosu Independent Audit Member 40 423

Mr W Hattingh Independent Audit Member 65 919

Mr H Moolla Independent Audit Member 65 895

172 237

Executive Committee Members


Ms L Jarvis Acting Director: Finance (Seconded - thus not on CP payroll) – to 2013/08/31 -

Mr D Kanfer Acting Director: Finance (Seconded - thus not on CP payroll) – from 2013/09/01 -

Ms S Mafora Director: Human Resources 763 900

Mr N Msomi Acting Director: Engineering Services - to 2013/09/13 General Manager: Field Services PP North – from 2013/09/16 588 440




Mr TM Nzimande Director: Engineering Services – joined 2013/09/16 547 579

Mr T Nkgoedi Director: Retail Services – acted until appointment on 2013/10/01 723 117

Mr D Pieterse Director: Engineering Operations 744 966

Ms NF Msiza Director: Risk, Assurance & Compliance from 2013/11/01 334 317

Mr M Smith Company Secretary 540 867

4 243 187

Board Functioning and Financial Management

Any director movements in the quarter including resignations, new appointments, reshuffling of board members in board committees There were a number of changes to the Board during the quarter under review. At the Mayoral Committee meeting held on 25 July 2013 a resolution was passed confirming the amended 11 March 2013 AGM Resolutions. The retirement of Adv G Badela and resignations of Mr B Mofokeng and Dr M Motebang was noted in the AGM Resolutions. On 19 July 2013, Mr K Mokhobo accepted his appointment to the Board, which occurred at the 11 March 2013 AGM. The Mayoral Committee resolution of 25 July 2013 also reappointed Dr Y Ndema to the Board together with Mr D Naidu and the appointment of Mr T Sithole to the Audit Committee. The Company Secretary’s Office has engaged with the Shareholder’s Group Governance to finalise the signing of the 11 March 2013 AGM Resolutions. A letter dated 21 October 2013 was received from Group Governance on 6 December 2013 informing the Board of the appointment of Mr K Mokhobo to the Audit Committee. Board noted the appointment at its meeting held on 6 December. Report on any special resolutions passed by the Board in that quarter and whether such have been registered with the Registrar

The Board passed no special resolutions during the quarter under review. Confirmation that no loans or advances have been made to the directors in this quarter It is confirmed that no loans or advances have been made to the directors. Confirmation that a register of directors’ declarations of conflict of interest is maintained (Entities should provide a report where directors has declared an interest in a contract by the Entity). It is confirmed that a register of directors’ declarations of conflict of interest is maintained. There were no interests declared by any director in any contract with the entity. Report on any irregular expenditure or any fruitless and wasteful expenditure discovered in the municipal entity. No irregular, fruitless and wasteful expenditure were reported during the period under review. Report on disposal of capital assets.

There has been no report of any disposal of capital assets.



Abbreviation/ Acronym

Explanation/ Description

AA Affirmative Action

ABC Aerial Bundled Conductor

ADMD After Diversity Maximum Demand

AFS Annual Financial Statement

AG Auditor General

AMR Automated Meter Reading

AMI Automated Meter Infrastructure ( Smart meter)

BBS Behaviour Based Safety

BBBEE Broad Based Black Economic Empowerment

BTC Basic Training Centre

CAIDI Customer Average Interruption Duration Index. The average outage duration that any given customer would experience in a year. Computed as follows: SAIFI /SAIDI

CAIFI Customer Average Interruption Frequency Index. Measures the average number of interruptions per customer interrupted per year. Computed as follows: Total number of customer interruptions/customers experiencing one or more interruptions

Capex Capital Expenditure

CCMA Commission for Conciliation, Mediation and Arbitration

COJ City of Johannesburg

DIFR Disabling Injury Frequency

DoE Department of Energy

DME Department Mineral and Energy

DSM Demand Side Management

EAP Employees Assistant Programme

EPWP Expanded Public Works Programme

EWSETA Energy and Water Sector Education and Training Authority

FBE Free Basic Electricity

FY Financial Year

GDS Growth and Development Strategy

GRAP Generally Recognised Accounting Practice HIV Human Immunodeficiency Virus

HR Human Resources

HV High Voltage

IBT Inclining Block Tariff

IDP Integrated Development Plan

ISO Internal Organisation for Standardization

JMPD Johannesburg Metro Police Department

KPA Key Performance Area

KPI Key Performance Indicator

kWh Kilowatt Hours

LLF Local Labour Forum

LPU Large Power User

MD Managing Director

MDMS Master Data Management System

MOE Municipal Owned Entity

MRQC Meter Reading Quality Control

MV Medium Voltage

MVA Motor vehicle accident

MW Megawatts

MYPD Multi Year Price Determination

NERSA National Energy Regulator of South Africa

NIHL Noise Induced Hearing Loss NRS National Rationalised Standards

NT National Treasury

OPEX Operating Expenditure

PCons Public Contributions

R&CRM Revenue and Customer Relationship Management

RAC Risk Assurance and Compliance Department



RAT Remote Access Terminal

RNC Revenue Nerve Centre

SABS South African Bureau of Standards

SAIDI System Average Interruption Duration Index. Total duration for an interruption for an average customer for the year. Computed as follows: Customer interruptions duration/Total number of customers served

SAIFI System Average Interruption Frequency Index. The average number of times that a system customer experiences an outage during the year. Computed as follows: Customer interruptions/Total number of customers serviced

SANS South Africa National Standards

SAP System Application and Production in Data Processing

SCM Supply Chain Management

SMD Scrap Metal Dealers STEP Service Delivery, Transformation, Excellence, Performance SHEQ Safety Health Environment and Quality

SLA Service Level Agreement

SWH Solar Water Heating

TAT Turn Around Time

USDG Urban Settlement Development Grant

VDO Vehicle Display Output

YTD Year to Date

Documents

Chairpersons Mid-Term Report to the MMC EISD Mid-year report … Reports... · 2014-11-03 · Sales. • Revenue collection target has been exceeded for Mid-Year to 96.45%. • Though