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ANNUAL REPORT2014/2015

STATE INFORMATION TECHNOLOGY AGENCY

STATE INFORMATION TECHNOLOGY AGENCY

(SITA)

ANNUAL REPORT

2014/2015 FINANCIAL YEAR

RP151/2015 ISBN: 978-0-621-43625-9

CONTENTS

List of Abbreviations/Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

Foreword by the Minister . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Administrative Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi

PART A: STRATEGIC OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Vision, Mission and Corporate Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Legislative Mandates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Organisational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Foreword by the Chairperson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Chief Executive Officer’s Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Statement of Responsibility and Confirmation of Accuracy . . . . . . . . . . . . . . . . . . . . . . . . 12

PART B: PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 13

Auditor-General’s Report: Predetermined Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Situational Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Performance Information by Programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Revenue Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

PART C: GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

The SITA Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Board Attendance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Board Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Internal Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Compliance with Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Fraud and Corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Minimising Conflict of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Code of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Company Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

PART D: HUMAN CAPITAL MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 59

Human Resource Oversight Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Health Safety And Environmental Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

PART E: ANNUAL FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 71

Statement of Responsibility by the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Report by the Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Report of Social and Ethics Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Report of the Audit, Risk and Compliance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Report of the Auditor-General to Parliament on the State Information Technology Agency Soc Limited . . 94

Certificate by the Company Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Annual Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

SITA ANNUAL REPOR T 2014/2015iv

LIST OF ABBREVIATIONS/ACRONYMS

AFS Annual Financial Statements IT Information Technology

APP Annual Performance Plan LAN Local Area Network

ARCC Audit, Risk and Compliance Committee MIOS Minimum Interoperability Standards

BEE Black Economic Empowerment MLP Management Letter Points

CAPEX Capital Expenditure MTSF Medium Term Strategic Framework

CEO Chief Executive Officer NGN New Generation Network

CMMI Capability Maturity Model Integration NDP National Development Plan

DBE Department of Basic Education NPA National Prosecuting Authority

DHET Department of Higher Education NT National Treasury

DoD Department of Defence OHI Operational Health Index

DoH Department of Health OSM Original Software Manufacturer

DHA Department of Home Affairs P-CMM People Capability Maturity Model

DPSA Department of Public Service and Administration PFMA Public Finance Management Act

DPW Department of Public Works PFSC Projects and Financial Sustainability Committee

DTPS Department of Telecommunications and Postal Services PTN Public Telecommunications Network

EAP Employee Assistance Programme PWC PricewaterhouseCoopers

ECM Enterprise Content Management RFQ Request for Quotation

EE Employment Equity SAPS South African Police Services

ERP Enterprise Resource Planning SARS South African Revenue Service

EVP Employee Value Proposition SASSA South African Social Security Agency

EXCO Executive Committee SCM Supply Chain Management

GIS Geographical Information System SCoPA Standing Committee on Public Accounts

GRAP Generally Recognised Accounting Practice SOC State Owned Company

HPO High Performance Organisation SITA State Information Technology Agency

HR Human Resources SLA Service Level Agreement

IAF Internal Audit Function SMME Small, Medium and Micro Enterprise

IASB International Accounting Standards Board TIS Technical Information Systems

ICT Information and Communications Technology VAN Value Added Networks

IFMS Integrated Financial Management System WAN Wide Area Network

IFRS International Financial Reporting Standards WSP Workplace Skills Plan

IPSAS International Public Sector Accounting Standards

FOREWORD BY THE MINISTER v

FOREWORD BY THE MINISTER

In line with international trends, the availability and wide use of information and communications technologies

(ICTs) is critical for South Africa’s socio-economic development and global competitiveness. Access to ICTs will

ensure the radical socio-economic transformation of our society, thus allowing us to deal with the effects of

persistent unemployment, inequality and poverty prolonged by the legacy of apartheid. SITA is a critical vehicle

for delivering the complex and much needed ICT services to South Africa’s citizens, particularly in the areas of

broadband, cybersecurity and e-Government.

In the National Development Plan (NDP), government committed to achieve 100% broadband penetration by

2020. Phase 1 of the broadband rollout, to eight rural districts, was announced by President Zuma in his State of

Nation Address in February 2015. Broadband rollout is a huge but urgent project, which must not be delayed if

we are to remain globally competitive, and SITA has to play a pivotal role in driving this initiative.

With the expansion of ICT systems and coverage, good cybersecurity is essential. South Africa has implemented

a number of strategic and tactical interventions, including the approval of National Cybersecurity Policy

Framework (NCPF) on 7 March 2012. The aim is, among others, to promote a cybersecurity culture, demand

compliance with minimum security standards, and ensure adequate national capacity to develop and protect

our cyberspace. In this regard, SITA has to be the go-to provider of end-to-end services for secure IT environments.

Government has mandated SITA to prioritise e-Government and to drive a programme of action that will ensure

that, by 2019, at least 70% of public-facing services are accessible online to citizens. The focus is on frontline

departments and those entities dealing with critical data and archives in a secured environment. Through smart

partnerships with social partners and the private sector, SITA has the opportunity to enhance our connectivity

efforts, skill our citizens and consolidate e-Government and related e-strategies.

SITA remains central to leveraging ICT as a strategic resource, strengthening public sector operations and

providing citizen-centred, convenient e-Government services; and, ultimately, contributing to socio-economic

transformation and global competitiveness.

Honourable Dr Siyabonga Cwele MP

Minister of Telecommunications and Postal Services

Government of the Republic of South Africa

15 September 2015

Dr Siyabonga Cwele

Minister of Telecommunications and Postal Services

SITA ANNUAL REPOR T 2014/2015vi

ADMINISTRATIVE INFORMATION

REGISTERED NAME: State Information Technology Agency

(SITA) SOC Limited

REGISTRATION NUMBER: 1999/001899/30

PHYSICAL ADDRESS: 459 Tsitsa Street

Erasmuskloof

Pretoria, South Africa

POSTAL ADDRESS: P O Box 26100

Monument Park

0105, South Africa

TELEPHONE NUMBER/S: +27 12 482 3000

FAX NUMBER: +27 12 367 5151

EMAIL ADDRESS: [email protected]

WEBSITE ADDRESS: http//www.sita.co.za

EXTERNAL AUDITORS: Auditor-General of South Africa

BANKERS: Standard Bank of South Africa

COMPANY SECRETARY Mashumi K Mzaidume

PART A:STRATEGIC OVERVIEW

SITA ANNUAL REPOR T 2014/20152

VISION, MISSION AND CORPORATE VALUES

VISION

To be the lead Information and Communications Technology (ICT) agency in public service delivery.

MISSION

To render an efficient and value-added ICT service to the public sector in a secure, cost-effective and

integrated manner, contributing to service delivery and citizen convenience.

VALUES

In the quest to achieve its mission and vision, SITA has adopted and seeks to promote the following values:

Service Excellence. We shall strive to attain internationally recognised standards of service quality,

and maintain continuous improvement in service delivery.

Transparency. We shall always ensure transparency in everything we do in order to build trust and

confidence with all our stakeholders.

Integrity. We shall conduct our business with integrity at all times to inculcate a culture of honesty,

respect and accountability among all our employees.

Fairness. We shall treat all our partners, our suppliers and our employees with fairness at all times.

Prudence. We shall exercise prudence and economy in running the business of SITA and in

pursuance of its goals and the objectives of government.

Innovation. We shall pursue innovation by demonstrating thought leadership and proactive behaviour

on the use of communication and information technology to enhance public service delivery.

VISION, MISSION AND CORPO

VISIONVISION

To be the lead Information and Communications Technology (ICT) agency

MISSIONMISSION

LEGISLATIVE MANDATES 3

LEGISLATIVE MANDATES

SITA is established in terms of the SITA Act (No. 88 of 1998) as amended, and its mandate is informed by the

recommendations of the Presidential Review Commission of 1998. In executing its role, SITA is also guided by

the following legislation and regulations.

SITA Regulations of 2005

Electronic Communication Act (No. 36 of 2005)

Public Finance Management Act (PFMA) (No. 1 of 1999)

Companies Act (No. 71 of 2008)

Public Service Act (No. 103 of 1994), as amended by Public Service (Amendment) Act (No. 30 of 2007)

Electronic Communication and Transactions Act (No. 21 of 2002)

National Key Points Act (No. 102 of 1980), as amended by National Key Points Amendment Act (No. 47 of 1985)

Preferential Procurement Policy Framework Act (No. 5 of 2000)

Government IT House of Values, as contained in e-Government policy1

The Machinery of Government (May 2003)2

Minimum Interoperability Standards (MIOS)

Minimum Information Security Standards

Constitution of the Republic of South Africa Act (No. 108 of 1996),as amendedAs a public enterprise, SITA is subject to the following mandates outlined in Chapter 10:

Section 195: Basic values and principles governing public administration

1. Public administration must be governed by the democratic values and principles enshrined in the

Constitution, including the following principles:

a. A high standard of professional ethics must be promoted and maintained.

b. Efficient, economic and effective use of resources must be promoted.

c. Public administration must be development-oriented.

d. Services must be provided impartially, fairly, equitably and without bias.

e. People’s needs must be responded to, and the public must be encouraged to participate in policy-making.

f. Public administration must be accountable.

1. DPSA (Department of Public Service and Administration.) 2001. Electronic Government - The digital future: A Public Service IT Policy

Framework. Pretoria: DPSA.

2. DPSA. 2003. The Machinery of Government. Pretoria: DPSA.

NDATES

e SITA Act (No. 88 of 1998) as amended, and its mandate is informed by the

ential Review Commission of 1998. In executing its role, SITA is also guided by

ulations.

ct (No. 36 of 2005)

Act (PFMA) (No. 1 of 1999)

08)

f 1994), as amended by Public Service (Amendment) Act (No. 30 of 2007)


g. Transparency must be fostered by providing the public with timely, accessible and accurate information.

h. Good human resource management and career-development practices, to maximise human potential,

must be cultivated.

i. Public administration must be broadly representative of the South African people, with employment

and personnel management practices based on ability, objectivity, fairness, and the need to redress the

imbalances of the past to achieve broad representation.

Section 217: Procurement

1. When an organ of state in the national, provincial or local sphere of government, or any other institution

identified in the national legislation, contracts for goods or services, it must do so in accordance with a

system which is fair, equitable, transparent, competitive and cost-effective.

2. Subsection (1) does not prevent the organs of state or institutions referred to in that subsection from

implementing a procurement policy providing for the following:

a. Categories of preference in the allocation of contracts.

b. Protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination.

3. National legislation must prescribe a framework within which the policy referred to in subsection (2) must

be implemented.

SITA Act (No. 88 of 1998), as amended by Act (No. 38 of 2002)According to the Act, the agency’s objects are:

a. To improve service delivery to the public through the provision of information technology, information

systems and related services in a maintained information system security environment to the departments

and public bodies; and

b. To promote the efficiency of departments and public bodies through the use of information technology.

SITA is listed as a Schedule 3A National Public Entity in terms of the PFMA. Government is the sole shareholder

of SITA, and the Minister of Telecommunications and Postal Services exercises the custodian rights attached to

the shareholder on behalf of the State. Although SITA, as a PFMA Schedule 3A entity, does not have to conclude

a compact with the shareholder, a shareholder performance compact was concluded between SITA and the

shareholder. The compact details the agreed key performance objectives and indicators for the organisation.

ORGANISATIONAL STRUC TURE 5

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FOREWORD BY THE CHAIRPERSON

The information and communications technology (ICT) sector is a critical contributor to the country’s economic

growth. SITA has a significant opportunity to expand its reach and impact, and to play a much larger role in

helping deliver South Africa’s ICT ambitions. For that, and to reach its full potential, SITA needs to enable

government departments to deliver efficient and effective services to citizens through ICT.

Government’s adoption of the National Development Plan (NDP) as a roadmap continues to be the point of

departure for all state departments, including SITA, to deliver the key national strategic priorities of poverty

eradication, improved economic growth and social development. ICT is central to making these endeavours a

reality for citizens, through enabling service delivery and contributing to modernising the state.

As ICT continues to transform the global environment, SITA has an ever-increasing role to play in assisting the

South African government to deliver relevant and accessible services to its citizens through the effective use of

ICT goods and services. Therefore, following its transfer to the Department of Telecommunications and Postal

Service (DTPS) in July 2014, SITA streamlined its focus towards achieving integrated e-Government services,

government data security and IT procurement for government. Attaining these ICT priorities will not only

modernise government in line with international standards but will also reclaim SITA’s vision of being a leading

ICT Agency.

On 1 April 2015, Dr Mohapi joined as CEO to lead the execution of the Board-defined and approved strategy.

SITA has honed its capabilities and competencies to support the strategic plan, which resulted in pleasing

progress in implementing the strategic initiatives outlined in the strategy.

SITA’s goal is to continue to build and strengthen its innovation capability and to be recognised as government’s

thought partner. We will continue to collaborate with our shareholder DTPS, to determine how best to

implement the SA Connect policy, which is targeted at driving greater digital inclusion and lowering the costs-

to-communicate for all citizens. SA Connect is aligned to SITA’s strategic initiatives to lower the cost of IT to

government through operational excellence.

J S Vilakazi

Chairman of the Board of Directors

FOREWORD BY THE CHAIRP

The information and communications technology (ICT) sector is a critical contri

growth. SITA has a significant opportunity to expand its reach and impact, an

helping deliver South Africa’s ICT ambitions. For that, and to reach its full p

J S Vilakazi


FOREWORD BY THE CHAIRPERSON 7

SITA will continue to support government in its efforts to reduce fragmentation and duplication in the ICT sector

through the State Owned Companies (SOC) rationalisation programme. This programme is aimed at aligning SOCs

in all spheres of government in order to achieve the country’s developmental objectives and aspirations.

SITA, the DTPS and the Department of Public Service and Administration are collaborating on prioritising the

e-enablement of at least five services by 2019 to meet the Medium Term Strategic Framework, Outcome 12,

Sub-outcome 4, Action number 6 “prioritised services e-enabled”:

Information technology (IT) is an important tool for improving service delivery. For example, IT can be used to

make services more accessible, reduce the cost of accessing services, streamline administrative processes and

improve turnaround times, and strengthen accountability and responsiveness. To achieve these objectives it is

important that IT systems are tailored to specific areas of service delivery. Government will therefore identify and

prioritise those areas where IT has the greatest potential to improve access to services.

Our e-Government programme will enable government to work more efficiently, strengthen public service

delivery and enhance communication channels with citizens. Our approved procurement strategic plan will

result in effective and integrated ICT supply chain management and will improve SITA’s turnaround time from

entry to exit. In partnership with the Department of Higher Education and Training and Umalusi, we are fully

committed to ensuring that the certificate distribution backlog of National Certification Vocational (NCV) is

reduced from 192 000 to zero by the end of 2015 and maintained as such going forward. The teams working on

this project are addressing systems and processes to ensure that students’ job-seeking prospects are not further

hampered by the absence or unavailability of their hard-earned certificates. SITA aspires to achieve a clean audit

by 2016–2017 and to move from a risk management maturity level 4 to 4+ by 2016–2017.

Public expenditure on ICT in South Africa amounts billions of Rands. How this money is spent and the quality

of services it provides is critically important to us all, as users of services and as taxpayers. Therefore, we all need

the governance of our SOCs to be of a high standard: good governance leads to good management, good

performance, good stewardship of public money, good public engagement and, ultimately, good outcomes.

As the people responsible for SITA’s governance (its leadership, direction and control), the Board of Directors

has sought to address the purpose and objectives of SITA and work in the public interest. It has strived to bring

about positive outcomes for the citizens of this country, the ultimate beneficiaries of Government ICT

expenditure and services, and to provide good value for the taxpayers who fund these services. It has

endeavored to balance the public interest with its accountability to Government in an increasingly complex

socio-political and regulatory environment, and to motivate front-line staff by making sure that good executive

leadership is in place.


I would like to extend my appreciation to my fellow board members for their contribution and judicious

oversight, and to thank our loyal customers and stakeholders for their support. My thanks also go to the staff for

building an organisation that continues to maintain and support key state information systems, thereby

propelling SITA to play a strategic role in the developmental agenda of our country.

Finally, I would like to take this opportunity to thank the shareholder representative, Minister of

Telecommunications and Postal Services, Dr Siyabonga Cwele (MP), for his leadership and for entrusting us with

the responsibility to preside over SITA as its Board of Directors, and the Deputy Minister, Prof Hlengiwe Mkhize

(MP) for her guidance and stewardship. They both made the board’s performance of SITA’s tasks lighter. I also

extend my gratitude to the Chairperson of the Portfolio Committee on Telecommunications and Postal Service,

Honourable Ms Mmamoloko Kubayi (MP) and members of the Committee for their continued support and

counsel. And of course, in welcoming Dr Mohapi, I also would like to thank the former CEO of SITA, Mr Freeman

Nomvalo, for his services during his tenure that ended with the financial year.

J S Vilakazi


State Information Technology Agency SOC Limited (SITA)

29 July 2015

CHIEF EXECUTIVE OFFICER’S OVER VIEW 9

CHIEF EXECUTIVE OFFICER’S OVERVIEW

SITA’s strategic and operational initiatives must be centred on improving the effectiveness and efficiency of the

public sector to enable service delivery to the citizens. We are well on our journey of implementing our strategic

plan, which aims to improve customer services and create a high-performance organisation, through:

Becoming customer-led, served by highly motivated and skilled employees

Radically improving and transforming procurement systems and processes

Developing and implementing integrated e-Government services in partnership with our customers and

in alignment with the Medium Term Strategic Framework (MTSF)

Modernising and upgrading infrastructure, and improving the security of government data assets

Implementing Strategic Imperatives At 35%, customer satisfaction was at an all-time low, with complaints in SITA’s key areas of supply chain

management (SCM), solution development and infrastructure services. We have recognised the urgent need to

be more customer-led, and to understand and proactively manage customer requirements. This is why we are

developing and implementing a customer engagement model, which will bring the customer and SITA closer

to each other. The aim is on getting the basics right: strengthening communication to customers, delivering at

the lowest cost possible and honouring commitments made.

The procurement function is another area that has experienced challenges over the year, and we recognised

the need to tackle the root causes rather than the symptoms. Therefore, a comprehensive procurement strategic

plan was developed as a roadmap and based on world-class procurement best practices. During 2014/15, no

unsolicited bid proposals were concluded as part of the procurement of goods and services. We have begun

improving our SCM processes and systems, and reviewed the old SCM Policy that was developed in 2011. The

SCM Policy is now aligned to the SCM regulatory framework and better placed to guide the agency in becoming

an ICT procurement best practices hub in South Africa. Various procurement adjudication structures are in place

and are monitored actively, as control measures for procurement-related risks. SITA’s objective is to curb fraud

and corruption in procurement-related activity. We are also committed to driving the transformation of the

South Africa ICT industry, by empowering black suppliers, focusing specifically on small, medium and micro

enterprises (SMMEs). In 2014/15, SITA spent just under R274-million (R273,863,037) on SMMEs.

OFFICER’S OVERVIEW

nitiatives must be centred on improving the effectiveness and efficiency of the

elivery to the citizens. We are well on our journey of implementing our strategic

tomer services and create a high-performance organisation, through:

Dr S J Mohapi

Chief Executive Office


Our commitment to deliver e-Services is formulated in the SITA Strategic Plan and e-Government Plan of Action.

In 2014/15, we finished developing seven e-Services, two of which were successfully launched to the customer.

The Tender Portal was launched on 1 April 2015, in collaboration with National Treasury. This central portal

is where all government tenders are published. Its objective is to eliminate duplication and fragmentation

of government tenders, as well as to establish a central supplier database that consolidates supplier

information across all spheres of government.

The Electronic Case (or e-Case) service was successfully piloted at the Benoni Court in January 2015. E-Case

integrates processes of the South African Police Services (SAPS), the Departments of Justice and

Correctional Services, and the National Prosecuting Authority (NPA).

For 2015/16, e-Services will be aligned to the outcomes defined in the MTSF 2014–2019 and will focus on the

government’s socio-economic priorities.

To enable the delivery of e-Services, we are investing in modernising the government data centres and

upgrading the next generation network capacity in line with SA Connect Targets. We are also investing in human

capital because, as custodian of government’s data, we have to be at the forefront of defence against ICT security

threats. This requires having sufficient highly capable and skilled personnel in the fields of information security

and cyber security, to ensure the security of the government’s information systems.

Only with highly skilled, committed and motivated employees can we achieve our strategic imperatives. In

March 2015, an Operational Health Index (OHI) survey was undertaken to evaluate the internal environment and

had a response rate of 40%. Compared to the previous OHI survey (in 2014), SITA improved its health score by 10

points, whereas organisations typically aspire for a four-point improvement over a year. However, although

significantly improved, the agency’s health remains weak compared to regional and industry peers. This means

that we still have to do more if SITA is to become a high-performance agency for today and the future. We have

addressed the matter of employees who were displaced during the organisational restructuring, and all

employees are now able to focus on the crucial element of service delivery to our customers.

Bridging the Digital DivideSITA is passionate about improving the lives of citizens and bridging the digital divide. This year, 60 students (40

female and 20 male) were given the opportunity to further their ICT studies at recognised higher learning

institutions, while 208 interns were employed across the agency (against the initial target of 200 interns).

A total of 347 learners benefited from SITA’s rural development skills programme, and 110 girls were taken

through the “techno girl” programme at all SITA offices countrywide. This was less than the target of 150 girls,

and in 2015/16, we plan to increase the intake of girls by approximately 50%. We installed ICT labs at 11 schools

in six provinces and donated infrastructure worth about R5.5-million. This was in addition to training and

empowering teachers and learners to use ICT optimally in daily teaching and learning. The agency also provides

on-going technical support.

CHIEF EXECUTIVE OFFICER’S OVER VIEW 11

Improving Internal Controls

In 2013/14, the Auditor-General’s report highlighted a number of Management Letter Points (MLPs) that pointed

towards deficiencies in SITA’s internal controls, in particular in relation to supply chain management, IT and

business continuity arrangements, and capital expenditure management.

As part of SITA’s ongoing drive to improve the agency’s governance and internal controls, a number of initiatives

were implemented during the year to address the MLPs and avoid a repeat of the findings. While further

improvement is required, we are committed to achieving a clean audit report in the next financial year. The

maturity level of risk management implementation in the agency is at 3+.

Looking to the FutureSITA is an economically viable public entity that, for the 16 years of its existence, has been a growing concern

funded through the rates and tariffs charged to its customers for services rendered. The funds collected provide

SITA with the resources to meet its operational and capital expenditure requirements. For the year ended 31

March 2015, SITA has a net surplus after tax of R144.289-million, or 2.8% of the R5.090-billion total revenue

generated. This equates to an 8.54% year-on-year growth. The net surplus of R144.289-million will enable SITA to

further invest in infrastructure maintenance and upgrades in order to generate future identifiable streams of

sustainable revenue, thereby enhancing our services. SITA’s operating costs increased by 16% year-on-year.

The time for defining strategies is behind us. We are all focused on coordination and execution, as these actions

will ensure that SITA delivers value to Government and its citizens.

I would like to extend my sincerest appreciation to the SITA Board and the employees for their commitment and

support in the time that I have been at the agency. I look forward to the journey ahead and am grateful and

humbled by the opportunity to serve in such a critical and strategic entity.

Dr S J Mohapi

Chief Executive Officer

State Information Technology Agency SOC Limited (SITA)

29 July 2015


STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY

We the undersigned do hereby confirm that:

The information and amounts disclosed in this Report are consistent with the Annual

Financial Statements (AFS) as audited by the Auditor-General.

This Report is complete, accurate and free from any omissions.

The Report has been prepared in accordance with National Treasury’s guidelines on annual reporting.

The AFS (Part E) have been prepared in accordance with the Generally Recognised Accounting Practice

(GRAP) applicable to SITA.

SITA’s Board of Directors is the Accounting Authority of the entity and is responsible both for the

preparation of the AFS and for the judgements made based on the information contained in the AFS.

The Accounting Authority is responsible for establishing and implementing a system of internal controls,

which has been designed to provide reasonable assurance as to the integrity and reliability of the

performance information, the human resources information and the AFS.

The Auditor-General is engaged to express an independent opinion on SITA’s AFS.

In the opinion of the Accounting Authority, the Report fairly reflects the operations, the performance information,

the human resources information and the financial affairs of SITA for the financial year ended 31 March 2015.

Yours faithfully

SJ Mohapi (Dr)


14 August 2015

State Information Technology Agency SOC Ltd

J Vilakazi (Mr.)


14 August 2015

State Information Technology Agency SOC Ltd

STATEMENT OF RESPOCONFIRMATION OF ACC

We the undersigned do hereby confirm that:

The information and amounts disclosed in this Report are co

Financial Statements (AFS) as audited by the Auditor-General.

This Report is complete, accurate and free from any omissions.

The Report has been prepared in accordance with National Treasury’s guid

The AFS (Part E) have been prepared in accordance with the Generally Reco

(GRAP) applicable to SITA.

SITA’s Board of Directors is the Accounting Authority of the entity and is res

preparation of the AFS and for the judgements made based on the informa

The Accounting Authority is responsible for establishing and implementing

PART B:PERFORMANCE INFORMATION


AUDITOR-GENERAL’S REPORT: PREDETERMINED OBJECTIVES

The Auditor-General has audited the performance information for usefulness and reliability,

compliance with laws and regulations, and internal control, but an opinion is not expressed on the

performance information. See Part E, page 94 for the Auditor-General’s Report.

SITUATIONAL ANALYSIS

Service Delivery Environment

Following its transfer in July 2014 to the Department of Telecommunications and Postal Service (DTPS), SITA

integrated the following eGovernment and cyber-security priorities into its ICT Service Delivery Portfolios:

e-Government (including new IT service delivery model and solution integration)

consolidation and modernisation of data centres

upgrade of bandwidth and network

design and implementation of security system

Table 1: Progress of initiatives introduced in 2014/15

PLANNED ACTIVITIES ACHIEVEMENTS AS @ MARCH 2015

Initiative 8: consolidation and modernisation of data centres. This is to provide the strong foundation required by e-Government.

Short-term: Address the challenges caused by

extended electrical power outages (load-shedding) that

places prolonged strain on the emergency and standby

electrical power plants of the critical data centres and

network switching centres across the country.

Medium-term: Invest in modernising and expanding

data centre facilities and data centre ICT infrastructure to

meet government’s demand for a secure and world-

class data processing environment.

Emergency power plant at the main data centre was stabilised.

An additional interim disaster recovery centre was secured for the

Department of Home Affairs (DHA), to mitigate the risk of government

mission-critical ICT systems being adversely affected by prolonged power

outages. (Intermittent downtimes negatively affected service delivery at

various DHA sites.) This is a short-term solution, but SITA is engaging the

DHA on a medium/long-term proposal

The services of a registered electrical engineering company to assess the

emergency and stand-by power plants across the country in order to

upgrade them to a world-class specification.

Initiative 9: Upgrade Bandwidth and Network. Higher bandwidth network and wider network coverage are required to meet the

rise in demand for e-Government and enhanced network services.

Continued

AUDITOR-GENERAL’S REPREDETERMINED OBJECTIV

The Auditor-General has audited the performance information

compliance with laws and regulations, and internal control, but an o

performance information. See Part E, page 94 for the Auditor-General’s Repo

SITUATIONAL ANALYSIS

SITUATIONAL ANALYSIS 15


Several projects are planned over the medium-term, with the aim of:

Expanding the secure government network coverage

to underserviced areas.

Upgrading the network bandwidth to meet South

Africa’s broadband policy targets.

Modernising the network service offering to

government in a high-secure networking

environment.

Expanding network coverage to rural and underservices

areas remains a challenge.

Renewed service provider contracts with Telkom SA (last-mile) and with

Broadband-Infraco (core network connectivity) to provide core network

connectivity at increased bandwidth and reduced cost

Established a new secure high-speed internet service for use by

government at significantly reduced cost.

Commenced the upgrade of the critical core network at 24 switching

centres (planned completion September 2015).

Implemented the new high speed internet service.

Facilitated the first major broadband roll-out contract for the Western

Cape Provincial Government, to about 2000 government offices and

public service outlets (including +/-1100 public schools and =/-300

health facilities. With this expansion, the government secure network

covers approximately 9000 government offices and public service outlets

across the country.

Implemented redundancy measures at critical public service outlets to mitigate

the risks of network failures caused by power-shedding and copper theft.

Initiative 10: Design and Implement Security System. This is to protect against cyber-security threats, especially those directed at

gaining access to or destroying sensitive government data assets.

Short-term projects include

Enhancing security measures at data centre facilities to

comply with the National Key Point Act.

Consolidating several security functions in SITA into

a unified, highly skilled information-security business

unit capable of securing government’s critical ICT

infrastructures.

Raising security awareness through campaigns.

Responding to high-risk areas that are particularly

vulnerable to cyber-attack, such as government

websites and interfaces to the internet and other

non-government institutions.

Reviewing processes to respond better to security

incidents.

Medium-term projects include:

Consolidating different security monitoring units into an

integrated Security Operations Centre.

Implementing more comprehensive security counter

measures.

Establishing a complete high-secure environment for

government data assets.

Maintained position as the entity with the second highest percentage of

valid security clearance rating of personnel across all of government and

parastatal entities (the highest is the State Security Agency).

Enhanced several physical security measures in and around office

buildings and data centres in line with the National Key Points Act

prescripts.

Continued



Initiative 11: e-Government. This is informed by the NDP and the MTSF 2014–2019, and aligned to international best practice.

2014/15. Establishment of e-Service technology

platforms and development of six basic e-Services to

demonstrate the platform capability. Citizens and public

service officials will be able to start doing business with

government online using these e-Services, such as apply

online for benefits, permits, grants or licences.

2015/16. An enhanced transversal e-Service

technology platform and 15 additional basic e-Services

that enable data and workflow to be integrated vertically

into departmental systems.

2016/17. Data sharing across departments and five

complex e-Services that are able to integrate data and

workflow across different departmental systems.

2017/18. Government data hub that enables

government to establish a “single view of the citizen”

across several departments.

1 x e-Government platform that allows citizens to fill in forms

electronically and submit to government departments.

2 x platforms that provide a technology environment where e-Services

can be developed and deployed in government.

2 x e-Services accepted by customers: (i) National Treasury’s electronic

tender portal that provides a central place where all government tenders

are published and a central supplier database. (ii) A pilot of the Electronic

Case (e-Case) service that processes data and workflow between SAPS,

Department of Justice and National Prosecuting Authority.

5 x e-Services are in process of customer acceptance: 3 x online

applications, for grants (City of Johannesburg), permits (Department of

Environmental Affairs) and housing subsidies (Department of Human

Settlements); 1 x online enquiry for vacancies (SAPS); 1 x online

registration as military veterans (Department of Military Veterans).

Organisational Environment

Cabinet approved the appointment of Dr Setumo Mohapi as SITA’s new Chief Executive Officer (CEO) with effect

from 1 April 2015 to 31 March 2019. The previous CEO (Mr Nomvalo) completed his contract on 31 March 2015,

and the transition was smooth and swift, which is important for business continuity.

SITA has been plagued by low staff morale because of transformation fatigue that left many employees feeling

disengaged and displaced. An organisational health survey carried out in 2013–2014 found SITA’s health to be

extremely low, which may have contributed to poor performance across the agency. A year later, the 2014–2015

health survey revealed a 10-point improvement, but employees were still found to be un-motivated and lacking

trust in leadership. Therefore, more work needs to be done to improve staff morale. A positive development is

that 1116 of the 1127 employees that were in a pool have been placed, and the remaining 11 employees should

be placed by end June 2015. In addition, the critical vacancies in the agency have been filled.


During 2014/15, no proven cases of corruption came to light, but SITA is alive to the threat of corruption and

other unethical behaviour being perpetrated within and against the organisation. To this end, a number of anti-

corruption initiatives have been implemented in order to deter and detect instances of unethical behaviour.

Central to these initiatives is SITA’s independently operated Ethics Line, where employees can report allegations

of unethical behaviour within the organisation. The Ethics Line is supported by appropriate internal and external

resources, to ensure all reported allegations of unethical behaviour are fully investigated and resolved.

Key Policy Developments and Legislative ChangesThe 7 May 2014 elections resulted in a new mandate for Government and new priorities for SITA, involving a

greater focus on the National Broadband Policy (SA Connect), accelerated expansion of e-Government services,

the coordination and streamlining of public entities in the sector, and a reconfigured department that would

ensure policy and regulatory certainty within the ICT sector. In July 2014, and in terms of Presidential Proclamation

No. 47 of 2014 dated 15 July 2014, the Executive Authority of SITA was transferred from the Minister of Public

Service Administration to the Minister of Telecommunications and Postal Services.

On 30 April 2014, the then Minister of Public Service and Administration and Executive Authority of SITA, Dr

Lindiwe Sisulu, approved the agency’s 2014–2019 Corporate Strategy, 2014/2015 Annual Performance Plan

(APP) and 2014/2015 Corporate Balanced Scorecard. Following the May 2014 elections, Minister Collins Chabane

replaced Dr Sisulu as Minister of Public Service and Administration. Therefore, SITA’s approved Corporate Strategy,

Annual Performance Plan and Corporate Balanced Scorecard were tabled before Parliament on 26 May 2014

under the auspices of Minister Collins Chabane.

Subsequently, the agency’s Corporate Strategy, APP and Corporate Balanced Scorecard were reviewed, to bring

them in line with the new mandate of Government and the priorities of the new Executive Authority. The review

also took advantage of the opportunity to rationalise the Scorecard, which has been approved by the SITA Board

of Directors.

SITA’s Transformation Journey SITA’s value proposition is derived from the Government ICT House of Values. It is about:

ensuring efficiency and cost-effectiveness in government service delivery.

assisting Government to leverage economies of scale in the procurement of ICT goods and services.

providing innovative ICT solutions.

To realise the value proposition, the strategic focus will be on transforming and excelling in the areas of

procurement, e-Government and IT service delivery, and organisational health, supported by robust

business enablers (Figure 1).


Figure 1: SITA’s transformation journey

SITA’s transformation journey will be implemented through 22 initiatives across 4 key categories

A

C

B

D

Procurement E Gov & IT Service Portfolio

OrganisationalHealth

SITA

BusinessEnablers

PMO Strategy Institutionalization

Recruit top talent to SITA

Develop and implement new

customer engagement model

Implement contract tracking & management system

Design and implement retained

organisation (contract exturnal

assistance)

Build internal capabilities

New IT Service Delivery Model

System Integrated & e0Gov

Design and impliment security

system

Upgrade bandwidth & network

Consolidate & modernise

datacentres

Implement new approach to technical specifications

Launch new procurement process

Establish contact model

Launch On-line BUying

Introduce new organisation model

Revise SITA’s procurement policies

Create transparency on cost

Integrate and automate finance

and procurement process

Empower SITAzens to fully

leverage their capabilities

17

18

19

20

21

22

16

15

14

12

11

9

8

Impliment HPO across organisation

Reward and recognise exeptional

performance

Create a customer centric

organisation

13

10

1

2

3

4

5

6

7

Over the next 3–5 years, SITA will be implementing an aggressive transformation programme aimed at rapidly

stabilising the organisation, building sustainability and enabling the agency to grow and excel through

diversifying its client base and service offering. Table 2 depicts the five-year plan. The items in blue are initiatives

that have already been delivered, items in orange are initiatives that are work in progress, while the items in red

are initiatives that have not started.


Table 2: SITA’s five-year plan

2014-2015STABILISATION

2015-2016SUSTAINABILITY

2016-2017EXCELLENCE

2017-2018GOVT DATA HUB

2018-2019GOVT ESERVICE

AGGREGATOR

[16][2]

[7]

[9-12]

[18]

[16]

[9]

[5]

[9]

[10]

[22]

[9]

[11]

[9]

[6]

[9-13]

[13,14]

[9-13]

[9-13]

[9-13]

[19-20]

[9-12]

[9-12]


2.5 Strategic Outcome-Oriented Goals

SITA has six strategic programmes, each aligned to a strategic goal, as shown in Table 2.

Table 3: Strategic programmes and goals

STRATEGIC PROGRAMME GOALS

Programme 1: Procurement

To address all issues relating to delayed procurement turnaround

times, removing customer pain points, and transforming the

procurement function.

Programme 2: Service DeliveryTo provide high-quality IT services to enable government to deliver

efficient and convenient services through the use of ICT.

Programme 3: Infrastructure and Cybersecurity

To optimise the provision of SITA’s IT infrastructure services in order

to increase availability, flexibility, scalability, predictability and

security.

Programme 4: Financial SustainabilityTo ensure an effective and efficient financial management, and

financial growth and sustainability.

Programme 5: Organisation

To build and maintain organisational capability to enable SITA to

achieve its strategic imperatives and become an employer of

choice within the ICT industry.

Programme 6: Governance and Administration

To provide leadership, strategic management, governance, risk and

resource management in line with government-accepted norms

and standards.

PERFORMANCE INFORMATION BY PROGRAMME 21

PERFORMANCE INFORMATION BY PROGRAMME

Programme 1: Procurement

The purpose of this programme is to address all issues relating to delayed procurement turnaround times, removing

customer pain points, and transforming the procurement function. The increased customer-led focus is reflected

in the results of key performance measures. A dedicated SMME development strategic plan has been put in place

to increase ICT spend through SMMEs.

OBJECTIVE PERFORMANCE INDICATOR

ACTUAL ACHIEVEMENT

2013/14

ACTUAL PERFORMANCE AGAINST TARGET 2014/2015

DEVIATION FROM

PLANNED TARGET FOR 2014/2015

REASON FOR VARIANCEPLANNED

TARGETACTUAL STATUS

M8.1: Improved SCM

turnaround times 108.94 days

90 days from

the day the

bid is

published

Achieved

85 days5 days

Due to efficiencies implemented in

terms of management proactive

monitoring and supervision of

transaction through regular

meetings

M8.2: Number of

days taken to

complete transversal

bid

120 days for

transversal

bids

Achieved

89 Days31 days

a) Due to streamlined processes

and the allocation of dedicated

resources

b) Improved collaborative working

relationship with the designated

department

M8.3: Number of

days taken to finalise

contract

29.94 days

30 days on

contract

finalisation

Not

achieved

40 days

10 days

Development process not yet

streamlined resulting to lack of

collaborative approach from various

stakeholders in the process

M8.4: Number of

days taken on

preferred list RFQ

67.10 days

80 days on

preferred list

RFQs

Achieved

55 days25 days




transaction through regular meetings

M8.5: Number of

days taken on ad hoc

RFQ

14.55 days20 days ad

hoc RFQ

Achieved

15 Days5 days




transaction through regular meetings

Continued

NFORMATION

ement

to address all issues relating to delayed procurement turnaround times, removing

orming the procurement function. The increased customer-led focus is reflected

measures. A dedicated SMME development strategic plan has been put in place

MMEs.

ACTUAL HIEVEMENT


DEVIATIONFROM

PLANNED REASON FOR VARIANCE



ACTUAL ACHIEVEMENT

2013/14


DEVIATION FROM


REASON FOR VARIANCEPLANNED

TARGETACTUAL STATUS

M9: % Savings on

acquisition of ICT

goods and services

18%

12% Savings

on acquisition

of ICT goods

and services

Achieved

16%4%

Due to Microsoft License

transactions

M10: % of ICT

acquisition spend

through SMME

0%

7% of

acquisition

spend

through

SMME

(cumulative)

Not

achieved

6%

1%

Due to lack of dedicated SMME

development strategic plan with

clear objective on how various

developmental opportunities will

be leveraged. SMME awareness

campaigns were conducted but

had limited impact in terms of

spend contribution

M11: % of ICT

acquisition spend

through BEE

Compliant Entities

30% of

acquisition

spend

through

BBBEE

Compliant

Entities

Achieved

71%41%

Due to the majority of suppliers

who have B-BBEE accreditation

within level 1-4

Strategies to overcome procurement underperformanceA new approved SITA procurement policy and strategy is expected to improve the processes and provide the

necessary education to employees. Standardised and easy to use SCM contract templates are to be developed.

With regard to SMME spend, the underperformance was related to low capex spending.


Programme 2: Service Delivery

The purpose of the programme is to provide high-quality IT services to enable Government to deliver efficient

and convenient services through the use of ICT.


ACTUAL ACHIEVEMENT

2013/14


DEVIATION FROM

PLANNED TARGET

FOR 2014/2015

REASON FOR VARIANCE

PLANNED TARGET ACTUAL STATUS

C1:

M5.1: %

implementation of

e-Government

50 forms

developed

90% as per

approved plan

Achieved

97%7%

a) Executive oversight and weekly

progress reviews by the CTO

have ensured that the project

teams pull all stops to deliver

b) Because this was a strategic

project with visibility up to

Parliamentary level, the most

experienced resources were

assigned to the project

M5.2: %

implementation of

e-Cabinet lead site

implementation

90% of the targets

achieved to pilot

at the following

departments

– (Presidency/

State Security/

DPSA/ /Treasury/

DTPS)

Achieved

95%5%

a) The technical expertise assigned

to the project surpassed the

normal assignment levels and

the Executive Management

assisted on all risks escalated

b) The CEO, DCEO and CTO

attended each Executive

Steering Committee

M5.3: Approval of

the award

recommendation for

the new IFMS project

No roll-out

sites

completed

Award

recommendation

to the client

Achieved

100%None No variance

M6: % Level of

performance against

signed SLA metrics

contracted

97%

95%

implementation

against contracted

SLA metrics

Achieved

95%None No variance

C2:

M7: % of ICT

controls

implemented

according to plan

95% of security

plans implemented

(vetted employees;

ICT security,

physical security,

Subsidiary security

unit )

Achieved

97%2%

Due to intensified efforts by the

fieldworkers to complete the

vetting forms


Programme 3: Infrastructure and Cybersecurity

The purpose of this programme is to optimise the provision of SITA’s IT infrastructure services in order to increase

availability, flexibility, scalability, predictability and security to protect government data assets.


ACTUAL ACHIEVEMENT

2013/14


DEVIATION FROM

PLANNED TARGET

FOR 2014/2015

REASON FOR VARIANCE


C1:

M5.4: % Implementation of

infrastructure

upgrades and

modernisation plan

M5.4.1:

90%

implementation of

data centre

upgrades

Achieved

100%10%

The supplier contract was

finalised earlier than anticipated

and the installation process was

fast tracked

M5.4.2:

Below 75%

utilisation of

bandwidth

Achieved

15%60%

Due to proactive bandwidth

capacity management on the

network core and trend analysis,

all necessary bandwidth

upgrades were effected

timeously resulting in

consistently low utilisation

M5.4.3

100% coverage of

Centurion data

centre

Achieved

100%None No variance

M5.5 %

Implementation of

process automation

and integration

39% of mapped

processes has

been automated

90%

implementation as

per the approved

project charters

Achieved

91%1%

Additional resources were

recruited in quarter 4

C2:

M7: % of ICT

controls

implemented

according to plan

95% of security

plans implemented

(vetted employees;

ICT security,

physical security,

Subsidiary security

unit )

Achieved

97%2%

Due to intensified efforts by the

fieldworkers to complete the

vetting forms


Programme 4: Financial Sustainability

The purpose of this programme is to ensure an effective and efficient financial management, and financial growth

and sustainability

.


ACTUAL ACHIEVEMENT

2013/14

ACTUAL PERFORMANCE AGAINST TARGET 2014/2015 DEVIATION

FROM PLANNED

TARGET FOR 2014/2015

REASON FOR VARIANCE

PLANNED TARGET

ACTUAL STATUS

M1: % increase

in revenue

(year-on-year)

9.5% below

target

R5.1 Billion

(10% of

baseline)

Not

achieved

8.6%

1.4%

This is because the National

Network Upgrade Projects, from the

SAPS which were discontinued

during the year

M2: % Profitability Net Surplus3% Profitability

Not

Achieved

2.3%

0.7%

This is mainly due to lower than

expected revenue and higher than

expected operational expenditure

M3: Liquidity Ratio 2.8:1 L≥1.2:1Achieved

3.1:11.9 Due to underspending on CAPEX

M4: Expenditure

against approved

Capex budget

16.8%

80%

Expenditure

against

approved

CAPEX

Not

achieved

16.5% spent

63.5%

Mainly due to cancellations of major

tenders for Infrastructure equipment

and late delivery of NGN equipment


Programme 5: Organisation

The purpose of this programme is to build and maintain organisational capability to enable SITA to achieve its

strategic imperatives and become an employer of choice within the ICT industry.


ACTUAL ACHIEVEMENT

2013/14


DEVIATION FROM


REASON FOR VARIANCE


L1:

M14: Increase OHI

baseline points from

30 to 40 points

Increase OHI

baseline points from

30 to 40 points

Achieved

10 pointsNone No variance

Strategies to improve organisational efficiency and stability The CEO has a four-year contract, which contributes to the agency’s perceived stability. The health of the

organisation improved last year (OHI up by 10 points) and, with the clearing of the staffing pool, this trend is

expected to continue. SITA had committed to an objective of achieving a Maturity Level 3 against certain

processes and practices for financial year 2015/16. At an EXCO meeting dated 26 January 2015 during the CMMI

awareness briefing, a decision was made not to focus only on maturity levels but rather to identify the weaknesses

of processes and practices against Maturity Level 3 for Capability Maturity Model Integration (CMMI) and

Maturity Level 2 for People Capability Maturity Model (P-CMM). The Standard CMMI Appraisal Method for Process

Improvement (SCMAPI) undertaken during April and May 2015 assessed the organisation against Maturity Level

3 for CMMI constellation and Maturity Level for P-CMM. SITA processes were assessed against best international

practice framework for process improvement (CMMI from the CMMI Institute). This assessment identified

strengths and weaknesses in all practices applied by SITA to deliver services to its customers. The assessment

placed SITA at Maturity Level 1. A comprehensive process improvement plan is being implemented to improve

the maturity of service delivery within SITA.


Programme 6: Governance and Administration

The purpose of this programme is to provide leadership, strategic management, governance, risk and resource

management in line with government-accepted norms and standards.


ACTUAL ACHIEVEMENT

2013/14

ACTUAL PERFORMANCE AGAINST TARGET 2014/2015 DEVIATION

FROM PLANNED

TARGET FOR 2014/2015

REASON FOR VARIANCE

PLANNED TARGET

ACTUAL STATUS

P1:

M12: Compliance

with internal control

framework

Clean Audit for

FY2013/2014

with no

matters of

emphasis

Unqualified

Audit report Achieved None No variance

P2:

M13: Organisation

practice maturity

level

CMMI CL2

SCAMPI

Maturity Level 3

for selected

practice areas

achieved

Not Achieved

Maturity

level 1

2

The fundamental contributor is the

lack of or often fragmented end to

end processes and effective product

life cycle management supported

by the right tools and people across

the organization.


REVENUE COLLECTION

Table 4: Summary of Revenue Collection

2014/2015 2013/2014

ESTIMATE AMOUNT R'000

ACTUAL AMOUNT

COLLECTED R'000

OVER/UNDER COLLECTION

R'000

ESTIMATE AMOUNT

R'000

ACTUAL AMOUNT

COLLECTED R'000

(OVER)/UNDER

COLLECTION R'000

(OVER)/UNDER

COLLECTION

R’000

Products and Service Rendered to Government

BPO Service Desk - - - - 34 -34

Commercial Printing 17 419 8 073 9 346 30 468 47 558 (17 090)

Contract Management 12 800 - 12 800 - - -

ICT Advisory Services 62 742 34 504 28 238 44 473 50 760 (6 287)

Information Management 36 570 41 940 (5 370) 37 300 34 253 3 047

Managed Applications 783 293 535 588 247 705 735 899 521 638 214 261

Managed Desktop 679 412 397 211 282 201 622 813 393 551 229 262

Managed Infrastructure 2 085 889 2 077 342 8 547 1 665 748 1 528 786 136 962

Project Management 63 645 50 050 13 595 294 330 226 296 68 034

Requisition and Fulfilment 1 056 714 1 563 705 (506 991) 1 632 063 1 603 339 28 724

Security Management 43 333 24 068 19 265 15 987 11 593 4 394

Service Management Centre

123 606 179 968 (56 362) 170 423 127 623 42 800

Training 40 484 28 649 11 835 37 603 28 800 8 803

Solution Development 176 566 148 580 27 986 347 893 117 783 230 110

Total 5 182 473 5 089 678 92 795 5 635 000 4 692 014 942 986

REVENUE COLLECTION

Table 4: Summary of Revenue Collection

2014/2015

ESTIMATE AMOUNTR'000

ACTUAL AMOUNT

COLLECTED R'000

OVER/UNDER COLLECTION

R'000

ESTIMATE AMOUNT

R'000

ACTUAAMOUN

COLLECTR'000

REVENUE COLLEC TION 29

In 2014/15, the main reason for the underperformance was because a project to upgrade a customer’s network

programme did not materialise.

Strategies to Overcome Revenue UnderperformanceSITA is improving its customer engagement process, to ensure that better service offerings are delivered to

customers. The agency’s internal service delivery processes are being optimised, which will entail a new service

delivery model including pricing and innovative product lifecycle management. SITA is in the process of

submitting revised tariffs to the Ministry for approval. A renewed drive has begun to improve debt collection, by

engaging with debtors around reasons for non-payment and exploring alternative means of recovery.

Table 5: Summary of payments by programme

2014/2015 2013/2014

PROGRAMME NAME

R’000

BUDGET

R’000

ACTUAL EXPENDITURE

R’000

(OVER)/UNDER EXPENDITURE

R’000

BUDGET

R’000

ACTUAL EXPENDITURE

R’000


R’000

Administration 917 552 1 200 971 (283 419) 992131 981799 10 332

Business Operations 4 145 978 3 891 257 254 721 4 805 000 3 849 400 955 600

Total 5 063 530 5 092 228 (28 698) 5 797 131 4 831 199 965 932


Table 6: Capital investment, maintenance and asset management plan

2014/2015 2013/2014

INFRASTRUTURE PROJECTSBUDGET

R’000

ACTUAL EXPENDITURE

R’000


R’000

BUDGET

R’000

ACTUAL EXPENDITURE

R’000


R’000

Infrastructure: Network 175 000 112 833 35 246 75 000 64 979 10 021

Infrastructure: Switching Centres 100 000 - 100 000 20 000 - 20 000

Infrastructure: Data Centres 100 000 35 231 64 769 177 000 112 631 64 369

Infrastructure: Modernisation 200 000 2 616 197 384 280 000 - 280 000

Solution Development: Transversal

30 000 7 019 22 981 45 000 32 686 12 314

Solution Development: IFMS 100 000 16 345 83 755 260 000 107 358 152 642

Solution Development: Customer Unique

117 000 - 117000 50 000 - 50 000

Solution Development: Modernisation

100 000 1 009 98 991 90 000 7 89 993

Solution Development: Integration

65 000 - 65 000 65 000 - 65 000

Solution Development: R&D 115 000 22 890 92 110 100 000 21 162 78 838

Security 25 000 245 24 755 10 000 15 9 985

Service Management: Contact Centres

40 000 4 234 35 766 30 000 2 750 27 250

Service Management: DSS & 1st Line

40 000 - 40 000 30 000 311 29 689

Operational Support: Internal IT 40 000 40 110 (110) 50 000 4 481 45 519

Operational Support: Facilities 125 000 23 993 101 007 130 000 6 952 127 888

Operational Support: Production toolsets

20 000 - 20 000 331000 2 672 328 328

Operational Support: Integrated Security Management

146 000 - 146 000 - - -

Operational Support: ICT Academy - - - 50 000 - 50 000

Total 1 538 000 266 525 1 271 475 1 793 000 356 004 1 492 133


Capital Investment

SITA’s performance suffered greatly in the areas of capital investment, maintenance and asset management. In

2014/15, only about 19% of the allocated CAPEX investment was spent. While reasons may vary, the common

issues are:

1. The lack of governance structures responsible for managing CAPEX. CAPEX approval was not done in a

controlled manner, resulting in a lack of proper monitoring of the adequacy of the plans to achieve their

targets.

2. Lack of continuity and leadership in key executive positions. The executive responsible for infrastructure

services and the head of department responsible for network infrastructure were suspended, which

created a vacuum at a crucial time of the financial year.

3. Changing structures within the agency meant that responsibilities were allocated differently. This created

confusion and hindered visibility on the plans that were drafted.

4. Organisational health. Since the start of the turnaround strategy in 2010, employees have been unsettled

in their positions, with over 100 employees unassigned (“in the pool”). Although this problem had mostly

been addressed by the end of the financial year, the instability had already taken its toll on the employees.

5. Ineffective procurement processes, which contributed to critical and needed resources not being spent.

6. Poor planning and lack of monitoring are central to all these issues.

Strategies to Overcome CAPEX UnderperformanceSITA has improved governance structures responsible for managing CAPEX. The Projects and Financial

Sustainability Committee (PFSC) chaired by the SITA Chief Financial Officer has been established to closely

monitor the capital expenditure programme and escalate deviations or non-compliance to the Executive

Committee on a regular basis. Executives have been allocated responsibilities for CAPEX programmes, following

the approval of the macro structure by the SITA Board. Procurement plans have been created and are monitored

regularly by departments. SITA is improving its planning and monitoring processes around CAPEX spend, and

reports are submitted at the CEO’s weekly operations meeting.

Table 7: CAPEX expenditure vs. budget 2014/15

INFRASTRUCTURE PROJECTS

BUDGET

R’000

ACTUAL EXPENDITURE

R’000

(OVER)/ UNDER

EXPENDITURENOTES

Infrastructure: Network

175 000 112 833 35 246

R7-million of the actual expenditure catered for 13/14 order

payments on NGN equipment The R125-million NGN

upgrades project consisted of a number of tenders that had to

be aligned. Significant delays in approving the tenders and

importing the WAN equipment affected the capital spending.

Infrastructure: Switching Centres

100 000 - 100 000

Delay caused by overall NGN delays and the replacement of the

core network supplier. The R105-million emergency power (UPS)

upgrades for Switching Centre were unfortunately paid under

the Network Upgrade programme.

Continued



BUDGET

R’000

ACTUAL EXPENDITURE

R’000

(OVER)/ UNDER

EXPENDITURENOTES

Infrastructure: Data Centres

100 000 35 231 64 769

The infrastructure refresh tenders delayed from 2013/14

affected expenditure in 2014/15. The larger data centre

strategy led to key infrastructure tenders being cancelled and

then republished but too late for 2014/15.

Infrastructure: Modernisation

200 000 2 616 197 384

The planned R200-million was for cloud computing platforms, a

strategic intent carried forward from 13/14. However, the cloud

strategy was postponed in favour of the infrastructure refresh.

Solution Development: Transversal

30 000 7 019 22 981

The R30-million was for the IFMS Business Intelligence

capabilities, but the programme was cancelled and alternative

strategic transversal solutions were launched. Bulk

deployment was delayed due to infrastructure capacity and

the cancellation of IFMS as main vehicle. The geographical

information system (GIS) service provider contract had to be

cancelled due to an inability to provide the services as

stipulated in the contract.

Solution Development: IFMS

100 000 16 345 83 755

The IFMS was cancelled, but some financial commitment had to

be concluded before tenders could be cancelled. Some

software capabilities developed were reused on other

programmes and will accelerate development in 2015/16.

Solution Development: Customer Unique

117 000 - 117 000

The R117-million was for the e-Government programme and

e-Cabinet solution for the Presidency, which was delayed as a

result of engineering works and concerns over supplier

solvency. The e-Government development cost was reflected

in R&D programme.

Solution Development: Modernisation

100 000 1 009 98 991

The R100-million was intended to assist SAPS with their crime

integration platforms, as well as for Smart City solutions and

legacy renewals for other customers. Limited work was done

on the legacy renewal but the DPW could not commit in

2014/15. Solution architecture work was done on the Smart

City concept, but then priorities changed. SAPS opted to fund

their own projects without SITA’s assistance.

Solution Development: Integration

65 000 - 65 000

The R65-million was for a government-wide integration

platform (R20-million), which was delayed because of the

reassessment within the large e-Government strategy, and for

the SITA internal process optimisation (R45-million), which

was also delayed.

Continued



BUDGET

R’000

ACTUAL EXPENDITURE

R’000

(OVER)/ UNDER

EXPENDITURENOTES

Solution Development: R&D

115 000 22 890 92 110

The R115-million (2% of annual revenue) was for Java Integrated

Development platform (JIG) and various other emerging

technologies. The technology laboratory infrastructure RFQ was

cancelled because no suitable submissions were received. The

JIG project was put on hold until approval was granted for the

platform to be one of the enablers of e-Government. Getting

approval for enhancing further the OpenJig took too long, and

eventually contracts were cancelled. Most of the CAPEX was

allocated to e-Government projects, which underspent for

various reasons, such as late infrastructure and licences.

Security 25 000 245 24 755

The R25-million was for Multi-Factor Authentication and

Security Testing software, which was delayed because of the

potential creation of a separate security subsidiary.

Service Management: Contact Centres

40 000 4 234 35 766

The R40-million for the Service Management Centre online

capabilities was delayed because of the larger Infrastructure

refresh priorities.

Service Management: DSS & 1st Line

40 000 - 40 000

The R40-million was for acquiring remote LAN and desktop

management software but was delayed because of concerns

about internal capacity. An external consultant had

recommended this function be outsourced, but capacity

issues have now been addressed.

Operational Support: Internal IT

40 000 40 110 (110)

The R40-million was for internal infrastructure upgrades

(R30-million) and ERP licences (R10-million). The upgrade of

the Erasmuskloof PBX capability absorbed most of the

available funding, and ICT equipment for Western Cape and

Cluster 2 was acquired.

Operational Support: Facilities

125 000 23 993 101 007

The R125-million was for upgrading security at SITA’s office as

National Key Points. The review of SITA’s overall

accommodation strategy delayed some upgrade projects.

Operational Support: Production toolsets

20 000 - 20 000

The R20-million was planned for service monitoring software,

but the acquisition process was not launched because of the

overall assessment of SITA’s internal systems capability/strategy.

Operational Support: Integrated Security Management

146 000 - 146 000

Delays caused by a potential creation of a separate security

subsidiary, and as a result the acquisition process was only

launched late in the year.

Operational Support: ICT Academy

- - -

In 2014/15, the ICT Academy changed from a standalone

project to a collaboration project with the National School of

Government, and therefore no capital expenditure was

allocated to the line item.

Total 1 538 000 266 525 1 271 475

PART C:GOVERNANCE


The SITA Board

The SITA Board of Directors aligns itself with the understanding that good corporate governance consists

of a system of structuring, operating and controlling in order:

To achieve a culture based on a foundation of sound business ethics.

To fulfil the agency’s long-term strategic goals, while taking into account the expectations of all key

stakeholders.

To consider and care for the interests of employees, past and present.

To maintain excellent relations with customers and suppliers, while taking into account the needs of the

environment and the local community.

Portfolio CommitteesAs part of its governance endeavour and oversight, SITA briefs Parliament on its legislative mandate and related

activities, as well as responds to parliamentary questions. The Portfolio Committee on Telecommunications and

Postal Services, which oversees the activities of SITA, is presided over by the Honourable Ms MT Kubayi MP. Its

members are Honourable Ms MR Shinn MP, Honourable Ms LM Maseko MP, Honourable Mr PP Mabe MP,

Honourable Mr C Mackenzie MP, Honourable Ms MV Mafolo MP, Honourable Ms LL van der Merwe MP,

Honourable Mr PWA Mulder MP, Honourable Mr MQ Ndlozi MP and Honourable Ms N Ndongeni MP.

In 2014/15, SITA briefed the Portfolio Committee on:

Progress in respect of broadband (policies and regulations, implementation plans, challenges, the

broadband framework in relation to NDP and DTPS vision 2020, timeframes for envisaged broadband

roll-out plan and target implementation, resources needed and any other relevant information; on

broadband and schools connectivity).

SITA’s 2014–2019 Corporate Strategy and 2014/2015 Annual Performance Plan.

Services to the DBE.

The state of readiness for digital migration.

How SITA is dealing with issues raised by the Auditor-General and internal control measures used to

mitigate risks in terms of the audit.

Quarterly performance.

Executive AuthorityThe Department of Public Service and Administration (DPSA) was the line Ministry until the promulgation of

Proclamation 47 on 15 July 2014 which transferred the executive powers from the DPSA to the DTPS. All reports, as

prescribed in terms of PFMA and Treasury Regulations, were submitted to the Executive Authority during the

period under review. Additional reports submitted related to e-Government, SOC Rationalisation, senior executive

appointments, a burglary at the SITA Centurion Data Centre, power interruptions and failures, and service delivery.

The SITA Board

The SITA Board of Directors aligns itself with the understanding that goo

of a system of structuring, operating and controlling in order:

To achieve a culture based on a foundation of sound business ethics.

To fulfil the agency’s long-term strategic goals, while taking into account th

stakeholders.

To consider and care for the interests of employees, past and present.

To maintain excellent relations with customers and suppliers, while taking i

environment and the local community.

THE S ITA BOARD OF DIREC TORS 37

THE SITA BOARD OF DIRECTORS

Leaders need to define strategy, provide direction, and establish the ethics and values that will influence

and guide practices and behaviours to achieve sustainable performance. This is the fundamental purpose of

a Board.

In terms of Section 66(1) of the Companies Act (No. 71 of 2008), the business affairs of a company must be

managed by, or under the direction of, a Board of Directors, which has the authority to exercise all the powers

and perform any of the functions of the company, except where the Companies Act or SITA’s Memorandum on

Incorporation provide otherwise.

The Board’s roles and responsibilities are provided for in:

State Information Technology Act (No. 88 of 1988), as amended (SITA)

Public Finance Management Act (No. 1 of 1999) (PFMA)

National Treasury Regulations issued in terms of the PFMA (March 2005)

Companies Act (No. 71 of 2008)

SITA Board Charter of 9 January 2013

King III Report on Governance for South Africa (King III).

The Board CharterThe SITA Board Charter (Corporate Governance Code) is informed inter alia by the Constitution of the Republic

of South Africa; the SITA Act and Regulations; the PFMA and Regulations; the Companies Act and Regulations;

the 1992, 2002 and the 2010 King Reports on Corporate Governance; as well as best practice in the management

of boards of directors.

Its departure point is that governance in any context reflects the value system of the society in which it operates.

In the South African context, this means collectiveness over individualism, consensus rather than dissension,

humility instead of criticism, and inclusiveness as opposed to prejudice. It acknowledges that corporate

governance thrives on co-existence, consultation, and high standards of morality and trust. It further recognises

that corporate governance is essentially about leadership – leadership for efficiency, leadership for probity,

leadership with responsibility and leadership that is both transparent and accountable. These are the ideals that

inform the SITA Governance Code (the Code).

The Code begins by acknowledging the constitutional and legislative roots of SITA governance. This is followed

by a brief overview of the principles of corporate governance and a detailed exposé of the powers, functions

and responsibilities of the Board and the directors, including delegation of authority. The Code then deals with

the constitution, responsibilities and management of the Board in session and Board Committees; the disclosure

of director interest in the business of the SITA; and the need to assess the performance of individual directors

OF DIRECTORS

provide direction, and establish the ethics and values that will influence

ours to achieve sustainable performance. This is the fundamental purpose of

Companies Act (No. 71 of 2008), the business affairs of a company must be

tion of, a Board of Directors, which has the authority to exercise all the powers

s of the company, except where the Companies Act or SITA’s Memorandum on

.


and directors as a collective. It provides for alternative dispute resolution; and highlights the nature and

importance of risk management, internal audit, information technology, compliance, and the management of

stakeholder relationships. The Code also recognises that directors are entitled to have access to members of the

SITA Secretariat and to secure independent professional advice at the company’s expense.

The Code concludes by recognising the pivotal nature of the role of the Company Secretary in the administration

of the Company, as well as the non-static nature of its prescripts.

There has been material compliance with the provisions of the Code and a substantially revised version thereof

is currently pending before the Board of Directors.

Composition of the Board Section 8(1) of the SITA Act provides that SITA will be governed and controlled by a Board of Directors appointed

by the Minister after consultation with Cabinet. According to Section 10(1B)(a), the Minister may appoint an

alternative member for each non-executive member of the Board, other than the Chairperson. The alternative

members may attend and vote at meetings of the Board on behalf of a member if that member is unable to attend

In terms of Section 10(1) of the SITA Act, the Board consists of a maximum of 14 members appointed in the

following capacities:

a. A non-executive Chairperson;

b. Executive members, one of whom must be designated as the Managing Director;

c. Additional non-executive members, consisting of:

i. One person representing the Department of Public Service and Administration;

ii. One person representing the National Treasury;

iii. One person as a legal expert; and

iv. Other persons on the grounds of their expertise.

It also states that the majority of the Board members must be non-executive members and that the Minister

must designate one of these non-executive members as the Deputy Chairperson to step in should the

Chairperson be unable to perform his/her functions.

Remuneration of Board Members Non-executive directors and committee members who are not employed by government receive a fee for their

contributions to the Board and committees on which they serve. Fees are determined by the shareholder. (See

page 141 of the AFS for further disclosure on remuneration).

The current Board of Directors is as follows, and includes alternative members (if applicable) and outgoing Board

members and their designation.


Mr J Vilakazi

BA (Unisa), MA (Thames Valley), MA (London), MBA (California Coast University)

Non-Executive Chairperson: 22 November 2012–20 November 2015

Mr Jerry Vilakazi is the founder of the Palama Group, an investment holding company

with a diversified portfolio of investments. For over six years, he served as CEO of

Business Unity South Africa, representing South African businesses on international

business councils and structures. He is currently chairman of the Mpumalanga

Gambling Board and the Mpumalanga Economic Growth Agency, non-executive

chairman of Netcare Limited and holds directorships in a number of JSE-listed

companies. He is also a non-executive director of General Health Group (UK), an

advisor to Citibank (SA) and serves on the National Planning Commission.

Dr V Mahlati

MSc (UK London School of Economics), PhD (University of Stellenbosch)

Non-Executive Deputy Chairperson: 18 September 2013–17 September 2016 (resigned 13 August 2014)

Dr Vuyo Mahlati is co-owner of African Financial Group, responsible for Pan African

and Emerging Markets Innovative Financial Solutions, and led the Siyaya TV rural-

based digital television trial licensed by Sentech. After serving two terms as President

of the International Women’s Forum (IWF) South Africa, she was appointed the IWF

Global Director. As part of the National Development Plan (NDP) team, she chaired

the NDP Working Group on Capable and Developmental State, Active Citizenry and

Nation Building, and Spatial Transformation. She is the Deputy Chair of the Integrated

Urban Development Framework (IUDF) Panel of Experts and an independent

member of the Industrial Development Cooperation (IDC) Agro-processing

Competitive Fund. She is also on the Global Advisory Council of Corporate Women

Directors International based in Washington DC, USA and the Global Advisory Council

of the Global Entrepreneurial Hub Network in Vienna.

Dr Setumo Mohapi

BSc in electrical engineering and computer science (MIT), Master’s in electrical engineering (MIT), PhD in

electrical engineering (Wits).

Chief Executive Officer: 1 April 2015 to 31 March 2019.

Dr Setumo Mohapi is well versed in the ICT sector, with a wealth of experience from

various executive positions held in both the public sector and private sector. He was

the Chief Executive Officer at Sentech SOC Limited between 1 November 2010 and

March 2015. Prior to Sentech, he worked in various technology and business positions

at Transtel, Internet Solutions, Neotel and Telkom.


Mr SF Nomvalo

B.Compt Hons (Unisa), Advanced Valuations Techniques (INSEAD), Mastering Strategy (GIBS), Senior

Executive Programme (Wits and Harvard Business School)

Chief Executive Officer: 1 June 2013–31 June 2014 (extended: 1 July 2014–31 December 2014; 1 January

2015–31 March 2015)

Mr Sithembiso Freeman Nomvalo was the CEO of SITA until the end of financial year

under review. For over nine years, he was South Africa’s Accountant General at

National Treasury, where he pioneered a leadership development programme that

was later extended to other departments and government structures. Pursuant to

this work he was invited, as faculty, to the Harvard Kennedy School of Government’s

Art and Practice of Adaptive Leadership Development programme. He has served on

various boards of directors and trustees on behalf of government, including the

Independent Regulatory Board for Auditors and the Accounting Standards Board. He

advises the University of Pretoria’s faculty of Economic and Management Sciences.

He has also worked with the Commonwealth Secretariat on improving financial

governance in 18 Commonwealth Caribbean countries.

Ms N January-Bardill

BA and Certificate in Education (UBLS, Lesotho), MA Applied Linguistics (Essex UK), Diploma in Human

Resources Management (Damelin College, South Africa)

Non-Executive Board Member: 18 September 2013–18 September 2016 (resigned 19 May 2015)

Ms Nozipho January-Bardill is the Executive Director of Bardill & Associates, a consulting company that focuses on

strategic communications, high-level government relations, social justice, stakeholder management and sustainable

development. She is an independent non-executive director of AngloGold Ashanti (AGA) and Credit Suisse

Securities, Johannesburg (CSSJ). Previously, she was Executive Director, Corporate Affairs and Spokesperson for the

MTN Group, and served on the boards of a number of operations in MTN Africa. She was also the South African

Ambassador to Switzerland, Lichtenstein and the Holy See, and the Deputy Director-General, Human Capital

Management and Head of the Foreign Service Institute in the then Department of Foreign Affairs (now DIRCO). She

is a member of the United Nations Expert Committee on the Elimination of Racial Discrimination (CERD), a board

member of the African Women’s Development Fund (Ghana) and a Trustee of Anglo Platinum’s Lefa La Rona Trust.

Ms S Chaba

BA (Economics and Industrial Psychology); Post-Graduate Diploma in Human Resources Management

(Wits), Senior Executive Programme (Wits and Harvard Business School)

Non-Executive Board Member: 18 September 2013–17 September 2016

Ms Seadimo Chaba is the CEO and owner of Seadimo Chaba Consulting, a

management consulting company that specialises in human capital management,

strategy, change management, leadership, and performance monitoring and

management. She has extensive experience at executive level in the private and

public sectors, where she has worked in the petrochemical, retail and financial

industries. She sits on a number of boards of state-owned enterprises, private sector

companies and non-governmental organisations.


Mr Z Malele

BSc (Computer Science) (University of Limpopo; BAP (Wits Business School); MAP (Wits Business School)


Mr Zeth Malele is non-executive chairman of Sandford (Pty) Ltd and non-executive

deputy chairman of the Gauteng Growth and Development Agency, Meadow Star

Investments 28 (Pty) Ltd, and Sec-Itech (Pty) Ltd. He also serves on the ICT

Governance Committee of the Ubank (Pty) Ltd Board and has held senior and

strategic management positions at, among others, the Gauteng Economic

Development Agency, Innovation Hub, Sybase SA, Ariel Technologies, Arivia.kom,

Paracon Holdings, Blue IQ Holdings, debis Systemhaus (now T-Systems) and the SA

Electrotechnical Export Council. He was part of the Presidential National

Commission on Information Society and Development, and advises the Limpopo

Premier on technology.

Adv T Masuku

BA (University of Zimbabwe), LLB (UCT) LLM (International Business Law) (Vrije Universiteit, Amsterdam)

Non-Executive Board Member: 18 September 2013–17 Sept 2016 (resigned 25 June 2014)

Advocate Thabani Masuku is an admitted advocate of the High Court of South Africa

and member of the Cape Bar. He is also chairperson of the Cape Bar Council Human

Rights Committee and a previous chairperson of Advocates for Transformation in the

Western Cape. His practice covers constitutional and public law litigation, commercial

litigation (contract, companies), insurance, internet law, criminal law and commercial

arbitrations. He worked as a researcher for Justice Richard Goldstone at the

Constitutional Court, as a consultant at the World Bank in Washington DC, at the

NEPAD Secretariat (on secondment by IDASA) and was involved in formulating

political and economic governance indicators.

Adv BM Matlejoane

B Proc. LLB

Alternate Board Member: 21 November 2012–20 Nov 2015 (Interim Board)

Non-Executive Board Member: Reappointed 18 September 2013–17 September 2016

Advocate Beatrice Matlejoane started her judicial career at D.H Zondi Attorneys, after

which she became a practising advocate of the High Court from 2003 to date. The

nature of her work includes, litigation, drafting of pleadings including opinions, as

well as appearances in the Constitutional Court.


Mr JS Mngomezulu

B.Com. (Acc.) (Unisa), Master of Business Leadership (MBL) (Unisa)

Non- Executive Board Member: 21 November 2012–20 November 2015 (interim Board)


Mr Stadi Mngomezulu is Deputy Director-General at National Treasury and sits on the

boards of the Government Employees Pension Fund (GEPF) and the Finance and

Accounting Services Sector Education and Training Authority (FASSET). He gained

hands-on experience in multi-national organisations such as Lucent Technologies,

Mercedes-Benz and Colgate-Palmolive. His expertise is in accounting, finance,

compliance, governance, risk and strategy.

Dr A Mokgokong

Bsc (University of Botswana), MBCHB (Medunsa), D.Com. Honoris Causa (Commerce) (Unisa)

Alternate Board Member: 21 November 2012–20 November 2015 (interim Board)

Non-Executive Board Member: Reappointed 18 September 2013–17 September 2016 (resigned May 2014)

Dr Anna Mokgokong is the co-founder and executive chairperson of Community

Investment Holdings (Pty) Ltd. She has been chairperson and director of Rebosis

Property Fund Limited since April 2011 and serves on the boards of the following

companies: Malasela Taihan Electric Cable Pty Ltd (M-Tec), Community Healthcare

Holdings (Pty) Ltd and subsidiaries Conlog (Pty) Ltd, Nulec South Africa (Pty) Ltd,

Malesela Transmission and Distribution (Pty) Ltd, CZ Electronics, MCT (Pty) Ltd, and

Crossroads Ventures (Pty) Ltd. She is also a director of Cape Resources Plc, Afrocentric

Investment Corp, Jasco Electronics Holdings, and Community Investment Ventures.

Mr Z Nomvete

Certificate in Aeronautical Engineering (Ireland), Diploma and Licence in Aviation Maintenance (Ethiopia),

Diploma as Flight Engineer B727 (Ethiopia), Management Advancement Programme (Wits Business School)

Alternate Board Member: 21 November 2012–20 November 2015 (interim Board)


Mr Zukile Nomvete is chairman of Dragon Pride International Holdings, a non-

executive director of Aurco (Pty) Ltd and was previously a non-executive director at

the South African Civil Aviation Authority. He has been Chairman of the Board for

Great North Transport, South African Rail Commuter Corporation (now PRASA), the

Gauteng Tourism Authority, 1Time Airlines, Moving Into Dance Mophathong and

Pekwa Travel. He was Deputy Chair of the Civil Aviation Authority and a director at the

Airports Company of SA, SUNAIR and the Tourism Business Council of SA. He

previously served as executive director of Transnet responsible for SAA and its

subsidiaries as well as Transnet’s property portfolio. He is an honorary colonel of the

South African Air Force and chairman of World Expo 2025 South Africa.


Mr G Victor

BSc (Engineering) (cum laude) (Wits), MSc (Stanford), MEng (Stanford), B.Compt Hons (Unisa), CA (SA)


Mr Graeme Victor is the group CEO of Du Pont Telecom (Pty) Ltd. Prior to joining Du

Pont, he was managing director at Tiscali World Online, Vodacom Service Provider

and Computicket. Before his various stints in senior management, he founded

Kessel Feinstein Consulting, growing it into a highly successful consulting business

over 10 years.

Ms M Williams


Ms Michelle Williams has held a number of key positions in the public and private

sectors. Her career includes being Government Chief Information Officer from 2007 to

2011 and head of research at the Department of Communications. Previously she

worked for Siemens, the National Institute for Economic Policy, the Education Policy

Unit, the Economic Policy Research Project and the Southern Africa Labour and

Development Research Unit.

Mr N Gosebo

MSc (Computer Science) (New Jersey Institute of Technology)

Non-Executive Board Member: 19 May 2014–17 September 2016

Mr Ntjatji Gosebo is Deputy Director-General in the Government Chief Information Office within the DPSA. With

over 30 years’ experience in information technology, he coordinates and consolidates public administration IT

efforts across the three spheres of government. He was Information Technology Advisor to the Minister of Public

Service and Administration between 1999 and 2003, and played a leading role in conceptualising and establishing

the Government IT Officers’ Council, as well as the SITA Amendment Act of 2002 and the e-Government Policy

Framework of 2001. He contributes thought leadership related to the adoption of information technology as a

strategic tool of public administration, particularly in developing economies. He has presented papers at

international and domestic conferences and been published in peer-reviewed journals.


Mr M Ndlangisa

BSc Hons (Computer Science and Information Systems) (Rhodes University), MSc (Computer Science)

(Rhodes University), Higher Diploma in Computer Auditing, IEDP (Wits and London Business School)

Executive Director: 1 June 2014–31 May 2017

Mr Mboneli Ndlangisa has spent all of his working life in ICT. Before joining SITA, he

worked for MIH group as head of ICT Strategy and Business Development. The

responsibility entailed giving strategic support to all ICT subsidiaries within the

group. Before that, he held senior management positions in organisations such as

SSA (COMSEC), Standard Bank of South Africa and Telkom SA. He is a Certified

Information Systems Security Professional (CISSP) and Certified Information Security

Manager (CISM).

Lt General J Nkonyane (Ret.)

BSc (Statistics and Financial Accounting) (University of Toronto, Canada), MBL (Unisa)

Executive Director: 1 June 2014 – 31 May 2017

Lt General (Ret.) Justice Thulile Nkonyane is the former Chief Logistics of South African

National Defence Force (SANDF) in which he served from 1998 to 2014. He

championed the SANDF’s stewardship project that enabled the SANDF to achieve its

first unqualified audit opinion in 2011/2012. As Chairman of the Castle Control Board

(CCB), he orchestrated the repositioning strategy of the CCB that resulted in the

Castle of Good Hope (CGH) becoming a major player within the heritage and tourism

industry – a project that will result in CGH attaining the UNESCO Heritage Site listing.

Over the past 30 years, he has held various strategic positions, from serving as a

commander during the liberation struggle, to being a financial administrator in

various private sector entities in Canada. His areas of specialisation are strategic

planning, leadership, financial accounting and logistics.

Mr W Mudau

BSc Hons (Computer Science) (University of Limpopo), UED (University Education Diploma) (University of

Venda), MBA (University of North West – Potchefstroom University for CHE)

Alternate Board Member: 19 May 2014 – 17 September 2016

Mr Walter Mudau is a Chief Director at the DPSA responsible for policy, strategy and

regulations, ICT oversight and SITA oversight. Previously, he worked for more than 10

years at the University of Venda as Deputy Director: ICT Services where he was also a

part-time lecturer in statistics and business management. He has also lectured in

computer studies at a teacher training college and taught high school mathematics.


Mr DC Niddrie

B.Ed (University of Durban Westville)

Alternate Board Member: 18 September 2013–17 September 2016

Mr. Niddrie is a media, broadcasting and ICT sector strategy consultant. He was the co-founder and steering

committee member of the Campaign for Independent Broadcasting (CIB). On behalf of the CIB, Mr. Niddrie

contributed to media legislation and helped develop the process by which the first board of the SABC was

appointed. Previous positions include Executive Director of the Public Broadcasting Initiative, Director of

Broadcasting for the independent Media Commission and Head of Strategic Planning at the SABC.

Ms R Mokoena

”B.Juris. (University of Zululand), LLB (Natal), MBA (Milpark Business School)

Alternate Board Member: 19 May 2014–17 September 2016

Ms Refiloe Mokoena was admitted as an Attorney of the High Court of South Africa

in 1990. She practises for her own account as an attorney, regulator, liquidator, estate

agent, auctioneer and alternative dispute resolution practitioner. She has worked as

a member of the Broadcasting Complaints Commission of South Africa, where she

had to enforce the provisions of the Code of Conduct for the Broadcasters and ensure

compliance with the Code. She has also served on the ICASA Complaints and

Compliance Committee enforcing the provisions of the ICASA Act. She currently

serves on the Regulating Committee of the Airports Company of South Africa (ACSA)

and the Air Traffic Navigation Services (ATNS) where she is responsible for enforcing

the provisions of both the ACSA Act and ATNS Act.

Mr. G Ncanywa

BSc (Computer Science and Mathematical Statistics) (University of Fort Hare)


Mr Gracious Mnikelo Ncanywa is Applications Development and Maintenance

Manager at Standard Bank Limited. He held the same portfolio at the South African

Revenue Service (SARS) until being appointed Chief Architect for SARS modernisation

strategy. An avid ICT professional, he is also a founding member of the local Microsoft

subsidiary responsible for building the local technical capacity for support structures

in Southern Africa. Prior to joining Microsoft, he worked as an IBM Systems Engineer

in Mainframe Systems at companies such as General Motors, Ford Motor Company,

BP Southern Africa, SAB Miller and Daimler Chrysler.


Adv J De Lange

BA (UCT), LLB (UCT)


Advocate Johnny de Lange runs a legal and policy consultancy, and currently advises

the Department of Environment Affairs and the Speaker of the National Assembly. He

was a Member of Parliament for 20 years (1994–2014), during which time he served

as chairperson of the Portfolio Committee on Justice (later including Constitutional

Development) and the Portfolio Committee on Water and Environmental Affairs, and

was Deputy Minister for Justice and Constitutional Development (2004–2009). He

was appointed as Advocate of Supreme Court of South Africa (Cape Division) in 1984

and member of the Cape Bar from 1985 to 1993. From 1994 to 1996, he served as a

member of the Constitutional Assembly, which was responsible for the drafting and

adoption of South Africa’s Constitution in 1996

.

BOARD AT TENDANCE 47

BOARD ATTENDANCE

NAME BOARD SPECIAL BOARD

BOARD DEVELOPMENT

WORK SESSIONS INDUCTION NOTES

Jerry Vilakazi (Chairperson) 7/7 7/7 3/3 2/4 0/1

Dr Vuyo Mahlati (Dep. Chairperson

3/7 2/7

1/3

Attended the

first day only

2/4 - Resigned on 13 August 2014

Freeman Nomvalo (Managing)

7/7 5/7 3/3 4/4 1/1

Nozipho January Bardill - - - - -On sabbatical from January

2014 to 31 March 2015

Seadimo Chaba 7/7 5/7 3/3 2/4 -

Zeth Malele 7/7 6/7 2/3 3/4 -

Thabani Masuku - 1/7 - 2/4 - Resigned on 25 June 2014

Beatrice Matlejoane 6/7 2/7 - - -

Stadi Mngomezulu 4/7 5/7 3/3 2/4 -

Dr Anna Mokgokong 1/7 1/7 - 1/4 - Resigned on 26 May 2014

Zukile Nomvete 6/7 4/7 - 3/4 -

Graeme Victor 7/7 6/7 1/3 3/4 -

Michelle Williams 6/7 5/7 3/3 3/4 -

Ntjatji Gosebo 2/7 1/7 3/3 1/4 1 Appointed on 19 May 2015

Mboneli Ndlangisa 5/7 4/7 3/3 2/4 1 Appointed on 1 June 2014

Lt. General Justice Nkonyane (Ret.)

5/7 3/7 3/3 2/4 1 Appointed on 1 June 2014

Walter Mudau (Alternate) 6/7 5/7 3/3 3/4 -

David Niddrie (Alternate) - - - - - Never attended

Refiloe Mokoena (Alternate) 5/7 4/7 3/3 1/4 1 Appointed on 19 May 2015

Johnny de Lange (Alternate) 3/7 1/7 3/3 - - Appointed on 19 May 2015

Gracious Ncanywa (Alternate)

4/7 4/7 3/3 2/4 1 Appointed on 19 May 2015


BOARD COMMITTEES

Each Board Committee is governed by a charter or terms of reference approved by the Board, and

committee membership is restricted to Board members only. The committees are:

1. Audit, Risk and Compliance Committee (ARCC)

2. Human Resources, Nomination and Remuneration Committee

3. Social and Ethics Committee

4. ICT, Innovation and Research and Development (ICT, RDI) Committee

5. Procurement Committee

6. Chairpersons’ Committee

Audit, Risk and Compliance CommitteeThe ARCC is established in terms of Section 51(1)(a)(ii) of the PFMA and Section 27.1.1 of the Treasury Regulations

and operates according to terms of reference that are reviewed annually by the Board. The committee’s

responsibilities include:

Monitoring compliance with relevant legislation and ensuring that management addresses any instances

of non-compliance and that appropriate internal management controls are implemented and maintained

to protect SITA’s interests and assets.

Monitoring and reporting on organisational performance against predetermined objectives.

Reviewing the activities and effectiveness of the Internal Audit Department.

Evaluating the independence, objectivity, effectiveness and cost of the external auditors.

Reviewing the accounting and auditing concerns identified by internal and external audits.

Reviewing the accuracy, reliability and credibility of financial reporting.

Overseeing SITA’s financial and non-financial risk management and controls, including IT risks and controls.

Reviewing management decisions related to accounting policies, practices and disclosures.

Enquiring about operational and financial risk identification, and the measures in place to contain these risks.

Monitoring and reporting on instances of fraud and corruption.

Reviewing periodically and approving the Committee Charter and ensuring compliance with SITA’s Code

of Conduct.

Regularly reporting to the Board and recommending the AFS, Annual Report and the external auditors’

report for approval by the Board.

Human Resources, Nominations and Remuneration CommitteeThe Human Resources, Nomination and Remuneration Committee comprises non-executive directors, and

management attends meetings by invitation. The committee’s responsibilities include:

Making recommendations to the Board on executive management appointments

Overseeing and monitoring the human capital management strategies and implementation

Determining the organisation’s general policy on remuneration

Recommending to the Board specific remuneration packages for executive management

BOARD COMMITTEES

Each Board Committee is governed by a charter or terms of referen

committee membership is restricted to Board members only. The committe

1. Audit, Risk and Compliance Committee (ARCC)

2. Human Resources, Nomination and Remuneration Committee

3. Social and Ethics Committee

4. ICT, Innovation and Research and Development (ICT, RDI) Committee

5. Procurement Committee

6. Chairpersons’ Committee

A dit Ri k d C li C itt

BOARD COMMIT TEES 49

Social and Ethics Committee

The Social and Ethics Committee comprises non-executive directors, and management attends meetings by

invitation. The committee’s responsibilities include:

Monitoring the agency’s activities, having regard to any relevant legislation, other legal requirements or

prevailing codes of best practice

Promoting good corporate citizenship

Promoting environment, health and public safety, including the impact of the agency’s activities, products

or services

Overseeing client relationships, including the agency’s advertising and public relations

Monitoring labour and employment issues, including the agency’s standing in terms of the International

Labour Organisation Protocol on decent work and working conditions, and the agency’s employment

relationships and contribution towards the educational development of its employees.

ICT, Innovation and Research and Development Committee The ICT, RDI committee comprises non-executive directors, and management attends meetings by invitation.

The committee’s responsibilities include:

Ensuring that SITA’s overall IT systems and strategy are managed effectively

Monitoring the efficiency and effectiveness of stakeholder relations

Ensuring effective marketing of SITA’s services, systems and products

Maintaining best practices in client services with world-class standards and turnaround times

Sustaining a customer-centric organisational culture wherein SITA’s clients come first

Establishing SITA as a leader in research and development, and a training corporate entity which designs

local solutions that enhance service delivery using the world’s best practices

Procurement CommitteeThe Procurement Committee comprises non-executive directors, and management attends meetings by

invitation. The committee’s responsibilities include:

Providing the final evaluation and approval of all tenders that are recommended by management for

award in line with the PFMA and Treasury Regulations

Renewing contracts that have expired

Before this committee approves any tenders, the Internal Audit Department executes agreed procedures for

tenders within the R30-million threshold; tenders beyond this amount are submitted for external review.

Chairpersons’ CommitteeThe Chairperson of the Board chairs the Chairpersons’ Committee whose members are the other committee

chairpersons, and management attends the meetings by invitation. The committee’s responsibilities include:

Overseeing key SITA strategic activities

Identifying, promoting and evaluating inter-committee linkages and synergies

Reviewing annually, and when necessary, the corporate performance of SITA


Conducting periodic reviews of SITA’s role, functioning and mandates

Overseeing the Board decisions with respect to high risk areas

Supervising all communication and stakeholder management initiatives of SITA

Acting on behalf of the Board between Board meetings.

The Board recognises that it is ultimately accountable and responsible for the performance and affairs of SITA

and that the use of delegated authorities to Board Committees and management does not discharge the Board

and its directors of their duties and responsibilities.

Attendance of Board and Committee Meetings 2014/2015

MEMBERS BOARD AUDIT, RISK & COMPLIANCE

HR, NOMINATIONS & REMUNERATION

SOCIAL & ETHICS PROCUREMENT ICT, RDI CHAIRPERSONS’ PARLIAMENTARY

Number of Sittings 19 7 9 3 11 9 2 4

Mr J Vilakazi 17 2 2

Dr V Mahlati 6 4 4 1

Ms S Chaba 16 8 2 5 2

Mr Z Malele 17 1 10 9 1 4

Adv T Masuku 1 1 0 1

Adv B Matlejoane 8 1 2 2

Mr J Mngomezulu 12 1 0 9

Dr A Mokgokong 2 - 1 1

Mr Z Nomvete 12 6 5 2 1 1 3

Mr G Victor 16 6 8

Ms M Williams 16 7 7 2

Mr W Mudau 12 4 7

Mr N Gosebo 8

Mr G Ncanywa 13 3 1 5

Adv L De Lange 7 1

Ms R Mokoena 13 3 0 6 1

Mr F Nomvalo 17

BOARD COMMIT TEES 51

Table 8: In-year changes in Board committee membership

NAME PRIOR TO 29 APRIL 2014 AFTER 29 APRIL 2014

Mr J Vilakazi Chairpersons’ Committee Chairpersons’ Committee

Dr V Mahlati Chairpersons’ Committee

ICT, RDI Committee

Procurement Committee

Chairpersons’ Committee

ICT, RDI Committee


Ms S Chaba

Human Resources, Nominations and

Remuneration Committee









Mr Z Malele Audit, Risk and Compliance Committee

ICT, RDI Committee

ICT, RDI Committee,



Adv T Masuku Audit, Risk and Compliance Committee







Adv B Matlejoane

Audit, Risk and Compliance Committee








Mr J Mngomezulu Audit, Risk and Compliance Committee




Dr A Mokgokong Human Resources, Nominations and






Mr Z Nomvete









Mr G Victor Audit, Risk and Compliance Committee

ICT, RDI Committee


ICT, RDI Committee

Ms M Williams ICT, RDI Committee


ICT, RDI Committee


Mr N Gosebo ICT, RDI Committee

Mr W Mudau (Alternate) ICT, RDI Committee


Mr G Ncanywa (Alternate)ICT, RDI Committee



Adv L De Lange (Alternate) Audit, Risk and Compliance Committee

Ms R Mokoena (Alternate)

Human Resource, Nominations and




Mr F Nomvalo

Lt. Gen. J Nkonyane (Ret.)

Mr. Mboneli Ndlangisa


RISK MANAGEMENT

In terms of the PFMA, Treasury Regulations and good corporate governance, the company should

strive to ensure that responsibility for risk management is vested at all levels of management and that

the risk management strategy is incorporated into the agency’s language and culture, and embedded in the

behaviour and mind-set of its people. SITA’s risk management is guided by the Board-approved Risk Management

Policy and Framework. The Risk Management Strategy details the initiatives and activities, and is approved by

the Chairman of the ARCC.

Corporate risk management involves identifying events or circumstances, and assessing their likelihood, impact

and severity, especially when changes occur in the operating environment. For example, risks and mitigation

plans may be required when restructuring the company, evaluating new projects or expanding to new markets.

Risks are not limited to sudden, abrupt events but can arise from gradual changes over time. Risks may be

strategic, operational and financial.

SITA carries out an annual risk assessment in the first quarter of the financial year, and the Risk Management

Division follows up throughout the year to ensure that risk mitigation and management plans are implemented.

In 2014/15, a risk assessment was conducted in the first quarter according to the Risk Management Plan.

Departments had their own operational risk registers to monitor and implement the mitigation plans as per the

agreed dates. The Risk Management Division followed up on the implementation and gave quarterly progress

reports to the ARCC, which presents the risk management quarterly reports to the Board for approval. By the

end of the financial year, 68% of the mitigation plans had been implemented, with the remaining 32%

comprising risk mitigation plans that are implemented over a long period of time.

To ascertain the current level of SITA’s risk management maturity, Corporate Executive Board (an independent

international risk management assessing body) conducted an organisation-wide survey in 2014/15. The

assessment found that SITA’s current risk maturity level is 3+.

RISK MANAGEMENT

In terms of the PFMA, Treasury Regulations and good corporate go

strive to ensure that responsibility for risk management is vested at all

the risk management strategy is incorporated into the agency’s language an

behaviour and mind-set of its people. SITA’s risk management is guided by the Bo

Policy and Framework. The Risk Management Strategy details the initiatives an

the Chairman of the ARCC.

Corporate risk management involves identifying events or circumstances, and a

and severity, especially when changes occur in the operating environment. F

plans may be required when restructuring the company, evaluating new projec

INTERNAL CONTROL 53

INTERNAL CONTROL

The Board is ultimately responsible for establishing a framework of internal controls. These controls

are designed to provide cost-effective assurance of the financial wellness and financial management of

the company. The internal control environment includes the assignment of authority and responsibility,

segregation of duties, supervision, integrity and ethical values, and governance structures. It is managed by

management and monitored by the Internal Audit Department.

Despite the internal controls in place, in 2014/15 the Internal Audit (and the Auditor-General) identified internal

control weaknesses. These were reported to management for appropriate corrective action. The Executive

Committee and the ARCC monitor the implementation of corrective actions.

Internal Audit DepartmentThe Internal Audit Department reports functionally to the ARCC (see page 64). It focuses on the risk, governance

and control processes of the agency and is responsible for expressing an opinion on the adequacy and

effectiveness of the internal controls within those processes. The department currently has the following

divisions:

Internal Audit Assurance Services

Information Technology Assurance Services

Integrity Assurance Services

Performance Audit Services

Professional Technical Audit Service

During 2014/15, Internal Audit conducted 238 audit projects (114 planned and 124 unplanned) in the following

areas: supply chain management, risk management, delegation of authority, Oracle enterprise resource planning

(ERP) infrastructure, national key points, data centres and provincial operations, and segregation of duties. The

audits identified areas where controls are inadequate and ineffective. Progress continues to be made, particularly

in SCM (acquisition management), finance (cash management), information security (governance) and SITA’s

ERP system. However, the current governance levels need to improve further, to provide management and the

Board with the appropriate level of assurance.

ROL

ble for establishing a framework of internal controls. These controls

ective assurance of the financial wellness and financial management of

rol environment includes the assignment of authority and responsibility,

on, integrity and ethical values, and governance structures. It is managed by

the Internal Audit Department.

lace, in 2014/15 the Internal Audit (and the Auditor-General) identified internal

e reported to management for appropriate corrective action. The Executive

or the implementation of corrective actions.


COMPLIANCE WITH LAWS AND REGULATIONS

To ensure compliance with laws and regulations, the Audit, Risk and Compliance Committee (see page 64),

the Company Secretary (see page 74) and the following divisions within SITA have a role to play:

The Finance Division maintains a PFMA checklist, as recommended by National Treasury, and updates the

checklist every month

The Corporate Services Division ensures that SITA is compliant with all applicable human resource

management and facility management laws and regulations

The Legal Services Division assists with interpreting the laws and regulations applicable to SITA

The ICT Service Delivery Division ensures that SITA is compliant with all applicable ICT laws

COMPLIANCE WITH LAWS ANREGULATIONS

To ensure compliance with laws and regulations, the Audit, Risk and Comp

the Company Secretary (see page 74) and the following divisions within SITA h

The Finance Division maintains a PFMA checklist, as recommended by Nati

checklist every month

The Corporate Services Division ensures that SITA is compliant with all appl

management and facility management laws and regulations

The Legal Services Division assists with interpreting the laws and regulation

The ICT Service Delivery Division ensures that SITA is compliant with all app

FRAUD AND CORRUPTION 55

FRAUD AND CORRUPTION

SITA has adopted a zero tolerance stance towards fraud and corruption. The agency has a robust Anti-

Corruption and Anti-Fraud Strategy, designed to deter, detect and resolve issues of unethical behaviour

perpetrated within and against SITA. The strategy focuses on preventing, deterring and detecting corruption,

fraud and other crimes of dishonesty, and is supported by fraud awareness training and education initiatives.

The strategy is regularly reviewed and updated, in line with good governance practices.

Key components of the strategy include:

The SITA Code of Ethics

Training on SITA’s policies and procedures, rules and regulations

Restricting suppliers who engage in unethical behaviour

Conducting fraud and corruption detection reviews

Conflict of interest checks

Vetting of employees

Fraud risk workshops

Regular presentations and formal training for employees on the manifestations of fraud and corruption

within SITA

Communication campaigns (ethics and integrity)

Progress reports on the implementation of this strategy are regularly given to the relevant Board Committees.

SITA has established an independent Ethics Line where employees and stakeholders can anonymously report

any irregular practices. The Ethics Line operates 24/7, 365 days of the year. Operators are able to take calls in all

official languages. Other reporting channels include SMS, fax, email and Free Post. SITA’s Ethics Line is supported

by SITA’s Whistle-blowers Policy, which is based upon and aligned to the Protected Disclosures Act (No. 26 of

2000), which came into effect on 16 February 2001. In order to comply with the Act, SITA strives to create a

culture that facilitates the disclosure of information by employees relating to criminal and other irregular

conduct in the workplace, and to promote the eradication of criminal and other irregular conduct within SITA.

SITA’s Anti-Corruption and Anti-Fraud Strategy is further bolstered by SITA’s Anti-Corruption and Anti-Fraud

Policy and Response Plan, which serves to confirm SITA’s zero tolerance stance and to reinforce existing systems,

policies, procedures, rules and regulations. Reported allegations of fraud, corruption or other crimes of

dishonesty committed by any employee of SITA are pursued by thorough investigation and to the full extent of

the law. This may include taking disciplinary action within a reasonable period of time after the incident,

instituting civil action, initiating criminal prosecution by reporting the matter to the SAPS or any other relevant

law enforcement agency, and any other appropriate and legal remedy available.

RRUPTION

ce stance towards fraud and corruption. The agency has a robust Anti-

tegy, designed to deter, detect and resolve issues of unethical behaviour

SITA. The strategy focuses on preventing, deterring and detecting corruption,

nesty, and is supported by fraud awareness training and education initiatives.

d and updated, in line with good governance practices.

include:

d procedures, rules and regulations


MINIMISING CONFLICT OF INTEREST

Executives, prescribed officers, managers, all SITA employees and consultants have a legal and

ethical obligation to act in the best interest of the agency. Therefore, they are not allowed to pursue

interests that are in conflict with and/or undermine the interests of SITA. The purpose of the SITA Conflict

of Interest Policy, read with the SITA Code of Ethics and the SITA Policy on Gifts and Entertainment, is:

To enable directors, executives, prescribed officers, managers, employees and consultants to acquire and

maintain personal outside interests, provided that these interests do not interfere, or have the potential to

interfere, with their obligations to SITA, or improperly influence the judgment expected of them when

acting on behalf of SITA.

To protect directors, executives, prescribed officers, managers, employees and consultants from real or

perceived charges of conflict of interest, by providing a mechanism for the objective review and approval

of any personal outside interests held by them and establishing a formal procedure for dealing with any

possible conflicts of interest.

To protect and manage the reputational risks of SITA, by avoiding any real or perceived bias or self-interest

by directors, executives, prescribed officers, managers, employees and consultants acting in situations

where SITA has approved the holding of personal outside interests.

To allow transactions to be treated as valid and binding, even though an affected person has, or may have,

a conflict of interest with respect to that transaction.

The primary objectives of this policy are:

To promote and enforce ethical business practices and standards in SITA

To provide guidance on the behaviours expected in accordance with the values of SITA

To promote transparency and avoid conflicts of interest

To ensure fairness and consistency in decision-making

To document the process for the disclosure, approval and review of activities which may amount to actual,

potential or perceived conflicts of interest

To provide a mechanism for the objective review of personal conflicts of interests

Each person shall at least annually, or as and when changes occur, complete a declaration form. Any person with a

conflict of interest with respect to a contract or transaction must disclose this in writing to the Company Secretary.

In the case where the contract or transaction will be considered at a Board or Board Committee meeting, any person

with a conflict of interest must disclose all material facts to the Chairman of the Broad or the Board Committee prior

to the meeting. Any person with a conflict of interest will not participate nor be permitted to hear the Board’s or

Committee’s discussion of the matter except to disclose material facts and to respond to questions. There is an

obligation to report all incidents which are clearly in contravention of the SITA on Conflict of Interest, the SITA Code

of Ethics, the SITA Gifts and Entertainment Policy, or the Prevention and Combating of Corrupt Activities Act (No. 12

of 2004). Any person who suspects that the Act has been contravened should immediately report it to the Office of

the Company Secretary, the Chief Executive Officer or the Chairman of the Social and Ethics Committee. If prima

facie evidence exists that the Act has been transgressed, the matter should be reported to the SITA ethics officer or

legal adviser who may, if necessary and after appropriate consultation with the Company Secretary, Chief Executive

Officer or the Chairman of the Social and Ethics Committee, have the matter reported to SAPS.

MINIMISING CONFLICT

Executives, prescribed officers, managers, all SITA employees a

ethical obligation to act in the best interest of the agency. Therefore

interests that are in conflict with and/or undermine the interests of SITA.

of Interest Policy, read with the SITA Code of Ethics and the SITA Policy on G

To enable directors, executives, prescribed officers, managers, employees a

maintain personal outside interests, provided that these interests do not in

interfere, with their obligations to SITA, or improperly influence the judgme

acting on behalf of SITA.

To protect directors, executives, prescribed officers, managers, employees a

perceived charges of conflict of interest, by providing a mechanism for the

of any personal outside interests held by them and establishing a formal pr

CODE OF CONDUC T 57

CODE OF CONDUCT

The purpose of the SITA Code of Conduct is to establish a set of ethical values and standards

that are consistent with the objects and vision of SITA, and the constitutional and legal framework.

All business conduct should be well above the minimum standards required by law. Accordingly, employees

must ensure that their actions cannot be interpreted as contravening, in any way, the laws and regulations

governing the SITA’s operations. Anything prohibited by the SITA’s policies, applicable laws and regulations

would still be prohibited even if done on behalf of a SITA Board member or SITA employee representing SITA.

All Board members and SITA employees are required to comply with the Code. The principles contained in the

Code also apply to contract labour, consultants, temporary employees, part-time employees, casual employees,

suppliers and others acting for and on behalf of SITA. Although SITA has limited legal rights to enforce the Code

on its goods and service providers, SITA can exercise moral persuasion to gain compliance or choose not to

enter into business relationships with providers who do not comply with the Code. SITA will not conclude

contracts or collaborate with any third party that has sought in any sphere of activity to improperly influence

day-to-day activities and decision-making within SITA.

SITA will consider any contravention of the Code as a serious matter. In a similar vein, any investigation that is

conducted into any suspected or alleged contravention will be treated confidentially.

Any Board member or employee who believes that their actions have, or may have, been in contravention of the

Code should report the matter to their immediate supervisor, to a person at management level, to the Chairperson

of the Board, the Chairperson of the Social and Ethics Committee, the Chief Executive Officer, or the Company

Secretary as the case may be. Any Board member or employee who suspects that a fellow Board member or

employee has contravened the Code should report this promptly and confidentially, preferably in writing, to their

immediate supervisor, to a person at management level, or to the Chairperson of the Board, the Chairperson of the

Social and Ethics Committee, the Chief Executive Officer, or the Company Secretary as the case may be. The Board

member or employee making the report should not confront the suspected individual. This will facilitate the

maintenance of confidentiality and impartiality of any subsequent investigation into the matter and also limit the

risk of damaging the reputation of the suspected person should the suspicion be unfounded.

Any breach or suspected breach of ethical standards by a Board member or employee will be dealt with in

accordance with the applicable disciplinary policies and procedures. It is the Board’s responsibility to bring any

breach of ethical standards by a Board member to the attention of the President of the Republic of South Africa

through the office of the responsible Minister.

UCT

f Conduct is to establish a set of ethical values and standards

cts and vision of SITA, and the constitutional and legal framework.

well above the minimum standards required by law. Accordingly, employees

cannot be interpreted as contravening, in any way, the laws and regulations

. Anything prohibited by the SITA’s policies, applicable laws and regulations

done on behalf of a SITA Board member or SITA employee representing SITA.

ployees are required to comply with the Code. The principles contained in the

ur, consultants, temporary employees, part-time employees, casual employees,

nd on behalf of SITA. Although SITA has limited legal rights to enforce the Code


COMPANY SECRETARY

All directors have access to the advice and services of the SITA Company Secretary, who is responsible

to the Board for ensuring compliance with established procedures, statutes and regulations. The

Company Secretary’s responsibilities include:

Ensuring that directors (individually and collectively) are aware of, and understand, the law applicable or

relevant to SITA; and are kept abreast of changes in the law, the implications of the changes and how to

respond to the changes

Ensuring that SITA is compliant with all applicable laws and regulations, and that the Board of Directors is

conversant and complies with the provisions of the SITA Act, the Companies Act, the Companies

Regulations and the PFMA

Inducting and orienting new directors, and guiding directors as to their duties, responsibilities and powers,

in particular with reference to ethics and good governance

Providing legal advice to the Board and Board Committees on issues pertaining to and of SITA

Assisting with Board Strategy and APP development, and monitoring performance against predetermined

objectives

Ensuring the Board has relevant, accurate, timely and complete information in order to monitor, review,

make decisions and report to shareholders

Preparing agendas for Board and Board Committee meetings in consultation with the Chairperson of the

Board and Chairpersons of Board Committees, and ensuring that adequate notice of meetings is given and

all meeting papers and other important information are provided in time

Ensuring that Board meetings are properly constituted, and providing support to the Board Chairperson

and the Chairpersons of Board Committees during and outside meetings so as to ensure the proper

running of Board and Board Committee meetings

Developing Board and Board Committee Terms of Reference, Policies and Procedures for approval by the

Board and ensuring that they are regularly reviewed, and that Board policy, resolutions, instructions and

wishes are consistently implemented

Arranging indemnification for directors to the extent allowed by the law, and ensuring the protection of

the intellectual property of SITA and that the interests of SITA are protected when contracting

Ensuring that the Board has comprehensive communication and stakeholder management frameworks,

strategies, policies and programmes

Acting as chief correspondent of SITA, and ensuring the preservation of institutional memory as prescribed

by legislation and policy, or as deemed appropriate by the Board

COMPANY SECRETARY

All directors have access to the advice and services of the SITA Comp

to the Board for ensuring compliance with established procedures

Company Secretary’s responsibilities include:

Ensuring that directors (individually and collectively) are aware of, and unde

relevant to SITA; and are kept abreast of changes in the law, the implication

respond to the changes

Ensuring that SITA is compliant with all applicable laws and regulations, and

conversant and complies with the provisions of the SITA Act, the Companie

Regulations and the PFMA

Inducting and orienting new directors, and guiding directors as to their du

PART D:HUMAN CAPITAL MANAGEMENT


In 2014/15, the SITA Board approved the Human Capital Management Strategy, which

defines specific focus areas that support the achievement of the SITA Corporate Strategy

from a people perspective, through proper human capital planning and well-developed

policies, practices and programmes.

In 2014/15, the Board also approved the following human resources (HR) policies and strategies:

Talent Management Strategy and Framework

Succession Management Policy

Career Management Policy

Organisational Development and Design Policy

Human Capital Planning Policy

Relocation, Secondment and Transfers Policy

Rewards and Recognition Policy

Competency Assessment Policy

The implementation of these strategies and policies will go a long way in ensuring that SITA achieves its

objective of becoming a performing organisation. These policies were institutionalised through company-wide

awareness roadshows.

The following human capital management priorities were set for 2014/2015:

Table 9: Human capital management priorities (2014/2015)

HIGH LEVEL INTERVENTIONS / PROGRAMMES YEAR 1 STATUS IMPACT

STRATEGIC OUTCOME 1: SITA AS AN EMPLOYER OF CHOICE

Develop and implement a comprehensive Employee

Value Proposition (EVP)

Develop an integrated talent management strategy

and framework.

Review the HR development strategy.

Develop and approve retention strategy.

Approve the leadership development strategy.

Approve and implement work from home policy.

PARTIALLY ACHIEVED

SITA is able to compete to attract and retain the best

skilled employees in the ICT market.

85% of employees have completed their performance

contracts on the ERP system whilst 56% completed their

interim performance reviews

For the third successive year (since 2012), the Top

Employers Institute certified SITA as a Top Employer in

South Africa.

A memorandum of understanding is in place with North

West University to finalise the EVP.

Continued

In 2014/15, the SITA Board approved the Human Capi

defines specific focus areas that support the achievemen

from a people perspective, through proper human capita

policies, practices and programmes.

In 2014/15, the Board also approved the following human resources (HR) po

Talent Management Strategy and Framework



Organisational Development and Design Policy

Human Capital Planning Policy

Relocation, Secondment and Transfers Policy

Rewards and Recognition Policy

61

HIGH LEVEL INTERVENTIONS / PROGRAMMES YEAR 1 STATUS IMPACT

STRATEGIC OUTCOME 2: BUILD A HEALTHY ORGANISATION

Conduct organisational health assessment.

Conduct the OHI survey.

Implement large-scale intervention and CIBART

(conflict, identity, boundaries, authority, roles and tasks).

Implement stress management workshop.

Implement sports and recreation programmes.

Assess the need for family-friendly practices.

Comply to occupational health practices.

Benchmark catering services and training of SITA

catering staff.

Carry out a feasibility assessment of the gym facilities.

ACHIEVED

The OHI survey resulted in a score of 40, representing an

improvement of 10 points compared to 2013. This score

of 40 falls into the bottom quartile, which denotes a

weak organisational health profile.

(The OHI score is the best available predictor of an

organisation’s future capacity to perform. Companies in

the top quartile perform on average three times better

financially and operationally.)

STRATEGIC OUTCOME 3: DEVELOP A HIGH PERFORMANCE AND INNOVATIVE ORGANISATION

Define and establish the SITA culture programme.

Implement the Arbinger culture training programme,

which is targeted at improving organisational culture

and conflict resolution.

Review the current performance management policy

and rewards programme.

Implement capacity-building programme to

empower managers and employees on performance

management.

Develop and approve rewards and recognition policy

and programme.

Conduct salary benchmarking across the business.

ACHIEVED

559 employees participated in the Arbinger Culture

training programme.

The Board approved the revised Integrated Performance

Management Policy.

The rewards and recognition policy and programme

were approved and implemented. 2156 employees

participated: 425 who were part of the pilot programme

and 1731 who received long-service awards.

2096 employees participated in job-relevant training, as

part of the capacity-building programme.

Salary benchmarking completed and is pending Board

approval.

STRATEGIC OUTCOME 4: CREATE A CUSTOMER-CENTRIC ORGANISATION

Conduct a needs analysis.

Appoint a training service provider.

Conduct customer service training.

ACHIEVED

The Customer Service Focus Programme was developed

and piloted.

STRATEGIC OUTCOME 5: FACILITATE TECHNICAL AND ORGANISATIONAL CAPABILITY

Develop and implement the Human Capital Plan.

Attract and retain top talent.

Implement learnership and internship programmes.

Implement workplace skills plan (WSP) to empower

SITAzens to fully leverage their capabilities.

Skills audit.

Approve succession and career management policies.

ACHIEVED

The Human Capital Planning Policy was approved and

the process piloted in the LAN & Desktop, Service

Management and Hosting, Storage & Printing divisions.

The WSP was approved and recorded an over-

achievement of 102% – 2096 employees (2049 planned

training) participated in job-related training. (1020

non-WSP related interventions were also implemented.)

The skills audit was implemented, covering 553

employees in the pilot areas.

The Board approved the succession and career

management policies.


HUMAN CAPITAL MANAGEMENT

Employee Wellness

The Employee Wellness Programme is designed to help employees resolve their personal and emotional

difficulties that may be affecting their workplace performance and functioning. It is a short-term, therapy

programme that focuses on clarifying the problem, implementing solutions and monitoring progress. The result

is healthier, more productive employees with improved relations at home and at work. Every attempt has been

made to adhere to relevant standards of confidentiality and reporting excellence throughout the Employee

Assistance Programme (EAP) Report to EXCO. The annual utilisation rate for this period was 8.9%, which is within

the industry benchmark.

Face-to-face counselling is the preferred method for the employees to address their personal problems, and

123 individual cases were opened for the reporting period. Figure 2 shows the most common reasons for self-

referral by employees.

Figure 2: Top reasons for self-referral

Top presenting problems

Stress

Bereavement

Traumatic events

Couple Relationships

Family Issues

Phase of Life Adjustments

In response to the high level of stress among almost a quarter of SITA’s employees, a large-scale intervention

was rolled out across SITA, whereby individual and corporate health profiles were developed through medical

bio-metric assessments and health screenings. Budgets were allocated to ongoing wellness interventions,

which were developed based on the assessments. Stress management training sessions were conducted to

mitigate the high-stress levels for identified, high-risk individuals, and all employees were encouraged to use

SITA’s health and wellness services.

Employees affected by bereavement are supported through counselling interventions by SITA’s service partners,

and a spiritual development intervention was designed for roll-out across SITA offices. An external service

HUMAN CAPITAL MAN

Employee Wellness

The Employee Wellness Programme is designed to help employees reso

difficulties that may be affecting their workplace performance and functio

programme that focuses on clarifying the problem, implementing solutions and

is healthier, more productive employees with improved relations at home and

made to adhere to relevant standards of confidentiality and reporting excell

Assistance Programme (EAP) Report to EXCO. The annual utilisation rate for this

the industry benchmark.

Face-to-face counselling is the preferred method for the employees to addre

HUMAN CAPITAL MANAGEMENT 63

provider, Careways Services, provides counselling services for employees with couple relationship problems, as

well as financial wellness services, and audiology and eye screening clinics. A retirement and financial wellness

programme was also rolled out across SITA.

HR Challenges Faced by SITAWhile significant progress was made during 2014/15 with regard to human capital management, certain

challenges remain:

Vacancies. Out of a total 3255 approved permanent positions, 667 are vacant. The Organisation Design and

Development policy now delimits vacancies that have not been filled for six months or more. Dedicated

resources are to be allocated to expedite the filling of these vacancies

Employee turnover. The SITA turnover rate for the period was 16.8% which is slightly above the industry

norm of 15.2%. However, in the same period, an increase in the number of preventable resignations was

observed. Measures put in place to address this issue include: succession management, recognition and

reward, and validation of the salary scale compared to the ICT market

Employee equity. The EE targets achieved were 45% for gender (annual target was 50%) and 1.2% for

disability (annual target was 2%)

Employee morale. Low employee morale is still in the lower quartile as shown in the OHI Survey results

Fixed-contract employees. Amendments to the Labour Relations Act related to employees on fixed

contracts will entail cost and procedure changes

Table 10: High-level HR interventions/programmes (2015–2019)

YEAR 2 YEAR 3 YEAR 4 YEAR 5

STRATEGIC OUTCOME 1: SITA AS AN EMPLOYER OF CHOICE

Implement integrated talent

management strategy and

framework.

Implement corporate social

responsibility programme in

collaboration with

communication and

marketing.

Implement leadership

development programme.

Ensure conducive working

conditions for employees.

Implement the SITA

retention strategy.

Review and implement

talent management strategy

and framework.


corporate social

responsibility programmes

in collaboration with

communications and

marketing.

Monitor the implementation

of the talent management

strategy and framework.

Monitor the implementation

of the SITA retention strategy.

Monitor and evaluate.

Continued


YEAR 2 YEAR 3 YEAR 4 YEAR 5

STRATEGIC OUTCOME 2: BUILD A HEALTHY ORGANISATION

Implement work stability

programme.

Implement awareness and

education programmes.

Implement family–friendly

practices.

Comply with occupational

health practices.

Establish day-care facilities

and wellness clinic services.

Implement improved health

menus.

Launch and promote the

gym facilities.

Enhance implemented

stability programmes.

Enhance implemented

awareness and education

programmes.

Implement family–friendly

practices.


health practices.

Sustain the day-care facilities

and wellness clinic services.

Sustain the improved health

menus.

Sustain and promote the

gym facilities.

Review implemented

stability programmes.

Review implemented

awareness and education

programmes.


health practices.

Monitor and evaluate use of

services.


STRATEGIC OUTCOME 3: DEVELOP A HIGH PERFORMANCE AND INNOVATIVE ORGANISATION

Implement and monitor the

current performance

management policy and

rewards programme.

Implement rewards and

recognition programmes

linked to innovation.

Implement and embed the

High Performance

Organisation (HPO) model

and improvement plan.

Implement continuous

improvement initiatives to

drive the attainment of a

high performance culture.

Implement continuous

improvement initiatives to

drive the attainment of a

high performance culture.


STRATEGIC OUTCOME 4: CREATE A CUSTOMER-CENTRIC ORGANISATION

Evaluate the impact of the

Customer Service Focus

Programme.

Monitor and evaluate. Monitor and evaluate. Monitor and evaluate.

STRATEGIC OUTCOME 5: FACILITATE TECHNICAL AND ORGANISATION CAPABILITY

Implement the Human

Capital Plan.


Implement learnership and

internship programmes.

Conduct company-wide

skills audit.

Compile and implement

WSP.

Implement succession and

career management

processes.

Review and monitor the

Human Capital Plan.



learnership and internship

programmes.


WSP.

Review the implementation

of succession and career

management processes.

Review and monitor the

Human Capital Plan.


Review and Implement

learnership and internship

programmes.


WSP.

Review and monitor

succession and career

management processes.



Monitor and evaluate

implemented learnership

and internship programmes.


WSP.

Monitor and evaluate

succession and management

processes.

HUMAN RESOURCE OVERSIGHT STATISTICS 65

HUMAN RESOURCE OVERSIGHT STATISTICS

Personnel Costs

TOTAL EXPENDITURE FOR THE ENTITY

(R’000)

PERSONNEL EXPENDITURE

(R’000)

PERSONNEL EXP. AS A % OF TOTAL EXP.

(R’000)NO. OF EMPLOYEES

AVERAGE PERSONNEL COST PER EMPLOYEE

(R’000)

R5 140 502 R1 206 496.64 23% 3356 R359.50

Personnel Costs by Occupational Category

OCCUPATIONAL CATEGORY


(R’000)AS % OF

PERSONNEL EXP. NO. OF EMPLOYEESAVERAGE PERSONNEL COST PER EMPLOYEE

(R’000)

Top management R18 768.77 2% 23 R816.03

Senior management R138 443.89 11% 145 R954.79

Professional qualified R172 909.63 14% 313 R552.43

Skilled R784 070.47 65% 2146 R365.36

Semi-skilled R84 325.71 7% 676 R124.74

Unskilled R7 978.17 1% 53 R150.53

TOTAL R1 206 496.64 100% 3356 R359.50

Performance RewardsSITA did not pay performance bonuses in 2014/15 because the company performance targets were not

achieved. However, awards in recognition of long service were paid out, amounting to R6 172 500.

RCE OVERSIGHT

ONNELDITURE 000)

PERSONNEL EXP. AS A % OF TOTAL EXP.

(R’000)NO. OF EMPLOYEES

AVERAGE PERSONNELCOST PER EMPLOYEE

(R’000)

496.64 23% 3356 R359.50


Training Costs

OCCUPATIONAL CATEGORY


(R’000)

TRAINING EXPENDITURE

(R’000)

TRAINING EXPENDITURE AS A % OF PERSONNEL COST

NO. OF EMPLOYEES

TRAINED

AVG. TRAINING COST PER

EMPLOYEE (R’000)

Top management R18 768.77 R83.99 0.45% 16 R 5.25

Senior management R138 443.89 R2 799.91 2.02% 260 R 10.77

Professional qualified R172 909.63 R2 964.17 1.71% 356 R 8.33

Skilled R784 070.47 R14 478.26 1.85% 1946 R 7.44

Semi-skilled R84 325.71 R3 166.06 3.75% 531 R 5.96

Unskilled R7 978.17 R57.05 0.72% 8 R 7.13

Total R1 206 496.64 R23 549.43 1.95% 3117 R 7.56

Employment and Vacancies

ORGANISATION ARCHITECTURE PROGRAMME

SIYASHESHA - PLACEMENT AND MIGRATION MACRO STRUCTURE REALIGNMENT

2011/12 (V10.2) 2012/13 (V10.3) 2013/14 (V10.4)

Approved

structure #

positions

Actual

employee

headcount

Vacancies

Approved

structure #

positions

Actual

employee

headcount

Vacancies

Approved

structure #

positions

Actual

employee

headcount

Vacancies

3183 2436 1802 3221 2303 965 3239 2259 930

Note: all data as end March 2015

The challenge for SITA is finding suitable skills. To develop the requisite skills, intensive internship and learnership

programmes were implemented. An external service provider was also procured in order to expedite the

recruitment and placement process, as internal recruitment capacity was insufficient. SITA uses social media and

recruitment search engines such as LinkedIn and PNet to attract skilled resources.


Employment Changes

SALARY BAND EMPLOYMENT AT BEGINNING

OF PERIOD

APPOINTMENTS TERMINATIONS EMPLOYMENT AT END OF THE

PERIODOCCUPATIONAL CATEGORY PERM FTC TOTAL

Top management 18 6 5 11 6 23

Senior management 135 21 0 21 11 145

Professional qualified 325 3 3 6 18 313

Skilled 1791 164 277 441 86 2146

Semi-skilled 481 47 200 247 52 676

Unskilled 50 2 4 6 3 53

Total 2800 243 489 732 176 3356

Note: Board members and Learners are excluded from the employment figures at beginning of period but included in the figures at end of period because they are also included in the personnel costs.

Reasons for Staff Leaving

REASON FOR TERMINATION NUMBER % OF TOTAL NO. OF STAFF LEAVING

Abscondment 1 0.57%

Contractor resignation 56 31.82%

Deceased 12 6.82%

Dismissal 3 1.70%

Dissatisfaction: salary 1 0.57%

Early retirement: 55 > 60 2 1.14%

End of contract 19 10.80%

Full-time studies 2 1.14%

Ill health 1 0.57%

New career opportunities 51 28.98%

Personal – reason not disclosed 19 10.80%

Retirement 8 4.55%

Spouse Transferred 1 0.57%

Total 176 100.00%

Staff turnover 2014/2015 5.24%


Labour Relations: Misconduct and Disciplinary Action

NATURE OF DISCIPLINARY ACTION NUMBER

Verbal warning 1

Written warning 2

Final written warning 2

Dismissal 2*

Settlements (employees exited) 6

Suspensions 13

Total number of cases 26

Note: Due to the negative effects of the Organisational Architect project, managers did not actively pursue disciplinary processes. One dismissal was settled out of court and converted to an employee exit. All suspensions were lifted except for one where the case against the employee is still ongoing.

Equity Targets and Employment Equity Status

OCCUPATIONAL CATEGORY MALE

CURRENT NO BLACKS WHITETOTAL

AFRICAN COLOURED INDIAN ACTUAL % TARGET CURRENT ACTUAL % TARGET

Top management 12 0 0 71% 70% 3 29% 30% 15

Senior management 56 3 5 71% 70% 20 29% 30% 84

Professional qualified 63 10 20 71% 70% 132 29% 30% 225

Skilled 703 77 78 71% 70% 360 29% 30% 1218

Semi-skilled 218 14 3 71% 70% 15 29% 30% 250

Unskilled 36 1 0 71% 70% 0 29% 30% 37

TOTAL 1088 105 106 71% 70% 530 29% 30% 1829

Note: The overall target was 70% for Blacks (Race) and 50% for Gender (women)


OCCUPATIONAL CATEGORY FEMALE

CURRENT NO BLACKS WHITETOTAL

AFRICAN COLOURED INDIAN ACTUAL % TARGET CURRENT ACTUAL % TARGET

Top management 6 2 0 72% 70% 0 28% 30% 8

Senior management 37 6 2 72% 70% 16 28% 30% 61

Professional qualified 31 2 6 72% 70% 49 28% 30% 88

Skilled 561 38 24 72% 70% 305 28% 30% 928

Semi-skilled 358 25 6 72% 70% 37 28% 30% 426

Unskilled 16 0 0 72% 70% 0 28% 30% 16

TOTAL 1009 73 38 72% 70% 407 28% 30% 1527

Note: The combined actual percentage achieved was 72% for Blacks (race)and 45.5% for Gender (women)

OCCUPATIONAL CATEGORY DISABLED STAFF

MALE FEMALETOTALS

CURRENT TARGET CURRENT TARGET

Top management 0 2% 0 2% 0

Senior management 1 2% 1 2% 2

Professional qualified 2 2% 0 2% 2

Skilled 17 2% 8 2% 25

Semi-skilled 5 2% 4 2% 9

Unskilled 0 2% 0 2% 0

TOTAL 25 2% 13 2% 38

Note: Combined actual percentage achievement for disability: 1.13%

SITA exceeded the target for designated black employees but has been struggling to achieve the gender and

disability targets, mainly because of ICT skills shortages among women. As a result, SITA’s internship programme

favours females, while a concerted effort is being made to partner with organisations for the disabled to assist

in meeting the target.


HEALTH SAFETY AND ENVIRONMENTAL ISSUES

A safe and hazard-free working environment is one of the most important factors for

employee commitment and performance. SITA has the following initiatives to mitigate and

control hazardous risks:

Risk assessments: environmental risks assessment has been conducted with the aim of identifying health

hazards, improving working conditions and preventing the risk of employees contracting infectious diseases.

Assessments focused on noise levels, ventilation and airborne infections, sanitation, offices/building, etc.

First aid services: first aid training has been provided to occupational health and safety representatives

who inspect and manage first aid boxes.

Medical services: a room has been designated for sick staff members to retire to in order to take a moment,

monitor chronic medical cases and have a rest before returning to work.

SOCIAL RESPONSIBILITY

SITA believes that the correlation between people, business and the community is inseparable, and that a

company is fundamentally a social structure. In line with its commitment to promoting sustained social and

economic development, ongoing support has been provided to the communities in the geographical areas

where the agency operates. Many SITA employees have also taken the initiative to actively contribute in cash

and kind, and volunteered their time to support events such as Mandela Day and International World Aids Day.

SITA’s Social Responsibility programme supports those who have been economically marginalised and

previously disadvantaged. As modern technology is one of the most powerful vehicles through which to drive

transformation, the programme has focused on empowering teachers and learners in secondary schools

through ICTs. This past year’s efforts have focused on the installation of ICT labs at secondary and some primary

schools in various provinces throughout the country, in collaboration with key stakeholders such as the Ministry

for Telecommunications and Postal Services and ICT industry partners. These initiatives have resulted in opening

doors to the world of digital information and connecting the schools to a vast array of opportunities.

SITA is also a proud sponsor and strategic branding, communications and technology partner of the Techno Girl

Programme, a national job shadowing initiative. In 2014/15, SITA opened its doors to approximately 110 girls in

Grades 10–12 who are considering careers in Science, Technology, Engineering and Mathematics, fields with a

gender imbalance. The programme exposes girls to the world of work during school holidays and increases

their knowledge of possible careers choices.

SITA strives to manage its operations in a sustainable manner, thereby minimising its carbon footprint. For the

GovTech 2014 conference, SITA adopted green business practices creating opportunities to effectively manage

this event, reduce input costs and increase operational efficiencies. To offset the carbon footprint on the

environment, SITA donated approximately 60 trees to two schools in KwaZulu-Natal. The agency also plays a key

role in providing advice to other government departments on green technology and e-waste management.

HEALTH SAFETY AENVIRONMENTAL IS

A safe and hazard-free working environment is one of

employee commitment and performance. SITA has the follo

control hazardous risks:

Risk assessments: environmental risks assessment has been conducted w

hazards, improving working conditions and preventing the risk of employees

Assessments focused on noise levels, ventilation and airborne infections, sanit

First aid services: first aid training has been provided to occupational health

who inspect and manage first aid boxes.

Medical services: a room has been designated for sick staff members to ret

monitor chronic medical cases and have a rest before returning to work.

PART E:ANNUAL FINANCIAL STATEMENTS


STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORS

The directors are responsible for the preparation, integrity and fair presentation of the report on

performance information and the annual financial statements of SITA. The financial statements

presented on page 105 to 145 have been prepared in accordance with Generally Recognised Accounting

Practice and include amounts based on judgments and estimates made by management.

The going concern basis has been adopted in preparing the financial statements.

The directors have no reason to believe that the organisation will not be a going concern in the foreseeable

future based on forecasts and available cash resources. These financial statements support the viability of SITA.

The report on performance information and the annual financial statements have been audited by the Auditor-

General, who was given the give unrestrictive access to all financial records and related data, including of

minutes of all meetings of the Board, committees of the Board and executives. The directors believe that all

representations made to the Auditor-General are valid and appropriate.

The annual financial statements set out on pages 105 to 145, which have been prepared on the going concern

basis, were approved by the Board of Directors on 29 July 2015 and were signed on its behalf by:

Jerry Vilakazi


14 August 2015

Setumo Mohapi


14 August 2015

STATEMENT OF RESPOBY THE BOARD OF DIREC

The directors are responsible for the preparation, integrity and fa

performance information and the annual financial statements of S

presented on page 105 to 145 have been prepared in accordance with Ge

Practice and include amounts based on judgments and estimates made by ma

The going concern basis has been adopted in preparing the financial statemen

The directors have no reason to believe that the organisation will not be a go

future based on forecasts and available cash resources. These financial stateme

The report on performance information and the annual financial statements ha

REPOR T BY THE CHIEF EXECUTIVE OFFICER 73

REPORT BY THE CHIEF EXECUTIVE OFFICER

General Review of State ICT

Customer confidence and service deliveryA key focus of the leadership team is restoring customer confidence and improving service delivery. Over the

last few months, SITA has conducted a number of workshops and EXCO offsite sessions to understand and

improve the agency’s current state of operations. Based on these engagements, several challenges were

identified that need to be urgently addressed to enable SITA to effectively deliver value to the public. The recent

organisational diagnostic supported the views expressed by SITA’s customers about the agency:

Long lead times and perceived corruption in procurement

Poor service delivery to customers

High costs of SITA services

Loss of critical skills

Demotivated staff

Ageing and outdated infrastructure

Customer dissatisfaction

Insufficiently proactive or innovative product design and customer solutions

SITA continues to implement initiatives aimed at improving customer satisfaction and addressing critical service

delivery issues raised in the client satisfaction survey of 2012/2013. Performance levels are closely monitored

and reported on against signed Service Level Agreement (SLA) metrics, in order to improve performance and

thus customer service delivery. SITA continues to establish governance mechanisms (both manual and

automated) that will ensure better service delivery, specifically regarding customer complaints. SITA has

concluded the 2016/2016 Annual Performance Plan (APP), to ensure a more focused approach to improving

performance. Going forward, accountability and good governance will be the agency’s key drivers.

Security and upgradingThe security of government data and SITA’s network continues to be reviewed in line with best practices. SITA

solutions are designed to withstand any form of cyber-attack and have the necessary operational structures,

standards, business processes and management technologies to respond to any threat. Modernising of the data

and switching centres is underway. The data centre and disaster recovery infrastructure are being upgraded,

and management systems deployed to monitor, control and command the information system infrastructure,

with a strong emphasis on disaster recovery. The core network is also being refreshed and should yield further

cost efficiencies for internet connectivity. The objective is to upgrade and refresh the entire network infrastructure,

in order to deliver further benefits to our customers and enable readiness for the rollout of e-Government.

Supply chain managementTo deliver on its mandate of cost effectively procuring IT goods and services to government, SITA is enhancing

its SCM capability. An integrated procurement strategic plan has been approved, which will enable the agency

to address key challenges. Changes to the procurement function are intended to ensure clean and transparent

processes, fast and efficient turnaround times, and real cost savings for government.


Human capital and skillsIn July 2015 the placement process for 11127 employees, displaced as a result of the turnaround restructuring

at the beginning of 2013/2014, was concluded. The process of filling the outstanding executive positions

continues and should be finalised in time for the new executives to be part of the leadership team who will be

driving the implementation of the 2015–2018 strategic plan. The EXCO has resolved to prioritise filling 410 out

of a total of 1023 vacancies budgeted for in order to contain operational expenditure. During 2014/15, the

Board approved a number of critical human capital management-related strategies and policies, including the

five-year Human Capital Management Strategy. A Skills Audit is underway and will ensure that SITA becomes

aware of its current capability needs and can thus position itself to meet present and future requirements.

Strategic Overview SITA continues on its journey of implementing the strategic plan, which aims to improve service delivery, create

transparency on costs and result in a high-performance organisation through:

Becoming customer-led, served by highly motivated and skilled employees

Radically improving and transforming procurement systems and processes

Developing and implementing integrated e-Government services in partnership with our customers and

in alignment with the MTSF

Modernising and upgrading infrastructure, and improving the security of government data assets

The SITA strategy for 2015–2018 and the APP for 2015/16 were revised, approved and tabled at Parliament. The

Corporate Balanced Scorecard was aligned to the changes in the corporate strategy and APP.

Services RenderedThe agency provides mandatory and optional services to government, including:

MANDATORY OPTIONAL

Providing or maintaining Public Telecommunications

Networks (PTN) and Value Added Networks (VAN)Providing training on ICTs for government

Providing or maintaining transversal systems Developing application software

Providing data processing for government Technical

Information Systems (TIS)Maintaining software and ICT infrastructure

Procuring ICTs for governmentProcessing data for department-specific applications

or systems

Setting standards of interoperability Providing ICT technology or business advice to government

Setting security standards Conducting research and development

Setting certification standards for government ICT acquisition Providing management services for government ICTs

Certifying information and technology acquisitions for compliance Providing authentication products

Facilitating the elimination of duplications

Leveraging economies of scale


Programme Structure

SITA’s work is centred on initiatives that support six key programmes:

STRATEGIC PROGRAMME GOALS

Programme 1: Procurement To address all issues relating to delayed procurement turnaround times,

removing customer pain points, and transforming the procurement function

Programme 2: Service DeliveryTo provide high-quality IT services to enable government to deliver efficient

and convenient services through the use of ICT

Programme 3: InfrastructureTo optimise the provision of SITA’s IT infrastructure services in order to increase

availability, flexibility, scalability, predictability and security

Programme 4: Financial SustainabilityTo ensure an effective and efficient financial management, and ensure

financial growth and sustainability

Programme 5: OrganisationTo build and maintain organisational capability to enable SITA to achieve its

strategic imperatives and become an employer of choice within the ICT industry

Programme 6: Governance and

Administration

To provide leadership, strategic management, governance, risk and resource

management in line with government-accepted norms and standards

RevenueThe deficit before tax for the quarter ending 30 June 2015 was R215.3-million, from a revenue of R1.235-billion,

or -17.4% as a percentage of revenue. The actual revenue of R1.235-billion is 31.5% above the budgeted R939.4-

million, and the cost of sales of R1.305-billion is 16.7% above the budget of R1.118-billion. Net deficit after tax

amounted to R155-million.

Infrastructure Spending SITA underwent a number of reviews to ensure alignment between the operational and strategic capital

requirements against the available capital for the year. On 29 July 2015, the SITA Board approved R640-million

for infrastructure investment in 2015/2016:

APP PROGRAMMES GROWTH MAINTAIN REFRESH GRAND TOTAL

Programme 1: Infrastructure R361 274 221 R189 959 658 R89 405 226 R640 639 105

Programme 2: Solution Development R140 095 671 R34 232 000 R9 632 286 R183 959 957

Programme 3: Service Management R600 000 R17 129 140 R3 565 000 R21 294 140

Programme 4: Operational Support R1 435 000 R6 282 520 R102 655 104 R110 372 624

Grand Total R503 404 893 R247 603 317 R205 257 616 R956 265 826


By 31 July 2015, R215 004 513 had been spent on the network upgrade projects and R41 434 383 on the upgrade

and maintenance of the data centre capabilities. The majority of the contracts for the infrastructure spend are

now in place and the allocated amount will be fully utilised.

Integrated financial management systemThe award of the integrated financial management system (IFMS) tender to the original software manufacturer

(OSM) was delayed by over four months. SITA had concluded all the required processes, but probity services by

National Treasury resulted in the delay. The actual impact cannot be estimated until the award is made to the

OSM, and the delay will continue to increase until the award is concluded.

E-CabinetThe e-Cabinet project was delayed by the construction work that the Department of Public Works (DPW) had to

complete at both the Union Building and Tuynhuys, but SITA and DPW are working to recover lost time. SITA and

the Presidency have developed a plan to get the project back on track, the commitment of the Presidency staff

to this project is commendable.

The Western Cape Broadband project target had to be revised after the supplier could not complete the site

preparations as per the original plan. SITA has been engaging with the supplier to get the project back on track.

Capacity ConstraintsThe scarcity of ICT skills, especially for software developers and testers, business analysts and IT architects, is an

organisational capacity challenge for SITA in meeting its business objectives. The total number of vacancies at

the end of the year was 667 out of 3255 approved permanent positions. Therefore, SITA needs a sound staffing

model that provides a balance between buying talent and building organisational capacity, and establishing a

strong Employee Value Proposition (EVP) that both attracts and retains top talent. In 2014/15, the Board approved

a number of strategies and policies that will enable SITA to address its capacity constraints, including the Talent

Management Strategy, Leadership and Skills Development Strategy, Competency Management Policy,

Succession Management Policy and Career Management Policy. SITA has established strategic partnerships with

tertiary institutions, including the North-West University and the University of Pretoria, to implement its capacity

building programmes. SITA also continues to develop ICT skills through its internship and learnership

programmes. In 2014/2015, SITA employees attended a total of 3117 ICT-related training interventions and 208

trainees underwent the SITA internship programme.

Utilisation of Donor FundsThe Board revised the capital expenditure budget for 2015/16 from R1.151-billion to R956.3-million, in line with

the estimated available cash.


Transfer Payments to Organisations

None

Events After the Reporting DateNone

Corporate Governance Arrangements

Internal Audit FunctionThe Internal Audit Function (IAF) continued to fulfil its mandate, of providing independent, objective assurance

and consulting activity designed to add value and improve the SITA’s operations. Through a systematic and

disciplined approach, the IAF assists SITA in evaluating and improving the effectiveness of risk management,

control and governance processes within the agency.

The IAF operates in accordance with an approved Internal Audit Charter and is guided by a fully functional

Audit, Risk and Compliance Committee (ARCC). The IAF has processes in place to ensure that existing staff

obtain appropriate qualifications and are kept abreast of changes within the Internal Audit profession.

Through, inter alia, engagement with internal stakeholders, the IAF formulated a comprehensive three-year

rolling plan, incorporating an annual risk-based internal audit plan approved by the ARCC. The 114 audits

planned for the year were fully executed. In addition, the IAF undertook 124 unplanned projects, including

various consulting activities and ad-hoc management requests. Relationships with management improved, as

shown by the number of unplanned specialised projects, which in turn indicates that management sees the

value of the IAF within its systems of governance and control. The IAF’s executive has complete access and a

direct reporting line to the ARCC, and presents reports at each committee meeting on internal audit activities.

Audit, Risk and Compliance CommitteeThe ARCC continues to operate within its terms of reference, which are reviewed annually. During 2014/15, the

ARCC met five times. The Accounting Officer and executive management are always represented, and the

Auditor-General is always invited to attend, ensuring that these meetings are as effective and transparent as

possible. The ARCC provides objective oversight and advice on institutionalising risk management, business

continuity and anti-corruption processes throughout SITA.

Risk managementThe risk management culture within SITA continues to improve, with management taking an active role. The

Enterprise Risk Management Strategy was successfully implemented during the year. The Chief Risk Officer

championed good governance practices through key governance committees, and the direct reporting line to

the Accounting Officer continues to create a strong tone at the top. The benefits of risk management were


continuously communicated through awareness campaigns promoting the embedding of risk management

principles and processes within SITA. The ARCC actively monitors SITA’s risk profile, which includes strategic,

operational, corruption and business continuity risks and forms the basis for the SITA’s internal audit plans. SITA

supported and monitored the successful implementation of its anti-corruption plan and encouraged strong

ethical values from all its employees. The anti-corruption plan is implemented across numerous functions and

results in a multi-dimensional approach to mitigating identified corruption risks and combating corruption

holistically. SITA has a zero tolerance stance on corruption, and the mitigation of identified corruption risks is

supported at all levels.

Internal policy reviewIn the period under review, the following Codes, Charters (Terms of Reference), Policies and Procedures were

adopted and/or reviewed:

Fixed Asset Management Policy

Competency Assessment Framework

Revised Supply Chain Management Policy

Integrated Talent Management Framework


Recognition and Rewards Policy


Accounts Receivable Policy

Debt Management Policy

Accounts Payable Policy

Revised Foreign Exchange Policy

Revised Banking and Investment Policy

Revised Competency Management Policy

Revised Organisation Design Policy

Revised SITA Integrated Talent Management Policy

Revised Human Capital Resource Planning Policy

SITA Secondment, Transfers and Relocating Policy

SITA Risk Management Policy

SITA Risk Management Framework

Revised Integrated Corporate Performance Management Policy

SITA Skills, Training and Leadership Development Framework and Strategy

Policy on Policy Development

Corporate Social Investment Strategy

Corporate Social Investment Policy

Revised Employee Conflict of Interest Policy

Revised Gifts and Entertainment Policy

Integrated Internal Control Framework


Other Governance Matters

Integrated sustainability managementSITA recognises that strategy, risk, performance and sustainability are inseparable, as outlined in the King III best

practices, and that the agency is (and is seen to be) a responsible corporate citizen. SITA views sustainability as a

business practice that creates value for stakeholders through managing the environmental, social and governance

factors affecting the agency’s ability to achieve sustainable service delivery. SITA acknowledges the importance of

reporting the results of its operations in a way that brings together information about the SITA’s strategy, governance,

and performance and future prospects while reflecting the commercial, social and environmental context within

which it operates. SITA continues to emphasise the importance of embedding the management of environmental

and sustainable development issues in its core business, and has already integrated sustainability aspects in its strategic

objectives (see pags 37 to 43). At the core of its sustainability agenda, SITA recognises the need to be cost efficient and

environmentally friendly, to ensure that resources are used efficiently and in a socially and environmentally responsible

manner. To this end, cost-saving initiatives and green practices are gradually being introduced into business practices.

South Africa has made a conscious effort to move towards a green economy, as part of the long-term plan to

grow the economy while mitigating the effects of climate change. Embracing the government’s efforts, SITA

strives to live green in all aspects of its work, in interactions with customers and employees, leading by example

in ensuring that the impact on the environment is as minimal as possible. To this end, SITA adopted sustainable

event management principles. The aim is to minimise SITA’s carbon footprint and impact on the environment

throughout the different stages of event planning and execution. SITA uses an environmental policy document

to plan an event and ensure adherence to these principles. For instance, service providers selected must be

committed to, and provide proof of being committed to, environmental objectives. After an event, targets are

revised and improvements recommended for the next event. The success of this approach was acknowledged

when the GovTech 2014 conference, the foremost gathering of ICT professionals from the private and public

sector received a gold class pass on the green scoreboard. This translates to an 84. 7% score for planning and

implementation of sustainable business practices, an improvement on the 79.2 % achieved in 2013.

Supply chain managementImprovements in the SCM function have begun to make a visible contribution towards operational efficiency

and good governance within the SITA. SITA is committed to further and more substantial improvements that will

keep the supply chain function responsive to the strategic needs of stakeholder. Key initiatives include:

The development of an Integrated Procurement Strategic Plan, which was approved by EXCO in January

2015 and subsequently endorsed by SITA Board of Directors on 29 July 2015. The strategy provides a

roadmap of the approach and initiatives that SITA must embark on to establish procurement excellence

that enables service delivery to our clients. A service provider has been appointed to assist with

developing the process and tools for implementing the strategy.

The Board approved the revised SCM Policy of 2011 on 25 November 2014, and the supplementary

revision on 29 July 2015. The revised SCM Policy enables the organisation to enhance internal controls to

address majority of findings raised by Auditors-General during the last financial year.

A new procurement organisational structure, which incorporates new capabilities required to address current

challenges, has been approved, and the recruitment process to fill critical leadership positions is underway.


An ECM (Enterprise Content Management) Contract Tracking and Management system has been developed

internally and was rolled out in November 2014. All contracts are now stored in one electronic database.

New procurement checklists for various process stages have been introduced to enhance the quality of

execution and to curb non-compliance by practitioners, including other process-related risks.

New practices have been introduced to ensure that the CEO approves all business cases requesting deviation

from the normal procurement process, irrespective of value. In addition, the Chief Procurement Officer must

pre-approve any deviation before the market or targeted supplier is engaged. This control will curb the abuse

of procurement deviation by procurement practitioners and end-users from line of business.

Asset managementIn terms of sub-section 57(b) of the PFMA as amended, the officials of a public entity are responsible for the

effective, efficient, economical and transparent use of the entity’s resources. In addition to the normal day-to-

day administration and management of SITA’s asset register, the SITA’s Asset Management Unit undertook

several key activities to improve the overall asset management environment of SITA:

Asset verification. The internal asset verification was concluded by 31 March 2015. The involvement of SITA

employees in the process enhanced the organisation’s hands-on knowledge and awareness of asset management

matters. In 2014/15, overall coverage for asset verification was 99.81%, which we believe is within acceptable levels.

Asset disposal. In line with the SITA’s Asset Management Policy, Treasury Regulations and the King III Code on

Corporate Governance, in 2014/15 the Asset Management Unit disposed of 830 assets with a net book value of

R7 516 284. Of these, 36 assets (with a net book value of R7 965) were donated to schools, one vehicle (with a

net book value of R27 683) was sold and the remaining assets (with a net book value of R7 520 121) were sold

as scrap, as they had no value for use.

ICT CapabilityApproximately 85% of the total SITA third party expenditure was spent on enhancing SITA ICT capability.

Information on Predetermined ObjectivesEvery month, divisional heads report to the CEO on progress made with regard to programme delivery and

measurable objectives, as contained in the SITA 2014/2019 Strategic Plan and 2014/2015 APP. Detailed

information on annual performance against predetermined objectives is set out on pages 37 to 43 of this report.

Standing Committee on Public Accounts (SCoPA) ResolutionsThere were no SCoPA Resolutions.

Exemptions and Deviations Granted by National TreasuryThe following exemptions and deviations were granted by National Treasury:


Deviations 2014/2015

ITEM NAME DESCRIPTION AWARDED AMOUNT AWARDED VENDOR

1Release 2 and Release 3 Enhancement

Request for the functional enhancement of existing

Release 2 and Release 3 enhancement to include

ICPC, including maintenance and support for a

period of two years.

R4 393 512Magna BC Business

Consulting (Pty) Ltd

2 Encryption SoftwareMaintenance and support of the IP Granite

encryption software and Nanoteq supplied hardwareR16 646 745 Nanoteq (Pty) Ltd

3 PKI Solution Support and maintenance of PKI solution R649 800

Law Trust Information

Security Solutions (Pty)

Ltd

4Library Information Systems

Provision of Library Information Systems

to SITAR9 468 401

CIPAL Brocade Library

Services NV

5

Repair and Three (3) Year Maintenance for Galaxy Range Products

Request for deviation from normal procurement

process and award Schneider Electric Once Off

Repair and three years’ maintenance for Galaxy

Range Products

R7 500 000 Schneider Electric

6 Renewal of Licences The renewal of RADSIM licences and support R157 320 Maretek CC

7 Repair of UPSRepairs on UPS No 4 located in SITA Centurion

BuildingR419 916 Schneider Electric

8Dumpmaster Software Licences Renewal

Renewal, maintenance and support for

Dumpmaster software licencesR4 425 494

Blue Turtle

Technologies (Pty) Ltd

9CMMI (Capability Maturity Model Integration)

CMMI Training R7 298 813 CCMI Institute

10

Performance Management Capacity-Building Programme

Development and delivery of a performance

management capacity-building programmeR1 120 981 Epi-use (Pty) Ltd

11Email Security Technology Licences

Renewal of email security technology (SOPHOS)

licencesR1 208 682

Business Connexion

(Pty) Ltd

12 HylaFAx LicencesRenewal, maintenance and support of HylaFAx

licences, including procurement of additional licencesR99 516

Obsidian Systems (Pty)

Ltd

Continued



13 Adobe LicencesEnterprise Licence Agreement: procurement of

Adobe licences including support and servicesR7 324 619 Adobe systems

14Executive Advertisement

Placement of advertisement for Executive: Service

Delivery and SystemsR160 854

Media24 and Times

Media

15 Lectora Licences Renewal of Lectora licences R84 759 Bytes People (Pty) Ltd

16 TOAD LicencesRenewal, maintenance and support, including

procurement of additional licencesR142 688

Blue Turtle Technologies

(Pty) Ltd

17Supply Grid Remediation and Upgrade

Remedy of the current supply grid configuration, to

supply transitional (rental) units and to upgrade key

power supply components for a period of one year

R10 197 779RO-AL Construction

(Pty) Ltd

18 DoD Licences Renewal of SAAB Grintek licences on behalf of the

Department of Defence (DoD)R8 326 231 SAAB Grintek (Pty) Ltd

19 Vending MachinesProvision of maintenance of coffee, tea and hot

chocolate vending machines month on monthR345 500

HOT Vending Solutions

cc

20 ARIS Licences Renewal of ARIS software licence R5 865 043Software AG South

Africa (Pty) Ltd

21 Bomgar LicencesRenewal, maintenance and support Bomgar

software licenceR6 340 582

Netvision Network

Solutions

22 Foresight LicencesThe renewal of Foresight licences for a period of

one yearR484 272

Gijima Holdings (Pty)

Ltd

23 SAS SAPS BI The renewal of SAS SAPS BI for a period of one year R83 801 SAS Institute (Pty) Ltd

24SAS Vulindlela Licences

The renewal of the SAS licences for the Vulindlela

project on behalf of National Treasury, for a period

of one year

R4 683 917 SAS Institute (Pty) Ltd

25CA Service Desk Manager

The renewal of CA Service Desk Manager for a

period of three yearsR6 041 843 CA Southern Africa

26LAN and Workplace Support

Deviation to appoint Gijima and XON for LAN and

workspace support including hardware

maintenance at KZN Department of Health (DoH)

for a period of nine months

R46 603 304 Gijima and XON

27KZN LAN and Desktop Support

Deviation to appoint current service provider for

provision of LAN and desktop support to the KZN OTP

for a period not exceeding three months

R865 853 SIZWE Pty Ltd

28 Mpumalanga PAABDeviation to reappoint Faranani IT Services (Pty) Ltd

for the support and maintenance of the PAAB system

/ application for the Mpumalanga DoH

R4 965 237Faranani IT Services

(Pty) Ltd

Continued



29 KZN OTPDeviation to appoint current service provider for

provision of LAN and desktop support to the KZN OTP

for a period not exceeding three months

R2 308 938 SIZWE Pty Ltd

30 DPME InfrastructureIT infrastructure solution for the Department of

Performance Monitoring and EvaluationR3 067 132 Integral Networking

31 SASSA VSAT

Deviation to appoint Vodacom (Pty) Ltd for the

renewal of maintenance of VAST services for SASSA

(South African Social Security Agency) for a period

not exceeding two years

R8 866 574 Vodacom

32 Microfilm ServicesDeviation for the extension of contract RFB

861/2010 (Microfilm Services) for DODR1 032 000 Meniko

33EMC Equipment and Software

Deviation to appoint EMC computer systems for the

maintenance and support of EMC equipment and

software for a period of 12 months

R5 898 835EMC Computer

Systems

34DCS Cabinets and UPs

Maintenance of the cabinets and UPs for

Department of Correctional ServicesR1 771 941 Telenetix Technology

Contract Expansion 2014/2015

DESCRIPTION PREVIOUS EXPIRY DATE

NEW EXPIRY DATE

ORIGINAL CONTRACT AMOUNT

EXTENSION AMOUNT

% INCREASE REASON FOR EXTENSION

LAN and Cabling Infrastructure

30-Jun-13 31-Jan-14 R487 008 R243 504 50%

Replacement tender RFB 1154 was

cancelled due to poor costing model.

The new replacement tender RFB

1233/2014 closed on 8 September 2014.

Cash-in-Transit 27-Aug-13 28-Feb-14 R152 800 R173 000 113.22%

The new replacement contract RFQ

JZM-733-AH-2014 commenced from 1

July 2014 for one year.

Multi-disciplinary Consultant Engineering for Cloud Computing and Tier Rating

28-Feb-13 28-Feb-14 R1 343 262 R199 158 15%

The Bloemfontein Data Centre was

not included in assessment for the

successful implementation of the

SITA cloud computing project. If this

centre is not included, it will not be

able to provide cloud computing

services to the Free State province.

Continued



NEW EXPIRY DATE


EXTENSION AMOUNT


Hardware Maintenance and Software Support

30-Sep-13 31-Dec-13 R28 463 018 R15 290 930 54%

Contract extended for three months

to allow the replacement process

(RFQ 1988) to be finalised. The RFQ is

being reviewed by Internal Audit.

Maintenance and Support of Rofin Equipment

30-Nov-13 30-Nov-14 R32 113 162 R153 788 818 478.90%

Extension of the current contract to

allow the research and testing of

alternate products to be finalised.

Diginet Term Discount Agreement

31-Oct-13 31-May-14 R146 788 493 R105 000 000 71.53%

Contract extension with the current

service provider to allow the Telkom

MSA to be finalised.

Maintenance of Audio-visual and Video Conferencing Equipment

27-Sep-13 31-Mar-14 R2 001 488 R379 810 18.98%

To allow for the finalisation of RFQ

1144/2013, which is the replacement

RFQ. The RFQ is under adjudication.

Lease Vehicles for SITA 30-Sep-13 28-Feb-14 R7 638 167 R2 492 436 19%

To allow an open bid process. The

replacement tender is 1209 and the

evaluation commenced on 25–29

August 2014.

Provision of Vending Machine

01-Oct-13 31-Mar-14 R6 100 122 R1 006 164 16.49%

Replacement tender 1219 is under

evaluation and targeted completion

date is end of November 2014.

Eastern Cape Offices Security

01-Dec-13 30-Apr-14 R481 399 R124 419 25.85%

Contract was extended pending the

outcome of the relocation processes/

discussions at the province.

Armed Response and Monitoring Services (PE)

01-Nov-13 01-Jun-14 R10 245 R1 861 18.17%




Hygiene Services (PE) 01-Nov-13 30-Apr-14 R31 608 R6 005 19.00%




Provision of Security Services for SITA Pretoria Buildings

31-Jul-13 31-Jan-14 R15 560 571 R5 957 243 38.28%

The replacement contract with

Fidelity was established for a period

of 1 year (until 31 March 2015) as per

NT 16A6.6

Courier Services 27-Aug-13 28-Feb-14 R600 000 R600 000 100%

The replacement tender was

submitted for cancellation due to

incorrect specification and costing

model, and permission sought to

participate in the NT RT contract.

Continued



NEW EXPIRY DATE


EXTENSION AMOUNT


Provision of Business Process Architecture

14-Feb-13 31-Aug-13 R23 544 600 R11 772 300 50%

Contract was extended for six months

to allow for the finalisation of the

project.

Courier Services 28-Feb-14 31-Aug-14 R1 242 835 R500 000.00 40.23%

Contract was extended with the

current service provider to allow for

the finalisation of the replacement

process.

Hardware Maintenance and Support for SAPS (RFB 769)

Month to

month31-Jan-15 R171 432 908 R278 967 511 162.73%

Tender for/replacement contract

underway and the technical

requirements tabled in the next Bid

Specification Committee.

Bandwidth and Email Cleansing

28-Feb-14 30-Nov-14 R65 835 319 R27 465 301 41.72%

The replacement tender 1211 tabled

in the Recommendations Committee

for adjudication on 3 September 2014.

Provision of STM Transmission Services between SITA and Telkom.

31-Mar-13 31-Mar-15 R34 722 063 R42 903 327 123.56% Partnership process in progress.

LAN and Desktop Support Services Countrywide for SAPS

30-Apr-14 30-Sep-14 R20 117 897 R9 309 196 46.27%Fixed-term contract process in

progress.

Hardware Maintenance and Support

31-Mar-14 30-Sep-14 R4 523 818 R2 769 279 61.22%

To allow the replacement process

RFQ 1988 to be finalised. The RFQ is


LAN and Desktop Services for KZN Provincial Department

31-Mar-14 30-Sep-14 R6 705 965 R6 716 760 100.16%

To allow the replacement process

RFQ 1988 to be finalised. The RFQ is


Access Link and Bandwidth between Legislature & Ocean Terrance Office building

31-Apr-14 30-Apr-15 R142 609 R142 614 100.00%

To allow the client to finalise the

Neotel connection, which is already

installed. As soon as IT equipment has

been moved to Neotel connection, the

Telkom data line will be dismantled

and the contract will be terminated.

DR Broadband Service for SITA

31-Mar-14 31-May-14 R6 344 812 R1 057 468 16.67% Partnership process in progress.

Continued



NEW EXPIRY DATE


EXTENSION AMOUNT


Provision of Hardware Maintenance at the Department of Basic Education (DBE) and the Department of Higher Education and Training (DHET)

30-Jun-14 31-Dec-14 R4 928 724 R993 581 20%

The replacement tender process

underway and business case

submitted to SCM.

Monitoring Services for the DBE

31-May-14 31-May-15 R2 255 148 R751 756 33%

The replacement tender process RFB

1207 presented at the

Recommendations Committee for

cancellation due to poor costing model.

IT Support Services for the Core IT Infrastructure of SAPS

31-May-14 30-Jun-14 R3 149 136 R2 094 175 66%

To allow the finalisation of the

replacement tender 1208 which is

under evaluation.

Courier Services for SITA

1-Sep-14 28-Feb-15 R500 000 R1 900 000.00 380%

Replacement RFB 1073/2013 under

evaluation and request for

cancellation submitted for approval.

Cleaning Services for SITA Pietermaritzburg

1-Sep-14 28-Feb-15 R364 719 R229 638 63%To allow initiation and finalisation of

replacement contract.

Paper Supply 1-Mar-13 30-Apr-16 R986 240 R1 730 000 175%

The client had exhausted all the funds

in the previous contract and printing

services were still needed. This

expansion relates to increase of the

capped amount.

Metro Connectivity in the EThekwini Metropolitan Municipality

31-Oct-14 31-Oct-16 R18 800 211 R12 501 525 66%To allow line of business to do price

bench mark.

Cleaning Services at Erasmuskloof, Perseus Park and Centurion

31-May-13 31-Jan-15 R9 930 739 R4 081 052 41.10%

Replacement RFB 1124 was cancelled

and the replacement tender RFB 1252

closed on 30 October 2014.

Cleaning Services at Blenny

31-Jan-14 31-Jan-15 R275 253 R307 109 111.57%

Replacement RFB 1124 was cancelled

and the replacement tender RFB 1252

closed on 30 October 2014.

Provision of Maintenance and Support of SAPS Rofin , Spheron and Nikon Equipment for 3 Years

30-Nov-14 30-Nov-19 R3 211 3162 R582 252 167 1813.13%To allow finalisation of the

replacement tender process.

Continued



NEW EXPIRY DATE


EXTENSION AMOUNT


Hardware Maintenance and Selected Software and Maintenance of WAN and LAN and all Computer-related Peripheral Equipment

31-Jan-15 31-Oct-15 R171 432 908 R210 872 652 123.01%To allow finalisation of the


Internet Services and Selected Allied Services for SITA and its Clients

30-Nov-14 30-Apr-15 R65 835 319 R13 616 083 20.68%To allow finalisation of the


DBE Hardware Maintenance

31-Dec-14 31-Jun-15 R4 928 724 R1 063 132 21.57%To allow finalisation of the


For the Maintenance of Video Wall Equipment in the Network Operations Centres at SITA Gauteng.

31-Nov-14 31-Aug-15 R6 143 099 R1 030 900 16.78%

To allow the procurement process to

publish an open bid as a replacement

of the current contract.

Maintenance and Support Contract for HP Automation Software

31-Jan-15 31-Jan-16 R3 531 943 R690 115 19.54%

To allow for the finalisation of the

replacement tender. The specification

still needs to be presented to Bid

Speciation Committee for approval.

Provision of Cleaning Services

30-Apr-12 31-Jan-15 R275 254 R307 109.82 111.57%

To allow for the finalisation and

transitioning of the replacement

tender (RFB1252/2014) which is

under adjudication.

Provision of Cleaning Services

31-May-13 30-Apr-15 R6 714 596 R3 216 144 47.90%

To allow for the finalisation and

transitioning of the replacement

tender (RFB1252/2014) which is

under adjudication.

Provision of Monitoring Services for DBE

31-May-15 31-May-16 R1 978 200 R751 716 38.00%

RFB 1207/2014, which was intended

to replace this contract, was cancelled

due to deficiency in the specification.

The business case for the replacement

tender submitted by 31 May 2015.

Provision of Physical Guarding Services for SITA Pretoria Buildings

31-Mar-15 30-Jun-15 R16 464 743 R4 112 723 24.98%

To allow for the finalisation of RFB

1289/2014 which is at the

adjudication stage. The targeted

completion date is dependent on the

PC Schedule (July 2015).

Continued



NEW EXPIRY DATE


EXTENSION AMOUNT


Maintenance and support of Discovery Solution

31-Jan-15 31-Jan-16 R955 183 R1 380 802 144.56%

Cancellation of the replacement tender

was approved on 20 January 2015. The

cancellation was due to misalignment

of the scope of work and costing

model. Line of business is currently

reviewing the specification so that they

can submit for publication.

Request for Deviation to Reappoint Faranani IT Services (Pty) Ltd for the Support and Maintenance of the PAAB System / Application for the Mpumalanga DoH (Deviation)

31-Mar-15 30-Sep-15 R4 965 237 R4 099 272 83%

Extended on a month-to-month basis

until the replacement contract RFB

1286/2014 is concluded. RFB 1286 is

being reviewed by Internal Audit and

the target for Management

Procurement Committee is 14 May

2015.

Symantec End User Security and Services for SAPS

30-Apr-15 30-Apr-16 R9 920 097 R10 515 303 106%

Extended to allow for the finalisation

of a resource plan and a replacement

contract. The business case to start a

replacement tender will be submitted

by 24 April 2015.

Interim Financial Statements

Interim financial statements were issued at the end of each quarter of the financial year as prescribed. These

reflected a fair view of the financial performance, financial position, changes in net assets and cash flows of SITA

at the end of each quarter.

ApprovalThe Annual Financial Statements set out on pages 105 to 145 have been approved by the Chief Executive

Officer.


14 August 2015

REPOR T OF SOCIAL AND E THICS COMMIT TEE 89

REPORT OF SOCIAL AND ETHICS COMMITTEE

Introduction

The Social and Ethics Committee of the State Information Technology Agency SOC has pleasure in presenting

its Report for the Financial Year ended 31 March 2015.

BackgroundThis report is provided by the Social and Ethics Committee in terms of Regulation 43(5)(c) of the Companies

Regulations promulgated in terms of the Companies Act 71 of 2008, as amended (the Companies Act).

The purpose of the Committee is to enforce a more structured and focused approach to social and ethical

issues, with standardised and comparable performance and information reported upon.

Composition and Terms of ReferenceThis statutory Committee was established by the SITA Board of Directors on 9 January 2013 and its terms of

reference were approved on 30 April 2013. The said terms of reference were revised during the past financial year.

The Committee monitors and oversees the functions as set out in the Companies Act as well as the responsibilities

assigned to it by the Board.

Information on the composition of the Social and Ethics Committee, its terms of reference and its procedures

are set out more fully in the Corporate Governance Report and the Annual Report.

Purpose and Functions

Legislation and codes of best practiceThe Committee is responsible for monitoring the Company’s activities, having regard to any relevant legislation,

other legal requirements and prevailing codes of best practice in the areas set out in the Companies Act. In

respect of legal and regulatory requirements, during the year under review the Committee, inter alia:

Discharged those regulatory obligations of a Social and Ethics Committee as prescribed by Regulation

43(5) of the Companies Regulations;

Considered reports provided by management regarding compliance with legal and regulatory

requirements in terms of the Company’s Legal and Regulatory Compliance Policy;

AL AND TEE

e of the State Information Technology Agency SOC has pleasure in presenting

nded 31 March 2015.

ocial and Ethics Committee in terms of Regulation 43(5)(c) of the Companies


The Company is committed to high moral, ethical and legal standards in dealing with all of its stakeholders. All

the Directors and employees are required to maintain high standards to ensure that the Company’s business is

conducted honestly, fairly and legally and in a reasonable manner, in good faith and in the best interests of SITA.

These principles are set out in SITA Code of Conduct.

Social and economic developmentThe Committee monitored and reviewed the implementation of policies regarding adding value to and giving

to the communities in which SITA operates, including Corporate Social Responsibility.

LabourSITA is committed to fair labour practices and freedom of association. The Company’s policies are aimed at

eliminating unfair discrimination and promoting equality in line with, inter alia, the South African Constitution,

the Labour Relations Act, the Employment Equity Act and the Broad-Based Black Economic Empowerment Act.

The Committee monitored and reviewed the implementation of labour policies, including:

Attraction, retention and development of skills to support the Company’s growth plan

Employment equity

Employee turnover

Learnerships and bursaries

Educational training and development of its employees; and

Literacy

Safety, health and environmentSITA is committed to providing its employees with a safe and healthy work environment. The Committee

monitored and reviewed the implementation of safety, health and wellness policies, including:

Safety performance;

Occupational health and wellness; and

Tuberculosis, HIV and Aids

Seadimo Chaba

Chairperson: Social and Ethics Committee

14 August 2015

REPOR T OF THE AUDIT, R ISK AND COMPLIANCE COMMIT TEE 91

REPORT OF THE AUDIT, RISK AND COMPLIANCE COMMITTEE

We are pleased to present our report for the Financial Year ended 31 March 2015.

Committee Members and AttendanceThe Committee consists of the members listed hereunder and has met as reflected below, in line with its

approved terms of reference.

MEMBERS NUMBER OF MEETINGS

NAME AND SURNAME 7

Adv B Matlejoane 1/7

Mr J Mngomezulu3 1/7

Mr Z Nomvete 6/7

Mr G Victor 6/7

Ms M Williams 7/7

Mr W Mudau 4/7

Audit, Risk and Compliance Committee Responsibility

The Committee has complied with its responsibilities arising from the requirements of the Companies Act of

2008, the Public Finance Management Act of 1999, and National Treasury Regulations of 2005. The Committee

has adopted appropriate formal terms of reference as its audit committee charter, has regulated its affairs in

compliance with this charter and has discharged all its responsibilities as contained therein.

The Adequacy, Reliability and Accuracy of the Financial InformationProvided to Management and Other Users of Such Information The Committee is of the opinion, based on the information and explanations given by management, the

internal auditors, and the Auditor-General on the results of its audits that the financial information provided to

management and other users of such information is adequate, reliable and accurate.

3. Ceased to be member of Committee after first meeting of the Financial Year

UDIT, RISK AND OMMITTEE

port for the Financial Year ended 31 March 2015.

and Attendancemembers listed hereunder and has met as reflected below, in line with its

S NUMBER OF MEETINGS

7


The Effectiveness of Internal Control

From the various reports of the Internal Auditors, the Audit Report on the Annual Financial Statements and the

management letter of the Auditor-General, no significant or material non-compliance with prescribed policies

and procedures were reported. Thus the system of internal control for the period under review was generally

effective. However, attention is drawn to the following areas of concern:

CAPEX

Billing and Collections

Supply Chain Management

The Effectiveness of Internal Audit The Committee received a wide variety of risk-based audit reports from the internal auditors and is of the

opinion that internal audit is effective in the fulfillment of its mandate. We are satisfied with the activities of the

internal audit function, including its annual work programme, co-ordination with the external auditors, the

reports of significant investigations and the responses of management to specific recommendations.

The Risk Areas of the Institution’s Operations A Risk Management Committee meets on a regular basis and shares its reports with the ARCC. A risk register is

kept and updated continuously to ensure that all the major risks facing the programmes and entities under the

National Treasury are recorded. The risk management system will be subject to internal audit in the coming year.

Accounting and Auditing Concerns Identified as a Result of Internal andExternal Audits No additional accounting and auditing concerns have been reported.

The Institution’s Compliance with Legal and Regulatory Provisions The Committee has noted the in-year management and reporting in terms of the SITA Act, the PFMA and all

other applicable law and is satisfied with the quality thereof.

Evaluation of Financial Statements The Committee has evaluated the annual financial statements of the agency for the year ended 31 March 2015

and, based on the information provided, concurs and accepts the Auditor-General’s conclusions on the annual

financial statements, and is of the opinion that the audited annual financial statements be accepted and read

together with the report of the Auditor-General.

REPOR T OF THE AUDIT, R ISK AND COMPLIANCE COMMIT TEE 93

Independence of External Auditors

In terms of the PFMA the Auditor-General is responsible for the external audit of the affairs of the agency.

However, the Auditor-General is, in terms of the Public Audit Act (No. 25 of 2004) as amended, authorised to

outsource such an audit.

The Auditor-General outsourced the external audit of the affairs of the agency to PricewaterhouseCoopers

(PwC), which conducted the 2014/2015 audit. The Committee is satisfied with the independence of the Auditor-

General and of PwC.

Issues raised in prior yearThe Committee has reviewed the agency’s implementation plan for audit issues raised in the prior year and is

satisfied that the matters have been adequately resolved except for the following:

CAPEX

Collections

Supply Chain Management

Zukile Nomvete

Chairman: Audit, Risk and Compliance Committee

14 August 2015


REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE STATE INFORMATION

TECHNOLOGY AGENCY SOC LIMITED

Report on the financial statements

Introduction1. I have audited the financial statements of the State Information Technology Agency SOC Ltd set out on

pages 105 to 145, which comprise the statement of financial position as at 31 March 2015, the statement

of financial performance, statement of changes in net assets, and cash flow statement the statement of

comparison of budget information with actual information for the year then ended, as well as the notes,

comprising a summary of significant accounting policies and other explanatory information.

Accounting authority’s responsibility for the financial statements2. The board of directors, which constitutes the accounting authority is responsible for the preparation and

fair presentation of the financial statements in accordance with South African Standards of Generally

Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Public Finance

Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA) and the Companies Act of South Africa,

2008 (Act No. 71 of 2008), and for such internal control as the accounting authority determines is

necessary to enable the preparation of financial statements that are free from material misstatement,

whether due to fraud or error.

Auditor-general’s responsibility3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted

my audit in accordance with International Standards on Auditing. Those standards require that I comply

with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in

the financial statements. The procedures selected depend on the auditor’s judgement, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation

and fair presentation of the financial statements in order to design audit procedures that are appropriate

in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s

internal control. An audit also includes evaluating the appropriateness of accounting policies used and the

REPORT OF THE AUDITOR-GENEPARLIAMENT ON THE STATE INFO

TECHNOLOGY AGENCY SOC LIMITE

Report on the financial statements

Introduction1. I have audited the financial statements of the State Information Technology

pages 105 to 145, which comprise the statement of financial position as at

REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE STATE INFORMATION TECHNOLOGY AGENCY SOC LIMITED 95

reasonableness of accounting estimates made by management, as well as evaluating the overall

presentation of the financial statements.

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my

audit opinion.

Opinion6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the

State Information Technology Agency SOC Ltd as at 31 March 2015 and its financial performance and cash

flows for the year then ended, in accordance with SA Standards of GRAP and the requirements of the

Companies Act of South Africa.

Emphasis of matter 7. I draw attention to the matters below. My opinion is not modified in respect of these matters.

Significant uncertainties8. With reference to note 27 to the financial statements, the public entity is the defendant in various lawsuits.

The public entity is opposing these claims. The ultimate outcome of these matters cannot presently be

determined and no provision for any liability that may result has been made in the financial statements.

Additional matters9. I draw attention to the matters below. My opinion is not modified in respect of these matters.

SITA as the procurement agent on behalf of other government institutions 10. According to section 7(3) and (5) of the State Information Technology Agency Act, 1998 (Act No. 88 of

1998) (SITA Act), every department must, and while other public bodies may, procure information

technology related goods and services through SITA.

11. In instances where requests are received from government departments and other public bodies, SITA acts

as the procurement agent on behalf of these institutions. SITA must facilitate the procurement process

strictly in terms of the prescribed legislation. SITA will make a recommendation to the accounting officer or

accounting authority on a preferred bidder(s). The accounting officer or accounting authority, however,

retains the right to accept or reject SITA’s recommendation.

12. During the audit of procurement of information technology goods and services for government

departments and other public bodies by SITA, we have identified several instances of non-compliance with

laws and regulations pertaining to the procurement process, contract management and adherence to

internal control. The details of these findings are included under paragraphs 46-53 of this report. These

non-compliance matters may cause modifications to the government departments and other public

body’s auditors’ reports.


Other reports required by the Companies Act 13. As part of my audit of the financial statements for the year ended 31 March 2015, I have read the Directors’

Report, the Audit Committee’s Report and the Company Secretary’s Certificate for the purpose of

identifying whether there are material inconsistencies between these reports and the audited financial

statements. These reports are the responsibility of the respective preparers. Based on reading these reports

I have not identified material inconsistencies between the reports and the audited financial statements in

respect of which I have expressed an unqualified opinion. I have not audited the reports and accordingly

do not express an opinion on them.

Report on other legal and regulatory requirements14. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general

notice issued in terms thereof, I have a responsibility to report findings on the reported performance

information against predetermined objectives for selected objectives presented in the annual

performance report, non-compliance with legislation and internal control. The objective of my tests was to

identify reportable findings as described under each subheading but not to gather evidence to express

assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives15. I performed procedures to obtain evidence about the usefulness and reliability of the reported

performance information for the following selected objectives presented in the annual performance

report of the entity for the year ended 31 March 2015:

Objective C1: Enhance efficiency of government business processes on pages 5,6 and 7

Objective C2: Improve security of government data assets on page 7

Objective C3: Review and improve performance of SCM on pages 7,8 and 9

Objective C5: Drive economies of scale in the acquisition of large ICT goods and services on page 9

Objective C6: Drive transformation agenda on page 9

16. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

17. I evaluated the usefulness of the reported performance information to determine whether it was

presented in accordance with the National Treasury’s annual reporting principles and whether the

reported performance was consistent with the planned objectives. I further performed tests to determine

whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant,

as required by the National Treasury’s Framework for managing programme performance information

(FMPPI).

18. I assessed the reliability of the reported performance information to determine whether it was valid,

accurate and complete.

19. I did not identify any material findings on the usefulness and reliability of the reported performance

information for the following objectives:

REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE STATE INFORMATION TECHNOLOGY AGENCY SOC LIMITED 97

Enhance efficiency of government business processes

Improve security of government data assets

Review and improve performance of the SCM

Drive economies of scale in the acquisition of large ICT goods and services

Drive transformation agenda

Additional matters20. Although I identified no material findings on the usefulness and reliability of the reported performance

information for the selected objectives, I draw attention to the following matters:

Achievement of planned targets21. Refer to the annual performance report on pages 37 to 49 for information on the achievement of the

planned targets for the year.

Adjustment of material misstatements22. I identified material misstatements in the annual performance report submitted for auditing on the

reported performance information of ‘Drive economies of scale in the acquisition of large ICT goods and

services ‘. As management subsequently corrected the misstatement, we did not raise any material findings

on the usefulness and reliability of the reported performance information.

Compliance with legislation23. I performed procedures to obtain evidence that the entity had complied with applicable legislation

regarding financial matters, financial management and other related matters. My findings on material

non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of

the PAA, are as follows:

Procurement and contract management24. Goods and services of a transaction value above R500 000 were procured without inviting competitive

bids as required by Treasury Regulations 16A6.1.

25. Sufficient appropriate audit evidence could not be obtained that all contracts and quotations were

awarded in accordance with the legislative requirements as supporting documentation for two (2)

contracts and one (1) quotation could not be provided.

Expenditure management26. The accounting authority did not take effective steps to prevent irregular expenditure as per the

requirements of section 51(1)(b)(ii) of the Public Finance Management Act.


Internal control27. I considered internal control relevant to my audit of the financial statements, annual performance report

and compliance with legislation. The matters reported below are limited to the significant internal control

deficiencies that resulted in the findings on non-compliance with legislation included in this report.

Financial and performance management28. The entity did not review and monitor compliance with applicable laws and regulations.

Other reports

Investigations29. The special investigations unit is currently investigating two (2) cases relating to procurement irregularities.

30. There are seven (7) cases where potential irregularities in respect of supply chain management and ICT

service delivery are being investigated that may result in financial misconduct.

31. The internal audit department has completed twenty nine (29) investigations in the current year in respect

of supply chain management, ICT service delivery and corporate services.

Pretoria

Date: 29 July 2015

CER TIF ICATE BY THE COMPANY SECRE TARY 99

CERTIFICATE BY THE COMPANY SECRETARY

I, Mashumi K Mzaidume, in my capacity as Company Secretary of SITA SOC Ltd, hereby certify that,

to the best of my knowledge and belief, the company has lodged with the Registrar of Companies all

such returns as are required of it in terms of Companies Act No 71 of 2008, and that all such returns are true,

correct and up to date.

Mashumi K Mzaidume

Company Secretary

14 August 2015

THE COMPANY

apacity as Company Secretary of SITA SOC Ltd, hereby certify that,

nd belief, the company has lodged with the Registrar of Companies all

in terms of Companies Act No 71 of 2008, and that all such returns are true,


DIRECTORS’ REPORT

1. Introduction

The directors have pleasure in presenting their report, which forms part of the audited annual financial

statements of the State Information Technology Agency SOC Ltd for the year ended 31 March 2015. This report

and the annual financial statements comply with the requirements of the Public Finance Management Act No

1 of 1999 (as amended), the SITA Act No 88 of 1998 (as amended by Act 38 of 2002) and the Companies Act No

71 of 2008. The Board of Directors is the accounting authority in terms of section 49(2) (a) of the PFMA.

2. Nature of Business The nature of the company’s business is the provision of information technology, information systems and

related services in a maintained information systems security environment to, or on behalf of, participating

national government departments, provincial government departments, and local government. In this regard

the company is an agent of the South African Government, in accordance with SITA Act No 88 of 1998 (as

amended by Act 38 of 2002). The company derives all its revenue from ICT services and goods.

3. Registration DetailsThe company’s registration number is 1999/001899/30. The registered office is 459 Tsitsa Street, Erasmuskloof,

Pretoria, 0001.

4. Ownership The company is wholly owned by the Government of the Republic of South Africa as represented by the Minister

for Telecommunications and Postal Services, Dr Siyabonga Cwele.

5. Equity ContributedThere were no changes to either the authorised or issued share capital of the company during the year ended

31 March 2015. Details of the authorised and issued share capital can be found in note 12 to the annual financial

statements.

DIRECTORS’ REPORT

1. Introduction

The directors have pleasure in presenting their report, which forms part o

statements of the State Information Technology Agency SOC Ltd for the year en

and the annual financial statements comply with the requirements of the Pub

1 of 1999 (as amended), the SITA Act No 88 of 1998 (as amended by Act 38 of 2

71 of 2008. The Board of Directors is the accounting authority in terms of sectio

DIREC TORS’ REPOR T 101

6. Financial Highlights

The financial performance is set out on pages 105 to 145 of this report.

The group financial performance is summarised as follows:

31 March 2015 31 March 2014

Rand % change

Revenue 5 089 678 442 8.48

Gross surplus 1 134 831 917 34.68

Surplus for the year – before tax 207 996 070 209.00

Total assets 3 725 842 126 0.79

Net assets 2 730 915 672 5.58

Cash generated from operations 160 156 016 -66.44

7. Dividends

There were no dividends declared for the current financial year (2014: R Nil).

8. Internal ControlsThe Board has the ultimate responsibility for establishing a framework of internal controls. The controls are

designed to provide cost effective assurance that assets are safeguarded and that liabilities and working capital

are efficiently managed. The internal control environments were effectively managed by management and

monitored by the internal audit department. During the year internal controls operated effectively.

9. Public Finance Management Act (PFMA)

PFMA complianceVarious sections of the PFMA place responsibility on the Board to ensure that the company complies with all

applicable legislations. Any non-compliance with legislation is reported on a quarterly basis to both EXCO and

the Board of Directors.

Materiality and Significance FrameworkA Materiality and Significance Framework has been developed for reporting losses through criminal conduct

and irregular, fruitless and wasteful expenditure, as well as for significant transactions per section 54(2) of the

Act, that require ministerial approval. The framework was approved by the Board of Directors and the Minister of

Public Services and Administration for the 2012/13 financial year.


Material losses through criminal conduct, irregular, fruitless and wasteful expenditureSection 55(2) b of the PFMA requires that SITA include in the annual report particulars of any material losses

through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred

during the financial year.

Public Private Partnerships The company did not enter into Public Private Partnership during the current financial year.

Basis of PresentationThe annual financial statements have been prepared in accordance with the Standards of Generally Recognised

Accounting Practices (GRAP) including any interpretations and directives issued by the International Accounting

Standards Board (IASB). In terms of these standards (GRAP), in the absence of a standard or pronouncement

comprising the GRAP financial reporting frameworks that specifically applies to a transaction, other event or

condition, management should apply judgement and may consider the following pronouncements, in

descending order, in developing an accounting policy for such a transaction, event or condition.

Standards of GRAP that have been issued, but are not yet effective,

IPSAS

IFRS

Events Subsequent to the Date of Financial PositionThere are no events subsequent to the date of the financial position.

Going ConcernThe directors confirm that they are satisfied that the company has adequate resources to continue in business

for the twelve month period from the date of this report. For this reason they continue to adopt the going

concern basis for preparing the financial statements as confirmed in the Statement of Responsibility by the

Board of Directors on page 12

DIRECTORS Disclosure of directors’ remuneration is detailed in the Audited Annual Financial Statements.

The following individuals were directors during the year under review:

DIREC TORS’ REPOR T 103

Non-executive directors:Jerry Vilakazi (Chairperson)

Vuyo Mahlati (Deputy Chairperson) Resigned 13 August 2014

Nozipho January-Bardill

Seadimo Chaba

Zukile Nomvete

Graeme Victor

Michelle Williams

Ntjatji Gosebo 19 May 2014 to date

Zeth Malele

Thabani Masuku Resigned 25 June 2014

Beatrice Matlejoane

Stadi Mngomezulu

Anna Mokgokong Resigned 26 May 2014

Alternate directorsWalter Mudau 19 May 2014 to date

Johnny De Lange 19 May 2014 to date

Refiloe Mokoena 19 May 2014 to date

Gracious Ncanywa 19 May 2014 to date

D C Niddrie

Company SecretaryMashumi K Mzaidume 12 May 2014 to date

ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2015


STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2015

in Rand Note 2015 2014

Assets

Non-current assets 1,008,780,868 874,700,690

Property, plant and equipment 4 613,913,014 475,657,828

Intangible assets 5 291,785,142 245,649,295

Non-current portion of Prepayments 10 – 64,211,206

Deferred tax assets 7 103,082,712 89,182,361

Current assets 2,717,061,257 2,821,828,139

Cash and cash equivalents 8 1,539,404,636 1,630,152,938

Trade and other receivables 9 1,022,868,657 1,021,490,046

Income Tax receivable 140,478,942 91,696,017

Current portion of Prepayments 10 14,309,022 78,489,137

Total assets 3,725,842,125 3,696,528,828

Net assets and liabilities

Net assets 2,730,915,672 2,586,626,536

Share capital 11 1 1

Reserves 12 627,334,546 627,334,546

Accumulated surpluses 2,103,581,125 1,959,291,989

Liabilities

Non-current liabilities 127,445,745 109,266,745

Post-retirement employee benefits 13 127,445,745 109,266,745

Current Liabilities 867,480,708 1,000,635,547

Trade and other payables 14 688,444,211 771,920,024

Provisions 15 – –

Income received in advance 16 179,036,497 228,715,523

Total net assets and liabilities 3,725,842,125 3,696,528,828

: ANNUAL F INANCIAL STATEMENTS 107

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 MARCH 2015

In Rand Note 2015 2014

Revenue 17 5,089,678,442 4,692,013,369

Cost of sales 18 3,954,846,525 3,849,400,431

Gross surplus 1,134,831,917 842,612,938

Other income 19 34,457,302 37,317,228

Operating expenses 20 1,083,613,962 936,570,443

(Deficit)/Surplus from operating activities 85,675,257 (56,640,277)

Finance income 21 160,654,579 147,289,814

Finance expenses 22 38,333,766 23,336,437

Surplus before income tax 207,996,070 67,313,100

Income tax expense 23 63,706,934 21,891,736

(Deficit)/Surplus for the year attributable to shareholder 144,289,136 45,421,364

STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 MARCH 2015

in Rand Share capital ReserveAccumulated

surplusesTotal

Balance as at 31 March 2013 1 627,334,546 1,913,870,625 2,541,205,172

Surplus for the year – – 45,421,364 45,421,364


Surplus for the year – – 144,289,136 144,289,136


Note 11 12


CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2015


Cash flows from operating activities

Receipts 5,162,983,377 4,795,897,586

– Sale of goods and services 5,088,469,135 4,716,913,183

– Finance income received 74,514,242 78,984,403

Payments (5,002,827,361) (4,318,622,078)

– Payment to suppliers and employees (4,863,307,114) (4,199,381,387)

– Finance costs paid (13,130,037) (384,055)

– Income tax paid 30.1 (126,390,210) (118,856,636)

Net Cash flows from operating activities 30.2 160,156,016 477,275,508

Cash flows from investing activities

Purchase of property, plant and equipment (194,400,037) (148,620,890)

Purchase of intangible assets (59,994,211) (207,383,333)

Proceeds from the sale of property, plant and equipment 3,489,930 29,019

Net Cash flows from investing activities (250,904,318) (355,975,204)

Cash flows from financing activities

Repayment of interest-bearing borrowings

Net Cash flows from financing activities – –

(Decrease)/Increase in cash and cash equivalents (90,748,302) 121,300,304

Cash and cash equivalents at beginning of year 1,630,152,938 1,508,852,634

Cash and cash equivalents at end of year 8 1,539,404,636 1,630,152,938


STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS FOR THE YEAR ENDED 31 MARCH 2015

In Rand Note ACTUAL BUDGET VARIANCE

Revenue a 5,089,678,442 5,182,472,519 –1.79%

Cost of sales b 3,954,846,525 4,145,978,015 –4.61%

Gross surplus 1,134,831,917 1,036,494,504

Other income c 34,457,302 30,690,714 12.27%

Operating expenses d 1,083,613,962 839,042,159 29.15%

Surplus from operating activities 85,675,257 228,143,059

Net Finance income e 122,320,813 52,250,000 134.11%

Surplus before income tax 207,996,070 280,393,059 –25.82%

Income tax expense 63,706,934 78,510,056 –18.86%

Surplus for the year attributable to shareholder 144,289,136 201,883,003 –28.53%

The budget represented above is the approved final budget that has been prepared on the accrual basis for a period of 1 year.

Notes:

a. The variance is mainly due to agency sales as well as business opportunities which did not materialise as planned.

b. The variance in respect of cost of sales is mainly due to lower depreciation expenses as a result of underspending on

CAPEX and under expenditure in respect of agency sales.

c. The variance is mainly due to higher than expected income in respect of GovTech conference sponsorships.

d. The variance is mainly due to higher labour costs as a result of changes in SITA structure which now has additional

number of Executives and non-recoverable resources and more than planned expenditure on professional services,

subsistence and travel, software, service contracts, marketing and training costs.

e. The variance is mainly due to the net fair value adjustments on trade receivables and payables with regards to

notional interest earned and incurred as well as interest received on bank balances.


NOTES TO THE ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2015

1. Reporting EntityThe State Information Technology Agency SOC Ltd (SITA) is a state owned company domiciled in South Africa. The

company is primarily involved in the provision of information technology, information systems and related services

in a maintained systems security environment on behalf of participating government departments, including

provincial and local government departments. The financial statements for the year ended 31 March 2015 were

authorised and approved in accordance with a resolution of the Board of Directors on 29 July 2015.

2. Basis of preparationThese financial statements are presented in South African Rands (R), which is the company’s functional currency. They

have been prepared on the historical cost basis except for financial instruments which are recorded at fair value.

a. Statement of complianceThe annual financial statements have been prepared in accordance with the Standards of Generally Recognised

Accounting Practices (GRAP) including any interpretations and directives issued by the Accounting Standards Board

(ASB). In terms of these standards (GRAP), in the absence of a standard or pronouncement comprising the GRAP

financial reporting frameworks that specifically applies to a transaction, other event or condition, management

should apply judgement and may consider the following pronouncements, in descending order of the hierarchy

listed below, in developing an accounting policy for such a transaction, event or condition.

Standards of GRAP (Generally Recognised Accounting Practices) that have been issued, but are not yet effective,

IPSAS (International Public Sector Accounting Standards)

IFRS (International Financial Reporting Standards)

b. Use of estimates and judgementsThe preparation of financial statements in conformity with the basis of preparation requires management to make

judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and

liabilities, revenue and expenses. The estimates and associated assumptions are based on historical experience and

various other factors that are believed to be reasonable under the circumstances. The results of which form the basis

of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates

are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period

of revision and future periods if the revision affects both current and future periods.


3. Significant accounting policiesThe principle accounting policies adopted in the preparation of these financial statements are set out below. The

accounting policies are consistent with those used to present previous years financial statements, unless specifically stated.

3.1 Foreign currency transactionsTransactions in currencies other than in Rand are defined as foreign currency transactions. Transactions in foreign

currencies are translated at the rates of exchange ruling at the transaction date. Monetary assets and liabilities

denominated in foreign currencies are translated into Rand at the rate of exchange ruling at the reporting date. Non

monetary assets and liabilities that are measured in terms of the historical cost in a foreign currency are translated at

the exchange rate ruling at the original transaction date. Any foreign exchange differences are recognised in surplus

or deficit in the period in which the difference occurs.

3.2 Financial instrumentsFinancial assets and liabilities are recognised in the statement of financial position when the company has become

party to contractual provisions of the financial instruments.

A financial asset and a financial liability is initially recognised at its fair value plus, in the case of a financial asset or a

financial liability not at fair value through surplus or deficit, transaction costs that are directly attributable to the

acquisition or issue of a financial asset or a financial liability

After initial recognition, financial assets, including derivative assets, are measured at their fair values, without any

transaction costs it may incur on sale or other disposal, except for the following financial assets:

Loans and receivables are measured at amortised cost using the effective interest method.

After initial recognition, financial liabilities are measured at amortised cost using the effective interest method,

except for financial liabilities at fair value through surplus or deficit. Financial liabilities at fair value through surplus

or deficit, including derivatives that are liabilities, are measured at fair value.

At the end of each reporting period, financial assets measured at amortised cost are assessed whether or not there

is any objective evidence of impairment. If objective evidence exists that an impairment loss has been incurred, such

loss is recognised in surplus or deficit. The amount of the impairment loss is measured as the difference between the

asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s

original effective interest rate.

When a subsequent event causes the amount of an impairment loss to decrease, the decrease in the impairment

loss is reversed through surplus or deficit.

A gain or loss on a financial asset or a financial liability classified as at fair value through surplus or deficit, including

a derivative asset or liability, is recognised in surplus or deficit.


3.3 Property, plant and equipmenta. Recognition and measurement

Items of property, plant and equipment, except land, are measured at cost less accumulated depreciation and

accumulated impairment losses. Land is stated at cost and is not depreciated. The cost of items of property, plant

and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after

deducting trade discounts and rebates, and any costs directly attributable to bringing the asset to the location and

condition necessary for it to be capable of operating in the manner intended by management.

Where an asset is acquired at no cost, or for a nominal amount , its cost is its fair value as at the date of acquisition.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

Where components of an item of property, plant and equipment have different useful lives, they are accounted for

as separate items (major components) of property, plant and equipment.

b. Subsequent costsThe cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the

item if it is probable that the future economic benefits embodied within the part will flow to the company and its

cost can be measured reliably. The carrying amount of the replaced part is derecognised. Repairs and maintenance

costs are not capitalised, they are recognised in surplus or deficit as incurred.

c. DepreciationDepreciation is recognised in the surplus or deficit on a straight-line basis over the estimated useful life of each item

of property, plant and equipment. Land is not depreciated. Depreciation begins when the item of property, plant

and equipment is in the location and condition necessary for it to be capable of operating in the manner intended

by management. Depreciation ceases when the asset is derecognised.

The estimated useful lives for the current and comparative periods are as follows:

Original useful lives Revised useful lives

Buildings 17 – 53 years 5 – 54 years

Computer equipment 3 – 13 years 3 – 25years

Office furniture 7 – 13 years 3 – 36 years

Vehicles 9 – 13 years 4 – 19 years

Depreciation methods, useful lives and estimated residual values are reviewed at each reporting date. The effect of changes

in the depreciation methods, useful lives and estimated residual values are accounted for in accordance with the Standard

on Accounting Policies, Changes in Accounting Estimates and Errors as a change in estimate.


d. DerecognitionThe carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future

economic benefits or service potential are expected from its use or disposal. The gain or loss arising on the disposal

or retirement of an item of property, plant and equipment is determined as the difference between the sale proceeds

and the carrying amount of the asset at the disposal date and is recognised in surplus or deficit.

3.4 Intangible assetsIntangible assets that are acquired by the company are initially measured and recognised at cost. Subsequently they

are carried at cost less accumulated amortisation and impairment losses.

Intangible assets with finite useful lives are amortised over their useful economic lives and assessed for impairment

whenever there is an indication that the intangible asset may be impaired. Amortisation is charged to surplus or

deficit on a straight line basis over the estimated useful lives of intangible assets. The amortisation period and the

amortisation method is reviewed annually and any changes are accounted for in terms of the Standard on Accounting

Policies, Changes in Accounting Estimates and Errors, as a change in accounting estimate.

Expenditure on an intangible item is recognised as an expense when it is incurred unless it forms part of the cost of

an intangible asset that meets the recognition criteria.

Computer softwareComputer software is initially recognised at cost. Subsequently it is carried at cost less accumulated amortisation

and accumulated impairment losses. Amortisation is charged on a straight line basis over the estimated useful life of

the software. Annual license fees on software are expensed in the year of accrual.

Software is amortised over a useful life of between 2 and 26 years.

Research and developmentExpenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge

and understanding, is recognised in surplus or deficit in the year in which it is incurred.

Development costs that have been incurred on internally generated intangible assets are capitalised and recognised

as an intangible asset when management can demonstrate all of the following:

the technical feasibility of completing the intangible asset so that it will be available for use or sale;

its intention to complete the intangible asset and use or sell it;

its ability to use or sell the intangible asset;

how the intangible asset will generate probable future economic benefits or service potential.

the availability of adequate technical, financial and other resources to complete the development and to use or

sell the intangible asset.

its ability to measure reliably the expenditure attributable to the intangible asset during its development.


3.5 Leases Lessee

Leases where the company does not retain a significant portion of the risks and rewards of ownership are classified

as operating leases. Payments made under operating leases are recognised in the surplus or deficit on a straight-line

basis over the lease term. Lease incentives received are recognised as an integral part of the total lease expense, over

the term of the lease.

There are no items of Property, plant and equipment classified as finance leased assets.

LessorRental income (net of any incentives given to the lessee) from operating leases is recognised on a straight-line basis

over the term of the relevant lease. Lease incentives granted are recognised as an integral part of the total rental

income, over the term of the lease.

Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the

leased asset and recognised, as an integral part of the total lease income on a straight-line basis, over the lease term.

Assets leased to third parties under operating leases are included in property, plant and equipment in the statement

of financial position.

a) Determining whether an arrangement contains a leaseThe company ensures that the following two requirements are met, in order for an arrangement transacted by the

company to be classified as a lease in terms of GRAP 13:

Fulfilment of the arrangement is dependent on the use of an asset or assets, and this fact is not necessarily

explicitly stated by the contract but rather implied; and

The arrangement conveys a right to use the asset or assets, if one of the following conditions is met:

the purchaser has the ability or right to operate the asset or direct others to operate the asset; or

the purchaser has the ability or right to control physical access to the asset; or

there is only a remote possibility that parties other than the purchaser will take more than a insignificant

amount of the output of the asset, and the price that the purchaser will pay is neither fixed per unit of output

nor equal to the current market price at the time of delivery.

The company’s assessment of whether an arrangement contains a lease is made at inception of the arrangement,

with reassessment occurring in the event of limited changes in circumstances as specified by GRAP 13.

3.6 ImpairmentThe carrying amount of the company’s tangible and intangible assets with a finite useful life, other than financial

assets and deferred taxation assets, are reviewed at each reporting date to determine if there is any indication of

impairment. If such an indication exists, the recoverable amount of the asset is estimated to determine the extent of

impairment loss (if any). Where an asset does not generate cash flows that are independent from other assets, the

company estimates the recoverable amount of the cash generating unit to which the asset belongs.


An impairment loss is recognised in surplus or deficit whenever the carrying amount of an asset exceeds the

recoverable amount.

The recoverable amount of an asset is the higher of the asset’s fair value less costs to sell and it’s value in use. Fair

value less costs to sell is determined by ascertaining the current market value of an asset after deducting any costs

relating to the realisation of the asset. In assessing the value in use, the expected future cash flows from the asset are

discounted to their net present values using a pre-taxation discount rate that reflects current market assessments of

the time value of money and the risks specific to the asset.

A previously recognised impairment loss is reversed if the recoverable amount increases as a result of a change in the

estimates previously used to determine the recoverable amount, to an amount not higher than the carrying amount

that would have resulted, net of depreciation and amortisation, had no impairment loss been recognised. A reversal of

an impairment loss is recognised as income immediately if the impairment was recognised previously as an expense.

3.7 Employee benefitsa) Defined contribution plan

A defined contribution plan is a post-retirement benefit plan under which the company pays fixed contributions

into a separate company and will have no legal or constructive obligation to pay further amounts. Obligations for

contributions to defined contribution pension plans are recognised as an employee benefit expense in the surplus

or deficit when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a

reduction in future payments is available.

b) Defined benefit planThe post retirement benefit plan is a defined benefit plan. Medical benefits are provided for all permanent employees

via three medical funds. All contributions paid are charged to the surplus or deficit in the year to which they relate.

The company provides post-retirement health care benefits to a closed group of qualifying employees and retirees.

The entitlement to post-retirement health care benefits is based on the qualifying employee remaining in service up

to retirement age. The expected cost of these benefits are accrued for over the period of employment, using the

projected unit credit method. Annual valuations of these obligations are carried out by independent qualified

actuaries. Any actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions

are recognised as an expense in the period in which the plan is amended.

c) Termination benefitsTermination benefits are recognised as an expense when the company is demonstrably committed, without a

realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal

retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.

Termination benefits for voluntary redundancies are recognised as an expense if the company has made an offer

encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances

can be estimated reliably. Benefits falling due more than 12 months after the end of the reporting period are

discounted to their present values.


d) Short-term benefitsShort-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related

service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus plans if the company has

a present legal or constructive obligation to pay this amount as a result of past service provided by the employee

and the obligation can be estimated reliably.

3.8 ProvisionsProvisions are recognised when the company has a present legal or constructive obligation as a result of past events;

it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably

estimated. Provisions are not made for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation

using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the

obligation. The increase in the provision due to the passage of time is recognised as an interest expense.

3.9 RevenueRevenue comprises amounts invoiced to customers for goods and services and is recognised at the fair value of the

consideration received or receivable, and excludes value added tax.

Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods are

transferred to the buyer, recovery of the consideration is considered probable, the associated costs and possible

return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated

with the transaction shall be recognised by reference to the stage of completion of the transaction at the reporting

date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:

(a) The amount of revenue can be measured reliably.

(b) It is probable that the economic benefits or service potential associated with the transaction will flow to the company.

(c) The stage of completion of the transaction at the reporting date can be measured reliably.

(d) The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When the outcome of a transaction involving the rendering of services cannot be estimated reliably, revenue shall

be recognised only to the extent of the expenses recognised that are recoverable.


3.10 Finance incomeFinance income comprises interest income earned on funds invested, interest charged on overdue customer

accounts and adjustments in terms of GRAP 104

Interest is recognised on the time proportion basis using the effective interest method over the period to maturity,

when it is determined that such income will accrue to the company.

3.11 Finance expensesFinance expenses comprise interest and penalties payable on overdue accounts and adjustments in terms of GRAP

104. Interest is calculated and recognised in surplus or deficit using the effective interest method.

3.12 TaxationIncome tax comprises current and deferred tax. Income tax expense is recognised in surplus or deficit except to the

extent that it relates to items recognised directly in the statement of changes in net assets.

Current taxation comprises tax payable calculated on the basis of the expected taxable income for the year, using

the tax rates enacted or substantively enacted at the reporting date, and any adjustment of the tax payable for

previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities

for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided

for is based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities

using the tax rates enacted or substantively enacted at the reporting date. The effects of deferred taxation of any

changes in tax rates is recognised in the surplus or deficit, except to the extent that it relates to items previously

charged and credited directly to the statement of changes in net assets.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the

extent that it is probable that future taxable profits will be available against which the associated unused tax losses

and deductible temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are

reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and

assets, and they relate to income taxes levied by the same authority on the same taxable entity, or on different tax

entities, but they intend to settle current tax liabilities and assets on a net basis or their assets and liabilities will be

realised simultaneously.


3.13 Related partiesThe company operates in an economic environment currently denominated by entities directly or indirectly owned

by the South African government. As a result of the constitutional independence that is guaranteed for the different

spheres of government, only parties within the national sphere of government are considered to be related parties.

Key management is defined as being individuals with the authority and responsibility for planning, directing and

controlling the activities of the company.

Close family members of key management personnel are considered to be those family members who may be

expected to influence, or be influenced by key management individuals in their dealings with the company.

All related party transactions are disclosed in terms of the requirements of IPSAS 20 Related Party Disclosures. The

objective of the standard and the financial statements is to provide relevant and reliable information and therefore

materiality is considered in the disclosure of these transactions.

3.14 Irregular, fruitless and wasteful expenditureIrregular expenditure is defined as expenditure incurred in contravention of or not in accordance with a requirement

of any applicable legislation.

Fruitless and wasteful expenditure represents expenditure that was made in vain and would have been avoided had

reasonable care been exercised.

All irregular, fruitless and wasteful expenditure are charged in surplus or deficit in the period in which they are identified.

3.15 Cash and cash equivalentsCash includes cash-on-hand and cash with banks. Cash equivalents are short-term highly liquid investments that are

held with registered banking institutions with maturities of three months or less and are subject to an insignificant

risk of change in value.


4. Property, plant and equipment

in Rand Land BuildingsComputer

EquipmentOffice

furnitureVehicles Total

At 31 March 2015Cost

Balance at beginning of year 24,743,595 264,162,979 638,176,743 112,968,539 1,148,757 1,041,200,613

Additions and improvements – 2,465,907 169,367,048 22,567,083 – 194,400,037

Disposals/Retirements – (60,975) (16,448,012) (598,715) (232,456) (17,340,158)

Balance at end of year 24,743,595 266,567,911 791,095,779 134,936,907 916,301 1,218,260,493

Accumulated depreciation

Balance at beginning of year – 102,870,313 388,608,917 73,309,880 753,675 565,542,785

Depreciation charge – 5,183,049 37,486,844 5,870,067 49,122 48,589,082

Disposals/Retirements – (45,677) (9,096,373) (437,555) (204,783) (9,784,389)

Balance at end of year – 108,007,685 416,999,388 78,742,392 598,014 604,347,479

Net carrying amount 24,743,595 158,560,226 374,096,391 56,194,515 318,287 613,913,014


Balance at beginning of year 24,743,595 261,936,023 585,070,709 111,909,686 1,148,757 984,808,770

Additions and improvements – 2,256,532 141,669,266 4,695,092 – 148,620,890

Disposals/Retirements – (29,576) (88,563,232) (3,636,239) – (92,229,047)

Balance at end of year 24,743,595 264,162,979 638,176,743 112,968,539 1,148,757 1,041,200,613

Accumulated depreciation

Balance at beginning of year – 93,318,168 436,819,697 74,487,573 831,200 605,456,638

Depreciation charge – 9,574,904 9,841,264 1,771,643 –77,525 21,110,286

Disposals/Retirements – (22,759) (58,052,044) (2,949,336) – (61,024,138)

Balance at end of year – 102,870,313 388,608,917 73,309,880 753,675 565,542,785

Net carrying amount 24,743,595 161,292,666 249,567,826 39,658,659 395,082 475,657,828

None of the items of property, plant and equipment are held under finance lease.

A register of land and buildings is available for inspection at the registered office of the company.


5. Intangible assets

in Rand Intangible assets Internally generated

intangible asset Total


Balance at beginning of year 193,272,694 346,243,408 539,516,102

Additions and improvements 6,099,245 53,894,966 59,994,211

Disposals/Retirements (44,288) – (44,288)

Balance at end of year 199,327,651 400,138,374 599,466,025

Accumulated amortisation


Amortisation charge 13,852,566 – 13,852,566

Disposals/Retirements (38,490) – (38,490)


Net carrying amount 66,761,176 225,023,966 291,785,142



Additions and improvements 30,082,690 177,300,643 207,383,333

Disposals/Retirements (39,860,501) – (39,860,501)


Accumulated amortisation

Balance at beginning of year 145,845,513 – 145,845,513

Amortisation charge 2,085,566 – 2,085,566

Disposals/Retirements (29,178,680) – (29,178,680)

Impairment – 175,114,408 175,114,408


Net carrying amount 74,520,295 171,128,999 245,649,295

Intangible assets comprises of software and licenses.

Internally generated intangible assets relate to the development of IFMS and solutions for Transversal Solutions.

Due to a strategic change in direction relating to IFMS, an amount of R175m was required to be impaired.


6. Capital and Operational commitments

in Rand 2015 2014

Budgeted and contracted for 255,974,751 329,076,990

255,974,751 329,076,990

The capital and operational commitments are funded through the company’s operational activities.

7. Deferred tax assetsDeferred tax assets are attributable to the following:

in RandStatement of financial

performance movement2015 2014

Movement in impairment on trade receivables 5,439,344 66,470,320 61,030,976

Movement in asset impairment – 49,032,034 49,032,034

Accrual for leave pay benefits 1,877,297 20,207,679 18,330,382

Post-retirement medical benefits 5,090,120 35,684,809 30,594,689

Income received in advance (13,910,128) 50,130,219 64,040,346

Notional interest adjustment 55,146 823,989 768,842

Leases (129,622) 305,396 435,018

Prepayments 8,985,216 (2,003,264) (10,988,479)

Section 24C allowance 14,275,553 (49,764,794) (64,040,346)

Depreciation/amortisation (7,782,576) (67,803,676) (60,021,101)

13,900,351 103,082,712 89,182,361

Reconciliation between opening and closing balance

Deferred tax asset at beginning of year 89,182,361 62,679,080

Statement of financial performance movement 13,900,351 26,503,281

– current year 13,900,351 26,503,281

Deferred tax asset at end of year 103,082,712 89,182,361


8. Cash and cash equivalents

in Rand 2015 2014

Cash with Banks 1,539,404,636 1,630,152,938

– Current account balance 33,214,317 127,455,638

– Unidentified receipts (2,758,230) –

– Interest Accrual 247,552 360,963

– Call account balance 2,000,000 2,159,964

– Monies held in trust 32,914,754

– Payroll account 9,922 9,523

– CPD account 1,473,762,721 1,500,155,249

– Cash float 13,600 11,600

Ring-fenced cash 239,890,840 286,122,601

– IFMS Project 100,162,242 100,000,000

– Income received in advance 64,946,598 111,340,601

– Municipal guarantees 1,437,000 1,437,000

– Post retirement medical benefits 73,345,000 73,345,000

Available Cash 1,299,513,796 1,344,030,338

Ring-fenced cash represents cash received from customers to be utilised for specific projects in the future, deposits held

for rental and municipalities and money that has been ring-fenced to manage the immediate risk of an uncovered post-

retirement medical benefit liability.

The company’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 24.

The average rate of interest on the cash balances was 5.89% (2014: 5.16%)

9. Trade and other receivablesin Rand 2015 2014

Trade receivables 1,284,426,934 1,275,463,890

Less: Impairment of trade receivables (304,077,708) (279,194,675)

980,349,226 996,269,215

Other receivables 42,519,431 25,220,831

1,022,868,657 1,021,490,046

The company’s exposure to credit and currency risk and impairment losses related to trade and other receivables are

disclosed in Note 24.


10. Prepayments

in Rand 2015 2014

Software maintenance costs – Non-current portion – 64,211,206

Software maintenance costs – Current portion 14,309,022 78,489,137

14,309,022 142,700,343

11. Share Capital

in Rand 2015 2014

Authorised and issued

One ordinary share at R1.00 each 1 1

12. Reserves

in Rand 2015 2014

Opening balance 627,334,546 627,334,546

Movement – –

Closing balance 627,334,546 627,334,546

The State Information Technology Agency Act, 1998 (Act no.88 of 1998)(as amended by Act no.38 of 2002) resulted in the

reduction of the company’s share capital from R627 334 547 to R1. Approval was granted by National Treasury to transfer

the difference to reserves.


13 Post-retirement employee benefits

in Rand 2015 2014

Present value of unfunded obligations 127,445,745 109,266,745

Plan assets – –

Unrealised actuarial gains – –

127,445,745 109,266,745

Movement in the present value of the defined benefit liability

Balance at beginning of year 109,266,745 124,987,745

Statement of financial performance movement 18,179,000 (15,721,000)

Current service cost 3,889,000 3,921,000

Interest cost 10,569,000 7,031,000

Contributions paid (634,000) (1,070,000)

Settlement (gain)/loss (2,953,000) –

Curtailments (13,487,000)

Realised actuarial (gain)/loss 7,308,000 (12,116,000)

Balance at end of year 127,445,745 109,266,745

Employee benefit expense:

Current service cost 3,889,000 3,921,000

Interest cost 10,569,000 7,031,000

Settlement (gain)/loss (2,953,000) –

Curtailments – (13,487,000)

Net actuarial losses/gains recognised in surplus or deficit 7,308,000 (12,116,000)

Negative/positive past service cost – –

Total employee benefit expense 18,813,000 (14,651,000)


Principal actuarial assumptions

Gross Discount RateZero–coupon South African bond yield curve – 9.0%

Zero–coupon South African bond yield curve – 9.7%

Healthcare Cost Inflation2% higher than CPI inflation – 8.7%

0.5% lower than valuation discount rate at each term to maturity – 9.0%

Pre-retirement mortality assumptions:

– Males SA85-90 L SA85-90 L

– Females SA85-90 L SA85-90 L

Post-retirement mortality assumptions:

– Males

PA(90) rated down 2 year(s) plus 1% future improvement

PA(90) rated down 2 year(s) plus 0.5% future improvement

– Females

PA(90) rated down 2 year(s) plus 1% future improvement

PA(90) rated down 2 year(s) plus 0.5% future improvement

Expected retirement ages:

– Males65 years – ex Infoplan; 60 years – others

65 years – ex Infoplan; 60 years – others

– Females65 years – ex Infoplan; 60 years – others

65 years – ex Infoplan; 60 years – others

Continuation percentage 100% 100%

Percentage married at retirement 90% 90%

The medical inflation rate is assumed to be 0.5% lower than the valuation discount rate at each term to maturity.

The company provides for post-retirement medical benefits to the following qualifying employees:

a) Ex-Infoplan employees who transferred to the company on 1 April 1999 and who remain members of SITA approved

medical aids.

b) Ex-SAPS employees who transferred to the company on 1 April 1999, and

c) Other former public sector employees who transferred to the company on or after 1 April 1999 and who remain

members of SITA approved medical aids.

The amounts due in respect of the company’s liability regarding the post-retirement medical benefit has been determined

by independent actuaries as at 31 March 2015 using the projected unit credit method.

The current service cost, interest cost and actuarial gains and losses are included in the line item Operating Expenses (staff

costs) in the Statement of Financial Performance.

It is anticipated that the contributions to be paid in 2015/16 will amount to R683 000


Sensitivity analysis relating to the assumed medical cost trend rates:

Increase of 1%

BaseDecrease

of 1%

Change in Liability in Rand 101,438,000 127,445,745 162,204,000

Change in Liability as a % –20.41% 27.27%

Service cost and Interest cost in Rand 11,554,000 14,458,000 18,290

2015 2014 2013 2012 2011

Experience adjustments (12,050,000) (28,536,000) (23,274,000) 3,015,001 (1,887,674)

Present value of defined benefit obligation 127,445,745 109,266,745 124,987,745 129,151,713 114,230,403

13.1 Employee benefitsAll permanent employees are members of the following independent funds:

Denel Retirement Fund:The Denel Retirement Fund is a defined contribution fund, managed by a Board of Trustees in terms of the Pension Funds

Act of 1956 (Act no. 24 of 1956). The company has no financial liability in respect of this fund.

Government Employees Pension Fund:Retirement benefits are provided by membership of the Government Employees Pension Fund which is a defined benefit

fund. However, as the company’s responsibility regarding the funding of the shortfall of the pension fund is limited to the

current contributions made on behalf of its employees, this fund is classified as a defined contribution fund from the

company’s perspective. The Government of South Africa as the employer is responsible for any shortfall in this Fund. This

responsibility is governed by the General Pensions Act 29 of 1979 and Government Employees Pension Law, Proclamation

21 of 1996.

SITA Pension Fund:The SITA Pension Fund, which is administered by Alexander Forbes, is a defined contribution fund. The company has no

financial liability in respect of this fund.

The contributions charged against income for the above mentioned pension funds amounted to R83.5 million (2014:

R75.8 million).

Current medical benefits:The company contributes to three medical aid schemes for the benefit of permanent employees and their dependants.

Contributions charged against income amounted to R84.5 million (2014: R80.3 million). The company’s financial obligation

is limited to the current company contributions.


14. Trade and other payables

in Rand 2015 2014

Trade payables 439,675,296 512,653,545

Leave pay accrual 77,214,837 70,510,205

Accrual for 13th cheque 5,191,539 5,043,178

Non-trade payables 166,362,539 183,713,096

688,444,211 771,920,024

The company’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 24.

15. Provisions

in Rand 2015 2014

Balance at beginning of year – –

Additional provision (reversed)/raised during the year – –

Utilisation of provision during the year – –

Balance at end of year – –

– –

Provision is in respect of performance bonus.

16. Income received in advance

in Rand 2015 2014

Unearned Revenue 13,927,657 17,374,922

Ring fenced cash (Refer to note 8) 165,108,840 211,340,601

– Income received in advance 64,946,598 111,340,601

– IFMS 100,162,242 100,000,000

179,036,497 228,715,523

Income received in advance represents monies received from customers to be utilised for specific projects in future periods.

Unearned Revenue represents amounts that have been billed as per the contract with the customer, but relate to future

activity of the contract.


17. Revenue

in Rand 2015 2014

BPO Service desk – 34,016

Commercial Printing 8,072,540 47,557,562

ICT Advisory Services 34,503,774 50,760,104

Information Management 41,940,021 34,253,062

Managed Applications 535,588,260 521,638,308

Managed Desktop 397,210,682 393,551,075

Managed Infrastructure 2,077,341,663 1,528,785,564

Project Management 50,050,283 226,295,992

Requesting and Fulfillment 1,563,704,580 1,603,338,632

Security Management 24,068,338 11,593,222

Service Management Centre 179,967,954 127,622,503

Training 28,649,865 28,799,858

Solution development 148,580,482 117,783,470

5,089,678,442 4,692,013,369

18. Cost of sales

in Rand 2015 2014

Direct depreciation 44,667,149 20,232,341

Direct amortisation 10,661,614 2,085,308

Direct labour 1,098,592,312 981,137,832

Service delivery expenditure 2,800,925,450 2,845,944,950

3,954,846,525 3,849,400,431

19. Other income

in Rand 2015 2014

Profit on disposal of assets 19,039 29,019

Operating lease income 11,534,190 14,553,749

Income from GovTech conference 20,070,483 20,744,373

Sundry income 2,833,590 1,990,087

34,457,302 37,317,228


20. Operating expensesThe following separately disclosable items are included in operating expenses:

in Rand 2015 2014

Auditor’s remuneration

– Audit fees 9,805,349 11,761,166

Amortisation

Total amortisation 13,852,566 2,085,566

Included in Cost of sales (10,661,614) (2,085,308)

Non-recoverable amortisation 3,190,952 258

Depreciation

Total depreciation 48,589,082 21,110,286

Included in cost of sales (44,667,149) (20,232,341)

Non-recoverable depreciation 3,921,933 877,946

Impairment movement

– Trade and other receivables 21,827,222 12,158,083

– Impairment on IFMS – 175,114,408

Software written-off 86,703,914 –

Net Loss on disposal of assets 4,090,675 41,814,384

Operating lease expense 40,963,924 34,823,344

Staff costs 476,794,268 373,542,172

Refer to Annexure A for Director’s remuneration

21. Finance income

in Rand 2015 2014

Notional Interest earned 86,084,990 68,233,392

Foreign exchange gain 55,347 72,019

Interest on cash balances 74,514,242 78,984,403

160,654,579 147,289,814


22. Finance expenses

in Rand 2015 2014

Notional Interest incurred 24,170,595 22,202,548

Interest paid 13,130,037 384,055

Foreign exchange loss 1,033,134 749,834

38,333,766 23,336,437

23. Income tax expense

in Rand 2015 2014

Current tax expense

Income tax charge 77,607,285 48,395,017

Prior year under provision – –

Deferred tax expense

Origination and reversal of temporary differences (13,900,351) (26,503,281)

Total income tax expense 63,706,934 21,891,736

Reconciliation of effective tax rate

Profit for the period 144,289,136 45,421,364

Total income tax expense 63,706,934 21,891,736

Profit excluding income tax 207,996,070 67,313,100

2015 2014

% R % R

Income tax using the company’s domestic tax rate 28.00% 58,238,900 28.00% 18,847,668

Non-deductible expenses 2.63% 5,468,034 4.52% 3,044,068

Overprovision current tax

Underprovision deferred tax asset

Effective income tax 30.63% 63,706,934 32.52% 21,891,736


24. Financial instrumentsa) Credit risk

Credit risk is the risk of financial loss to the company when the customer or counterparty to the financial instrument

fails to meet its contractual obligations and arises principally from the company’s receivables from customers.

The company limits its counterparty exposure arising from money market instruments by dealing only with well-

established financial institutions of high credit standing. Exposure relating to trade and other receivables, which

mainly consist of national and provincial government departments as well as local government, is managed by

entering into contractual agreements that indicate payment terms of the services rendered. These customers fall

within the ambit of the Public Finance Management Act,1999 (Act No. 1 of 1999) and the Municipal Finance

Management Act, 2003 (Act No.56 of 2003). These legislations prescribe that suppliers of products and services be

paid within 30 days or as stipulated by agreements entered into.

The carrying amount of financial assets represents the maximum credit exposure. The maximum credit exposure to

credit risk at the reporting date was:

Carrying amount


Direct depreciation 9 980,349,226 996,269,215

Direct amortisation 9 42,519,431 25,220,831

Direct labour 8 1,539,404,636 1,630,152,938

3,954,846,525 3,849,400,431

Impairment lossesThe aging of trade receivables net of the impairment loss at the reporting date was:

in Rand 2015 2014

Not past due 572,606,452 566,476,996

Past due 0 – 30 days 71,112,135 116,941,632

Past due 31 – 90 days 147,549,922 125,587,242

Past due 91 – 360 days 144,300,591 159,742,431

Past due – more than 360 days 44,780,126 27,520,913

980,349,226 996,269,215

The due date of invoices is determined as being 30 days after the invoice date.


Credit quality of financial assets

Trade receivablesThe credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external

credit ratings, except for the credit quality of individual government debt that cannot be determined individually as

government as a whole is assessed by international rating agencies in total. Management does not deem it

appropriate to assign a national rating to specific debtors. Government debt does not prescribe and therefore the

credit risk exposure is limited.

Cash at bank

2015 2014

Zero risk (CPD) 1,473,762,721 1,500,155,249

Fitch BBB 65,380,763 129,465,371

Cash on hand 261,152 532,318

1,539,404,636 1,630,152,938

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

2015 2014

Balance at beginning of year 279,194,675 267,036,592

Impairment loss recognised 24,883,033 12,158,083

Balance at end of year 304,077,708 279,194,675

The impairment loss is based on history on invoices over 360 days and specifically identified invoices that are

considered doubtful based on information in the company’s possession. Each debtor is analysed individually and a

decision to impair is made.


b) Liquidity riskLiquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. The

company’s approach in managing liquidity risk is to ensure, as far as possible , that it will always have sufficient

liquidity to meet its liabilities when due, under normal and stressed conditions, without incurring unacceptable

losses or risking damage to the company’s reputation. This risk is managed by maintaining adequate cash reserves

by continuously monitoring cash flow forecasts, actual cash flows and the maturity profile of financial assets and

liabilities.

The following are the contractual maturities of financial liabilities, including estimated interest payments and

excluding the impact of netting agreements:

31 March 2015

in RandCarrying amounts

Contractual cash flow

6 months or less 6 – 12 months 1 – 2 years

Trade and other payables 688,444,211 688,444,211 688,444,211 – –

688,444,211 688,444,211 688,444,211 – –

31 March 2014

in RandCarrying amounts

Contractual cash flow

6 months or less 6 – 12 months 1 – 2 years

Trade and other payables 771,920,024 771,920,024 771,920,024 – –

771,920,024 771,920,024 771,920,024 – –

c) Currency riskCurrency risk arises from exposure to foreign currencies when the value of the rand changes in relation to these

currencies. The company primarily transacts in US dollar when dealing with foreign transactions.

The company’s exposure to foreign currency risk was minimal.


d) Interest rate riskAt the reporting date the interest rate profile of the company’s interest-bearing financial instrument was:

Carrying amount

in Rand 2015 2014

Fixed interest rateThe company does not hold any fixed interest rate financial instruments.

Fair value sensitivity analysis for fixed rate instrumentsThe company does not account for any fixed rate financial liabilities at fair value through surplus or deficit, and the

company does not designate derivatives (interest-rate swaps) as hedging instruments under a fair value hedge

accounting model. Therefore a change in interest rate at reporting date would not affect surplus or deficit.

Variable interest rate

Cash and cash equivalents 1,539,404,636 1,630,152,938

Fair value sensitivity analysis for variable interest rate instrumentsThe sensitivity analysis below has been determined based on the exposure to interest rates at reporting date and the

stipulated change taking place at the beginning of the financial year and held constant in the case of variable rate

borrowings. A 100 basis point increase or decrease has been used, as this represents management’s assessment of

the possible change in the interest rates.

If interest rates had been 100 basis points higher/lower and all other variables held constant, the company’s

surplus before taxation would increase/decrease by:

1,539,405 1,630,153

2015 2014

Carrying amount Carrying amount

e) Categories of financial instruments

Financial instruments at amortised cost:

Cash and cash equivalents 1,539,404,636 1,630,152,938

Trade and other receivables 1,022,868,657 1,021,490,046

Trade and other payables 688,444,211 771,920,024


25. Related partiesTransactions with governmentThe company is 100% owned by the government of South Africa represented by the Minister for Telecommunications and

Postal Services.

The company is a schedule 3A National Public Entity in terms of the Public Finance Management Act,1999 (Act No.1 of

1999). The related party disclosures is in terms of the requirements of GRAP 20 (Related Party Disclosures).

Related parties of the company consist of government departments, state-owned enterprises and other public entities in

the national sphere of government and key management personnel of the company and close family members of related

parties. All transactions entered into with related parties are at arm’s length. This entails that all transactions occur in the

normal course of operations and are at the same terms and conditions as available to all customers and suppliers alike.

Transactions with key management personnelThe key management personnel are directors and executive managers of the company for the year ended 31 March 2015.

Transactions with key management personnel are disclosed in Annexure A.

26. Operating leases

Operating lease expenseThe company entered into non-cancellable operating lease agreements for the occupation of certain premises.

At the reporting date, the future minimum lease payments under these lease agreements were as follows:

in Rand 2015 2014

Less than 1 year 35,766,033 21,960,255

Between 1 and 5 years 21,618,268 18,977,178

More than 5 years – –

57,384,301 40,937,433

Operating lease incomeThe company entered into non-cancellable operating lease agreements with tenants. At reporting date, the future

minimum lease payments receivable under these lease agreements were as follows:

in Rand 2015 2014

Less than 1 year 52,174 50,413

Between 1 and 5 years – 37,810

More than 5 years – –

52,174 88,223

The average period for operating lease agreements is 5 years.


27. Contingent liabilities Litigations and claims:

There are various claims against SITA estimated at approximately R25.3 million. Based on legal advice, the probability

is not determinable in the majority of these claims as the ruling could go either way. Furthermore, it is not possible

at this stage to estimate the exact potential damages and legal costs involved as it will have to be proved by the

plaintiffs/defendants. Legal costs in respect of these matters is expected to amount to at least R5.4 million.

Contingent liability relating to surplus fundsIn terms of section 53(3) of the Public Finance Management Act, SITA is required to remit back to National Treasury,

any surpluses at the end of its financial year. However, as SITA does not receive a vote from National Treasury and is

self-sustaining, self-funding entity, a submission is in the process of being made to National Treasury via DoTPS for

SITA to retain it’s accumulated surpluses as at 31 March 2015. Until such time as this approval is granted, the surplus

of R144 289 136 is considered to be a contingent liability. Based on previous experience, it is expected that the

request to retain SITA’s accumulated surplus as at 31 March 2015 may be granted.

28. Contingent liabilitiesAt the date of approval of these financial statements, the following Standards and Interpretations were in issue but

not yet effective:

Standard/Interpretation Applicable to SITA

GRAP 18 Segment reporting N/A

GRAP 20 Related Party Disclosures YES

GRAP 32 Service concession arrangements N/A

GRAP 105 Transfer of functions between entities under common control N/A

GRAP 106 Transfer of functions between entities not under common control N/A

GRAP 107 Mergers N/A

GRAP 108 Statutory Receivables N/A

With regards to GRAP 20 an assessment of the impact of their application has been made and it has been determined

that these standards will only have a impact on the company’s disclosure in the annual financial statements.


29. a) Irregular Expenditure

2015 2014

R R

Opening Balance 65,399,354 54,449,489

Add: Irregular Expenditure – current year 13,980,190 35,152,553

Less: Amounts condoned (22,751,178) (24,202,688)

Add/(Less): Prior year adjustment 175,722 –

Less: Amounts recoverable (not condoned) – –

Less: Amounts not recoverable (not condoned) – –

Irregular expenditure awaiting condonation 56,804,088 65,399,354

Analysis of expenditure awaiting condonation per age classification

Current year 13,980,190 30,699,200

Prior years 42,823,898 34,700,154

Total 56,804,088 65,399,354

b) Fruitless and Wasteful Expenditure

2015 2014

R R

Opening Balance 1,861,517 3,002,186

Add: Fruitless and Wasteful expenditure – current year 8,530,842 –

Less: Amounts written off – (1,140,669)

Less: Amounts not recoverable (not condoned) – –

Fruitless and wasteful expenditure awaiting write-off 10,392,359 1,861,517

Analysis of expenditure awaiting write-off per age classification

Current year 8,530,842 –

Prior years 1,861,517 1,861,517

Total 10,392,359 1,861,517

Details of Fruitless and Wasteful ExpenditurePrior YearsThe balance of R1,861,517 in respect of prior years relates to a matter under criminal investigation by the Serious

Commercial Crime Unit (SCCU). Recovery of the loss is not certain and can only be initiated upon conclusion of the

criminal investigation.

Current yearThe amount of R8,530,842 represents fruitless and Wasteful expenditure resulting from compounded interest accumulated

over the past 4 years in respect of back billing for the period March 2011 to March 2014.


1. Details of Irregular Expenditure – Current year

Item No. IncidentPrior Year

2013 Current

Year Totals

1IE00073 Irregular expenditure arising from the continued procurement of VSAT services without a valid contract in place, after expiry of the initial contract on 31 January 2014.

– 3,162,144 3,162,144

2

IE00090Irregular expenditure arising from the failure by senior officials to follow the Procurement policies and procedures when procuring services relating to the hire and use of conference facilities:

– 56,495 56,495

4

IE00086Irregular expenditure arising from failure by officials to follow SITA’s own procurement policies and procedures in the procurement of access links and bandwidths for various sites of clients.

– 295,176 295,176

5

IE00084Irregular expenditure arising from the continued procurement of ERP support and maintenance services without a valid contract in place, after expiry of the contract extension on 30 September 2013.

3,741,240 – 3,741,240

6

IE00072Irregular expenditure arising from continued procurement of maintenance and support services of PBX systems for a client, without a valid contract in place, after expiry of the initial contract (no. RFB677) on 31/12/2013.

4,779,617 – 4,779,617

8

IE00074Irregular expenditure arising from the continued procurement, without a valid contract, of commercial cleaning services for SITA WC provincial office, after expiry of the initial contract on 30 September 2013.

63,963 – 63,963

9

IE00075Irregular expenditure arising from the continued procurement, without a valid contract, of maintenance and repair of office air conditioning units for the provincial office, after expiry of the initial contract on 30 September 2013.

19,995 – 19,995

10

IE00076Irregular expenditure arising from the continued procurement, without a valid contract, of maintenance and repair of access control units for the provincial office, after expiry of the initial contract on 30 September 2013.

19,603 – 19,603

11

IE00077Irregular expenditure arising from the continued procurement, without a valid contract, of SOLIMAR software and maintenance for the provincial office, after expiry of the initial contract on 31 December 2013.

12,107 – 12,107

12

IE00078Irregular expenditure arising from the continued procurement, without a valid contract, of maintenance and repair of access control units for the provincial office, after expiry of the initial contract on 30 September 2013.

22,634 – 22,634

13IE00079Irregular expenditure arising from the continued procurement of services for a client from a supplier without a valid contract in place .

457,409 – 457,409

14IE00080Irregular expenditure arising from the continued procurement of services from a supplier after expiry of the initial contract on 31 Dec. 2012.

487,131 – 487,131

15

IE00081Irregular expenditure arising from the continued procurement of services for a client from a supplierwithout a valid contract in place after expiry of the initial contract on 31 Dec. 2012.

36,423 – 36,423

16

IE00082 Irregular expenditure arising from the continued procurement of services for a client from a supplie rwithout a valid contract in place after expiry of the initial contract on 31 Dec. 2012.

55,448 – 55,448

17IE00083 Irregular expenditure arising from the continued utilisation of labour broker resources without a valid contract in place, after expiry the initial contract on 31 December 2013.

770,805 – 770,805

Totals 10,466,375 3,513,815 13,980,190


2. a) Details of Irregular Expenditure Condoned

Item No. IncidentCondoned by (condoning authority)

Amount

1

IE00071Irregular expenditure arising from the continued procurement, without a valid contract, of services for the migration of two clients’ sites from their existing Telco Service Provider (Telkom) into a separate Virtual Private Network (VPN) on the SITA Next Generation Network (NGN) from 1 September 2013 to 31 March 2014.

Internal Audit, based on the result of their investigation, concluded that:

there is no defined process-flow to guide the process to renew/extend existing contract upon expiry.

Due to this weakness, accountability for the irregular exp. could not be attached to anyone of the several officials that were involved in the process..

Board of Directors 22,501,656

2

IE00056Irregular expenditure arising from continued procurement, without a contract, of security services after expiry of the contract extension on 31 Dec. 2012.

Board of Directors 119,290

3

IE00054Irregular expenditure incurred when officials tasked an electrical contractor to provide emergency plumbing services. The electrical contractor, in turn, sub-contracted the work to a plumbing contractor. The work was carried out over a period of 6 months. No authorisation was obtained for this deviation from the normal procurement processes and procedures.

Board of Directors 130,232

Totals 22,751,178


30. Cash flow notes

30.1 Normal tax paid

in Rand 2015 2014

(91,696,017) (21,234,398)

Opening balance 77,607,285 48,395,017

Current year normal tax charge 140,478,942 91,696,017

Closing balance 126,390,210 118,856,636

30.2 Reconciliation of net cash flows from operating activities

in Rand 2015 2014

NET CASH INFLOW FROM OPERATING ACTIVITIES 207,996,070 67,313,100

Surplus before taxation

Adjustments for non-cash flow items: 62,441,648 23,195,852

– Depreciation/Amortisation 21,827,222 12,158,083

– Increase/(decrease) in provision for impairment – debtors 3,055,810 –

– VAT on provision for impairment – debtors – 175,114,408

– Increase in provision for impairment – assets 86,703,914

– Increase in provision for impairment – prepayments 4,090,675 41,814,384

– Loss on disposal or scrapping of property, plant and equipment (19,039)

– Profit on disposal or scrapping of property, plant and equipment – 43,327

– Other adjustment 18,179,000 (15,721,000)

– Increase/(Decrease) in provision for post-retirement employee benefits 24,170,595 22,202,548

– Finance costs paid (86,084,990) (68,233,392)

– Finance income received – –

– Increase in provisions 342,360,905 257,887,310

Operating profit before working capital changes

Working capital changes: (26,261,643) 16,227,705

Decrease in trade and other receivables 41,687,407 (83,548,919)

Decrease/(Increase) in prepayments made (83,475,813) 198,553,833

Increase/(decrease) in trade and other payables (49,679,025) 160,981,371

Increase/(decrease) in income received in advance 224,631,831 550,101,300

Cash generated in operations (126,390,210) (118,856,636)

Normal taxation (24,170,595) (22,202,548)

Finance costs paid 86,084,990 68,233,392

Finance income received 160,156,016 477,275,508


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M W

illia

ms

12 m

on

ths

31-M

ar-1

5 4

16,5

32

13,

631

430

,163

3,6

13,6

68

–

–

–

107

,950

–

–

3

,721

,618

*Sta

te e

mp

loye

es t

hat

ser

ve o

n t

he

Bo

ard

of d

irect

ors

do

no

t re

ceiv

e co

mp

ensa

tio

n fr

om

th

e co

mp

any.

** T

hes

e ar

e al

tern

ate

dir

ecto

rs o

f th

e co

mp

any.


in R

and

– 31

Mar

ch 2

015

PO

SIT

ION

Du

rati

on

Fe

es

as

Dir

ect

or

Act

ing

A

llo

wa

nce

Ba

sic

Sa

lary

Ad

-ho

c p

ay

me

nt

Tra

ve

l A

llo

wa

nce

sO

the

r a

llo

wa

nce

s

Co

ntr

ibu

tio

ns

to p

en

sio

n,

me

dic

al o

r in

sura

nce

fu

nd

s

Tota

l

EX

EC

UT

IVE

CO

MM

ITT

EE

ME

MB

ER

S

Mr

F N

om

valo

(C

hie

f Exe

cuti

ve O

ffice

r)12

mo

nth

s31

-Mar

-15

–

–

2,7

19,1

67

–

–

28,

200

1,7

85

2,7

49,1

52

Lt-G

en J

Nko

nya

ne

(Ret

.) (D

epu

ty C

hie

f Ex

ecu

tive

Offi

cer)

10 m

on

ths

31-M

ar-1

5 –

–

1

,435

,833

–

3

00,0

00

21,

000

1,4

87

1,7

58,3

20

Mr

M N

dla

ng

isa

(Dep

uty

Ch

ief E

xecu

tive

O

ffice

r)10

mo

nth

s31

-Mar

-15

–

–

1,6

33,3

33

–

200

,000

2

1,00

0 1

,487

1

,855

,820

Ms

C H

ou

vet

(Offi

ce o

f th

e C

EO)

9 m

on

ths

31-M

ar-1

5 –

–

1

,277

,769

–

3

0,00

0 1

8,90

0 2

61,0

70

1,5

87,7

39

Mr

J M

osh

esh

(C

hie

f Fin

anci

al O

ffice

r)12

mo

nth

s31

-Mar

-15

–

–

1,6

77,4

32

–

–

25,

200

61,

388

1,7

64,0

20

Mr V

Mlo

koth

i (Ex

ecu

tive

: Co

rpo

rate

Ser

vice

s)9

mo

nth

s31

-Mar

-15

–

–

1,3

74,2

72

–

96,

102

18,

900

88,

564

1,5

77,8

39

Mr

M T

isan

i (A

ctin

g E

xecu

tive

: C

orp

ora

te S

ervi

ces)

3 m

on

ths

30-J

un

-15

–

36,

257

223

,306

–

3

9,00

0 2

,850

5

7,14

2 3

58,5

55

Mr

R A

lli (

Ch

ief A

ud

it E

xecu

tive

)4

mo

nth

s31

-Ju

l-15

–

–

712

,450

–

4

5,29

4 4

,800

6

5,37

6 8

27,9

20

Mr

D B

ou

cher

(Act

ing

Ch

ief A

ud

it E

xecu

tive

)8

mo

nth

s31

-Mar

-15

–

51,

099

808

,480

–

4

2,42

0 9

,600

1

74,6

77

1,0

86,2

76

Mr

S Ts

hib

ub

ud

ze

(Ch

ief P

rocu

rem

ent

Offi

cer)

9

mo

nth

s31

-Mar

-15

–

–

791

,215

–

2

25,0

00

18,

900

140

,236

1

,175

,351

Mr

S M

thet

hw

a (A

ctin

g E

xecu

tive

: Su

pp

ly C

hai

n M

anag

emen

t)3

mo

nth

s30

-Ju

n-1

5 –

3

4,36

2 2

06,4

01

–

75,

000

3,6

00

31,

250

350

,613

Mr

P M

un

yai (

Ch

ief T

ech

mo

log

y O

ffice

r)9

mo

nth

s31

-Mar

-15

–

–

1,5

11,9

51

–

270

,000

1

8,90

0 1

07,0

47

1,9

07,8

98

Ms

M M

osu

pi (

Exec

uti

ve: C

ust

om

er S

ervi

ces)

12 m

on

ths

31-M

ar-1

5 –

–

1

,293

,040

–

1

68,0

00

25,

200

200

,720

1

,686

,960

Dr

D M

ash

ao (A

ctin

g E

xecu

tive

: So

luti

on

D

evel

op

men

t, N

orm

s &

Sta

nd

ard

s)12

mo

nth

s31

-Mar

-15

–

95,

697

1,2

24,8

68

–

–

14,

400

188

,641

1

,523

,606

Mr

M D

on

do

lo (A

ctin

g C

hie

f Ris

k O

ffice

r)12

mo

nth

s31

-Mar

-15

–

–

954

,358

–

–

1

4,40

0 1

19,9

10

1,0

88,6

68

Mr

M M

zaid

um

e (C

om

pan

y Se

cret

ary)

11 m

on

ths

31-M

ar-1

5 –

–

1

,031

,493

–

4

0,45

2 2

3,10

0 1

71,6

73

1,2

66,7

18

Ms

S K

go

pe

(Act

ing

Co

mp

any

Secr

etar

y)1

mo

nth

31-M

ay-1

5 –

1

6,43

3 5

3,15

0 –

–

9

50

5,6

89

76,

222

–

233

,848

1

8,92

8,51

8 –

1

,531

,268

2

69,9

00

1,6

78,1

42

22,

641,

676


in R

and

– 31

Mar

ch 2

014

PO

SIT

ION

Du

rati

on

Fe

es

as

Dir

ect

or

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ing

A

llo

wa

nce

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sic

Sa

lary

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-ho

c p

ay

me

nt

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ve

l A

llo

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nce

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r a

llo

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nce

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ntr

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ns

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n,

me

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al o

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nce

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nd

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Tota

l

NO

N-E

XE

CU

TIV

E D

IRE

CT

OR

S

Ch

air

pe

rso

n

Mr

J V

ilaka

zi12

mo

nth

s31

-Mar

-14

406

,219

1

2,86

0 4

19,0

79

De

pu

ty C

ha

irp

ers

on

Dr V

Mah

lati

7 m

on

ths

31-M

ar-1

4 7

9,37

1 1

,343

8

0,71

4

BO

AR

D M

EM

BE

RS

Ms

S B

vum

a**

48,

126

48,

126

Mr

K D

lam

ini

4 m

on

ths

6-A

ug

-13

69,

926

2,4

95

72,

421

Ms

N J

anu

ary

Bar

dill

7 m

on

ths

31-M

ar-1

4 –

Ms

S C

hab

a7

mo

nth

s31

-Mar

-14

81,

958

2,5

93

84,

551

Mr

P K

gam

e**

48,

126

48,

126

Mr

R M

aben

a**

43,

772

43,

772

Ad

v T

Mas

uku

7 m

on

ths

31-M

ar-1

4 4

4,77

2 7

13

45,

485

Mr

Z M

alel

e7

mo

nth

s31

-Mar

-14

171

,307

6

,713

1

78,0

20

Ms

B M

alo

ng

ete*

* 3

4,37

2 3

4,37

2

Ms

M M

apo

nya

**

9,4

00

9,4

00

Ad

v B

Mat

lejo

ane

7 m

on

ths

31-M

ar-1

4 2

64,1

32

2,7

59

266

,891

Ms

M M

dlu

lwa*

* 6

9,47

4 6

9,47

4

Ms

N M

hla

kaza

**

43,

772

43,

772

Mr

S M

ng

om

ezu

lu*

12 m

on

ths

31-M

ar-1

4 –

Dr

A M

okg

oko

ng

12 m

on

ths

31-M

ar-1

4 1

10,8

35

550

1

11,3

85

Ms

T M

olo

ko**

43,

772

43,

772

Pro

f M M

ph

ahle

le**

4

8,12

6 4

8,12

6

Ms

K R

Mth

imu

nye

**1

mo

nth

30-A

pr-

13 4

8,12

6 4

8,12

6


in R

and

– 31

Mar

ch 2

014

PO

SIT

ION

Du

rati

on

Fe

es

as

Dir

ect

or

Act

ing

A

llo

wa

nce

Ba

sic

Sa

lary

Ad

-ho

c p

ay

me

nt

Tra

ve

l A

llo

wa

nce

sO

the

r a

llo

wa

nce

s

Co

ntr

ibu

tio

ns

to p

en

sio

n,

me

dic

al o

r in

sura

nce

fu

nd

s

Tota

l

Mr W

Mu

dau

7 m

on

ths

31-M

ar-1

4 –

Mr

DC

Nid

dri

e7

mo

nth

s31

-Mar

-14

–

Mr

Z N

om

vete

12 m

on

ths

31-M

ar-1

4 3

13,7

67

10,

116

323

,883

Ms

N N

tsin

de*

*1

mo

nth

30-A

pr-

13 4

3,77

2 4

3,77

2

Mr

G P

illay

*1

mo

nth

30-A

pr-

13 –

Ms

F Po

tgie

ter*

* 5

0,74

2 5

0,74

2

Mr

G V

icto

r7

mo

nth

s31

-Mar

-14

81,

658

2,6

96

84,

354

Ms

M W

illia

ms

7 m

on

ths

31-M

ar-1

4 7

5,05

8 2

,079

7

7,13

7

1,6

99,0

03

–

–

531

,580

4

4,91

7 –

–

2

,275

,500

*Sta

te e

mp

loye

es t

hat

ser

ve o

n t

he

Bo

ard

of d

irect

ors

do

no

t re

ceiv

e co

mp

ensa

tio

n fr

om

th

e co

mp

any.

** T

hes

e ar

e p

revi

ou

s d

irec

tors

of t

he

com

pan

y w

ho

wer

e p

aid

th

eir

reta

iner

fees

an

d fo

r m

eeti

ng

s th

at t

hey

wo

uld

hav

e at

ten

ded

wh

ile o

n s

pec

ial l

eave

. Th

e p

aym

ent

was

mad

e in

th

e cu

rren

t fi

nan

cial

yea

r b

ut

rela

tes

to m

eeti

ng

s th

at w

ere

sch

edu

led

du

rin

g t

he

per

iod

01

Jan

uar

y 20

13 –

31

Mar

ch 2

013.


in R

and

– 31

Mar

ch 2

014

PO

SIT

ION

Du

rati

on

Fe

es

as

Dir

ect

or

Act

ing

A

llo

wa

nce

Ba

sic

Sa

lary

Ad

-ho

c p

ay

me

nt

Tra

ve

l A

llo

wa

nce

sO

the

r a

llo

wa

nce

s

Co

ntr

ibu

tio

ns

to p

en

sio

n,

me

dic

al o

r in

sura

nce

fu

nd

s

Tota

l

EX

EC

UT

IVE

CO

MM

ITT

EE

ME

MB

ER

S

Mr

BK

Mo

sley

-Lef

ato

la

(Ch

ief E

xecu

tive

Offi

cer)

2 m

on

ths

31-M

ay-1

3 3

11,4

86

30,

000

4,2

00

8,5

14

354

,200

Mr

SF N

om

valo

(C

hie

f Exe

cuti

ve O

ffice

r)10

mo

nth

s31

-Mar

-14

2,1

66,6

67

23,

500

2,1

90,1

67

Ms

KP

S N

tsh

avh

eni (

Ch

ief O

per

atio

ns

Offi

cer)

12 m

on

ths

31-M

ar-1

4 1

,792

,656

2

5,20

0 9

9,69

8 1

,917

,554

Mr

JC M

osh

esh

(C

hie

f Fin

anci

al O

ffice

r)12

mo

nth

s31

-Mar

-14

1,5

34,5

97

25,

200

65,

403

1,6

25,2

00

Ms

AM

Mo

sup

i (Ex

ecu

tive

: IC

T Se

rvic

e D

eliv

ery)

12 m

on

ths

31-M

ar-1

4 1

,233

,779

1

68,0

00

25,

200

179

,640

1

,606

,620

Mr

M L

ebel

o (A

ctin

g E

xecu

tive

: IC

T Se

rvic

e D

eliv

ery)

1 m

on

th31

-Mar

-14

104

,774

2

,873

1

,200

1

1,83

4 1

20,6

81

Mr

BD

Mu

shw

ana

(Exe

cuti

ve: C

orp

ora

te

Serv

ices

)9

mo

nth

s31

-Dec

-13

1,1

23,5

78

18,

900

44,

351

1,1

86,8

28

Mr

M T

isan

i (A

ctin

g E

xecu

tive

: C

orp

ora

te S

ervi

ces)

8 m

on

ths

31-M

ar-1

4 4

3,29

1 6

10,7

46

104

,000

7

,600

6

1,69

0 8

27,3

27

Ms

TL M

joli

(Exe

cuti

ve: S

up

ply

Ch

ain

M

anag

emen

t)11

mo

nth

s28

-Feb

-14

1,0

58,8

56

23,

100

101

,529

1

,183

,485

Mr

S M

thet

hw

a (A

ctin

g E

xecu

tive

: Su

pp

ly C

hai

n M

anag

emen

t)8

mo

nth

s31

-Mar

-14

27,

490

576

,081

2

00,0

00

9,6

00

87,

961

901

,132

Mr

N T

ug

anad

ar (

Exec

uti

ve:

Go

vern

men

t So

luti

on

s &

Sta

nd

ard

s)12

mo

nth

s31

-Mar

-14

1,0

14,0

47

100

,200

4

3,20

0 1

63,2

03

1,3

20,6

50

Dr

D M

ash

ao (A

ctin

g E

xecu

tive

: G

ove

rnm

ent

Solu

tio

ns

& S

tan

dar

ds)

5 m

on

ths

31-M

ar-1

4 2

1,25

5 4

83,5

13

6,0

00

56,

836

567

,604

Mr

AR

Alli

(Ex

ecu

tive

: In

tern

al A

ud

it)

12 m

on

ths

31-M

ar-1

4 1

,056

,345

1

51,7

95

14,

400

37,

860

1,2

60,4

00

Ms

T Z

ide

(Co

mp

any

Secr

etar

y)5

mo

nth

s31

-Au

g-1

3 4

15,9

72

10,

500

16,

695

443

,167

Ms

S K

go

pe

(Act

ing

Co

mp

any

Secr

etar

y)10

mo

nth

s31

-Mar

-14

24,

650

532

,797

9

,500

2

1,24

5 5

88,1

92

–

116

,686

1

4,01

5,89

4 –

7

56,8

68

247

,300

9

56,4

59

16,

093,

207

146

NOTES

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P O Box 26100,

Monument Park 0105,

South Africa

Tel: +27 12-482 3000

Fax: +27 12-367 5151

[email protected]

http//www.sita.co.za

RP151/2015 ISBN: 978-0-621-43625-9

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