annual report fy 2009/10 portfolio committee on public enterprises 16 november 2010

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Annual Report FY 2009/10 Portfolio Committee on Public Enterprises 16 November 2010. Table of Contents. Chairman & Chief Executive Officer’s report National & international business development Governance report National & international business development - PowerPoint PPT Presentation

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  • Annual ReportFY 2009/10

    Portfolio Committee on Public Enterprises

    16 November 2010

  • Table of ContentsChairman & Chief Executive Officers report National & international business development Governance reportNational & international business developmentBoard, compliance & enterprise risk management performance against Shareholders CompactAnnual Financial StatementsExternal auditors reportOperating results, financial performanceash Flow Statement and FundingPriorities for FY 2010/11Market UpdateSummary & conclusionSlide *

  • Chairman & Chief Executive Officers ReportSlide *

  • Introduction to the Annual Report

    After twenty-eight months of operations, Broadband Infraco has made significant progress in both key national and international elements of the businessSome progress in the legal & regulatory environment ECNS Licence awardedThe company has adopted a wholesale, carrier-of-carriers business model to serve other licensed or exempt operators, consistent with its mandateBroadband Infraco has completed the development of its product and service offerings and will be ready to enter the market once a number of capital projects to ensure carrier grade services and open access have been completed.

    Slide *

  • Service pricing frameworks have been developed based on market benchmarkingBusiness development, marketing & sales pipeline activities advanced rapidlyOf importance is that the wholesale market in South Africa experienced significant changes during the 2009/10 financial yearOngoing network infrastructure expansion and improvement was doneBroadband Infracos internal operational capability was bolstered by a number of key initiatives and capital projects in the past year.

  • *Completed & commissioned initial 2.5 Gbits/s Lambdas for Neotel launch

    Installed new 10 Gbits/s DWDM Lambda on new fibre pair Initial Network Infrastructure: 2006 / 2007

  • *Additional fibre routes to close the rings to provide service protection capability

    Overall capacity expansion

    Inclusion of Limpopo SDH Ring (Northern Ring) Current Network Infrastructure: 2008 / 2010

  • WACS International Cable System (FY2009/10)Slide *C&MA and Supply Contract signed on 8 April 2009WACS governance structures in placeSupply Contract came into force on 25 May 2009Manufacturing of various cable system components is underwayPortugal shore-end cable has been installedMain fibre route installation (cable ship load 1) to commence shortlyThe landing station in South Africa will be at Yzerfontein and the system is expected to go live during the third quarter 2011.

  • WACS International Cable System UpdateSlide *The bulk of the wet plant (including cable, repeaters, power feed equipment and transmission equipment) has been manufactured and accepted by the WACS Inspection Authority.The lay of the first cable load was terminated off the coast of Sierra Leone after the lay of 4353 km of cable.The contracting for the supply of the transmission electronics for the section from Portugal to London was concluded.The tender process for the WACS Network Operation Centre & Overall Maintenance Coordinating functions has also been concluded. The main NOC will be in Midrand SA.

  • Broadband Infracos spending with companies meeting the necessary level 1 to level 4 B-BBEE contributor requirements was as follows for the financial year ending 31 March 2010:Level 1:R 1.5 m (0.6%)Level 2: R 17.2 m (6.7%)Level 3:R156.6 m (60.7%)Level 4:R 77.6 m (30.1%)

    EmpowermentSlide *Spending with companies meeting the minimum B-BBEE requirements was R252.9 m for FY2009/10, constituting 98.1% of the total procurement spent in the period.Competitive Suppliers Development Program spending amounted to R37.3 m (14.5%) in the form of initial upfront payments (of between 10% and 20% of total contract values), as well as suppliers benefitting from shorter payment cycles.

  • At the end of the 2009/10 financial year, Broadband Infraco had a staff compliment of 76 (2009: 37). Currently the headcount is at 125This was complimented by outsourcing contracts with original equipment manufacturers and external service providers to ensure the necessary skills to operate and expand the network infrastructureAppointments were made in the functional areas of marketing, sales, network engineering, project management, finance, HR, procurement, legal, enterprise risk management and other business support functionsBroadband Infraco racial equity and gender equity appointments equalled 79% and 46% respectively by year endPleasing human capital development results were achieved with regards to the completion of tertiary and post graduate studiesDuring the FY2009/10, Broadband Infraco spent 4% of payroll on skills development, thereby exceeding the minimum 1% required by the Skills Development Levy ActGraduates from previously disadvantaged backgrounds were granted an opportunity to gain meaningful workplace experience through a two year internship programme covering the fields of network engineering, project management and network operations and maintenance

    Slide *

  • Governance ReportSlide *

  • Corporate Governance and Compliance Ongoing progress has been made at Broadband Infraco in relation to establishing and implementing business processes, organisational controls, compliance and governance practices resulting in clean PFMA and Compliance audits for the reporting periodThe Board of Directors was actively involved in charting the strategic direction for the organisation, significant network infrastructure investment decision-making and in the enterprise risk management processes of the entityThe Board also provided effective oversight of the activities and operations of the company during the 2009/10 financial yearBroadband Infraco developed and implemented a risk management policy and strategy, a fraud prevention plan and a whistle-blowing policy in the year under reviewBroadband Infraco documented and implemented a comprehensive Business Continuity Plan that includes a Disaster Recovery Plan for the network infrastructure and the new Network Operations CentreNo lost time injuries or environmental incidents to report during FY2009/10

    Slide *

  • Shareholders Compact Performance Slide *

    Weighted Average Overall Achievement of Compact = 91%

  • Annual Financial StatementsSlide *

  • Extract from External Auditors ReportTo the members of Broadband Infraco (Proprietary) Limited:We have audited the annual financial statements of Broadband Infraco (Proprietary) (Broadband Infraco) Limited which comprise the accounting authoritys report, the statement of financial position at 31 March 2010, and the statement of comprehensive income, changes in equity and cash flows for the year then ended, and the notes to the financial statements which contain a summary of significant accounting policies and other explanatory notesOpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of Broadband Infraco (Proprietary) Limited at 31 March 2010, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa and the Public Finance Management Act.

    KPMG Inc.

    Slide *

  • Operating Results 1 Operating revenue from the rendering of network infrastructure rental services for the year was R317.5 million (2009: R227 million), excluding the charge of R11.1 million (2009: R46.7 million) which has been accrued to recognise the straight-lining of operating lease income over the period of the lease agreement with Neotel in terms of IAS 17.

    Slide *

  • Operating Results 2 (Comparison to Budget & Corporate Plan) The operating revenue for the year of R317.5 million was below the total budgeted revenue of R334 million by R16.5 million. This variance was primarily due to budgeted incremental revenue from the South African Research Network and the wholesale market that was not realised during the reporting period.Slide *

    ***

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