In terms of Section 55 (1) (b) of the Constitution, the National Assembly must provide mechanisms to effect oversight of among other any organ of state.
Hence this account to the Portfolio Committee on the performance over the 2008/09 financial year and application of public resources with which the
IDT has been entrusted, is being presented in respect of the Committee's oversight responsibility and to enable the Committee to recommend the IDT’s Annual Report to Parliament

Expectation that public institutions have mastered and institutionalised the PFMA
Extremely proud of the IDT achieving 7 th successive unqualified audit which sets the IDT apart and a leader.
Endorse the IDT Annual Report rooted in:
Quarterly reports: accountability; tracking
Witnessed the impact of the IDT’s performance and the impact thereof on peoples lives
Confidence in the value of the IDT as a development agency in advancing the national social policy agenda

IDT operates in a dynamic & changing environment.
Noted key changes which impacted over the reporting period, e.g., Executive Authority; changes in the Board
Board approved the IDT’s 1 st long term Strategic
Vision
Performance challenges, largely out of the organisation’s control, were timeously reported to the Board and corrective actions put in place
Confidently present the 2008/09 results

Compliance Statement : Page 9
Mandate of the IDT (Page 9-10):
Retained primary mandate to support government with the eradication of poverty despite changes of focus and interpretation
In 2008/09 the IDT introduced a focus on women in recognition of the increasing feminisation of poverty and the effectiveness of women as change agents
Corporate Governance (Page 10) : sound corporate governance is integral to the IDT’s business enterprise and ethics
Executive Authority: Complied with provisions of the Shareholder
Compact.
Reporting to Parliament: Presented 2009/11 Corporate Plan

Board Structure (page 11-12):
12 independent, non-executive Trustees, 10 by public nomination + 2 by Minister
Assumed office 1 October 2007
Names of Trustees
Responsibilities (page 13) facilitated by Board Committees.
Board Charter
Reserved specific matters and other delegated to
CEO
Functioning of Board (page 15): Attendance

Outline of functions of Committees, main achievements, dates of meetings and membership
Audit Committee : Same members
Finance Committee
Strategic Planning and Programmes Committee
Human Resources and Corporate Services Committee
Remuneration Committee

Financial Performance Information :
Sound financial management which emphasises internal controls and assures stakeholders that assets are safeguarded and transactions executed according to generally accepted business practices and adopted policies
Resources strictly applied in accordance with budget allocations approved by the Board
Actual overhead expenditure was R 332.3 m representing a variance of 0.85% under-spending for the reporting period
R150m of IDT’s funds approved for poverty eradication programmes
(‘Mud Schools’ programme in particular). R 94m was spent and the rest will be spent/concluded in 2009/10
Renewed focus on cost containment, improving efficiencies, working capital improvement and managing capital expenditure

Undertook a comprehensive review of programme recoverables:
Strict verification and ageing of all programme related transactions up to an including the 2005/06 financial year.
Results tested against strict criteria to determine reasonable expectations to recover such costs from clients
Based on this evaluation, the Board approved an amount of
R57.7m to be written off in order to appropriately restate the balance sheet item in respect of total programme expenditure of +R
3 billion over the period (2005-2009)
Does not represent wasted or lost resources as contracts were delivered to the satisfaction of clients
Exposure of this nature is unlikely to recur as, since 2008, payments for services are drawn down directly from dedicated client-contract bank accounts

Investment of main fund and other sources of income
Main source of funding = income from investment of main fund.
Income partially applied to fund operations
Capital applied in poverty eradication projects and thus gradually diminishing
At 31-Mar-09 balance= R 948m
Uncertainty in global markets, results in high volatility
Fund performance monitored by an Investment Committee which contributed to revenue receipts exceeding budget targets by 48% notwithstanding market fluctuations
Increased capacity and commitment to recover costs from public sector (and few private sector) programmes
Developed a Costing Model to identify cost drivers, have a sound basis for determining management fees and baselines for future financial planning

Expenditure
Budget
R 347,1 m
Mud Schools
Write-down of
Programme
Recoverables
Revenue
Application of
Investments
-
R 132 m
R 100,4 m
Actual
R 354,5 m
(Note)
R 89,8 m
R 56,6 m
%
102%
-
68%
R 157,5 m
R 343,4 m
156,9%

Long-Term Sustainability
IDT established with a R 2bn government grant in 1990
Until 2005, investment income from the balance of this grant covered operational expenses
Growth in business and volatility in market impacting on interest rates has resulted in a growing margin between expenditure applied and revenue since 2006
Capital base is depleting challenging the financial sustainability of the IDT post the 2011/12 financial year
IDT’s long-term Strategic Vision is aligned to social policy agenda (MTSF) as the development agency of choice.
Thus IDT has recorded its future funding requirements with National Treasury

Risks Management embedded in IDT's business processes
Key players:
Accounting Authority: Audit Committee in particular
Executive Management
Risk Champions
See Risk Management Infrastructure on Page 31

CEO’s Report (Page 35-45)
2008/09: Coincided with the end of the CEOs 1 st fiveyear term and start of 2 nd term
IDT able to effectively balance remaining focused on what has been planned with being responsive within a changing environment
2008/09 Scorecard represents a combinations of KPIs and targets completely in the control of the IDT and those which are integrated with and dependent on inputs and cooperation of client departments
Summary:
Achieved 11 (73.4%) of 15 KPI and targets, of which 10 (66.7%) were exceeded
Underachieved 4 (26.6%) all of which were not in
IDT’s control

CEO’s Report (Page 35-45)
Development Impact accounted through 3 examples:
Social Infrastructure Delivery
Empowerment of Women
Knowledge production
New Opportunities: responsive and flexible development agency, e.g.,
Xenophobia and intolerance Project; Re Tlisa Diphetoho; EPWP2
Looking ahead: 2010/30 Strategic Vision which positions the IDT as the as the development agency which will drive transformation and innovation in supporting government with the design and implementation of a long-term comprehensive integrated anti poverty strategy. IDT funds will be solely invested in community-based sustainable development and anti poverty programmes, and the public-mandated work, such as the social infrastructure and social development programmes, will be delivered on a full cost recovery basis.
IDT Team
..\..\..\BOARD\2009\MAY 2009\2008-09 PERFORMANCE SUMMARY
DRAFT 6.doc

CEO’s Report (Page 35-45)
Social Infrastructure Delivery
83% of Turnover= Social infrastructure delivery, largely delivered in rural
South Africa, e.g., EC = 39.6%; KZN= 22.8%. Thus supported government with the reduction of infrastructure backlogs in historically marginalised areas.
Concluded and handed over eight (8) schools (Eastern Cape, Mpumalanga and Kwazulu-Natal) which were constructed with IDT funds as part of the
Eradication of Mud Schools and Undesirable Structures Programme. Other outcomes of this specific programme:
24 contractors engaged on the projects, 21 (88%) were women contractors.
Constructed 116 classrooms providing learners with first-time access to decent facilities.
All schools were provided with: computer laboratories; furniture and solar power where there no electricity is available and pre-school facilities at the primary schools. Such facilities are not typically provided at state schools thus these rural learners have the access to the infrastructure for optimal learning and growth.

CEO’s Report (Page 35-45)
Social Infrastructure Delivery cont .
The IDT did not fully meet its programme expenditure targets because we were not provided with the funds to do so. Notwithstanding this challenge the IDT achieved R1.313 billion (88%) against a targeted R1.5 billion, which in real terms represents a 13% increase on the previous year’s achievement of R1.167bn. The development impact of this programme expenditure includes:
R632.5m of programme expenditure was spent on local contractors and labour, which includes R450m on women contractors;
53 581 job opportunities created of which 71% were women; and,
2 195 persons received technical training and a further 13 259 basic life skills.
Thus the IDT’s model of social infrastructure delivery, which is grounded in labour intensive methodologies and the empowerment of local labor and contractors, has meaningfully impacted the individuals who participated in the programme as well as their households .

CEO’s Report (Page 35-45)
Empowerment of Women
Introduced a Contractor Development Programme with the objective to meaningfully contribute towards the advancement and empowerment of disadvantaged communities, and women in particular, by: providing opportunities to existing contractors, as well as emerging entrepreneurs in the building and construction industries; developing a pool of capable, highly skilled contractors, and women in particular, able to compete with the best in sector and to benefit from the substantial budget available for infrastructure development; and,
Creating sustainable and self-sufficient contractors able to run profitable businesses.
Target: 45 women contractors but registered 59 participants
25 women contractors were up-scaled on grading system of the Construction
Industry Development Board as a result of contract values of the work they were awarded by the IDT .

Structure :
Operational model combines centralised systems, process, policies and functions with decentralised operations, which informs the structure
Innovations and operations of the four (4) Business Units:
Office of the CEO
Development Programmes Services
Corporate Services
Financial Services
Human Resources Management Report (Appendix 1):
Page 109-117)

Page 61-106

The IDT received its seventh consecutive unqualified audit report for the year ended 31 March 2009.
“In my opinion, the financial statements present fairly, in all material aspects, the financial position of the IDT as at
31 March 2009 and its statement of comprehensive income and its cash flows for the year then ended, in accordance with the Statement of Generally Accepted
Accounting Practice and in a manner required by the
PFMA. Without qualifying my opinion , I draw attention to the following matter”
The impairment of programme recoverable was highlighted as an Emphasis of Matter due to its value
Material amendments resulting from the audit were reflected as an “Other Matter”

The financial statements fully compliant with
SA GAAP (IFRS).
Expenditure base exceeds revenue generation capacity.
Revenue generating capacity volatile due to bonds in investment portfolio.
Deliberate thrust to increase cost recoveries on managed infrastructure programmes
.

Proudly and confidently present the 2008/09 yearend results to the Portfolio Committee.
Aware of the fact that the Committee might not have had the chance to witness the “IDT at work” during its Oversight visits
As is evident from the map at the front of the report, the IDT has clear and definite footprint in all provinces. Hence, we would like to invite the
Committee to:
Visit the IDT projects during the current year, and
Join us with the public presentation of the 2008/09
Annual Report in Tzaneen on 26 October 2009

www.idt.org.za