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INTEGRATED REPORT 2016/17 www.abrahamkriel.org
CONTENTS
Table of Contents 1
STRATEGIC STATEMENT, VALUES, STATEMENT OF COMMITMENT, GOVERNANCE STRUCTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2
About this Report
3
Chairperson’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4
Performance Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5
Organisational Overview and Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1
Our History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2
Our Corporate Identity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3
What we do and how we do it . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3.1
What we do . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3.2
Profiling our beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3.3
Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4
Capital wish list . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6
Abraham Kriel Childcare in context. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1
OUR KEY STAKEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1.1
Our Top Donors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2
Our Focus Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2.1
Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2.2
Determining the material issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2.3
Material Issues and our strategic response. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.2.4
Performance Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2.4.1
Financial sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2.4.2
Attraction and retention of skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.2.4.3
Sustainability of service offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.2.4.4
Standard of childcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.2.4.5
Brand awareness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.2.4.6
Business structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7
Corporate Governance and Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.1
CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2
REMUNERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8
Report by the Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9
Summary Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10
Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ABOUT US
1. Strategic Statement, Values, Statement of Commitment, Governance Structures STRATEGIC STATEMENT Our passion is to care for, protect and empower children and youth in need of care. Our residential and community based models enables these young people to develop to their fullest potential. As a Christian based organisation, we strive to live by sound values; to provide a high standard of childcare and maintain the highest level of good governance. We are committed to achieve greater sustainability and growth in order to make an impact on more
Management skills appropriate for executing strategy
Internal control systems
Approved policies and procedures
communities and their children and young people, building a better South Africa. VALUES Preamble: We honour the Christian values as it is set out in the Bible as the Word of God and we communicate our love, faith and hope to the children placed in our care. Therefore our values are: ● The best interest of the child ● Pride in our organisation ● Respect for different cultures ● Positive attitude towards our work and people ● Acknowledgement of human worth and potential ● Effective communication ● Teamwork ● Integrity GOVERNANCE ARRANGEMENTS Management skills appropriate for executing strategy ● Internal control systems ● Approved policies and procedures ● Board committees oversee key functions ● Risk management system ● King Code on Corporate Governance ● Internal audit ● External audit ●
External audit
GOVERNANCE STRUCTURES
Board committees oversee key functions
Internal audit
King Code on Corporate Governance
Risk management system
For further information on our governance structures, kindly refer to page 40 of this report.
STATEMENT OF COMMITMENT:
Our commitment to you, our funders and stakeholders is to maintain appropriate governance structures to support best practice when it comes to childcare and development; to ensure that resources entrusted to us as custodians thereof are used in the most cost effective way, only for the purpose it was meant for, and in the best interest of the children entrusted to us. 2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 1
THIS REPORT
2. About this Report 2.1 INTEGRATED REPORTING APPROACH We strive to deliver this report in line with the standards set by the International Integrated Reporting Council’s (IIRC) international integrated reporting framework.
OUR REPORTING SUITE INCLUDES:
Contents, Audience & Distribution
Integrated Report
Annual Financial Statements
Website (www.abrahamkriel.org)
This report focuses on material issues that drive our business strategy, how we have performed against the strategy and the future outlook that we are striving to achieve. In setting the strategy which responds to the material focus areas for Abraham Kriel Childcare, we have considered feedback from stakeholders, as well as risks and opportunities as identified through our risk management system.
This report contains our financial statements, our financial performance and position, as well as cash flows. Primary audience: • South African Revenue Service. • National and Gauteng Department of Social Development. • Non-Profit Organisation Directorate. • Highveld Synod of the Dutch Reformed Church. • Synod of the Uniting Reformed Church in SA. • Current and prospective donors and funding partners. • Tutela. Our complete annual financial statements are available on our website: www.abrahamkriel.org
The website focuses on services, opportunities, events and information relevant to people who wish to become involved or invest in the well-being of our beneficiaries. Our blog focuses primarily on the impact of services of our beneficiaries.
IFRS – International Financial Reporting Standards.
Abraham Kriel Childcare communication policy.
Companies Act.
Information is evaluated for relevance to Abraham Kriel Childcare stakeholders for publication to the website.
The report is aimed at all stakeholders. Our integrated report is accessible on our website and hard copies are available on request.
Codes and frameworks applied in preparation of reports
King Code on Corporate Governance. International Integrated Reporting Framework V1.0. The abridged financial statements included in this Integrated Report have been compiled in accordance with IAS 34, Interim Financial Reporting (Updated to January 2008).
2 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
The audience is all stakeholders of Abraham Kriel Childcare, with emphasis on donors and supporters.
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THIS REPORT
2.2 ASSURANCE, COMPARABILITY AND RESTATEMENTS Independent assurance was obtained from external auditors PwC in respect of the annual financial statements from which the financial information in this report was extracted. Non-financial information such as key performance information and statistics in respect of beneficiaries were extracted from the Abraham Kriel Childcare beneficiary database. This database was indirectly subjected to an internal audit through a review of our IT function carried out by KPMG. The IT function was found to be functional, but required some improvements, which have been prioritised for action by management. Key performance indicators in section four and targets associated with the six strategic focus areas have been compared to corresponding 2016 indicators and new targets have been set. There were no restatements in the current financial period. 2.3 CONTACT POINT FOR THE REPORT For any questions or feedback regarding this integrated report or its contents, our contact person is Ms Hilda du Toit, Manager: Marketing at +27 (11) 839 3058 or email hdt@abrahamkriel.org.
2.4 FORWARD LOOKING STATEMENTS Certain statements in this report are interpretations about the future which Abraham Kriel Childcare believes are reasonable and are based on information available at the date of the report. Outcomes could however differ materially as a result of factors such as economic and market conditions, as well as the regulatory environment, including evolving interpretation and application of welfare service and funding policies. These statements should therefore not be regarded as guarantees for future performance. 2.5 RESPONSIBILITY OF THE BOARD AND APPROVAL OF THE INTEGRATED REPORT The Board, assisted by the Audit and Risk committees, is ultimately responsible for overseeing the integrity of the integrated report. The directors confirm that they have applied their collective mind to the preparation and presentation of the integrated report which has been compiled in accordance with the International Integrated Reporting Council (IIRC) framework. The Board believes it addresses the material issues and is a fair presentation of the integrated performance of the organisation. The Board approved this integrated report on 28 August 2017.
ind. Imagine with all your m eart. Believe with all your h ight. Achieve with all your m
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 3
MESSAGE
3. Chairperson’s Message The world’s geopolitics has developed to a stage of unpredictability and uncertainty. The resurgence of terror attacks and the feeling of not being safe has led to conservatism and heightened nationalism. The world economy continues to show weak growth amidst high debt. The heightened feeling Mr Lawrence Mlotshwa of nationalism among Chairperson of the Board major economies has led to decisions such as Brexit and Making America Great Again. The implications of such approaches mean these great economies will rather invest internally than in foreign countries. Africa, South Africa and other countries are affected by such decisions as they are direct beneficiaries of these economies. The withdrawal of Barclays Bank from Africa after 100 years of investment is a case in point. The ongoing political uncertainty in South Africa has led to the country’s downgrades by the international rating agencies. The implication is dire and far reaching, as it means that South Africa is not an investor’s choice anymore and investors’ business returns cannot be guaranteed. South Africa’s ability to borrow funds has also been undermined. Given all of the aforesaid, our donors, the companies who participate in all these markets, are affected. This means their ability to continue to support organisations such as Abraham Kriel Childcare becomes somehow limited whereas our needs are increasing.
The high level of unemployment and the increase in poverty in South Africa makes our contributions even more relevant and important. Not only do we look after the orphaned, but also the abused children who come to us in increasing numbers. Our skills development programmes continue to be a beacon of light in impoverished communities as we produce more entrepreneurs who create jobs in the townships. Abraham Kriel Childcare has really become an agent for change by bringing together those who wish to contribute constructively and those who are desperate for a way out of a life that has become hopeless and untenable. However, all of these lofty ideas and initiatives need funding. Hence our partnership with our donors and sponsors are so vitally important to us, because together we change lives and make South Africa a better place for all. The Board of Directors, including management is focused on implementing and progressing the strategy that was developed recently. The strategy will help us to be relevant in the current climate and also enable us to grow and to be sustainable in the long run. We, at Abraham Kriel Childcare, have had an eventful, yet successful year. We thank and attribute our success and sustainability to our donors, the Department of Social Development, our Board of Directors, management and staff. I would be amiss not to mention our beneficiaries, the children we take care of, young men and women who benefit from our entrepreneurial programmes, for giving us their co-operation and an opportunity to carry out our duties and change the face of poverty. May God Bless You! BL Mlotshwa Chairperson of the Board
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PERFORMANCE
4. Performance Features KPI
Actual 2012/13
Actual 2013/14
Actual 2014/15
Actual 2015/16
Target 2016/17
Actual 2016/17
Target 2017/18
Beneficiaries in community care programmes
878
1 694
973
950
1 000
1 208
1200
Beneficiaries in residential care programmes
306
251
273
277
275
266
250
Total income
R37.8m
R35.6m
R36.8m
R39m
R42.7m
R40.7m
R44.6m
Profit / Surplus
R1.78m
(R1.3m)
(R1.7m)
R1.3m
R0.1m
R0.02m
R0.3m
Number of employees
235
238
238
236
248
236
240
Total donors donating during year
815
1 951
2 316
2 016
2 200
1 022
1 370
New donors
532
365
566
699
500
360
350
Per capita subsidy – residential care (p.m.)
R2 200
R2 288
R2 288
R2 425
R2 546
R2 571
R2 648
R1 375
R1 446
Per capita donor contributions – all programmes (p.m.) Electricity consumption (kWh) savings
-9%
-6.9%
+0.32%
-6%
-2%
+0.01%
-2%
Water consumption (kl) savings
-15%
-0.5%
-0.07%
-1%
-2%
-0.03%
-2%
Number of employees trained
224
249
334
270
392
122
130
Training spent
R187 000
R198 000
R414 141
R313 225
R320 000
R234 463
R233 000
B-BBEE contributor level
2
4
5
4
14
1
1
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OVERVIEW
5. Organisational Overview and Business Model 5.1 OUR HISTORY In 1902, South Africa and Johannesburg were devastated by many years of war, where a scorched earth policy was employed to win the war. That same policy caused severe food shortages and the death of both mothers and fathers, which left thousands of orphans. It was within these circumstances that Rev. Abraham Kriel opened the doors of a refuge for children on 4 September of that year. Later that year, in December, the facility housed more than 200 children and the numbers continued to swell. The first century of this organisation was plagued by events that impacted children and left them in dire need. This included two world wars, epidemics and the great depression. Towards the end of the of century the HIV/AIDs pandemic reared its ugly head, which led to the untimely death of so many parents in their most productive years, that it caused thousands of children to be orphaned with the result that no residential care system could possibly care for them all. Two organisations that would one day become part of what is today called Abraham Kriel Childcare, developed in parallel with the bigger organisation, also in response to dire needs of children. In 1908 Ms. Maria Kloppers opened the doors of a haven for unwanted babies. In 1916 the facility moved to property that she bought on a hill overlooking what is today called Yeoville. Here it still stands. It still cares for babies, but today it also cares for children of all ages and boasts two students at University. By 1978 Johannesburg had a flood of street children. In
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response to this Rev’s Kekana and Hofmeyr established a home in Emdeni on the far western side of Soweto, to provide a refuge for these children. In the early 1990’s these three organisations merged and prepared to face up to the challenges and opportunities presented by a new democratic South Africa. In the run up to the organisation’s centenary, the need to find an appropriate response for the wave of orphaned children became critical. The organisation established a community services branch, which had the objective of caring for hundreds more children whose lives were impacted by the HIV/AIDS pandemic. In time this resulted in two home-based care programmes and three drop-in centres. This also saw the transformation of the Emdeni Children’s Home to a drop-in centre and a skills development centre. The latter was needed because so many youth could not access the economy due to insufficient schooling and a lack of marketable skills. Abraham Kriel Childcare adapted its name and branding in step with these changes to its operations. The latest change is about to be implemented, which entails a small adjustment to our logo and the amendment of our name to Abraham Kriel Bambanani. Abraham Kriel Bambanani will continue to evolve in order to ensure that its services are offered where and how they are needed. It remains our objective to serve children and youth in order to grow healthy communities in the interest of all South Africans and for the love of children.
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OVERVIEW
Bambanani is a Zulu word that means togetherness
Abraham Kriel
5.2 OUR CORPORATE IDENTITY The Board of Directors pursued the need for the name and branding of the organisation to reflect an accurate picture of the services it renders. No substantial changes are planned for the corporate identity, but agreement has been reached in principle to a slight change to the logo and to a change from Abraham Kriel Childcare to Abraham Kriel Bambanani. These proposed amendments will be fully communicated to all stakeholders once they have been finalised and design work has been completed. The proposed amendments were as a result of extensive consultation and research. The amendment from Childcare/ Kindersorg/ Abondli Babantwana/ Batlhokomedi baBana to the singular name Bambanani is in aid of simplification and clarity. Bambanani is a Zulu word that means togetherness and it symbolises the support that we as a team give to children and youth in need. In a way it also speaks of Ubuntu, which recognises that our humanity lies in our recognition of the humanity of others. This change is perfectly in line with the company’s core values and represents our role in society accurately. This amendment requires an adjustment to the design of the logo, which previously incorporated the four translations of the concept “childcare”. It allows us to replace this with four translations of our slogan, “My Anchor of Hope”. Our consultation and research allowed us to have a fair expectation that these small amendments will be welcomed by our current support base. We hope that it will also be welcomed by broader support so that the children that we serve today and those that will come after can continue to rely on responsible adult intervention and a chance to achieve their potential in years to come. 5.3 WHAT WE DO AND HOW WE DO IT 5.3.1 WHAT WE DO Abraham Kriel Childcare NPC is registered as a non-
profit company (CIPC), a public benefit organisation (SARS) and a non-profit organisation (DSD). The organisation is operated under and is regulated by the provisions of the Children’s Amendment Act, Act 41 of 2007. We operate in the heart of the densely populated Gauteng, with an ever growing population, currently estimated at 13.7 million or 24% of the South African population, as stated by Statistics South Africa. This is an increase of an estimated one million people in the last four years, based on prior growth patterns. This high population growth is ascribed to an influx of people from neighbouring provinces and countries. It increases the pressure on systems and infrastructure in the province and drives the need to provide support and care to a growing number of very vulnerable children. We bring opportunities and a chance to find hope through protection, care, therapeutic and developmental programmes to some of the poorest and most vulnerable children in Gauteng. These children have been traumatised by the devastating effects of extreme poverty, HIV/AIDS, abuse, abandonment and neglect. We work with children and youth in specific communities as well as in residential care with a strong focus on development. We strive to find sustainable solutions to address issues such as malnutrition,
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WHAT WE DO
dependency, child-headed households, poor education, abuse, lack of the skills to access the economy, unemployment and a sense of hopelessness.
and developmental opportunities provided by the organisation, whilst staying in their own homes, however humble.
South Africa is known to have the greatest number of HIV/AIDS infected people, resulting in a population of 3.7 million orphans of which 150 000 are still believed to live in child-headed households. This in itself indicates the dire need for the services of Abraham Kriel Childcare.
In 2003, the organisation assumed responsibility for the Johanna Malan ECDC as a step into preventative care on the one hand and the educational field on the other. In 2008, the Impact School in Langlaagte was established for the many beneficiaries that were too traumatised to cope in mainstream schooling. A year later a skills development centre on our Emdeni Campus, to assist disadvantaged youngsters to gain access to the economy, was established.
5.3.2 PROFILING OUR BENEFICIARIES Up until 2003, the focus of Abraham Kriel Childcare has been to provide residential care services to abused, abandoned, neglected and otherwise vulnerable children, sometimes as a place of safety, but most often placed in its care by the children’s court. While this is still the case, since then hundreds of children orphaned by the HIV/AIDS pandemic also came under the organisation’s care. The pandemic required a suitable response by Abraham Kriel Childcare that resulted in many children in the Soweto and Westbury communities receiving the protection, care
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Our beneficiary profile therefore covers a broad spectrum of beneficiaries ranging in age from birth to young adults. Our beneficiaries include children with normal and above average intellectual abilities and also children who are cognitively low functioning. Children with physical disabilities are also represented. Despite their disadvantages, increasing numbers of our beneficiaries achieve success academically, culturally and on the sports field.
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BENEFICIARY PROFILE
Community Care profile:
Community Services racial profile 116
0 – 3 years
3
4 – 6 years
97
7 – 11 years 12 – 14 years
179
383
18+
242
687 Male
142
165
1 089
15 – 18 years
Black Coloured White
521 Female
Indian
Our Community Care Services beneficiary profile is that of children and young people coming from a poverty stricken urban background. Amongst them are child and youth headed households. A criteria for admission in the programme is for a child or youth to be HIV infected or affected or an orphan. All of these beneficiaries are black or coloured people. Of these beneficiaries 43% are female and 57% are male. We have 32% of beneficiaries that are over 18 years of age, mainly due to the skills development programme at our Emdeni campus for young adults, which was attended by 333 learners. We have served 736 orphaned and vulnerable children and youth from Soweto and Westbury through holistic care programmes and 139 disadvantaged children from the Yeoville area, who attended our Early Childhood Development Centre. Residential Care racial profile
Residential Care profile:
2 42
22
0 – 3 years 4 – 6 years 6 – 13 years
11
42
14 – 18 years Figures to come… 92
99
101
121
18 +
127 Boys
139 Girls
Black Coloured White Indian
Our Residential Care Services beneficiary profile is one that represents all cultures and a wide spectrum of ability. 55% of beneficiaries are black and 45% white. This percentage is expected to shift more towards black children as the need in these communities increase. 52% of beneficiaries are girls and 48% are boys. This shift, favouring girls is because there are more houses for girls at our Langlaagte Campus than for boys.
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ACTIVITIES
RE A C CORE AC
AND PRO
PROTECT
Residential Care ● Langlaagte Campus ● Maria Kloppers Campus ● Seven satellite homes
Every child has the right to.. ● Appropriate alternative care. ● Basic nutrition, shelter, health care and social services. ● Be protected from maltreatment, neglect, abuse or degradation.
SUPPORT P
Human Resourc Finance; G
REIN T E GR A TE
EXTERNAL FACTORS IMPACTING ABRAHAM KRIEL CHILDCARE: Government policy ● Economic climate ● Scarce skills ● Unemployment ● Poverty ● Substance abuse ● Disintegration of family values ● Crime ● HIV/AIDS
BUSINESS MODEL
Extracted from the RSA constitution.
INPUTS
FINANCIAL CAPITAL
HUMAN CAPITAL
●
●
Donors and funding partners 64% ● State 29% ● Third stream income 3% ● Other income 2.7% SOCIAL AND RELATIONSHIP CAPITAL
Communities where we operate ● Gauteng DSD ● Partners i.e. Steinhoff International and Siemens ● Donors: Please refer to list of top 25 donors (pg 21) ● Christian denominations ●
236 full time employees 220+ volunteers ● 10 non-executive directors ●
MANUFACTURED CAPITAL
Two campuses and seven satellite homes ● A Skills Development Centre ● An Early Childhood Development Centre ● Three Drop-in Centres ●
●
Ho
INTELLECTUAL CAPITAL
Accredited training for childcare workers ● Decades of collective experience in childcare, marketing and financial management ● Data collected ● Governance expertise ●
NATURAL CAPITAL
Environmental protection strategy ● Solar geyser installations ● Land ownership ●
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●
BUSINESS MODEL
CTIVITIES OCESSES:
DEV
ELOP
Community Care ● Steinhoff Extended Family programme ● Zola Drop-in Centre ● Emdeni Drop-in Centre ● Abraham Kriel Family Care programme ● Emdeni Skills Development Centre ● Johanna Malan Early Childhood Development Centre
PROCESSES:
RA
T
ces; Marketing; Governance
IN
OUTPUTS
OUTCOMES
PREVENTION SERVICES
Early Childhood Development Service (139 children)
EARLY INTERVENTION SERVICES
ome-based care (326 children) ● Drop-in centres (410 children) ● Daily meals ● Material support ● Access to grants ● Skills development (333 children)
STATUTORY SERVICES
Holistic care (266 children) ● Protection ● Therapeutic programmes ● Development programmes (15 tertiary students in 2017) ● Recreational programmes ●
To care for, develop, empower and re-integrate traumatised children and youth in need of care and where needed, their families through appropriate care models and therapeutic programmes to enable them to function independently and to contribute to society.
INTERNAL FACTORS IMPACTING ABRAHAM KRIEL CHILDCARE: Organisational values ● Faith base ● Dedicated employees ● Governance structures ● Policies ● Profile of beneficiaries
T RE A T
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ENVIRONMENT
s Every action in our live that touches on some chord will vibrate in eternity. 5.3.3.1 EXTERNAL ENVIRONMENT As a non-profit company and a public benefit organisation, Abraham Kriel Childcare is exposed to a very volatile environment, which asks of it to adapt to changing societal needs and market conditions. The South African political and economic environment was particularly volatile during the year in question, with international market conditions affecting the value and stability of the local currency negatively. Political uncertainty exacerbated this and fed a climate of financial weakness. The current financial outlook, with the threat of a recession and a downgrade of the sovereign credit rating has a direct and very real impact on the ability of the organisation to raise the funds it needs to sustain its services at current levels. Worsening economic conditions leads to a general increase in the ills that plague the community. Extreme poverty, hunger and unemployment lead to gangsterism, crime and substance abuse. The ultimate victims of these trends are the most vulnerable children in society, which makes the demand for an appropriate response by society so much more urgent. The South African government drives a social and economic transformation process. Social upliftment and economic empowerment of previously disadvantaged communities remains a high priority of the state.
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The DSD’s funding policies reflect this through an exponential growth in state grants to individuals and the redistribution of funds to emerging non-profit organisations (NPO’s). Well established organisations feel the brunt of these policies and are increasingly required to source funding from corporates and individual donors. Corporates on the other hand demand that NPO’s become less dependent upon them by developing their own income streams through social entrepreneurship. They too are inundated with requests for funding and have limited capacity to address the needs of the extensive NGO community, that is currently estimated to be 120 000 organisations in South Africa. The current financial situation does not make matters any easier and in many cases the purse that is divided amongst applicants is simply smaller. Abraham Kriel Childcare has responded to this environment with a determination to increase its sustainability by attracting and retaining donors with a relevant service offering that will benefit both donors and beneficiaries. We aspire to the achievement of real benefit, not only to beneficiaries, but also to the broader society and the economy through the development of those young people that the economy will need to grow in future.
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INPUTS
5.3.3.2 INPUTS Financial Capital: Abraham Kriel Childcare is dependent upon grants from the state and contributions from individuals, companies and corporates to fund its operations. The role of the state, through the DSD, is very important, as it is our single biggest source of income by way of per capita subsidies for residential care services and grants for community care programmes of Abraham Kriel Childcare. This source is currently at 29% of the income of the organisation. Needless to say, the expansion of our donor base is a priority. Abraham Kriel Childcare gained ground amongst English speaking communities and Black individuals, business and community leaders. The need remains to build a greater support base with this demographic. Our strategy has a deďŹ nite focus on building relations to be a partner to our corporate donors who can provide access to earning critical B-BBEE points and advancing those developmental goals associated with the B-BBEE codes of good practice and the National Development Plan.
Abraham Kriel Childcare is developing its own additional revenue sources through third stream income activities. Revenue from its programme to train childcare workers and the use of existing infrastructure to rent out as student accommodation provide a steady income stream totalling R694 525. These income streams, though still modest in relation to the overall needs, are gradually increasing and should expand further. Manufactured Capital: Abraham Kriel Childcare operates at 13 different sites across the greater Witwatersrand within facilities that are owned, rented or used by way of right of use granted to the organisation. The residential care services operate on two campuses and at seven satellite homes. Of these, the Langlaagte Campus and three of the seven satellite homes, namely the houses in Linden, Risidale and Benoni, are owned by the organisation. The organisation has right of use of the Maria Kloppers campus and another three satellite homes in Fontainebleau, Bermuda and Bredell smallholdings. The last satellite home, situated in Mayfair West is owned by Siemens and managed by AKC in a formalised partnership agreement.
Our income streams were as follows:
INCOME STREAMS 2013 – 2017 R16,000,00
2017 R14,000,000
2016 2015
R12,000,000
2014 R10,000,000
2013
R8,000,000
R6,000,000
R4,000,000
R2,000,000
R0
Donor Funding
National Lottery
Partnership Funding
State Funding
Church Funding
Other Income
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INPUTS
The Johanna Malan ECDC falls under the same right of use agreement that exists for the Maria Kloppers Campus. The Emdeni campus that houses the Skills Development Centre and the Emdeni Drop-in Centre is also run on a right of use agreement with the owners URCSA. Other facilities in Soweto and Westbury are rented. The Langlaagte Campus also houses the head office and offices for community services and satellite home management, the impact school for children with severe trauma, a training facility, a well equipped kitchen that provides the bulk of the meals for the community service programmes and a basic medical facility. A housing unit that can accommodate up to 60 beneficiaries is currently also being utilised as university student residence as a revenue generator. This property is the organisation’s largest infrastructure and is believed to hold potential for alternative use which continues to be investigated for viability. Intellectual capital: Abraham Kriel Childcare prides itself on having a learning culture. As child and youth care remains at the core of our business we prioritise staying abreast of new developments in this field. In order to satisfy our requirements for a high standard of care, we offer our own accredited training for childcare workers, both internally and externally. The learning culture extends to an initiative by the
Board to provide formal training to managers at business school level. It also extends to all staff, with personal development being a key focus area in the assessment of all staff members. This resulted in training 392 staff during the course of the year. The organisation is highly regarded in the South African Public Benefit Organisation field in respect of marketing and brand management; excellence in governance systems and the utilisation of appropriate technology. Human capital: Abraham Kriel Childcare have a staff compliment of 236 people, many of whom see their work here as a calling. Their dedication comes from a shared passion for children in need of care. Financial constraints in the reporting period continued to require staff to shoulder additional burdens. Posts for social workers, social auxiliary workers and childcare givers in community care programmes are subsidised in part by the DSD. Abraham Kriel Childcare also makes use of the services of volunteers in childcare, development and recreational activities, particularly within satellite homes and at the Maria Kloppers Campus and to a lesser extent at the Langlaagte Campus. Fixed term contract workers enlisted in the state’s employment creation programmes further complement the staff of our community services programmes.
good, Not only must we be ood but we must also be g for something. 14 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
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INPUTS
Social and relationship capital: Abraham Kriel Childcare executes its responsibilities in respect of the care and development of children and young people on behalf of society, with the purpose to improve societal health. Therefore, although it is vulnerable children in need of care who benefit directly, we believe that our services benefits society at large. Our Board consists of voluntary members who contribute their skills and expertise on a pro-bono basis in the furtherance of the objectives of Abraham Kriel Childcare.
STAFF COMPOSITION 16
15
65
35
105
Managers and supervisors
Professionals
Childcare workers
Cleaning, maintenance & security
Administrative staff
The organisation maintains relationships with a wide array of stakeholders. Among these are a number of churches, foundations, corporates, smaller firms and individuals that support our service in a multitude of ways. We form part of the Tutela group, which is responsible for the ministry of Caring of the Dutch Reformed Church in the Highveld. We partner with a number of congregations in order to operate satellite homes with their support, as well as other congregations that provide support with our services in the community and on our campuses. The Uniting Reformed Church owns two properties where we provide services and we have a close relationship with them as well as the Zola Methodist Church from where we run a drop-in centre. We network with other NGOs and Child and Youth Care organisations in Gauteng and play an active part in the Gauteng Welfare Forum and the Child and Youth Care Forum. This is useful to keep track of trends and developments and is important for benchmarking and as an instrument for collective negotiation and lobbying. The Gauteng DSD is a key stakeholder, who grants us our license to operate and who contributes substantially to our revenue. They oversee operations and determine compliance to the Children’s Act and the Public Finance Management Act. Please refer to our stakeholder engagement section on pages 19 to 21.
Natural Capital: Abraham Kriel Childcare owns the land on which the Langlaagte Campus and three of the satellite homes are situated, namely House Aasvoëlkop, House Benoni and House Mouton. The Maria Kloppers Campus and Johanna Malan ECDC operate from land owned by Pro-Ekklesia Utility Company on behalf of the Dutch Reformed Church. The Emdeni Skills Development Centre and Emdeni Drop-in Centre in Emdeni, Soweto is situated on land owned by the Uniting Reformed Church in SA. In order to contribute towards the protection of the environment, we have put a strategy in place that focuses particularly on the conservation of both water and electricity to improve the sustainability of these resources in the interest of future generations. Our solar geyser installation continues to impact positively on our usage of electricity. Consistent recording and assessment of electricity consumption at all of our sites of operations indicates that the initial capital layout of these installations have been recovered at a factor of 160% by way of savings. Saving on water consumption is more of a challenge with a very old reticulation system at both campuses where the bulk of the usage takes place. However, consistent recording and assessment of water consumption enable us to identify changes in consumption patterns or water loss as a result of leakages, enabling early interventions to curb wastage. To provide for possible water interruptions or shortages, boreholes at the Langlaagte, Maria Kloppers and Emdeni campuses were re-activated.
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INPUTS
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INPUTS
5.3.3.3 ACTIVITIES It is the vision of Abraham Kriel Childcare to develop children and youth in need of care to the maximum of their potential. This essentially means that we protect children from the effects of social dysfunction, abject poverty, neglect and emotional, physical as well as sexual abuse. Where possible we provide services to the children within their families and communities, but when factors that threaten their safety is detected and the situation becomes so severe that removal is indicated, alternative care becomes the option via the processes of the children’s court. We provide all the basic and essential care to children in the form of regular meals, access to medical and dental care, clothing, social interaction and emotional and spiritual guidance both in our community care programmes and in residential care. The majority of the children in our care have been traumatised to varying degrees. Therefore Abraham Kriel Childcare provides a range of therapeutic treatment options through our own social workers and external service providers, via private and state run treatment services. The development of the full potential of the children entrusted to our care starts with the way we raise them in the residential care homes and through adult intervention in their own places of residence. Their academic education from early childhood development right through to skills development and tertiary education is critical for our children’s future success in life. Children are also encouraged to develop their cultural and sporting talents as well as their spiritual life and social skills. Apart from attendance in public schools, Abraham Kriel Childcare directly contributes to the developmental needs of children and youth covering the spectrum from early childhood development at Johanna Malan ECDC, to specialised education for severely traumatised primary school children at Langlaagte to a Skills Development Centre at Emdeni. The Emdeni Skills Development Centre bridges a gap for young people who may or may not have completed their schooling, by providing skills that can provide access to the economy, either by way of employment or through the establishment of micro-enterprises.
These skills include vegetable tunnel farming, end-user computer skills, an assistant chef course, painting and tiling. We also have an accredited training course to train childcare workers employed by us and other child and youth care centres. Ultimately it remains our objective to either unite our beneficiaries with their natural families or with substitute families, or to re-integrate young people into the community as contributing members of society. To provide these services a range of support activities are required. Our resources are managed through sound administrative and financial management, good record keeping and regulatory compliance. Managerial and accounting records are available to ensure proper application of resources. Our human resources function is responsible for inter alia, the co-ordination of recruitment and training and the administration of remuneration, benefits and statutory processes. Our marketing and fundraising activities ensure that the integrity of our donor database is updated and resources are found and applied in line with donor requirements. It also takes responsibility for compliance to legal requirements in respect of donations. Finally our assets in the form of land, buildings, facilities, IT infrastructure, vehicles and equipment are maintained to ensure efficient operations. 5.3.3.4 OUTPUTS Abraham Kriel Childcare provides prevention, early intervention and statutory services. Prevention level services operate where social dysfunction is not evident in the families of beneficiaries. Such a service is provided by the Johanna Malan Early Childhood Development Centre. Early intervention level services are rendered where families are under severe stress, but their functionality does not pose a dire threat to the children in that family. Our services in community care programmes are an example of these. This includes home-based care services and drop-in centres to HIV/AIDS affected children, as well as skills development. It includes material support to beneficiaries and assistance to access grants administered by the state. Statutory level services refer to children placed in substitute care such as residential child and youth care centres. These services are comprehensive and include nutritional, recreational, therapeutic and developmental services.
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OUTCOMES
5.3.3.5 OUTCOMES Abraham Kriel Childcare cares for, develops, empowers and reintegrates traumatised children in need of care and where needed, their families through appropriate care models and therapeutic programmes to enable them to function independently and to contribute to society. We make a real and life changing impact on the lives of these children from the moment they come into our care and experience protection from harm or deprivation. In carrying out this mandate, Abraham Kriel Childcare contributes meaningfully towards the
constitutional rights of children as described in the RSA Constitution to include ” …basic nutrition and shelter; …basic healthcare and social services; …to be protected from maltreatment, neglect, abuse or degradation; and …appropriate alternative care.” 5.4 CAPITAL WISH LIST Abraham Kriel Childcare relies heavily on donor funding to satisfy capital needs, such as those listed in the table below. Donors, especially those in the property and automobile markets who wish to partner in fulfilling some of these capital wish list needs, can contact Abraham Kriel Childcare at hdt@abrahamkriel.org.
Capital needs in an operational context Langlaagte fencing project to improve the safety of children and staff Replacement of two aging minibuses and a third minibus that was stolen
R400 000 R1 200 000
Replacement of sedan vehicle for Johanna Malan ECDC
R150 000
Replacement of sedan vehicle for Community Services manager
R150 000
Facilities for Abraham Kriel Family Care in Westbury
R2 000 000
Capital needs for expansion of services Additional training facilities at the Emdeni Skills Development Centre
R2 000 000
Establishment of a satellite home in Soweto
R3 000 000
Procurement of existing rented satellite home in Randburg
R2 300 000
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IN CONTEXT
6. Abraham Kriel Childcare in context 6.1 OUR KEY STAKEHOLDERS As an organisation that works with people and for people and society, we are reliant on relationships with a number of stakeholders. Although every stakeholder is important to us, we present in this report only the information material that is critical to the viability of Abraham Kriel Childcare in the short, medium and long-term. Stakeholder DSD, Regions Johannesburg Ekurheleni and Gauteng Province
Methods of engagement
What matters to them
● Monthly, quarterly and
● Assisting government to
annual reporting
execute its mandate in accordance with the Children’s Act ● Compliance to regulations of PFMA ● Meeting targets i.r.o. services provided and beneficiaries ● Application of funding according to SLA’s
● Ad hoc meetings ● Ad hoc panel discussions ● Ad hoc monitoring and
evaluation inspections
Department of Justice, southern Gauteng and regional children’s courts
Donors ● Corporate SA, CSI and B-BBEE managers ● Church communities ● Trusts and foundations ● Foreign funding from government agencies, trusts and foundations ● Individuals including English speaking community and the Black community
● Children’s court cases
● Best interest of child
● Criminal investigations
● Child’s participation
● Reports and court
● Involvement of parents
appearances to children’s court i.r.o. extension of court orders
● Procedural correctness
● Funding proposals
● Making a difference that matters
● Campaigns driven via media
● Impacting the social ills that
and online platforms
affect society adversely ● Well-being of children ● Preparation of children for independence ● Accountability ● Cost-effectiveness ● Tax and B-BBEE benefits ● Monitoring and evaluation
● Telephone calls ● Personal appointments ● Written media eg. post or e-mail ● Social media interaction ● Monthly electronic newsletter ● Bi-annual printed newsletter ● Website
Link to focus area
in proceedings
● Press releases and public
service announcements The church, including the Highveld synod of the DRC and URCSA
● Meetings
● Kingdom expansion
● Inclusion in committees
● Spiritual development
● Annual reporting
of beneficiaries ● Opportunities to serve ● Accountability ● The best interest of the child
● Visits to congregations
Children and youth
● Daily care services
● Social, behavioural and life skills
● Daily educational services
● Recreational opportunities
● Therapeutic interventions
● Obtaining an education
● Developmental activities
● Physical care, including health
● Ad hoc one on one interviews
and protection
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IN CONTEXT
Stakeholder
Methods of engagement
What matters to them
● Ad hoc group work
● Psycho-social care in the
Link to focus area
form of therapy ● Skills development in order
to access employment ● Support to access grants ● Spiritual development
Children’s parents
● Ad hoc visits to centres
● Safety of their children
● Ad hoc interviews
● Good physical and emotional care
● Annual planning panels
● Contact with and access to
● Ad hoc telephone calls
Communities
Business partners such as: ● Steinhoff International ● Siemens ● City of Johannesburg
their children
● Ad hoc correspondence
● Feedback i.r.o. their children
● Ad hoc interaction with their social worker
● Support with challenging children
● Ad hoc meetings
● Access to information
● Annual report & press releases
● Quality care for children
● Ad hoc visits
● Transparency
● Continuous committee activities
● Involvement in services
● Continuous volunteer work
● Stewardship of resources
● Inclusion in committees
● Opportunity to serve
● Personal appointments
● Well-being of beneficiaries
and meetings ● Annual proposals ● Ad hoc visits ● Reports as per agreement
● Preparation of children to be
contributing members of society ● Monitoring and evaluation ● Contact with beneficiaries and
some level of commitment ● Accountability ● Cost-effectiveness ● Tax and B-BBEE benefits
Media ● Print media ● Radio ● Television ● Electronic media
● Press releases
● Newsworthiness
● Publication of industry specific
● Accuracy and verifiability
Employees Volunteers
Sustainability of Key Services
articles in appropriate media
● Relevance
● Television and radio appearances
● Timeliness
and exposure via events ● Public service announcements
● Trustworthiness
● Daily interaction
● Remuneration
● Continuous supervision
● Acknowledgement
● Six monthly performance
● Recognition
assessments ● Continuous guidance and coaching ● Quarterly staff meetings ● Training, guidance & coaching ● Multi-professional team meetings ● Staff newsletter
● Opportunity to do meaningful work
Standard of Childcare
● Access to training ● Life balance ● Empowerment ● Guidance ● Good communication
Financial Sustainability
20 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
Brand Awareness
Attraction and Retention of Critical Skills
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TOP DONORS
6.1.1 OUR TOP DONORS
Charl du Preez
Albert Wessels Trust Coert Grobbelaar
Coenraad Richardson
Judge AJ Heyns Charitable Trust
Dr Marie Luttig Trust
Mahdi Meyer Steyn Incorporated
Jacobus Loots
Abraham Kriel Childcare is in many respects simply the stewards of both the beneficiaries entrusted into our care and the resources that are provided to us to execute this duty of care and development on behalf of society. Without the generous support of our donors and funding partners we simply cannot do this. Thank you very much, we are infinitely grateful!
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FOCUS AREAS
6.2 OUR FOCUS AREAS 6.2.1 MATERIALITY For the purposes of this report a matter is considered material if it is of such relevance and importance that it could substantively affect the strategy of Abraham Kriel Childcare, its business model, or one or more of the capitals it uses or affects in the short, medium and long-term. 6.2.2 DETERMINING THE MATERIAL ISSUES Management assessed risks that were identified in the annual strategic planning process and a risk analysis workshop facilitated by KPMG. These risks were measured in terms of inherent risk exposure, perceived control effectiveness and residual risk exposure. Through these assessments, material risks were identified and ranked for future actions to reduce the residual risk exposure. These actions are approved by the Financial and Risk Committee and the Board. Management reports are submitted to the Financial and Risk Committee on a monthly basis and to the Board on a quarterly basis, in respect of progress with the execution of the action plans.
Furthermore the Board and management made substantial progress with the implementation of a long-term strategy for Abraham Kriel Childcare to ensure continued relevance, sustainability and growth. Six strategic initiatives were identified and progress has been made with research and assessment activities by six work groups in preparation for implementation as long-term strategy. The management and Board continuously interacts with external stakeholders such as other NPOs, the DSD, opinion leaders in the donor community, experts in the field of B-BBEE, accounting, social development funding and childcare, in order to source information and identify risks and opportunities that might shape the sustainability and future of Abraham Kriel Childcare. The focus areas discussed in the following sections represent the major risks in need of continuous strategic focus, as they have high potential to impact on the sustainability of the organisation, as well as the six strategic initiatives being assessed for viability as a long-term strategy.
Life is a succession of lessons which must be d. lived to be understoo 22 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
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MATERIAL ISSUES
6.2.3 MATERIAL ISSUES AND OUR STRATEGIC RESPONSE Focus Area 1 In context Financial sustainability
● Procurement of funds is dependent on grants from the public sector & largely on private sector donations, most of them reportedly under continuous pressure to contribute
more to increasing numbers of NPOs ● In the period under review an increase of 6% was awarded for state per capita funding, but the quota of funded beneficiaries was reduced, resulting in net decrease of funding ● Economic downturn impacts negatively on corporate contributions ● All of the above poses a sustainability risk for AKC, increasing the need to identify and tap into new sources of sustainable revenue
Stakeholders Strategic objective
Strategic enabler
Key performance measure
Target 2016/17
Progress i.r.o. 2016/17 target
Target 2017/18
of governmental funding
● Per capita & programme grants by DSD
● State grants covered at least 30% of actual costs ● Per capita funding of at least R2 670
● State grants covered 29% of actual operational costs ● Per capita funding increased to R2 571
● State grants cover at least 28% of actual costs ● Per capita funding of at least R2 648
● Formation of quality funding
● Successful conclusion
● Expenditure of seven
● Expenditure of seven
● Expenditure of seven
partnerships in private sector, meaning: – Three year to long-term commitment – Percentage of total costs funded, minimum 25% – Mutual association with funded programme ● Optimisation of revenue potential of TK Residence
of long-term partnership agreements
programmes are covered substantially by funding partners
programmes are covered substantially by funding partners
programmes are covered substantially by funding partners
● Available room capacity
● 60 students by Feb 2017
● Government
● Financial sustainability that ● Structural improvement
● Donors
will maximise long-term availability of our services to children in need of care
● Churches ● Employees ● Beneficiaries
(60) taken up by students
● Optimisation of training
● Successful accreditation
services as source of revenue
● Training services provided
to NPO Child & Youth Care Centres
● Attaining financial
objectives
● Board ● Management
● To establish new profit
generating commercial ● Beneficiaries activities to ensure the ● Funding financial sustainability of partners and Abraham Kriel Childcare donors ● DR Church ● DSD ● Potential partners ● SARS
● Focused due diligence
studies ● Dependable partnerships ● Sound management
● Exceeding approved revenue budget and meeting expenditure budget
● Successful implementation of at least two additional profitable commercial activities
● 60 students were contracted by Feb 2017 ● The profit was R672 160 ● Accreditation preserved ● Accreditation preserved ● Revenue from training ● Revenue from training R800 000 (Budget based on was R467 000. Internal 60 students) students (50% of planned uptake) did not receive funding as HWSETA learnerships were only available for the unemployed ● Total income ● Total income R42 748 000 R40 772 211 ● Total expenditure ● Total expenditure R42 686 000 R40 795 780 ● Operational ● Total deficit surplus of R62 000 of R23 569* ● Complete research and due ● Commercialise skills diligence studies in development centre, Aquarespect of: ponic plant and Social - Commercialised skills Housing scheme due development centre by diligence studies were comJuly 2016 pleted. Only aquaponics - Aquaponic/Hydroponic project found to be viable. ● Capex for a comprehenplant by September 2016 - Social Housing by sive aquaponics plant could November 2016 not be raised. Preparation ● Develop business plans for for the construction of a hotrespective projects by house is underway as first March 2017 step towards a compre● Source Capex funding for hensive plant respective projects by May 2017 ● Operationalise selected enterprises by August 2017 ●
R607 000 profit
● Increase to 65 students by
February 2018 ● R856 661 profit ● Revenue from training R993 744 ● Based on 90 students, 30 internal, to be funded with B-BBEE grants and 60 external, to be funded by their employees and/or B-BBEE grants ● Total income R44 623 917 ● Total expenditure R44 586 974 ● Operational surplus R36 943 ● To finish construction of the
hothouse, to be a functional hydroponics unit by July 2018 as a first step to prove to potential funders our capacity to operate successfully iro hydroponics before venturing into aquaponics ● To identify, research and carry out a due diligence study in respect of at least one other potential commercial activity for implementation in 2018/19 ● To identify by Oct 2017 a partner in a behavioural economics unit of a professional services firm or university to do the required research for us
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 23
MATERIAL ISSUES FINANCIAL SUSTAINABILITY CONTINUED… Stakeholders Strategic objective
Strategic enabler
Key performance measure
Target 2016/17
Progress i.r.o. 2016/17 target
● Board
● Complete assessment of
● A best use study and
● Management
market valuation of the property by June 2016 ● Consider prospective offer by interested buyer in June 2016 ● Conduct feasibility study re: prospective social housing project by August 2016 ● Apply for accreditation as Social Housing Institute by November 2016
a market valuation was completed ● A model was built to determine the cash flow implications of 38 different selling and new development scenarios ● It was found that the original plans for future operational facilities was not financially feasible ● A reliable selling price ensuring the establishment a scaled down version of new operational facilities was determined ● Three potential buyers were engaged. One indicated that it is no longer interested in acquiring the property
● To generate and optimise ● Identification of suitable ● Successful sale of the revenue through the use of buyer or partner property; or ● Beneficiaries the Langlaagte Campus ● Accreditation as social ● Successful redevelopment ● Partners and housing institute of the property into a social ● Phasing out of operational housing complex donors ● DR Church activities at Langlaagte ● DSD ● Capex to relocate head office ● Potential partners
Target 2017/18 ● Continue the engagement of potential buyers of the property ● Investigate more alternative uses for the property with a specific focus on using different components of the property for a variety of commercial activities
Focus Area 2 In context Attraction and ● NPO welfare organisations are not able to compete with the state on remuneration, as they offer very generous remuneration to their employees, resulting in a situation of NPOs retention of losing staff to the state ● AKC under increasing financial pressure critical skills ● It is increasingly difficult to attract and retain critical skills i.r.o. social workers, childcare workers and managers because AKC does not have the financial resources to compete with the state and open market on remuneration ● Employment Equity requirements contribute to remuneration inflation rate ● Each 1% increase in average remuneration increases expenditure by R220 000 Stakeholders Strategic objective Strategic enabler Key performance measure Target 2015/16 Progress i.r.o. Target 2016/17 2015/16 target ● Employees ● Beneficiaries
● To ensure uninterrupted services of appropriate standard for the optimal development of our beneficiaries
● Attraction of scarce skills
● Competitive remuneration i.r.o. scarce skills based on reliable benchmarking
● I.r.o. social workers 100% of DSD entry level salaries ● I.r.o. childcare workers 90% of DSD entry level salaries
● Social workers are on 100% of DSD entry level salaries ● Childcare workers 80% of DSD entry level salaries
● Effective recruitment
● Period to fill vacancies
● Vacancies filled within two months
● Refined psychometric selection battery for CCW’s
● Continue to refine psychometric selection process ● 248 employees
● Childcare workers were not filled within two months ● Social worker posts were filled within two months ● Psychometric tests were done for all final shortlisted candidates ● The employee count at year-end was 236 ● The latest survey indicated a 65% rate of satisfaction. There was a marked decrease in satisfaction with our performance management system and remuneration
platform
● Reliable selection and
screening tools ● All vacancies filled ● Satisfied employees
● Reliable talent pool or
data base
● Efficient recruitment processes ● Annual employee satisfaction survey
● Talent review sessions focusing on both internal and external available talent ● Encourage employee referral
● 75% of employees satisfied
● Screening interview sessions twice a year to build the database
● HR Department could not achieve the development of the proposed database
● I.r.o. social workers, 100% of DSD entry level salaries ● I.r.o. childcare workers, 80% of DSD entry level salaries ● Childcare workers to be filled within three months ● Social worker posts to be filled within two months ● Continue refined psychometric selection process ● 240 employees ● 70% of employees satisfied – Review performance management system – Retrain supervisors and managers iro assessments – Engage employees in order to influence attitudes ● Abandon the idea of the talent pool ● Focus on recruitment by means of a variety of methodologies, including agencies, digital channels, print media and identified congregations
Extended initiatives behind attraction and retention of critical skills in the medium and long-term strategy include the development of a long-term people plan to ensure that Abraham Kriel Childcare has the right people to execute its strategy and growth into the future. Refer to page 31.
24 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
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MATERIAL ISSUES
Focus Area 3 In context Sustainability Financial pressure presents a risk to AKC to maintain the following sustainably: of key services ● A wide spectrum of services. Residential services is perceived to be very expensive ● Services to children with special needs, for which there is a dire and increasing need in society ● Increasing number of traumatised children with challenging behaviour as a result of increasing dysfunctional families and disintegration of healthy family and interpersonal values in society Stakeholders Strategic objective ● ● ● ● ●
Strategic enabler
Beneficiaries ● To address the real needs ● Special funding dispensation Employees existing amongst children for specialised services Donors in need of care in a to traumatised children Community sustainable manner DSD ● Appropriate facilities for delivery of services to children with challenging behaviour ● Recruit funders who are
willing to invest in services to children with special needs
● Revenue earned via state
funding maximised
● Board ● Management
● To redevelop and relocate ● Capex Funding
key residential care facilities ● Conversion of Langlaagte to ensure sustainability, in a significant revenue ● Partners and appropriate location and generator ● Acquisition of well-located donors the best interest of ● DR Church beneficiaries land ● DSD ● Community support ● Development community ● Beneficiaries
Key performance measure
Target 2015/16
Progress i.r.o. 2015/16 target
Target 2016/17
● A realistic funding model
● Get funded number of
● Currently 40 children with
● 40 children with
for specialist service to traumatised children developed and adopted by DSD ● Single gender campus model developed and ready for implementation
children with special needs increased to 50 children by March 2017
special needs are funded with 6% increase in funding
special needs to be funded by the DSD
● Refer long-term strategy
● The model of single gender
● Refer long-term strategy
re: residential care below
campus is dependant on long-term strategy of residential care ● Percentage of operational ● Recruit at least one new ● Our efforts to recruit a new funding partner for Langlaagte cost covered funding partner for Langlaagte Campus was not successful. Donors programmes support individual houses on Langlaagte to a greater extent ● Service rendered to full ● Residential care ● Residential care capacity of facilities and services: 280 beneficiaries services: 266 beneficiaries ● Community care ● Community care human resources services: 1 000 beneficiaries services: 1 208 beneficiaries ● Phased over 15 years ● Finalise research in respect ● Research was completed ● AKC still engaged with availability of R30m for Capex of commercial activities by ● Successful phasing-out September 2016 two potential buyers ● Finalise plan for sale or ● One additional of Langlaagte Campus ● Establishment of five single redevelopment of Langlaagte commercial activity was gender satellite homes for Campus by September 2016 implemented ● Establish at least two ● Funding CAPEX from 50 children in Alexandra and Soweto additional commercial DSD not currently available activities with significant due to austerity measures revenue prospects by implemented by state ● The proposed March 2018 ● Research DSD grants for development of townshipCAPEX by March 2020 based facilities could not ● Develop and be taken forward due to the operationalise: fact that funds could not be - House for girls in Soweto raised by means of selling by January 2023 the Langlaagte property - House for boys in Alexandra and current unavailability of by January 2025 state funding - House for boys in Soweto by January 2027 - House for girls in Alexandra January 2029 - House for girls in Soweto January 2030
re: residential care below
● Recruit at least one new
funding partner for a residential care unit or units covering in excess of 25% of actual operating cost ● Residential care services: 250 beneficiaries ● Community care services: 1 200 beneficiaries ● Re-assess the development of new township-based facilities in line with progress of selling the Langlaagte property and/or alternative revenue generation with the Langlaagte property ● Investigate feasibility of sourcing funding for township based facilities through newly announced special housing needs grants of the Departments of Human Settlements and Social Development
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 25
MATERIAL ISSUES SUSTAINABILITY OF KEY SERVICES CONTINUED… Stakeholders Strategic objective ● Board
● To expand community
● Management
service programmes to ● Beneficiaries ensure appropriate care ● Partners services for orphaned and and donors vulnerable children and ● DR Church skills transfer opportunities ● DSD for youth at risk ● Development community
Focus Area Standard of childcare
Strategic enabler
Key performance measure
Target 2015/16
● Quality partnerships in
● Successful partnership formation and conclusion of MOI’s ● Negotiations with DSD and donors translate into R22m for Capex phased over 15 years ● New drop-in centres for 600 children and Skills Development centres for 900 young people are established and operating
● Identify key stakeholders in target communities and establish relationships by April 2017 ● Present strategy to DSD in order to gain support and funding by March 2018 ● Present strategy to prospective donor partners in order to gain support and funding by March 2018 ● Develop and operationalise Drop-in centres at: - Naledi/ Moletsane January 2018 - Jabulani/ Moletsane January 2020 - Braamfischerville January 2023 - Thulani/ Silverton January 2025 - Orange Farm 1 January 2028 - Orange Farm 2 January 2030 ● Develop and operationalise Skills Development Centres in: - Jabulani/ Naledi Jan 2019 - Braamfischerville Jan 2024 - Orange Farm Jan 2029
target communities ● Support of DSD ● Support of donors ● Sufficient capital
Progress i.r.o. 2015/16 target
Target 2016/17
In context ● The responsibilities of childcare workers become increasingly complex as a result of the increase in family dysfunction, deterioration in the societal value system, as well as the
misinterpretation and abuse of children’s rights ● Therefore a more sophisticated skills set is required from childcare workers ● Appropriate external training does not exist and available training is very basic in nature ● At graduate level social workers are not sufficiently equipped with appropriate therapeutic skills, as training is directed at more basic interventions and community development in
order to serve basic developmental needs in society Stakeholders Strategic objective ● Childcare workers ● Beneficiaries ● HWSETA ● Council for Social Service Professions ● DSD
Strategic enabler
Key performance measure
Target 2015/16
Progress i.r.o. 2015/16 target
Target 2016/17
● To have well trained
● Accreditation of training
● Percentage CCW’s and
● CCW examinations to be
● 34 examinations (99%)
childcare workers and social workers sufficiently capable of providing in the care, developmental and therapeutic needs of children in need of care
material and continuation of already implemented training programmes in order to provide appropriate accredited training
social workers appropriately trained
completed ● Train 90% of any new CCW’s by March 2017 ● Train 90% of any new social workers by March 2016 ● Maintain accreditation
were completed ● 100% of new CCW’s have either completed training or are busy with training ● Four new social workers (100%) have been appointed and started with training ● Accreditation has been maintained
● CCW examinations for new learners to be completed ● Train 100% of any new CCW’s by march 2018 ● Train 100% of any new social workers by March 2018 ● Extend accreditation to Emdeni Skills Development Centre
26 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
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MATERIAL ISSUES
Focus Area 5 In context ● The Abraham Kriel Childcare brand has always been better known within the Afrikaans speaking community Brand ● Due to its long history the brand is fairly widely known throughout South Africa despite it being operational in Gauteng only awareness ● As the social and economic environment in South Africa changed, so did the beneficiaries served by Abraham Kriel Childcare and along with that, the need to build a wider support base amongst the English and African communities in order to source revenue from a larger audience
Stakeholders Strategic objective ● Board
● To reposition the AKC
● Management
brand to develop support ● Beneficiaries amongst all communities ● Partners served by AKC and donors ● DR Church ● DSD ● Development community
Focus Area 6 Business structures
Stakeholders ● Board ● Management ● Beneficiaries ● Partners
and donors ● DR Church ● DSD ● SARS
Strategic enabler
Key performance measure
Target 2015/16
● Sound research, risk analysis
● Brand adoption by ● Completion of research and objective decision making stakeholders reflected into amongst key DSD officials continuous growth in support by August 2016 ● Completion of extended from all communities within which AKC operates research amongst current donors by August 2016 ● Generate alternative proposals by August 2016 ● Implement an objective decision making process that will ensure a sustainable repositioned brand by August 2016 ● Approve a change management plan by September 2016 ● Approve repositioned brand by November 2016 ● Implement a change management plan amongst key stakeholders by November 2016
Progress i.r.o. 2015/16 target
Target 2016/17
● Research amongst DSD
● Implement the
officials was completed. ● Extended research amongst current donors was completed. ● Alternate proposals were generated ● An objective decision making process was implemented and a new repositioned brand was approved by the Board ● A Communication plan was approved early in 2017 and is currently being implemented. This includes the consultation with key stakeholders
communication plan with key stakeholders with a view to presenting the amended brand at the annual general meeting to those stakeholders closest to the organisations and launching the amended brand at a donor function towards the end of October 2017 ● Design and produce all branding material in time for the launch ● Ensure re-registration under the amended brand at all relevant bodies in advance of the launch of the new brand ● Start using the amended brand on 1 November 2017 ● Perform a postimplementation stakeholder assessment by November 2018 to determine stakeholder brand awareness
Context ● Well established NPO’s are increasingly struggling to achieve and maintain sufficient levels of sustainability ● DSD officials communicate that NPO’s should be less dependent on the state and source more support from the private sector ● Subsidy levels have decreased from 66% of revenue of NPO’s in the 1990’s, to the current level of around 30% of revenue of NPO’s ● The donor market is inundated with NPO’s seeking support from them, therefore it is increasingly challenging to access substantial grants from them ● The DSD prefers NPO’s to operate and report on the activities and direct financial records of the different operational programmes individually and separately from other activities
Strategic objective
Strategic enablers
Key performance measures
● To restructure existing and to create new legal entities in order to provide vehicles for effective and compliant operational, governance and commercial activities
● Decision on re- branding ● Operational structures has been taken meets statutory prescripts ● Access to experts in and DSD requirements ● Profits are optimised the NPO, Income Tax ● Full compliance to and Companies Acts tax regulations
Target 2015/16
Progress i.r.o. 2015/16 target
Target 2016/17
● Decide on nature
● The delay in the
● Decide on nature and number of
and number of legal entities once rebranding decisions have been taken by April 2017 ● Register legal entities of choice with appropriate authorities by June 2017 ● Operationalise operational, managerial and commercial activities within restructured entities by January 2018
decisions to sell the Langlaagte property, commercial activities and rebranding of AKC a negative impact on the determination of the nature and the number of legal entities to be registered
legal entities once other relevant strategic decisions have been taken by March 2018
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 27
PERFORMANCE
6.2.4 PERFORMANCE REVIEW
Report by the Chief Executive As always the key question that needs answering in the Abraham Kriel Childcare context is, “How did you survive and sustain services?” I can truly attest to the fact that dedicated staff, the exceptional guidance and support of our Board, the generosity of the South African public, which includes Mr Paul Momsen corporates, trusts, foundations, Chief Executive churches, individuals and above all God’s grace, was indispensable for the survival of this organisation. As I write this report, I am overwhelmed by a sense of deep gratitude and humility. In the course of the past financial year there were many times when it was a mystery where the resources would come from to satisfy every need and yet we were able to celebrate numerous successes. At a total of 15, we have more students in tertiary education than ever before. We have established an accredited training programme to train our own staff, the staff of other institutions and unemployed people as child and youth care workers and we will utilise this new capacity as a future source of revenue. We have managed to fill the Talitha Kumi
28 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
Student residence to capacity, which bodes well for this source of revenue for the new financial year and we are operating a new place of safety for girls on the Langlaagte campus successfully. Abraham Kriel Childcare distinguishes itself in a field where an estimated 120 000 NGOs compete for funding, through its solid track record, exceptional governance and diversified services that address real needs for some of the most vulnerable children and youth in Gauteng. The organisation plays a role in advancing the objectives of the National Development Plan, through early childhood development, skills development and job creation. We know that the children emerging from the Johanna Malan ECDC are well prepared to make the most of their school careers because that is the feedback from the schools they enter. We know that the young people who emerge from our Emdeni Skills Development Centre either to find employment or to go on to further training opportunities or to start their own small businesses, have the opportunity to help their own families out of a state of perpetual poverty and hunger and into place where success becomes possible.
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The same motivation that drives our support for the NDP also motivates this organisation to make an impact via the B-BBEE codes. In the reporting period, we had an average of 87% black beneficiaries that we supported and developed according to the terms of the socio-economic element of the codes. This factor, together with the fact that we are a qualifying small enterprise and we devote a significant number of man hours to assisting young people to start their own enterprises, make us a level 1 contributor to the B-BBEE codes. We supported 11 emerging enterprises in the period and provided skills training not only to our own staff, but also to 333 young black adults at our Skills Development Centre in Emdeni. Still the core of our services remain to protect, heal and develop children made vulnerable by poverty, crime, substance abuse, societal dysfunction and the HIV/AIDS pandemic. This is our most valuable contribution to the community and the way in which we help to build a healthy society. Abraham Kriel Childcare is particularly blessed with an active Board of directors that bring valuable expertise, which they are willing to share by mentoring executive management. They bring access to services which the organisation could not afford, such as an ongoing internal audit function to strengthen our systems and procedures. They provide access to their professional networks as potential donors and they provide exceptional leadership and have done massive work in terms of governance, which places Abraham Kriel Childcare in a class of its own in the NGO environment. In this the board chairperson, Mr Mlotshwa, has proven to be a wise leader and an inspiration during his first full year in this position. We owe him our gratitude. With an eye to the future, the organisation is in the process of refining a long-term strategy that will address its sustainability, relevance and continued contribution to society. In this financial sustainability is central. Whilst state funding is still the single biggest source of income to the organisation, contributing 30% of its revenue, we know it is likely that this source will steadily decline. More and more community based organisations (CBO’s) are converted to NPO’s that also claim a stake in the limited state welfare budget. Creating additional revenue streams through commercial activities to augment income from the state and from donors is a vital part of our future strategy.
We aim to bring our residential care services closer to supportive and caring communities, including black townships such as Soweto. These facilities will be smaller and more manageable units like our satellite homes. The need amongst children whose lives have been severely impacted by the HIV/AIDS pandemic remains very high, with South Africa still the country with the highest rate of HIV infection in the world. We therefore aim to start more drop-in centres where they are needed the most. We also strive to expand our skills development initiatives in support of the NDP in communities where the need is the greatest. What remains is to thank our staff and board for their dedication and untiring work for the benefit of children in need; and to volunteers for their many contributions. I wish to thank the Department of Social Development for their funding that remains significant and indispensable. Our funding partners have been a source of great comfort. They are now an integral part of the organisation’s sustainability and contribute massively to our ability to provide quality services, particularly to children in black communities. May God bless each and every person or entity that has made a contribution to this cause as each of you have been a blessing to us!
Paul Momsen Chief Executive
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 29
PERFORMANCE
Executing against strategy FINANCIAL SUSTAINABILITY For the board and management of Abraham Kriel Childcare the financial sustainability of the organisation is of the highest priority. In the absence of financial stability, the organisation will not be able to provide for our beneficiaries sufficiently, neither will we be able to expand our services to more children, young people and communities in need. Abraham Kriel Childcare is very exposed to external factors such as the state of the economy, political instability and the response of corporate South Africa to the aforesaid. Needless to say, the current economic and political environment had a negative impact on the financial results of the period under review. The board and management continue to implement short and long-term strategies in order to reduce the negative impact of these external factors. In the year ending 31 March 2017, Abraham Kriel Childcare recorded operating revenue of R39 851 716 (2016: R38 155 643) and operating expenditure of R40 770 288 (2016: R38 977 319), resulting in an operating loss of R918 572 (2016: R821 676). Taking into account non-operating income, a loss of R23 569 (2016: R1 313 054) was recorded. It should be noted that the 2016 profit was skewed by insurance proceeds from fire damaged property, to the amount of R1 399 422. The cash and cash equivalents at the end of the year
was R3 744 320 (2016: R2 660 713), an inflow of R1 083 607 (2016: R8 558). The summary financial statements for the year ended March 2017 form part of this report. Detailed financial statements are available on request. Total operating revenue grew by 4.45% when compared to 2016. The single biggest source of revenue was donors and corporate funding, contributing 61.05% of our revenue. This source grew by R1 300 169, or 5.65% in the year under review. This is indeed a source of deep gratitude. We salute our donors and corporate funders. The DSD remained the biggest single contributor to our revenue. However, its contribution decreased year on year by 0.8%, and represents 29.25% of revenue at R11 655 864. Abraham Kriel Childcare has not received substantial funding from the National Lottery for four consecutive years. Our latest application is still to be processed. We are grateful to report that our services remained intact. We exercised tight controls over operating expenditure, which increased by 4.6%. The single biggest cluster of expenditure is employee costs. At R21 869 765 these costs increased by 10.55% and is indicative of the fact that we are continuously striving to improve the remuneration,
The operational expenditure can be broken down as follows: R25 000 000
OPERATING EXPENSES
R20 000 000
2017 2016
R15 000 000
2015
R10 000 000
R5 000 000
0
Personnel Expenditure
Property Expenditure
30 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
Household & Services
Office & Administration
Depreciation
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PERFORMANCE
EMPLOYEE SATISFACTION SURVEY 180 160 140 120 100 80 60 40 20 0 Remuneration
I agree completely
I agree strongly
Recognition
Performance Communication AKC’s overall Expectations re: assessment method by managers vision and mission job performance I agree somewhat
I do not agree
training and working conditions as part of our strategy to recruit and retain employees of the right calibre. Property expenditure increased by 8.3% to R4 224 470. This expenditure includes items such as municipal services and maintenance of property. Expenditure related to household, services and administration costs decreased by R590 701. The importance of medium to long-term funding partnerships is emphasised by the fact that 18.22% of our operating revenue is from this source. It remains a strategic objective to increase medium and long-term funders that commit to contribute at least 25% of the cost of one specific programme, for a period longer than three years. Another important strategic objective is to grow our third stream revenue. In the year under review the combined revenue from income from ventures and fees for services grew by 18.84% to R1 725 399. The Talitha Kumi Student Residence operated at full capacity. The expansion of this venture will be investigated going forward. The Child and Youth Care Worker training service contributed substantially. We will investigate the expansion of these training programmes to the discipline of Social Auxiliary Workers as part of our future strategy.
I disagree somewhat
Training needs met I disagree strongly
Working for AKC I disagree completely
The development of new opportunities to generate revenue remains an important facet of our strategic plan. Research and due diligence studies were carried out in respect of a commercial skills development centre and well as social housing. Neither of these proved to be viable ventures. The development of an Aquaponic/Hydroponic plant remains a dream. The first steps towards this venture is underway in the form of preparations for the construction of a hothouse at our Emdeni Skills Development Centre. The sourcing of potential buyers of the Langlaagte property have not been successful thus far. It remains a priority to either find a willing buyer, or to use the property for alternative income generation. To this end we plan to partner with a behavioural economics unit of a professional services firm or university to assist us with research in this regard.
ATTRACTION AND RETENTION OF CRITICAL SKILLS In the period under review good progress was made with the retention of staff in positions that were problematic to fill in the previous reporting period. We credit this progress to persistent recruitment in a variety of marketing channels, including digital channels,
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 31
PERFORMANCE
recruitment agencies, advertisements in community papers and recruitment by word of mouth.
EMPLOYEE DISTRIBUTION (MARCH 2016) 1%
The accredited training of child and youth care workers for our own staff as well as staff of other organisations was a timely intervention in preparation for the cutoff date in September 2017, whereafter only qualified and registered childcare workers will be allowed to provide childcare services. Although the interest in our training is very high, enrolments have been fewer than expected, due to financial constraints of childcare originations similar to us. The latest B-BBEE Codes opened opportunities for potential donors to subsidise training beyond the confines of their own staff. Although some funding found its way to Abraham Kriel Childcare in this manner, the response from donors was weaker than expected, reportedly due to uncertainties in respect of the interpretation of some of the stipulations of said codes. We continue to market this opportunity in the belief that the uptake will improve as potential donors gain certainty in respect of the codes. Abraham Kriel Childcare spent R234 463 (target R320 000) on training activities in the period under review. The HWSETA funded a substantial portion of this training by means of conditional grants. We provided 360 training opportunities to 122 staff members. Our 2017 survey indicated a 65% satisfaction rate amongst our staff. This is weaker than the 70% satisfaction rate reported the previous year. The specific areas of dissatisfaction remained recognition,
140
3%
16%
15%
0% 0% 6%
6%
0%
53%
African Males
Coloured Males
Indian Males
White Males
Foreign National Males
African Femals
Coloured Females
Indian Females
White Females
Foreign National Females
remuneration and performance assessments. We will endeavour to find ways to provide more non-monetary recognition to our people. Remuneration levels in the lowest categories are expected to improve somewhat as a result of the introduction of minimum wages in the 2017/2018 financial year. However, it is not foreseen that Abraham Kriel Childcare will be in a position to implement remuneration increases beyond the inflation rate. In respect of dissatisfaction with performance assessments we realise that we have to make sure that assessments are carried out in a sound manner.
EMPLOYEE NUMBERS VS EE TARGETS 2017
120
Total actual employees - March 2017
100
Total target 2016/17
80 60 40 20 0
African Male
Coloured Males
Indian Males
White Males
Foreign Nationals Males
32 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
African Females
Coloured Females
Indian Females
White Females
Foreign Nationals Females
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PERFORMANCE
This will be achieved through retraining of supervisors and managers. The staff will also be engaged by senior management to foster greater understanding of the value of and need for performance assessments. We are very encouraged that the staff expressed high levels of satisfaction in respect of training, clarity in respect of expectations of supervisors, as well as the positive association of staff with the core purpose of Abraham Kriel Childcare. Our total number of employees at year end was 236 and our total employee cost R21 548 061 (2016: R19 783 262, an increase of 9.1%. Abraham Kriel Childcare remains committed to the objectives of employment equity policy and legislation.
Board approved employment equity targets are pursued constantly. Fair progress has been made across all employment categories. We expect that the implementation of future strategy will bring a significant challenge to enlist the required human capital to carry out the envisaged strategic initiatives. One of the strategic initiatives therefore focuses on the development of a new people plan to service new strategic initiatives. SUSTAINABILITY OF SERVICE OFFERING The sustainability of the service offering of Abraham Kriel Childcare is inextricably linked to the financial sustainability of the organisation, which in turn is linked to the successful execution of long-term strategy, as well as optimisation of current funding by the DSD.
COMMUNITY CARE SERVICES: BENEFICIARY PROFILE
Total number of Beneficiaries Female Male Age Distribution 0 – 3 years 4 – 6 years 7 – 11 years 12 – 14 years 15 – 18 years 18+ School Distribution Grade 1 – 4 Grade 5 – 7 Grade 8 –12 Skills training Special education Remedial education Students Pre-school Not in school Total new admissions Boys Girls Total discharged Boys Girls Population Distribution Black Coloured White Indian
Steinhoff Extended Family Program
AK Family Care Westbury
17 60 170 92 76 17
23 22 37 52 42 25
102 106 113 0 10 0 6 60 35 23 10 13
50 33 62 0 5 0 8 3 40 36 16 20
86 40 46
36 19 17
432
94 107
432 210 222
201 103 98
Emdeni Skills Centre
Emdeni Drop-in Centre
Johanna Malan ECDC
139 71 68
1208 521 687
49 90
333
8 7 35 21 24 8
97 179 242 165 142 383
333 82 251
333
103 55 48
32 27 31 1 3 0 1 3 5 3 1 2
Total
53 21 32
184 166 206 334 18 0 15 205 80 59 48 67
127 9 3 0
1089 116 3 0
139
3 2 1
333
103
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 33
PERFORMANCE
RESIDENTIAL CARE SERVICES: BENEFICIARY PROFILE FOR 1 APRIL 2016 – 31 MARCH 2017 Langlaagte Campus Total number of beneficiaries Girls Boys Age Distribution 0 – 3 years 4 – 6 years 6-13 years 14 - 18 years 18 + School Distribution Grade 1 – 7 Public school Grade 8 –12 Public school Impact education Langlaagte Education for handicapped children Special education Remedial education Students Pre-school Not in school Total new admissions Total discharged Population Distribution Black Coloured White Indian
On a high level the long-term strategy in respect of services to beneficiaries entails the reduction and relocation of some residential care services to townships; and the expansion of non-residential community service programmes in the form of dropin centres for children affected by HIV/AIDS, as well as skills development centres for unemployed youth. As the work in respect of the execution of the long-term strategy proceeded over the past financial year, it became clear that the future use of the Langlaagte property is a crucial turnkey enabler in respect of the execution of other focus area strategies, with specific reference to the strategy referred to in the previous paragraph. The selling of the property at a sensible amount, or alternatively the use of the property for other profitable commercial activities, will most probably not only provide the necessary capital needed for strategy execution, but it will also determine the pace of execution of other strategies.
34 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
Satelite Homes
Maria Kloppers Campus
Total: Residential Care
114 66 48
75 35 40
77 38 39
266 139 127
0 0 54 48 12
0 0 21 47 7
42 11 17 4 3
42 11 92 99 22
8 20 30 27 27 2
20 33
43 55 30 29 40 7 10 9 43 50 44 101 42 121 2
18 13
1 8 6
15 2 0 0 2 5 2 9 42 24 25
38 16 60 0
19 7 48 1
44 19 13 1
2 11 8
Although a tremendous amount of time and effort was invested in the research and preparation for the prospective selling of the property, including the commissioning of a market valuation, a best use report and a tax opinion in relation to capital gains tax, research into the possible development of social housing as well as low cost housing, the engagement with three potential buyers, no tangible progress could be made. It was also determined that the DSD due to austerity measures is currently not in a position to provide capital to implement the proposed township based facilities. From the above, it is clear that we will either have to find a buyer for the property or to identify and implement more commercial activities using the assets available on the property. This might call for a re-assessment of strategy in line with unfolding realities. The possibility of access to funding by way
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PERFORMANCE
of newly implemented special housing needs grants announced by the Department of Human Settlements will also be researched in earnest.
singing, cross country, baseball, netball, etc. Such opportunities normalised the children’s experience of growing up in a supportive community.
It was however encouraging that we exceeded our 2017 beneficiary targets in respect of community service programmes, with the number of residential care beneficiaries slightly below target.
Some children also excelled in academics. One dreams of becoming a lawyer while another wants to become a chef or just do an ordinary job in an office. Preparation of school-leavers received top priority. Of the 11 schoolleavers at the end of 2016, five youths are pursuing further studies this year. Three of these students are the first of their families to study after school. The support and influence of their childcare workers as well as host parents played a big role in the choices they have made.
STANDARD OF CHILDCARE The successful development of children in need of care requires a combination of factors. One such factor is the ability to change the inner world of the child. Katz (1963) explained that one of the actions in empathetic engagement with children can be described as the “turning of the soul”. In looking back on the previous year at Abraham Kriel Childcare. We can see the impact that was made on the children, we can reflect on the moments when “a soul was turned” and we can review the times when children were not ready for change and still wanted to push back. Satellite homes At the satellite homes 73 children were given opportunities to grow and reach their full potential in seven different communities. These children were enrolled in excellent schools where they participated in rugby, cricket, hockey, soccer, athletics, drama,
This year, two school leavers also dream of further study. A girl plans to study drama as she wants to become a famous actress and a boy desires to become a chef. Five young people who matriculated before 2016 are still busy with their studies and two completed their studies in this period. This brings the total of current tertiary students from this programme to ten. For these children to have even considered working hard enough to qualify for university studies a realization that their past and current trauma will not deter them, had to have taken place. In these cases the social worker involved with the child, the childcare worker and other significant adults joined the child at that critical moment and supported them all the way further on their journey.
Why fit in when you were born to stand out? 2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 35
PERFORMANCE
Maria Kloppers Campus 77 children received care services during the course of the past year. For the management and staff of Maria Kloppers campus one of the biggest joys is the opportunity to see how children develop through different stages of their lives. There is no greater reward or positive outcome for years of hard work and commitment than to witness positive change in the life of a once broken child. The persistence of staff and therapists finally paid off after five years when a severely developmentally delayed boy, who also suffered from insecurity and anxiety, progressed to a level where he was found to be adoptable and matched with a perfect family. Good working relationships with adoption agencies and the high quality of care provided by the baby unit contributed to Maria Kloppers being the preferred partner for adoption agencies and this resulted in more children being adopted and fewer children being committed into the system. Specialised services provided by occupational and speech therapists helped to address developmental delays of toddles and pre-school children. The use of English as the preferred language of communication on the campus, contributed to improved language and speech development. Children attended age appropriate therapy and where services of private psychologists and psychiatrists were needed, it was sourced. The education of child and youth care workers through workshops and
literature with regards to attention deficit hyperactivity disorder (ADHD), saw great improvement in the overall functioning of children on treatment for ADHD. The social worker and students from various disciplines facilitated group work sessions which were focused on life skills and HIV/AIDS awareness. The true value of sport should never be underestimated. Positive changes with regards to behaviour and overall well-being resulted from the opportunities our children had to participate in sport. The enrolment into a football academy had a positive impact on a boy with behaviour and anger problems and being part of a rugby team served as a confidence booster for another. Maria Kloppers is very proud of their second tertiary student who started her journey at UJ this year. This shy and reserved girl arrived on the Maria Kloppers Campus six years ago only able to speak Zulu. Support from educators, social workers, managers and her child and youth care worker helped her to develop into a beautiful, confident and well-spoken young lady. Langlaagte campus 110 children were accommodated on this campus during the course of the past year. As most of the programmes are specialised the achievements of children are more focused on the healing of trauma in a safe environment, stabilizing behaviour and integration of emotional and social skills that was previously absent. When this is achieved the child can make progress regarding academic work. The childcare team on the campus faced the challenge of nurturing and developing children that sometimes refuse intervention because of the depth of their trauma but also because of the influence of genetic factors. Insight into their own behaviour is extremely difficult for some of these children. They find it very hard to make peace with their personal circumstances and the pull from their previous environment together with the influence of their biological families make the work of the childcare team so much more challenging. Every time a child shows positive change there is reason for celebration! ● The transformation of a little girl from a scared, oppositional figure with no smile and a “beanie” low over her ears into a smiling girl, standing tall with something pink in her clean hair every day is a joy.
36 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
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The observation of how a little, abused and mentally challenged boy transformed into a confident seventeen year old boy, excited to receive his ‘SASSA’ grant card when he turns eighteen is reason for celebration. He is actively preparing himself to move to another institution for adults. ● When we see a young boy who came from years of being locked up alone in a room, grow into a sixteen year old that visits the office to boast of his first kiss we respond with a bit of parental fear and a lot of pride. He says he knows how to kiss because he is a prince, so there is one thing less to worry about. ●
Community Care Services During the period under review the Community Services Department continued to ensure that in Home Based Care and Drop-In Centres, the much needed services to beneficiaries affected and infected by HIV and AIDS were delivered. Services provided included skills training, material-, psycho-social-, nutritional- and educational support. We ensured that children were not denied their childhood, as is so often the case when poverty and the impact of HIV and AIDS combine to force young children into adult responsibilities. When beneficiaries between the ages of 0 to 18 years are registered, their childhood is protected despite their orphaned and vulnerable status. Our staff members take on the responsibility of preparing them to be independent adults and to break the cycle of poverty. 736 beneficiaries were assisted via home based care programmes and at drop-in centres. Unfortunately the
programme had to refer 50 beneficiaries from Snake Park to another service provider as it falls outside the demarcated Johannesburg region. The DSD as provider of a license to operate and as a funder for the programme was instrumental in this change as our funding originates from the Johannesburg region for these programmes. The hard work of five children in high school paid off abundantly in January 2017 as they were referred by the Department of Education to attend the prestigious, newly established Curtis Nkondo School. This opportunity is a dream for any child in Zola and Emdeni communities. The young people who were successful in tertiary studies progressed very well. A young woman graduated with a Hospitality Diploma from the South Western College Campus and a young man was awarded a degree in Sports Management from the University of North West. Another woman achieved a Bachelor of Education from the University of Johannesburg and has been employed as a teacher since January 2017. Yet another young man was trained as a motor mechanic for one year in Randfontein Westcol College and he has been employed since February 2017. A young man who studied Carpentry at Sparrow College has also been employed since February 2017. Another young man completed a Diploma in Financial Accounting at the University of Johannesburg and is employed. Three youths are still busy with their tertiary studies.
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PERFORMANCE
The Emdeni Skills Development Centre continues to train students in an end user IT course, in tunnel agriculture, as assistant chefs, as qualified painters and tilers and in business management and life skills as compulsory additional courses. During the period under review 333 students were trained. Of this number at least 50 reported that they are now employed. 12 students registered businesses, which is a very good achievement. The construction of the painting and tiling centre was completed and training has been offered at Emdeni since April 2017. The information centre continues to provide services to the community which include internet access, photocopying and binding of documents. Abraham Kriel Childcare is extremely thankful to reflect on another year during which children’s and young people’s lives were touched. The childcare team are humbled by each “turning of the soul” moment and aware that for each child that still needs to struggle to that point, opportunities were created and will be created. We will walk together with the children every step of the way along their journey, with determination and hope. BRAND AWARENESS In the reporting period, great strides were made in researching, consulting and finally resolving on changes to the branding, which we would like to take with us into the future. Consultation was done within our current support
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base and with role players and stakeholders in the organisation itself, the state, communities that we serve and in the church. Respondents were predominantly in favour of change, but they were also in favour of retaining our links with our origins through the retention of the name Abraham Kriel. Out of this process we were faced with a challenge to come up with something that will reflect both our past and our commitment to a transformed future. The brief of the board was as follows: ● Signal transformation and inclusivity ● Include a concept in one of the dominant African languages ● Recognise the heritage by retaining Abraham Kriel But the re-branding process had its roots in 2000 already, when it was acknowledged that a new brand was needed to better reflect the changing nature and services of the organisation. The first actual change came about in 2006, when the name Abraham Kriel Maria Kloppers Children’s Home was changed to Abraham Kriel Childcare. In 2011 the logo was changed to the current one and the slogan changed from “I Can” to “My anchor of hope” This year we decided on an amended name, which is Abraham Kriel Bambanani. Bambanani means togetherness and it symbolises the support we give one another. In a way it also speaks of Ubuntu, which
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PERFORMANCE
recognises that our humanity lies in our recognition of the humanity of others. With this amended brand we recognise that we are no longer just a child-and youth care centre, but a force for good, that will do what is required to uplift children in need out of their circumstances of neglect, abandonment, poverty, ignorance, abuse and suffering to a place where hope is possible. We will lift them up by means of an early childhood development centre, such as our Johanna Malan facility in Yeoville ● We will lift them up at our residential care facilities such as Langlaagte, Maria Kloppers and the seven satellite homes in suburbs ● We will lift babies up by supporting programmes for their adoption or foster care, because that is what is best for babies ● We will lift up children suffering the consequences of extreme poverty in conjunction with the HIV/ AIDS pandemic. These kids cannot be taken into residential care, because there are too many of them. Still they deserve to have a decent plate of ●
food every day, access to school and medical care and an adult to look out for their well-being. ● We will lift them up past their 18th birthday by providing them with the basic skills to go out and earn a living, because it would be unreasonable to expect an 18 year old to be self-sufficient and independent in this day and age. ● We will keep on supporting and assisting young adults who are pursuing tertiary studies. This is our amended brand. This is Abraham Kriel Bambanani. We will use our hands and hearts to support children and young adults into a bright and hopeful future. The launch of this amended brand is planned for the new financial year. BUSINESS STRUCTURES The long-term strategy has as an objective to restructure existing legal entities and to create new legal entities in order to provide vehicles for more effective and compliant operational, governance and commercial activities. The implementation of this objective is dependent on re-branding decisions, advice from experts in respect of the NPO, Income Tax and Companies Acts, as well as decisions in respect of the future use of the Langlaagte property and new commercial activities. The board will ensure that new operational structures will meet statutory prescripts and requirements of the DSD. It will also have to ensure that profits by way of commercial activities are optimised. Furthermore any proposed structure will have to be in full compliance to tax regulations. As pointed out previously, one of the strategic initiatives focuses on the development of a new people plan to service new strategic initiatives. The objective to register proposed new legal entities of choice with appropriate authorities by June 2017 could not be met. The delay in the decisions to sell the Langlaagte property, commercial activities and rebranding of Abraham Kriel Childcare had a negative impact on the determination of the nature and the number of legal entities to be registered. We now will endeavour to decide on the nature and number of legal entities once decisions relating to the selling or alternative use of the Langlaagte property, as well as the implementation of new commercial activities, have been taken by March 2018.
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 39
GOVERNANCE
7. Corporate Governance and Remuneration 7.1 CORPORATE GOVERNANCE The board of Abraham Kriel Childcare regards the maintenance of a high level of good corporate governance as critically important to the integrity and reputation of the organisation. In respect of the management of resources, the board regards itself and management as stewards of resources entrusted to the organisation. This approach has preserved the reputation of Abraham Kriel Childcare over many decades in that it instils confidence and trust in donors and funding partners that resources are being applied in the best interest of the beneficiaries of Abraham Kriel Childcare. This confidence and trust is held in the highest regard, as we believe it is an indispensable component of the organisation’s sustainability. BOARD OF DIRECTORS AND COMMITTEES The board is governed by the Memorandum of Incorporation of the company as well as the board charter. Members of board committees are appointed by the board and these committees are governed by their respective charters, also approved and reviewed regularly by the board.
The Board exercises leadership, enterprise, integrity and judgment in directing Abraham Kriel Childcare, at all times acting in the best interests of Abraham Kriel Childcare in a manner based on the principles of good corporate governance and core values of Abraham Kriel Childcare. The board was trained in the basic principles of King IV by KPMG in November 2016. STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORS The Board’s primary responsibilities include determining the Abraham Kriel Childcare strategy, identifying key risk areas and key performance indicators of Abraham Kriel Childcare activities, monitoring the performance of Abraham Kriel Childcare against agreed objectives, advising on and directing significant financial matters and reviewing the performance of executive management against defined objectives. The Directors recognise the need to conduct the enterprise with integrity and provide effective leadership based on ethical values. The board charter sets out its responsibilities and duties including the adoption of strategic plans, monitoring of operational performance and management, determination of policy and processes to ensure the integrity of the company’s risk management and internal controls, communication policy and director selection, orientation and evaluation. The board of directors consists of 11 independent nonexecutive Directors and one Executive Director. The board ensures that there is an appropriate balance of power and authority in order that no single individual or block of individuals can dominate the board’s decisions. The Directors are individuals of calibre and proven credibility and have the necessary skills and experience to bring judgment to bear independent of management, on issues of strategy, performance,
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GOVERNANCE
resources, transformation, diversity and employment equity, standards of conduct and evaluation of performance. The current board’s size, diversity of professional expertise and demographics makes it effective with regard to current strategies of Abraham Kriel Childcare. The board shall ensure that in appointing additional members, the board as a whole will continue to reflect, whenever possible, a diverse set of professional and personal backgrounds. Directors have unrestricted access to all company information, records, documents and property to enable them to discharge their responsibilities effectively. The board has delegated certain functions to various committees, such as the Strategic committee, the Audit committee, the Financial and Risk committee, the Remuneration and Human Resources committee and others. The board is conscious of the fact that such delegation of duties is not an abdication of the board members’ responsibilities. The various committees’ terms of reference and performance shall be reviewed annually. The directors continue to strive for effective governance to ensure the professional flow of funds in the best interest of our beneficiaries, the children and young people we serve. The board as a whole and individual directors will have their overall performance periodically reviewed in order to identify areas for improvement in the discharge of individual director’s and the board’s functions. This review will be undertaken by the chairperson and, if so determined by the board, an independent service provider. The board will appraise the chairperson’s performance and ability to add value on an annual or such other basis as the board may determine. The chairperson, or a subcommittee appointed by the board, will appraise the performance of the Chief Executive at least annually. KING CODE ON CORPORATE GOVERNANCE The Abraham Kriel Childcare board subscribes to the principles of King III and endeavours to adopt the principles of King IV in all material aspects. The board will conduct an application analysis in respect of governance practices recommended by King IV in
the next reporting period. The board considered the King IV NGO supplement and will apply the concept of proportionality when considering the governance arrangements of Abraham Kriel Childcare. The Abraham Kriel Childcare board ensures independent assurance by retaining the services of both PricewaterhouseCoopers Inc. and KPMG to conduct the annual independent external financial audit and ongoing internal audits of all operational functions and systems. KPMG also guides management in the preparation of its Integrated Report and assists the organisation to prevent and detect possible fraud by providing an ethics hotline service. All of these services are provided on a probono basis. CHALLENGES The non-executive directors on the board do not receive any monetary or in-kind compensation for their service; however, the directors and prescribed officers carry a very high liability risk in terms of the Companies Act. The aforementioned increases the challenge of recruiting appropriate directors to fill vacancies. This in turn poses a challenge in terms of the King IV approach to the rotation of directors. BOARD AND COMMITTEE MEETINGS Board meetings are held at least quarterly, with additional meetings convened when circumstances necessitate. The Board had six board meetings in the period under review. The average attendance was 59.2% (2016: 58.3%). Board members contributed actively in all of the board committees which collectively conducted 40 (2015: 41) meetings during the year, excluding the six board meetings. The attendance of board committee meetings varied between 80% and 100%. Remuneration & HR Committee IT Committee . . . . . . . . . . . Strategic Committee . . . . . . . Financial & Risk Committee . . . Marketing Committee . . . . . . Professional Committee . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. 80% . 100% 94.4% 81.6% 87.5% . 100%
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 41
GOVERNANCE THE BOARD OF DIRECTORS
Mr JD de Villiers (Vice-chairperson) B Com (Hons), CA(SA)
Ms NN Mokhobo B.Com, PDM Property Development Management
Mr BL Mlotshwa (Chairperson) BA (Psych) HED, MBA
Rev PM Strydom BA, BD, Dip Teol, MdiV
Mrs I Fourie B Com (Hons), CA(SA)
Mr DJ Deysel M Com, C.A (SA)
Ms KJ Tshabala Bachelor in Ministry, OfďŹ ce Administration Diploma
42 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
Mr PS Momsen (Chief Executive) B.Diac, PDM Business Administration
Ms NR Mabale Degree in Public Relations Management
Ms S Mbokazi B SocSc (Psycology)
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Board of Directors Board Committees Audit Committee I Fourie (Acting Chairperson) J D de Villiers (Board member) D J Deysel (Board member)
Strategic Committee
HR & Remuneration Committee
Professional Committee
Financial & Risk Committee
B L Mlotshwa (Chairperson) J D de Villiers (Vice Chairperson) N N Mokhobo (Board member) P S Momsen (Board member) Y L Swartz (Advisory member)
S Mbokazi (Chairperson) H Adler (Volunteer) W Mahlangu (Advisory member) P S Momsen (Advisory member) T Nongauza (Advisory member)
P M Strydom (Chairperson) P S Momsen (Board member) A Bosman (Tutela Representative) M M Retsuri (Advisory member) M M van Zyl (Advisory member)
J D de Villiers (Chairperson) B L Mlotshwa (Board member) P S Momsen (Board member)
IT Committee
Marketing Committee
J du Toit (Chairperson) P S Momsen (Board member) N du Bruyn (Advisory member) H du Toit (Advisory member) Y L Swartz (Advisory member) M M van Zyl (Advisory member)
P S Momsen (Acting Chairperson) N N Mokhobo (Board member) K J Tshabalala (Board member) R Boonzaaier (Advisory member) H du Toit (Advisory member) A Kincaid-Smith (Advisory member) K Kalicharan (Advisory member) D Kotze (Advisory member) S Nel (Advisory member) N Nkosi (Advisory member) M Roberts-Lombard (Advisory member) A Viljoen (Advisory member)
External Audit Internal Audit Ethics Hotline
Emdeni Management Advisory Committee (EMAC)
Appeals Committee
P S Momsen (Acting Chairperson) Z N Bafo (URCSA Representative) T T Dhliwayo (Community Representative) Z Mlangeni (Advisory Member) E M Mohajane (Advisory Member) R E Mokgong (Advisory Member) M Molaetsi (Advisory Member) S S Nkwala (Community Representative) S Qina (Community Representative) M M Retsuri (Advisory Member) K J Tshabalala (Board member)
Judge N Claassen (Chairman) I J de Villiers (Volunteer) B L Mlotshwa (Board member)
Abraham kriel Bedieningstrust
Abraham Kriel Enterprises Trust
JD de Villiers (Chairperson) I J de Villiers (Trustee) B L Mlotshwa (Trustee) P S Momsen (Trustee) Y L Swartz (Trustee)
J D de Villiers (Chairperson) P S Momsen (Trustee) Y L Swartz (Trustee) M M van Zyl (Trustee)
Laws/Regulation Codes Children’s Act, Companies Act, Nonprofit Organisations Act, Lotteries Act, Income Tax Act, Labour Relations Act, Basic Conditions of Employment Act, Employment Equity Act, Skills Development Act, Social Service Professions Bill, Criminal Procedures Amendment Act, Occupational Health and Safety Act, King III Report on Corporate Governance, B-BBEE Codes.
Policies/Guidelines Board Charter, Committee charters, Code of Ethics, Board Induction, Conditions of Service, Disciplinary code, Recruitment Policy, Performance management policy, Remuneration policy, Employment equity policy, Sexual harassment policy, HIV/AIDS policy, Key financial policies and procedures, Anti-fraud and corruption policy.
Risk Management Financial Oversight Stakeholder Engagement
Staff meetings, Children’s forums, Newsletters, Donor meetings, Donor tours, Reporting, Court appearances, Panel discussions, Presentations, Social and public media, Therapeutic interventions, Volunteer committees.
Foundations to Governance 2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 43
GOVERNANCE
STRATEGIC COMMITTEE The Strategic Committee oversees the implementation of Board and Financial and Risk Committee decisions. The Strategic Committee acts in all strategic matters on behalf of the Board, when the Board is not in session. The Strategic Committee also serves as the nominations committee. The Committee gives guidance to management in respect of all six strategic focus areas, with a strong focus on financial sustainability, the development of employees and the sustainability of service offerings. The Committee actively drives the development of future strategy.
critical skills”. The Committee will continue to attend to the outcomes of the Staff Satisfaction Survey, with specific emphasis on finding solutions in respect of dissatisfaction with remuneration and performance management.
FINANCIAL & RISK COMMITTEE The Financial and Risk Committee oversees financial planning and execution; risk management and management of company assets; recommends the approval of the annual budget to the Board; approves all unbudgeted and capital expenditure; oversees the formulation and execution of the risk management plan; oversees the acquisition and disposal of company assets; and oversees formulation and execution of policies with regard to all matters pertaining to company assets.
EMDENI MANAGEMENT ADVISORY COMMITTEE The Committee advises the Board and management with regard to the functioning of the Emdeni Skills Development Centre and Emdeni Drop-in Centre. As an important link providing communication channels with and credibility to Abraham Kriel Childcare in the community of Soweto, that contributed to the sustainability of our services in Soweto.
AUDIT COMMITTEE The Committee oversees all corporate governance matters and financial policy, procedures and Audits. A separate report detailing the activities of the Audit Committee is available on page 46 of this report. REMUNERATION AND HUMAN RESOURCES COMMITTEE The Committee contributed actively by providing oversight and guidance to management i.r.o. remuneration levels of staff and management; succession planning of senior management; employment equity and human resources transformation processes; human resource policies; performance assessment and career development. The work of the Committee directly links to the strategic focus area “Recruitment and retention of
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MARKETING COMMITTEE The Committee oversees the marketing and implementation of the communication strategy. The Committee was actively involved in the process of redefining brand elements in support of the strategic focus area “brand awareness”, and also approved a revised marketing strategy and implementation plan.
APPEALS COMMITTEE The Committee deals with all appeals with regard to disciplinary enquiries. This Committee did not have to meet during the past year as no appeals cases were lodged. PROFESSIONAL COMMITTEE The Professional Committee oversees all statutory matters and professional services to the beneficiaries. Its sole focus is the strategic focus areas “standard of childcare” and “the sustainability of our service offering” to our beneficiaries. The Committee also serves as an important direct channel of communication between beneficiaries and the board. INFORMATION TECHNOLOGY COMMITTEE The Information Technology Committee of the Board oversees the management of risks associated with the IT function as well as the development of policies, procedures, systems and infrastructure. The Committee advised management on operational matters pertaining to inter alia the donor database; improvement of backup and data-recovery procedures; and the development of a change management policy and procedures. The Committee also attended to the implementation of measures to mitigate risks identified by way of an internal IT audit carried out by KPMG. This process will continue into the new reporting period.
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REMUNERATION
7.2 REMUNERATION The Board sets remuneration policies on recommendation of the Remuneration and HR Committee. Historically the remuneration costs of Abraham Kriel Childcare as a percentage of expenditure was 51%. The figure was 54% in the past financial year. The total personnel costs for the past financial year was R21 869 765 (2016: 19 783 262). Category
Remuneration components
Non-executive members
The non-executive members are not compensated for their duties which are provided entirely on a voluntary basis
The Chief Executive, an employee of the company and Executive Director Rest of employees
The CE receives a salary and travel allowance, without any bonus, according to his contract of employment. Remuneration increases of employees are approved by the Remuneration Committee and Financial Committee of the Board and are based on the outcomes of performance assessments. These performance criteria are linked to key performance indicators relating to job descriptions.
torn I arise in the morning prove between a desire to im to the world and a desire enjoy the world. 2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 45
AUDIT COMMITTEE
8. Report by the Audit Committee TERMS OF REFERENCE The Audit Committee has an independent role with accountability to its members in respect of its statutory duties, and to the Board in terms of the duties that the Board assigned to it as detailed in its terms of reference. These are reviewed and updated in line with an agreed schedule. The committee has performed its duties in accordance with the terms of reference in the past financial year. COMPOSITION AND MEETINGS The committee meets at least three times per year and comprises three independent, non-executive directors. Members of the committee are financially literate with the requisite levels of financial expertise. I Fourie CA (SA) – Acting Chairperson J D de Villiers CA (SA) - Board member D J Deysel CA (SA) - Board member Details of the meetings and attendance are included in the corporate governance report on page 41. The Chief Executive, Financial Manager and both internal and external auditors attended meetings by invitation. The external auditor has unrestricted access to the
46 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
committee and meets with it, without any executives present, on an annual basis. The Audit Committee has a good relationship with the Chief Exectuive. STATUTORY DUTIES The committee performed the following duties during the year under review: ● Considered the independence and objectivity of the external auditors and ensured that the scope of additional services provided did not impair their independence; ● Reviewed the external audit plan and approved the external auditor’s fee proposal for the 2017 financial year; ● Considered accounting treatments, significant financial transactions and other financial information; ● Reviewed the internal audit plan and regular feedback as provided by the Internal Auditors; and ● Considered changes to accounting policies and the appropriateness thereof. The committee is satisfied with the independence and objectivity of the external auditors after consideration of the requirements set out in section 94 (a-e) of the
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AUDIT COMMITTEE
Companies Act. They recommend the re-appointment of PricewaterhouseCoopers Inc at the next annual general meeting. INTERNAL FINANCIAL CONTROLS An independent service provider is contracted to provide an internal audit function as part of the enterprise wide risk management framework. The Audit Committee receives internal audit reports directly in line with the internal audit charter as approved by the Audit Committee. The Audit Committee also approves the internal audit plan. An informal information exchange with the external auditors ensures the efficient coverage of all internal controls. Based on control processes in place and the meticulous attention paid to their review, assurances obtained from management and the issues raised by external auditors in their management reports, committee members agree that the financial controls are effective. FINANCE FUNCTION The committee has considered and has satisfied itself on the appropriateness of the expertise and adequacy of resources of the finance function of the company.
GOING CONCERN The committee reviewed the 2017/8 budget and held discussions with management. It reported to the Board that it supported the view of management that the company will be a going concern for the foreseeable future RISK MANAGEMENT An annual review and analysis of the critical risks facing the company is done. The risk analysis and the company’s response to it are detailed on pages 23 to 27 of this report. The committee has satisfied itself that the compensating controls in place to mitigate the identified key risks are adequate, to the extent that it is possible given the wide range of known and unknown risks facing the company. INTEGRATED REPORT Based on processes and assurances obtained, the committee recommends the integrated report for the year ended 31 March 2017 to the Board for approval. D J Deysel On behalf of the Audit Committee 28 August 2017
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 47
GALLERY
nd to It’s good to have an e ’s the journey toward, but it the end. journey that matters in 48 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
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31 he M ye ar ar ch e 20 nd 17 ing
rt Fo
SUMMARY FINANCIAL STATEMENTS 2016/17 www.abrahamkriel.org
SUMMARY FINANCIAL STATEMENTS
ABRAHAM KRIEL CHILDCARE NPC Non-proямБt company in terms of the Companies Act 2008 Registration no: 1952/000010/08 Fundraising no: 011002690029 SUMMARY FINANCIAL STATEMENTS for the year ended 31 March 2017
50 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
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SUMMARY FINANCIAL STATEMENTS
PricewaterhouseCoopers Inc. Director: C Marais Roux Registered Auditor Sunninghill 28 August 2017
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 51
SUMMARY FINANCIAL STATEMENTS
ABRAHAM KRIEL CHILDCARE NPC
SUMMARY STATEMENT OF FINANCIAL POSITION as at 31 March 2017
ASSETS Non-current PPE
Current Assets Inventories Loans to related parties Trade and other receivables Cash and cash equivalents
Total Assets Equity and Liabilities Equity Reserves Accumulated loss
Liabilities Non-current liabilities Finance lease liabilities Deferred income Retirement beneďŹ t obligation
Current Liabilities Other payables Finance lease liabilities Total Liabilities Total Equity and Liabilities
52 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
2017 R
2016 R
11,637,732 11,637,732
11,871,184 11,871,184
72,846 80,071 363,217 3,744,320 4,260,454
77,690 493,771 214,915 2,660,713 3,447,089
15,898,186
15,318,273
14,146,868 (4,346,068) 9,800,800
14,037,627 (4,676,049) 9,361,578
297,986 313,660 2,014,041 2,625,687
51,009 478,308 2,155,128 2,684,445
3,395,635 76,064 3,471,699 6,097,386
3,253,335 18,915 3,272,250 5,956,695
15,898,186
15,318,273
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SUMMARY FINANCIAL STATEMENTS
ABRAHAM KRIEL CHILDCARE NPC
SUMMARY STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 March 2017 Note Revenue Operating expenses Operating profit Investment income Finance costs Insurance proceeds from damaged goods Other income Profit before taxation for the year Income tax expense Profit after taxation for the year
2017 R 39,851,716 (40,770,288) (918,572) 186,419 (25,492) – 734,076 (23,569) – (23,569)
2016 R 38,155,643 (38,977,319) (821,676) 128,360 (42,637) 1,399,422 649,585 1,313,054 – 1,313,054
(109,241) (764,429) 655,188 462,791 329,981
(1,375,337) (2,032,694) 657,357 (495,093) (557,376)
Note
2017 R
2016 R
5
842,242 186,419 (25,492) 1,003,169
1,161,046 128,360 (42,637) 1,246,769
(637,388) 413,700 (223,688)
(758,773) (307,808) (1,066,581)
304,126 304,126
(171,630) (479,438)
1,083,607 2,660,713 3,744,320
8,558 2,652,155 2,660,713
3 4
Designated funds transferred (to)/from reserves: (to) reserves from reserves Remeasurement of retirement benefit Total comprehensive profit/(loss) for the year
SUMMARY STATEMENT OF CASH FLOWS for the year ended 31 March 2017
Cash flows from operating activities Cash generated from operations Interest income Finance costs Net cash from operating activities Cash flows from investing activities Purchase of property plant and equipment Increase/(decrease) in loans to related parties Net cash from investing activities Cash flows from financing activities Increase/(decrease) in finance leases Net cash from financing activities Total cash movement for the year Cash at the beginning of the year Total cash and cash equivalents at end of the year
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 53
SUMMARY FINANCIAL STATEMENTS
ABRAHAM KRIEL CHILDCARE NPC
SUMMARY STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2017 Retained income R
2017 Balance at 1 April 2016 (4,676,049) Profit for the year (23,569) Reserves transferred from/(to) designated funds (109,241) Remeasurement of retirement benefit 462,791 Balance at 31 March 2017 (4,346,068)
Reserves R
Total R
14,037,627 – 109,241 – 14,146,868
9,361,578 (23,569) – 462,791 9,800,800
2016 Balance at 1 April 2015 (4,118,673) Profit for the year 1,313,054 Reserves transferred from/(to) designated funds (1,375,337) Remeasurement of retirement benefit (495,093) Balance at 31 March 2016 (4,676,049)
12,662,290 – 1,375,337 – 14,037,627
8,543,617 1,313,054 – (495,093) 9,361,578
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2017 1. Basis of preparation The summary financial statements should be read in conjunction with the full set of audited financial statements which is available at the Company’s registered office. The summary financial information has been prepared in accordance with International Financial Reporting Standards (IFRS), IAS 34, Interim Financial Reporting, and interpretations of those standards (as adopted by the International Accounting Standards Board) and applicable legislation (requirements of the South African Companies Act). The summary financial information is presented in South African Rands which is the Company’s functional currency. 2. Accounting Policies The summary financial statements have been prepared under the historical cost convention. The principal accounting policies used by the Company are in terms of IFRS and are consistent with those of the previous period.
3. Revenue Donor funding State funding Corporate funding income Church funding Fees for services Legacies and bequests Income from ventures Training recovery
54 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
2017 R
2016 R
17,063,292 11,655,864 7,267,641 1,212,292 1,030,874 750,352 694,525 176,876 39,851,716
15,626,798 11,750,858 7,403,965 1,153,911 835,557 559,652 616,262 208,640 38,155,643
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SUMMARY FINANCIAL STATEMENTS
ABRAHAM KRIEL CHILDCARE NPC
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2017
4. Operating Expenses Personnel expenditure Household and services expenditure Property expenditure Office and administration expenditure Depreciation
5. Cash generated from operations Profit before taxation Adjustments for: Depreciation and amortisation Non-cash retirement expense Interest received Finance costs Movement in retirement benefit obligation Movement in deferred revenue Insurance proceeds on damaged property Changes in working capital Inventories Trade and other receivables Other payables
2017 R
2016 R
21,869,765 10,703,446 4,224,470 3,101,767 870,840 40,770,288
19,783,262 10,885,812 3,900,610 3,510,116 897,519 38,977,319
2017 R
2016 R
(23,569)
1,313,054
870,840 462,791 (186,419) 25,492 (141,087) (164,648) –
897,519 (495,093) (128,360) 42,637 820,128 (164,649) (1,399,422)
4,844 (148,302) 142,300 842,242
11,734 100,767 162,731 1,161,046
6. Taxation In terms of section 10 (1) (cN) of the Income Tax Act, the company is exempt from taxation subject to annual review by South African Revenue Services. Accordingly, no provision for tax has been made.
2017 | INTEGRATED REPORT | ABRAHAM KRIEL CHILDCARE | 55
GLOSSARY
10. Glossary AKC – Abraham Kriel Childcare
B-BBEE – Broad-Based Black Economic Empowerment
CCW – Childcare Worker
CI – Corporate Identity
DSD – Department of Social Development
ECDC – Early Childhood Development Centre
CSI – Corporate Social Investment
HWSETA – Health & Welfare Sector Education and Training Authority
NLB – National Lotteries Board
NPC – Non-profit Company
PBO – Public Benefit Organisation
PFMA – Public Finance Management Act
QSE – Qualifying Small Enterprise
SARS – South African Revenue Service
SETA – Sector Education and Training Authority
SLA – Service Level Agreement
TK Residence – Talitha Kumi Residence
CBO – Community Based Organisations
NDP – National Development Plan Fund
UNICEF – United Nations International Children’s Emergency Fund
OVC – Orphans and Vulnerable Children
IFRS – International Financial Reporting Standards
56 | ABRAHAM KRIEL CHILDCARE | INTEGRATED REPORT | 2017
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ntil you Do the best you can u en you know better. Then wh r. know better, do bette
Abraham Kriel Childcare PO Box 60066
Langlaagte 2102
www.abrahamkriel.org
info@abrahamkriel.org Tel: +27 (0)11 839-3058/60
Auditors: PwC inc, 2 Eglin Road, Sunninghill
Company secretary: Y Swartz, Tel: +27 (0)11 839 3058 ys@abrahamkriel.org
Fax: +27 (0)11 839-1080
Banking Details
Registered address: Marais Street,
Account Name: Abraham Kriel Childcare
Paarlshoop, Johannesburg
Branch: 632005 (universal code)
corner Kamp Street,
Business address: Marais Street, corner Kamp Street,
Paarlshoop, Johannesburg
ABSA
Account Number: 140941336
Swift code for international deposits: ABSAZAJJ
Requests for Section 18a certificates: hdt@abrahamkriel.org
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