2016 ANNUAL REPORT Contents General information 2 Report from the Chair of Council 3 Meetings of Council 6 Report of the Vice-Chancellor 11 Performance Assessment Report 18 Report by Council on Corporate Governance 25 Council Statement on Sustainability 38 Report of the Audit and Risk Oversight Committee 40 Report on Internal Administrative/ Operational Structures and Controls 44 Report of Risk Identification and Management 46 Report of the Chairperson of the Institutional Forum 49 Senate Report 51 Report on Transformation 65 Annual Financial Review 68 Statement of Responsibility for the Financial Statements 74 Approval of the Financial Statements 74 Report of the Independent Auditors 75 Statement of Financial Position 82 Statement of Profit or loss and other Comprehensive income 83 Statement of Changes in Funds 85 Statement of Cash Flows 86 Notes to the Financial Statements 88 1 2016 ANNUAL REPORT General information REGISTERED ADDRESS PHYSICAL ADDRESS WEBSITE PO Box 1906 Administration Building www.cput.ac.za BELLVILLE Symphony Road 7535 BELLVILLE SOUTH Tel: 021 959 6911 7530 BANKERS ABSA STANDARD BANK AUDITORS External Auditors Internal Auditors (Annual Financial Statements) (Agreed Upon Procedures) SizweNtsalubaGobodo KPMG Inc. Ernst & Young Incorporated 2nd Floor, Block A 1 Mediterranean Road 35 Lower Long Road Century Falls Foreshore CAPE TOWN 8000 32 Century Boulevard CAPE TOWN 8000 Tel: 021 443 0200 CENTURY CITY 7441 Tel: 021 408 7000 Fax: 021 443 1462 Tel: 021 552 5311 Fax: 021 408 7100 Fax: 021 552 2805 ATTORNEYS Cliffe Dekker Hofmeyr Inc Minde Shapiro Smith Gunstons 11 Buitengracht Street Tyger Valley Office Park Block F CAPE TOWN 8001 Building No. 2 The Terraces Tel: 021 405 6066 cnr Willie van Schoor Steenberg Office Park Fax: 021 405 6149 & Old Oak Roads TOKAI 7945 TYGER VALLEY 7536 Tel: 021 702 7763 Bisset Boehmke McBlain Tel: 021 918 9037 11th Floor, Triangle House Fax: 021 918 9090 Riley Attorneys 22 Riebeeck Street 212 Rosmead Avenue CAPE TOWN 8001 Norton Rose Fulbright Wynberg Tel: 021 441 9800 Norton Rose House CAPE TOWN 8001 Fax: 021 441 9913 10th Floor Tel: 021 797 7116 8 Riebeeck Street Fax: 021 462 2256 Bradley Conradie CAPE TOWN 8001 Halton Cheadle Tel: 021 405 1308 S Morgan and Associates The Gatehouse – G04 Fax: 021 405 5515 6 Green Leaf Place Century Way Eastridge, Mitchells Plein CAPE TOWN 7441 Domisse CAPE TOWN 8001 Tel: 021 418 2196 Black River Park Tel: 021 391 2814 Ground Floor, Fax: 021 391 2801 Walkers Block D, North Block 15th Floor Plein Park 2 Fir Street Plein Street OBSERVATORY 7925 CAPE TOWN 8001 Tel: 021 671 1550 Tel: 021 464 1400 Fax: 021 462 2256 2 Report from the Chair of Council It is an honour for me to present you The academic year 2016 presented a difficult set of circumstances for CPUT that tested the character of with the Cape Peninsula University of our leadership. A process was convened by Council Technology’s Annual Report for 2016. to place the Vice-Chancellor, Dr Prins Nevhutalu on special leave pending a disciplinary process. He had The present Council, which has been accorded served three of the five years of his contract at the the fiduciary responsibility of University oversight for time. The disciplinary process is still inprogress. the period from September 2014 to August 2018, operates in a term that has been very challenging In the same breath, we are grateful for the service for the Higher Education sector in general and the rendered by Professor John Volmink who was University in particular. immediately available when Council approached him to take up the role of Acting Vice-Chancellor. Prof We are proud that despite the turbulence, the Volmink had been serving on Council in the capacity dedication and commitment by members serving on of Chairperson of the Finance Committee (FINCOM), a the CPUT Council remains steadfast, as witnessed role he was excused from when he took over as Acting by their attendance at Council and subcommittee Vice-Chancellor from 31 October. meetings. No meeting has been cancelled due to the lack of a quorum. The theme of moving the Council was met early in 2017 by the untimely University “from good to great” resonates strongly resignation of the chairperson of Council Mr Mbulelo with Council as it oversees the implementation of the Bikwani, who had presided over the council since University’s Vision 2020 Strategic Plan. In executing September 2010. His role and stewardship over the its responsibility, Council has always worked hard years does not go unnoticed. From the governance to ensure the sustainability and continuity of CPUT. point of view, continuity prevails as members remain Its members act with due diligence in all decisions committed to good corporate governance. The former processed to ensure that the integrity of the Council deputy chairperson, Ms Ruth Benjamin-Swales has as the highest decision-making body of the University been appointed chairperson of the Audit and Risk remains intact. Oversight Committee (AROC) and I was appointed 3 2016 ANNUAL REPORT deputy chairperson in her place. In this capacity, capital infrastructure of the University as part of the I currently act as chairperson of Council until the consolidation process, as well as an increased need position of chairperson is filled. for residences, which places additional cash flow demands on the institution”. For two successive years (2015 and 2016) the sector has been hit by student protests organized With regard to continuity, Council inherited and under the banner of #FeesMustFall. On both adopted the decision of the previous Council occasions the disruptions led to the postponement (2010 – 2014) that it needed “to generate a surplus of year-end examinations and the suspension of on recurrent operations of at least R30 million to university operations, creating a logistical nightmare for R50 million to be able to generate sufficient funds management. The violent protests resulted in damages to maintain the day to day operational needs of the of approximately R10 million in 2015 and R35 million institution, as well as adequately fund the capital in 2016. infrastructure and other strategic initiatives.” Below I share the overall financial performance of the University The presidential Fees Commission is ongoing and since this Council was composed in 2014: the sector anxiously awaits the final report that is due in June 2017, as it will chart the way forward in terms of the funding of higher education. We hope this will 2016 2015 2014 bring about stability. Annual (deficit)/ surplus from R181,5m R41,1m R123,9m recurrent operations Other external factors, such as the Rand’s weak performance and dwindling investor confidence in South Africa during 2016, have had a negative impact on the financial performance of the University, along The multiple protests that hit the higher education with increased costs and reduced donor funding. sector nationwide have made this standing decision impossible to realise in the past two years. Among the An increase in the number of special council contributing factors were: meetings in 2016, which were equal to the number of standing Council meetings, prompts the question: 1. A rise in costs in the context of a call by How do we measure our efficiency and effectiveness government for no fee increment for the academic in relation to what we have set ourselves to achieve? year of 2016. While the subsidy covered 75% of This will be that shortfall, the answered in a process Council will have to undertake 2. University had to carry the remainder. in 2017 to evaluate and monitor our performance and 3. The protests themselves, which came at a high impact. The process will be initiated in our June 2017 cost to the University through damages and strategic review. logistical rearrangements in both 2015 and 2016. 4. An increase in the provision for bad debt, as the This Annual Report is intended to provide a window call for free education has resulted in a decrease into our operations. The following key strategic areas in the payment of fees. are covered in the report: The challenge of generating third-stream funding 1. Teaching and Learning (refer to the Senate Report) continues. The Advancement Department managed 2. Research Excellence (refer to the Senate Report) to raise R29.4 million in 2016. The department has 3. Fiscal Discipline (refer to the Annual Financial already collected R4,6 million in 2017 and has pledges Review) of more than R52,7 million, mainly from the SETAs. The financial report points in a sustainable direction Going forward, the University seeks healing from under a difficult set of socio-economic circumstances the violent protests that affected the sector. Staff and a hostile political environment. As noted last have been traumatised and this is not healthy for year in the chairperson’s report, “there has been a the efficiency of the University’s operation. We need continuous urgent need to invest in and upgrade the to facilitate a process wherein the whole University 4 ” I thank my fellow Councilors for their work and the commitment they continue to display. Even in Even in difficult times we remain difficult times we remain dedicated to the good governance of the University and will continue to dedicated to the good governance take decisions in its best interests, without fear or of the University and will continue favour. to take decisions in its best Kea leboga. interests, without fear or favour. community experiences healing through dialogue on how we can maintain good relations beyond ” THATO MOLAOLWA the protests. Council, together with Executive Deputy Chairperson of CPUT Council Management, will have to develop measures through which the healing process can be realised. As an interim measure, Council passed a resolution to allow a three-member task team of Council to attend to leadership squabbles in the SRC when unresolved by Executive Management.