GOVERNMENT PRINTING WORKS

1. GOVERNMENT PRINTING WORKS PRESENTATION TO THE PORTFOLIO COMMITTEE FOR HOME AFFAIRS ANNUAL REPORT 2012 9 October 2012

2. CONTENTS • Legislative Mandate of GPW • Strategic Outlook of GPW • Strategic Objectives 2012/2013 • Transformation of GPW • Corporate Governance • Business Units • Production Statistics • Progress with Key Projects • ID Smartcard Project Plan • Key Performance Indicators Report • Financial Statements • Human Resources • Conclusion

3. LEGISLATIVE MANDATE OF GPW • The Government Printing Works (GPW) is a Government Component reporting to the Minister of Home Affairs; with oversight by the Parliamentary Portfolio Committee for Home Affairs • A Government Component is a new form of Entity in terms of Schedule 3 of the Public Service Act of 1994 as amended; Section 7(5)(c) • GPW was designated a Government Component on 9 October 2009 • The purpose of GPW is to deliver security printing and related services to the Government of South Africa 3

4. STRATEGIC OUTLOOK OF THE GPW • Vision • To be the State’s Mandated Security Printer • Mission • To provide cost effective, reliable and timeous services in security printing to all spheres of Government • To provide the public with valuable information • To disseminate Government information through technology, innovation and service excellence • Values • Reliability • Integrity • Accuracy • Stakeholder satisfaction 4

5. STRATEGIC OBJECTIVES 2012/2013 • Transform into a Government Component Conversion to a Government Component organisation to perform as a ring-fenced business entity with flexibility and within regulated parameters • OptimiseProcesses and Facilities Optimise production processes to increase operational effectiveness and improve customer service • Technology Migration of technology across the spectrum to enable current and new processes as well as increasing production capacity 5

6. STRATEGIC OBJECTIVES 2012/2013 • Market Strategy Implement an effective market strategy to ensure that GPW retains high value customers and consolidates its position as the State’s security documents printer • Financial Management Ensure strong financial management 6

7. TRANSFORMATION OF GPW • Human Resources : the new GPW establishment - rolled-out by the end of 2014 • New facilities : at Visagie street – for completion by end 2015 • Asset recapitalisation process :R388 million over the MTEF period to replace outdated technology and machinery • Business process : Enterprise resource planning (ERP) system – went live 1 October 2012 • Print and media company : ID Smartcard • Electronic Gazette and website : went live in August 2012 7

8. CORPORATE GOVERNANCE • For the third year in succession, the GPW obtained an unqualified audit for the 2011/12 financial year • This confirms its position as a government-owned entity running on sound business principles • With all its operations financed through revenue it generates by means of the services it provides 8

9. BUSINESS UNITS • Operations & Production • Strategic Management • Financial Services • Human Resource Management • Marketing • Information and Communications Technology • Internal Audit • Security 9

10. PRODUCTION STATISTICS 10

11. PROGRESS WITH KEY PROJECTS • Komori machine installed in new security printing division • Intaglio printing machine being sourced • Digital printing facilities in planning phase • ID Smartcard tender process underway for personalisation machines and blank polycarbonate cards – surplus will be needed to fund procurement of machines • Public website and Electronic Gazette went live in August 2012 • Implementation of the ABC costing methodology • Created capacity to print passport visa pages in-house • ERP system went live on 1 October 2012 • Development of new facility proceeding very slowly 11

12. ID SMARTCARD PROJECT PLAN :BUDGET ASSUMPTIONS • “Cost to citizen will be no more than the price of the current ID document” : R 140 • Therefore production cost must be less than R 100 per smartcard • “First issue ID smartcards will be free of charge : i.e. ~ 1 million South Africans a year turning 16 years of age” • 30 million smartcards will be replaced over 3 years : 2013 to 2016 i.e. 10 million p.a. or 833 000 per month 12

13. ID SMARTCARD PROJECT PLAN :TENTATIVE BUDGET 13

14. The two ID Smartcard personalisation machines will be placed in space reserved for them in the passport factory 14

15. BRANCH : OPERATIONS AND PRODUCTION 15

16. BRANCH : FINANCE 16

17. BRANCH : FINANCE 17

18. BRANCH : HUMAN RESOURCES 18

19. BRANCH : HUMAN RESOURCES 19

20. BRANCH : HUMAN RESOURCES 20

21. BRANCH : HUMAN RESOURCES 21

22. MARKETING BUSINESS UNIT 22

23. INFORMATION COMMUNICATIONS TECHNOLOGY BUSINESS UNIT 23

24. INFORMATION COMMUNICATIONS TECHNOLOGY BUSINESS UNIT 24

25. INTERNAL AUDIT BUSINESS UNIT 25

26. SECURITY BUSINESS UNIT 26

27. STATEMENT OF FINANCIAL PERFORMANCE 27

28. INCOME AND EXPENDITURE ESTIMATES 28

29. SELECTED PROJECTED BALANCE SHEET ITEMS 29

30. ASSET REPLACEMENT PROGRAMME AND OTHER CAPITAL EXPENDITURE 30

31. NEW GPW ESTABLISHMENT 31

32. STAFF EXPENDITURE 32

33. NOTES I.R.O. REQUIRED STAFF NEEDS • The CEO post has been filled with effect from 1 January 2012 and the vacant two General Manager positions have since been advertised. Several artisans, specialists and middle management positions have been filled during the financial year. • As soon as the two General Manager posts have been filled the recruitment of senior and specialist staff in these areas will receive attention • The structure provides for various specialists and senior positions in order to provide adequate human resources to ensure a vibrant, financial viable and sustainable organization. • Whilst various new systems and processes are implemented in the GPW extensive use will still be made of short term contract appointments to create interim capacity • Technology upgrading and improvement of production processes will have an impact on the number of posts required in future. An example of this is that the expanding of the High Security Printing capacity has lead to the creation of additional posts 33

34. NOTES ON ENVISAGED STAFF EXPENDITURE • The number of specialised artisans needs to be increased by 20% in order to ensure optimum utilization of equipment, reduction of overtime, replacement of obsolete skills, etc • Several business units still have to be expanded to provide adequate support services, such as equipment maintenance, information communication technology, strategic management and human resources. In some of these areas there is a vacancy rate of 50% and higher • More leadership and specialist positions have to be filed to ensure adequate leadership and technical abilities • A request to the Minister of Public Service and administration has been made for a special dispensation for the GPW to succeed as a Government Component to attract and retain skills in the core business, finance and other critical occupations. An amount of R20 million is provided for this in the current financial year. Without this dispensation GPW will find it difficult to attract and retain staff to built on the progresses made to date. • A task team has been set up, with GPW and the DG of DPSA, to look into the matter of a special salary dispensation. 34

35. NOTES ON ENVISAGED STAFF EXPENDITURE • Provision is also made for voluntary service packages as the GPW has an “aged” work force with several employees older than 55 years. It is anticipated that a number of them will not be interested to be re-trained on new equipment and processes. • Staff Development is still identified as a crucial success factors during the next three to four years and an amount between 15 and 20% of the total salary remuneration budget has been set aside for this purpose • Extensive training programmes will be implemented for all levels of staff. These will include training on the ERP system, managerial training, training on new acquired printing equipment, succession planning, implementation of learnerships and later internships as more appointments are made and functions properly established • The establishment of a training academy 35

36. NOTES ON FILLING STATUS OF FUNDED POSTS: • Senior Management level the vacancy rate is 80% • Middle Management and specialist positions the vacancy rate is 40% • The vacancy rate of critical artisan positions are between 20 and 30% • Uncompetitive remuneration structure is lagging on average by between 20% to 70% (Especially on specialist positions) compared with the local printing industry. This mainly applies to the technical grades, where significant shortage of skills exists 36

37. CONCLUSION • GPW has made considerable progress in the 2011/2012 financial year in its conversion to a Government Component • It is well on the path to achieve its vision of becoming “the State’s mandated security printer” • Progress has been made in becoming a modern “print and media company” through revamping internal business processes through the establishment of an Enterprise Resource Planning system (ERP) to integrate financial and production information systems • A public website has been launched; including an electronic government gazette • Migration to a “new GPW establishment” in human resources has been held up by delays in renovation of the Visagie Street premises • The asset recapitalisation process has also been slowed by the delays in renovation of Visagie Street • The ID Smartcard project is proceeding with tenders issued for card personalisation machines, and the supply of blank polycarbonate cards. Production should begin in early 2013 • The business is expanding as more and more government departments bring their work to GPW; and clients from other African countries approach GPW for security printing services 37

38. We thank you kindly 38