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ATNS Strategy 06/07ATNS Strategy 06/07 Presented to the Parliamentary Portfolio Committee Presented to the Parliamentary Portfolio Committee

Ms Wrenelle StanderMs Wrenelle StanderChief Executive OfficerChief Executive Officer

15 March 200615 March 2006

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Vision, mission, imperatives

VisionBe the preferred supplier of air traffic, navigationaland associated services to the African continent and Surrounding regions.

MissionTo provide safe, orderly, expeditious and efficient airtraffic, navigational and associated services.

Strategic imperatives• Continuous improvement of our safety performance• Become an employer of choice• Become a performance based service provider• Maintain long term financial sustainability• Position ATNS to secure a continued role in the changing global air traffic management system

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Continuous improvement of Continuous improvement of our safety performanceour safety performance

(Peter Marais - Executive Manager ATM/cns)(Peter Marais - Executive Manager ATM/cns)

Desired endstate: Continuous safety performance

ATS SYSTEM

People

TechnologyProcedures

Corporate Management

ATCO’s

SupportStaff

EngineeringStaff

Surveillance

Communications

Navaids

Information

OperatingMaintenance

ATNS Safety Management System

Safety Assessment

Safety Auditing

SafetyMonitoring

Safety Promotion

Safety Policy

Supporting organisational requirements

Management Philosophy

Safety Culture

Continuous improvement of

safety performance

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Becoming an employer of choiceBecoming an employer of choice Dumisani Majozi Dumisani Majozi

Executive Manager Strategic Human ResourcesExecutive Manager Strategic Human Resources

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Desired endstate

Stakeholders

Mobility of skill

War for Talent

Legislation

Bottom Line Driven

Accountability

Stretch

Energy

CommitmentEmpowerment

Pride

Passion

Resilience

Leadership

High Performance

Lean organisation

Transformation

Morale & Motivation

Reward &Recognition

Retention

Recruitment

Employer of Choice

EmployeeRelations

PerformanceManagement

EmployeeDevelopmentHR Systems

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Retaining our people our biggest strategic challenge

Priority to:

Leadership development

Revamped remuneration policy• Principles:

• Salary structure (all inclusive)• Position relative to market• Post and during employment benefits• Correction of anomalies

Revamped performance management system• Clear performance targets with linked, regular incentives• Honest, holistic performance management

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Current and future initiatives

• Revamped recruitment• Revamp recruitment methods and offering• Increased career awareness• Employment Equity• Hase se Bokhutlo

• Development of a brand and culture of ATNS’ers

• Revamped Training academy• Course development unit• Systems and equipment• Facilities• Capacity

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Service Delivery StrategyService Delivery Strategy(Boni Dibate – Executive Manager Service Delivery)(Boni Dibate – Executive Manager Service Delivery)

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Desired end-state

• Safe and secure use of airspace• Optimal use of airspace• Appropriate staffing mix• Capacity ahead of demand• Meet reasonable customer requirements with

industry norms

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Safety

• Reduce the safety ratio to 2.5 incidents per 100 000 movements• Implement the company safety management

system• Improve capacity to analyse all factors contributing to high incident rate• Continue our benchmarking with global

partners• Implement ongoing safety campaigns• Promote and facilitate a performance culture

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Performance driven service delivery

• Optimum utilization of available airspace• Increase runway throughput (FAJS 72, FACT 40,

FADN 36)• Staff planning and empowerment programme• Implement capex Plan in line with strategy• Ensure system capability and availability• Meet client needs and manage expectations

where necessary• Manage any service delivery risks proactively

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Maintaining long term Maintaining long term financial sustainabilityfinancial sustainability (Mohammed Mayat - Executive Manager Finance)(Mohammed Mayat - Executive Manager Finance)

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Desired end-state

• Financial health• Regulatory compliance - Permission - Statutory compliance• Sound administrative systems

•Position ATNS to secure a Position ATNS to secure a continued role in the continued role in the

changing global air traffic changing global air traffic management system:management system:

Africa strategyAfrica strategy(Joe Musandiwa)(Joe Musandiwa)

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Desired end state

• Safer corridors

• Reduced costs

• Implementation of “AFI Plan”

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..current ATNS initiatives aim to:

Establish ATNS’s people as a world class, service orientated air navigation service provider; Enable regional service provision; Achieve increases in capacity and safety through the introduction of new technologies e.g satellite; and Develop people in aviation management and the technical skills.

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..our vision – to connect Cape to Cairo - how are we doing?

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..Southern and West African ATCC’s interconnected

SADC VSAT Interconnects 13 SADC air traffic control centres, as well as Burundi and Rwanda

To be upgraded to meet existing future demands: GNSS, VHF and ATN

Facilitates 2 million data calls per annum

AFISNETInterconnected with ASECNA, Afisnet network – connecting SADC with 16 West African states

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..connecting North African states – shortly NAFISAT

Satellite network to be installed in North East Africa

Connecting Djibouti, Egypt, Ethiopia, Kenya, Saudi Arabia, Somalia, Sudan, Tanzania, Uganda and Yemen

IATA and ATNS jointly selected as the service provider

Equipment acquisition for SADC VSATII and Nafisat systems being done jointly

Tenders issues

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..and the Middle East – not soonMIDSAT

Feasibility study complete

No further plans at this time

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.. introduction of new technologies

GNSS Design of RNAV (GNSS) procedures

IATA project -37 airports: SADC states, Cape Verde, Kenya, Uganda) UN project - 10 airports - DRC

Implementation of RNAV (GNSS) procedures Project GROMMET –evaluation and validation of RNAV (GNSS) procedures

Undertaking SBAS trials using EGNOS – validation of SBAS augmentation FAA project - WGS 84 surveys

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..introduction of new technologies

RVSM Introduction of RVSM

Functional hazard assessment completed Pre-implementation safety case underway - being driven by RVSM implementation task team (includes ATNS)

AFI Regional Monitoring Agency (ARMA) – hosted by ATNS Contracted out the height monitoring service – Arinc

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ATNS Budget 2006/07ATNS Budget 2006/07 Presented to the Parliamentary Portfolio Committee Presented to the Parliamentary Portfolio Committee

Ms Agnes MlamboMs Agnes MlamboManagement AccountantManagement Accountant

15 March 200615 March 2006

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Assumptions

BUDGET FORECAST PERMISSION

Tariff Increase 0% 12.55% 9.2%Volume Growth 4.8% 7.08% 2%CPI 5.1% 4.1% 5.2%Rand/Dollar 6.7 6.17 10.37Euro/Dollar 8.9 8.39 11.82Salary Increase 8% 6.5% 6.2%VSAT Movement Growth

3.5% 10% 2%

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Revenue 06/07

BUDGET (R000)

FORECAST (R

000)

% INCREASE

Tariff Revenue 521 859 501 788 4.0

Small Aerodrome Fees 11 868 10 262 15.6

Training Revenue 21 176 19 977 6.0

Technical Maintenance Revenue 2 047 2 115 -3.2

Rental of Sites/Beacons 1 357 1 292 5.0

VSAT 12 293 12 015 2.3

RVSM 1 000 1 244 -19.6

AIS Services & Special Projects 3 968 9 359 -57.6

Sundry Income 1 330 1 868 -28.8

Profit/(Loss) on Foreign Exchange -619

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Revenue Continue …

BUDGET (R 000)

FORECAST (R 000)

% INC.

Tariff Revenue 521 859 501 788 4.0

Non Core 55 039 57 514 -4.3

TOTAL 576 898 559 301 3.2

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Tariff Revenue

Over recovery in the current financial Over recovery in the current financial year.year.

0% Increase in tariff revenue 06/07.0% Increase in tariff revenue 06/07. Zero Rating < 5001kg except JIA 06/07.Zero Rating < 5001kg except JIA 06/07. 4.8% Volume Growth.4.8% Volume Growth.

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R1.6m contract with ACSA for the R1.6m contract with ACSA for the maintenance of their ILS.maintenance of their ILS.

R0.4m – spares.R0.4m – spares. New ILS have been purchased by ACSA. New ILS have been purchased by ACSA. Less spares will be required. Less spares will be required.

Technical Maintenance Revenue

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Agreement – cost incurred is recovered plus Agreement – cost incurred is recovered plus 10% commission.10% commission.

Over recovery in the current year.Over recovery in the current year. 3.5% movement growth in 06/07.3.5% movement growth in 06/07. $1 tariff reduction in short, medium and $1 tariff reduction in short, medium and

long distance.long distance.

VSAT Revenue

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RVSM

ATNS is the regional monitoring agency for ATNS is the regional monitoring agency for Africa.Africa.

Responsible for conducting and managing Responsible for conducting and managing height monitoring trials.height monitoring trials.

Airlines paid a monthly fee to cover the Airlines paid a monthly fee to cover the implementation cost. Ended Oct 05.implementation cost. Ended Oct 05.

Future operational cost to be recovered Future operational cost to be recovered through tariff revenue. through tariff revenue.

R1m Collision Risk Assessment cost will be R1m Collision Risk Assessment cost will be recovered from IATA. recovered from IATA.

Cost (R1m) is included in professional fees.Cost (R1m) is included in professional fees.

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Sundry Income

Bloemfontein and East London will provide a Bloemfontein and East London will provide a 24 hour service.24 hour service.

In the current year services after normal In the current year services after normal working hours was provided at a fee.working hours was provided at a fee.

The fee received is approx. R 700k.The fee received is approx. R 700k. Hence the negative 28.8% varianceHence the negative 28.8% variance..

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Expenses 06/07

BUDGET (R000)

FORECAST

(R 000)

% INCREASE

Salaries and Related Cost 269 306 212 012 27.0

Training and Accommodation 15 256 10 230 49.1

Telecommunication 25 039 20 387 22.8

Contract Services 9 372 7 430 26.1

Insurance 12 230 10 920 12.0

Rent 2 582 2 300 12.3

Marketing Expenses 4 110 3 310 24 2

Depreciation 95 182 76 850 23.9

Other 78 984 77 599 1.8

Total 512 063 421 038 21.6

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Salaries and Related Cost

BUDGET FORECAST

% INCREASE

Salaries (A) 238 773 173 636 37.5

Vacancy Factor (B) -12 743

Budgeted Salaries (A-B)

226 030 173 636 30.2

Related Cost 43 185 38 375 11.1

Total Salaries & Related Cost

269 306 212 012 27.0

Head Count At March

864 722 19.7

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Staff Compliment

DIVISION BUDGET FORECAST INCREASE IN STAFF

INCREASE CTC (R 000)

Executives 8 8 0 0

CEO’s Office & Co Secretary

3 3 0 0

Communications

5 3 2 511

Finance 35 27 8 1 963

Human Resources

13 9 4 993

ATM/cns 48 22 26 10 687Business Development

13 10 3 1 617

ATA 62 46 16 6 450

Service Delivery 677 594 83 15 055

Total 864 722 142 37 276

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ATM/cns – Staff Compliment

Building additional competencies to improve:Building additional competencies to improve: ResearchResearch PlanningPlanning Oversight of the cns environmentOversight of the cns environment

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ATA – Staff Compliment

Optimize utilization of training tools.Optimize utilization of training tools. Review and update training modules.Review and update training modules. Contribute in increasing the number of Contribute in increasing the number of

qualified ATC’s for operational requirements. qualified ATC’s for operational requirements.

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Service Delivery

Additional air traffic service staff.Additional air traffic service staff. Additional intake of trainees.Additional intake of trainees. Supply of air traffic service staff 10% ahead Supply of air traffic service staff 10% ahead

of demand.of demand. New positions have been created to improve New positions have been created to improve

performance.performance.

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Telecommunications

7% increase - Additional staff.7% increase - Additional staff. R2.6m – Satellite transmission – NAFISAT and R2.6m – Satellite transmission – NAFISAT and

VSAT II.VSAT II. R0.6m – WAN upgrade to cater for the R0.6m – WAN upgrade to cater for the

increase in traffic.increase in traffic.

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Contract Services

Average 6% increase for cleaning, gardening, Average 6% increase for cleaning, gardening, freight and contract staff.freight and contract staff.

R2m- Height monitoring. R2m- Height monitoring. R2.4m ATDI training provided by IATA (R2.8m R2.4m ATDI training provided by IATA (R2.8m

in revenue).in revenue).

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Marketing

R 1000k International subscriptions and advertisements

R 600k Website to include e-recruitment

R 300k Implementation of new corporate identity

R 500k Entertainment

R700k Broadcast, exhibitions and air shows

R1 000k Social responsibility and sponsorships

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Average ROCE Current Permission

ACTUAL MARCH 05

FORECAST MARCH 06

BUDGET MARCH

07

AVG

Risk Free + 1.3%

10.13 9.09 8.98 9.40

Permission ROCE

8.05 10.15 11.31 9.84

ROCE 9.45 17.63 7.18 11.42

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Statistics

BUDGET 06/07

FORECAST

05/06

PERMISSION06/07

Net Profit Before Interest R 65m R 138m R 126mNet Profit R 42m R 97m R 70mCapital Expenditure R 225.8m R 127m R 172 mCash Balances R 81m R 165m R 55mBorrowings R 195m R 195m R 301mReturn on Capital Employed (ROCE)

7.18% 7.63% 11.31%

Risk Free plus Premium (1.3%)

8.98% 9.09% 8.98%

Gearing Ratio 0.33 0.34 0.53Interest Cover 6.5 16.7 3.5Fixed Asset Turnover 0.77 0.91 0.72

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ATNS Indicators for 2006/2007

Capex - R225.8mCapex - R225.8m Opex - R416.9 Opex - R416.9 BEE TargetsBEE Targets - Capex (35% of discretionary spend)- Capex (35% of discretionary spend) - Opex (35% of discretionary spend)- Opex (35% of discretionary spend) Social responsibility (R100 000)Social responsibility (R100 000) Training and Development - R21.1m Training and Development - R21.1m

including internal trainingincluding internal training Job Creation (R4.4m)Job Creation (R4.4m) - Bursaries : 40 ATC bursaries- Bursaries : 40 ATC bursaries - Learnership: 6 Engineering learnerships- Learnership: 6 Engineering learnerships Employment Equity TargetsEmployment Equity Targets 49% Black and 51% White49% Black and 51% White

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ATNS Indicators for 2006/2007

BUDGET PERMISSION

Revenue 576.9 595.3Opex 416.9 361.6Overheads 95.2 107.8Finance Costs 6.1 25.5PBT 58.7 100.4

Capex 225.8 91.5