GOVERNMENT PRINTING WORKS

PRESENTATION TO THE PORTFOLIO COMMITTEE FOR HOME AFFAIRS

ANNUAL REPORT 2012

9 October 2012

GOVERNMENT PRINTING WORKS

CONTENTS

1. Legislative Mandate of GPW

2. Strategic Outlook of GPW

3. Strategic Objectives 2012/2013

4. Transformation of GPW

5. Corporate Governance

6. Business Units

7. Production Statistics

8. Progress with Key Projects

9. ID Smartcard Project Plan

10.Key Performance Indicators Report

11.Financial Statements

12.Human Resources

13.Conclusion

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

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

STRATEGIC OBJECTIVES 2012/2013

1. 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

2. Optimise Processes and Facilities

Optimise production processes to increase operational effectiveness and

improve customer service

3. Technology

Migration of technology across the spectrum to enable current and new

processes as well as increasing production capacity

5

STRATEGIC OBJECTIVES 2012/2013

4. 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

5 Financial Management

Ensure strong financial management

6

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the MTEF period to replace outdated technology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

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

BUSINESS UNITS

Operations & Production

Strategic Management

Financial Services

Human Resource Management

Marketing

Information and Communications Technology

Internal Audit

Security

9

PRODUCTION STATISTICS

10

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

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

ID SMARTCARD PROJECT PLAN :TENTATIVE BUDGET

ITEM COST PAYMENT DUE

1 Card personalisation machines and mailing system : •2 for pavilion 1 at Visagie Street •1 for disaster recovery site at CSIR

R 60 million February 2013

2 1 or 2 million blank polycarbonate cards held in stock

R 100 million February 2013

3 Infrastructure alterations in pavilion 1 for personalisation machines

R 12 million November 2012

4 Polycarbonate card manufacturing plant in pavilion 3 at Visagie Street

R 100 million 2013/2014

13

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

14

BRANCH : OPERATIONS AND PRODUCTION KEY PERFORMANCE INDICATOR

ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

1.New printing equipment

27 pieces

30 pieces

+

2. Productivity of machines

50% increase in usage of available machine hours

Unable to measure as Hiflex system of ERP not functional yet

-

3. Government Gazettes

100% published according to delivery and quality specifications and within specified timeframes

100% of 2,180 editions

+

4. ID documents

<0.1% spoil rate of 2,233,943 IDs

0.04% spoil rate

+

5. ID documents

Turnaround time of less than 3 days

Turnaround time 3.3 days

-

6. Passports

Spoilage rate less than 3%

2.2% of 707,384 passports spoiled

+

7. Examination scripts

100% of required number of scripts delivered within client-specified timeframe

100% of 26,538,274 scripts delivered within specified timeframe

+

15

BRANCH : FINANCE KEY PERFORMANCE INDICATOR

ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

8. Clean audit report

Maintain unqualified audit opinion

Unqualified audit opinion for 3rd year running

+

9. Reduction in audit findings

Reduction in audit findings

30% increase from 10 to 13 finance related audit findings

_

10. Turnaround time in monthly and quarterly finance and management reports

14 days

12 days

+

11. Revenue – rand value

R695 429 000

R692 919 000

+

12. Operating cost as a percentage of revenue

23%

16.5%

+

13. Gross profit margin

26%

34.3%

+

16

KEY PERFORMANCE INDICATOR

ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

14. Debtor collection period

70 days

88 days

_

15. HDI procurement

26% of procurement from HDIs

34.2%

+

16. Inventory turnover rate

3 days

3.88 days

_

17. Draft SCM policy

Revised

Revised

_

18. Investment in additional production assets

R265 935 000

R17 850 000

_

19. Return on capital investment

15%

51%

_

BRANCH : FINANCE

17


ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

20. Revised HR policies, SOPs and strategies

15% completed

57% completed (17/30)

+

21. Human capital strategy

Completed, approved and implemented

Completed but not yet approved

_

22. Training partnerships

One entered into

One entered into : computer literacy

+

23. HR development manager or specialist recruited

HRD specialist appointed

HRD specialist appointed on 1 year contract

+

24. Workplace Skills Plan

Plan completed and approved

Completed but not yet approved

_

25. Training days per employee annually

One training day per employee annually

Achieved

+

26. Training of all current and new supervisors

5% of supervisors trained

28 (85%) of 33 supervisors trained in computer literacy

+

BRANCH : HUMAN RESOURCES

18


ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

27. Number of skills transfer programmes for critical positions

2

2 skills transfer programmes were implemented for critical positions

+

28. Number of job descriptions finalised

All outstanding job descriptions finalised

All outstanding job descriptions finalised

+

29. Number of posts evaluated

All outstanding posts evaluated

All outstanding posts evaluated

+

30. Migration of employees to new structure

All posts evaluated and job descriptions done and employees migrated to new structure

All posts evaluated and job descriptions done but not all employees migrated to new structure

_

31. Number of posts advertised

60% of vacant posts advertised (107 posts)

95% (102 posts) of target achieved

_

32. All identified staff migrated

100% of staff migrated

Migration plan not fully implemented

_


19


ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

33. Number of vacant posts filled

60% of vacant posts filled

69% of advertised posts (107) filled

+

34. All HR staff trained in customer services and protection of information laws

100%

All HR staff trained in customer services but not in protection of information laws

_

35. Customer satisfaction survey

Survey conducted

Survey not conducted

_

36. Improve turnaround time in termination processes

< 5 days

3.4 days

+

37.Percentage of staff turnover – for critical positions and for all employees

< 8%

Critical posts : 12.55% All employees : 6.23%

+

38. Implement measures to address job satisfaction

Identified measures to address job satisfaction

Exit interviews : majority resigned because of better remuneration elsewhere

_


20

BRANCH : HUMAN RESOURCES KEY PERFORMANCE INDICATOR

ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

39. Number of exit interviews

100% of exit interviews conducted

100%

+

40. Conduct remuneration benchmark survey

Completed survey

Partially complete

_

41. Identify and implement actions based on benchmark survey

Identify actions

Partially complete

_

42. Performance assessments completed within required timeframes

50% completed

100% complete (but not verified)

+

43. Address/resolve grievances timeously

Address/resolve grievances within stipulated 30 days

Of 13 grievances received :4 resolved within 30 days2 addressed within 30 days

_

44. Improve turnaround time handling disciplinary cases

Improve turnaround time and finalise within 4 months

All cases addressed within 4 weeks; but not finalised within 4 months

_

21


ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

45. Development and implementation of brand (and logo)

Brand in place

No progress as posts vacant

_

MARKETING BUSINESS UNIT

22


ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

46. Number of hours required for business recovery

Business recovery processes established

73% of planned actions for business recovery achieved

_

47. Reduction of percentage of illegal hits

100% of actions completed

50% of actions to prevent illegal hits completed

_

48. Secure infrastructure and applications

100% of actions to secure infrastructure completed

100%

+

49. Data rights management controls implemented

30%

0% because of delays in hardware upgrade project implementation

+

50. ICT aligned with overall GPW plan

100% alignment by 31 March 2012

43% alignment

_

51. Provide a single version of information through databases with integrity

Development and data migration testing completed by 31st March 2012

In progress

_

INFORMATION COMMUNICATIONS TECHNOLOGY BUSINESS UNIT

23


ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

52. Integrate applications and provide workflow

Develop and test integrated ERP systems

Go live postponed from 1 April to 1 Oct 2012

_

53. Voice and data communications equipment replaced

100% implemented

50% complete

_

54. Implement ICT governance structure

50% complete

Not complete

_

55. Number of non-compliance findings by assurance providers

Analyse findings by ICT assurance providers

Final reports and findings received

_

INFORMATION COMMUNICATIONS TECHNOLOGY BUSINESS UNIT

24


ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

56. Monthly risk management/ compliance improvement reports

50%

Risk management not yet fully adopted at GPW

_

57. Internal audit reports

100%

83% of originally planned audits completed

_

58. Updated policies

100%

100%

+

59. Approved risk-based internal audit plan

Complete by Sept 2011

In the absence of a risk register, an internal audit plan was completed

_

60. Percentage of risk-based internal audit plan completed

30%

83% of internal audits identified were completed

+

INTERNAL AUDIT BUSINESS UNIT

25


ANNUAL TARGET

PERFORMANCE

TARGET ACHIEVED +/-

61. Percentage of staff graded in terms of security criteria

100% of critical staff

All security staff and newly appointed staff completed Z 204 security compliance forms

+

62. Security risk management plan

Developed

Security risk management plan developed

+

63. Percentage of security staff trained and evaluated for security competence

35%

100% of staff trained in National Key Points (NKP) issues1 officer trained in Occupational Health and Safety matters

+

64. National Key Point Structure established

30% of structure established

Three Joint Planning Committee meetings took place

+

SECURITY BUSINESS UNIT

26

STATEMENT OF FINANCIAL PERFORMANCE

27

INCOME AND EXPENDITURE ESTIMATES

Statement of Financial

Performance (R million)

Audited Outcome 2008/09




Medium-Term

Estimate 2012/13

Medium-Term

Estimate 2013/14

Medium-Term

Estimate 2014/15

Medium-Term

Estimate 2015/16

Revenue 487,0 639,0 753,4 693,0 755,5 1 216,5 1 381,9 1464,8

Transfers Received

160,9 334,5 97,4 129,0 135,2 143,5 0,0 0,0

Gross Profit 83,3 142,0 279,6 237,4 221,3 333,3 376,2 431,2

Operating Expenditure

102,6 109,3 128,3 114,4 158,8 236,2 251,3 283,6

Net Profit 15,2 93,0 214,8 191,8 138,6 212,3 259,3 294,1

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SELECTED PROJECTED BALANCE SHEET ITEMS

Statement of Financial

Performance (R million)





Medium-Term

Estimate 2012/13

Medium-Term

Estimate 2013/14

Medium-Term

Estimate 2014/15

Medium-Term

Estimate 2015/16

Bank & Cash

103,3 390,9 645,5 958,5 830,2 742,2 667,0 660,7

Trade Receivables

139,5 152,6 212,0 164,3 177,5 311,4 329,0 390,0

Debtors Days Outstanding

83 63 61 88 70 70 70 70

Property, Plant & Equipment

348,7 359,4 351,1 337,9 370,4 452,1 400,3 340,9

Lease Improve-ments

44,0 41,7 138,8 309,7 538,4 677,7

29

ASSET REPLACEMENT PROGRAMME AND OTHER CAPITAL EXPENDITURE

DETAILS 2012/13R 000’s

2013/14R 000’s

2014/15R 000’s

2015/16R 000’s

Asset Replacement - Machinery 101 057 170 880 51 476 65 000

IT, Furniture & Equipment 20 000 20 000 21 000 12 000

Facilities 99 000 180 000 250 000 171 000

30

NEW GPW ESTABLISHMENT

31

Levels 2011/2012 2012/13 2013/14 2014/15 2015/2016

Levels 13 -16 7 40 40 38 38

Levels 9 - 11 32 55 57 81 81

Artisans (all levels)

93 127 115 130 130

Levels 7 - 8 41 52 53 54 54

Levels 3 - 6 345 372 357 337 337

Levels 1 - 2 16 0 0 0 0

Learners/Interns 3 15 20 30 30

Total 537 661 642 670 670

STAFF EXPENDITURE

Description

(R million)

Medium-Term Estimate 2012/13




Remuneration 145,1 239,9 242,9 271,0

Overtime 10,0 10,0 10,0 10,0

Training 1,7 10,3 10,3 12,8

32

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

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

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

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

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

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We thank you kindly

Documents

GOVERNMENT PRINTING WORKS