Presentation to Portfolio Committee

2005/2006 Annual Report

24 October 2006

Bruce Tashe

•Achievements 2005/2006•Operations and Research •Human Capital Management•Other Achievements•Challenges•Performance Against Goals•Financial Results

•Goals 2006/2007•Recapitalisation plan

CONTENTS

•Theme 2005/06 – Modernisation

Endengering customer focusUpgrading radar networkExpanding automatic weather stations (cover rural areas)Launch Meteosat 2nd generation training centreInstallation of lightning detection network – detect 95% of strikes over RSA

ACHIEVEMENTS

ACHIEVEMENTS

•Theme 2005/06 – Modernisation

98.8% uptime in networksLaunch early warning system for severe weatherInvest in cutting edge technologyRefurbish ageing meteorological and upper air sounding instruments abroad SA Agulhas (Norwegian funding)Run global atmospheric watch programOzone monitoring

ACHIEVEMENTS

•Theme 2005/06 – Modernisation

AMDAR software – increase atmospheric temperature and wind soundings over AfricaIncreased upper air observations – highest since 1990’s – 18 per day up 100%Installed 7 ground receiving stations – reduced satellite data communication costs with 20%

ACHIEVEMENTS

ACHIEVEMENTS

Lightning Detection Network (LDN)

Vast improvement in observation network

Installed 19 LD sensors over the country

Detection accuracy 500 meters

3.4 million strikes detected in January 2006 and

3.9 million in February 2006

ACHIEVEMENTS

The SAWS LDN

The SAWS LDN:Detection Efficiency

Floods and Storms

Floods and severe stroms

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Floods Severe Storms Linear (Floods) Linear (Severe Storms)

National Weather Radar Network

Network of 11 integrated radar systems

Provide detailed monitoring of weather over

major part of country

Linked to Mozambique – establish regional

weather radar network for Southern Africa, next

Botswana

ACHIEVEMENTS

Automatic Weather Stations (AWS)

Purchased equipment and components for 34

AWS and 200 electronic rain gauges

50 rain gauges assembled in March 2006

15 AWS deployed in Natal and Eastern Cape,

next roll out Western Cape

SMS messaging

ACHIEVEMENTS

Components within the AWS Electronics Enclosure

ACHIEVEMENTS

Aviation Weather Display System (AWDS)

•Up to date global aeronautical meteorological

information – installed at air traffic control towers

aerodome reports, forecasts, en-route

weather, wind conditions, satellite and radar images

Major tool in implementation of advanced air traffic

management

ACHIEVEMENTS

Research

Enhance Meteorological Early Warning System

by integrating current related activities with

focused goals

Use new Meteosat 8 and LDN

To improve warning detection procedures at

forecasting offices

Collaboration with disaster management centers

ACHIEVEMENTS

0 – 2 Hours

2 Days

7 Days

14 Days

Month

3-Month Season

F

ore

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Observations NWP GCM & Ensembles

-Satellite

-Radar

-Lightning

-Weather Data

-Regional

-Mesoscale

-Ensembles

-MOS

-Medium range

-Ensembles

-MOS

-Ensembles

-MOS

-Ensembles

-MOS

-Statistical Models

GCM Ensembles

-MOS

OutlookGuidance

Advisories

Warnings

Detail Warnings

R

es

ea

rch

P

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ram

me

s S

ys

tem

sPrediction Research

Short-range Forecasting

Long-range Forecasting

NWP

Ensembles

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Research

Research on the Utilisation of Meteosat Second

Generation (MSG) satellite data in Southern

Africa

Pollution monitoring project co-funded by DEAT

and Norwegian government was conducted

ACHIEVEMENTS

Research

Acquired Cloud Condensation Nuclei counter

Awarded for best scientific contribution to science

of rainfall enhancement research - presented to

SAWS at annual WMO commission for

Atmospheric Sciences

ACHIEVEMENTS

Research TRACM – Trace gas research and atmospheric

change monitoring - Maintaining trace gas

measurements to detect and monitor climate

change signals within atmosphere

Submitted national ozone report to United Nations

Environmental Program on behalf of DEAT

Provided trace gas analysis to DEAT for inclusion

in National Statement of Environment report

ACHIEVEMENTS

Research

The Cape Point GAW trace gas measurement program for close to 30 years are based primarily on measurements of pristine clean air that moves in from over the southern oceans.

ACHIEVEMENTS

Global Atmosphere Watch Laboratories around the world

ACHIEVEMENTS

Trace gas

ACHIEVEMENTS

Human Capital Management

Implemented performance management

system based on balanced scorecard

Reduced capped leave liability with R 6.7

million

32 new appointments of which 88% were

historically disadvantage

ACHIEVEMENTS

Race and Gender (365 employees)

125

87

31

8

5844

7 5

0

20

40

60

80

100

120

140

Black White Coloured Asian

Male

Femal

50% 36% 10% 4%

ACHIEVEMENTS

Training

Forecaster training – 30 forecasters during past 5 years trained, 2005/2006 – 5 of 6 students passed, 10 enrolled for next year

Observer training – 10 students completed successfully, 11 new students started

MSG International training – 3 national and 2 international training sessions conducted

141 Staff members attended short courses

ACHIEVEMENTS

Training

31 Staff members attended in house MAP course

12 Staff members attended ABET program

A total of 2161 days spent on training

Total amount spent for training R 4.2 million

which is 5.9% of total employee expenses

Received more than R 150 000 back from the SETA for discretionary grant

ACHIEVEMENTS

7 peer review articles were published

Participated in 7 air shows

Participated in several science related exhibitions

World Meteorological Day held in Polokwane and

Deputy Minister addressed users about hazards of

severe weather

1023 media reports covered SAWS

7598 climate data enquiries were answered by SAWS

OTHER ACHIEVEMENTS

PERFORMANCE AGAINST GOALSGOAL Performance Result

Good corporate governance Develop an effective and efficient organisation aligned with the strategic intent of SAWS

•Developed 37 policies of which 27 were finally approved by the Board at year end.•The SAWS Board and Committees are effective and meet regularly•Internal Auditors were appointed and executed the internal audit plan as approved by the Board.•An unqualified audit report was received •All legislative submissions was done on time•The Workplace Skills Plan submitted•The SAWS achieved the 40% BEE target through procurement processes•Implementation of Performance Management system for all employees was achieved.

Develop new sector specific products that will attract new customersMount research programmes and projects that will improve products and service offerings as well as operational efficiency

•Data availability of the data from weather radars was 75%.•An agreement to maintain meteorological equipment at all 9 ACSA airports was renewed•Maintenance was done on all 11 radars in the network •A weather radar has been commissioned for installation in Skukuza. An environmental impact assessment report in support of the radar installation process has been completed•MSG ground receiving equipment to receive real time satellite images was installed in 5 major forecasting stations and at the Bethlehem Weather Office for research purposes•Installation of 19 lightning detection sensors and development of in-house lightning display system.•Replacement of the automatic weather stations •50 automatic rainfall stations prepared and made ready for deployment

Mainstream SAWS products

•Ordering of new NEC super computer •Improvement of accuracy of monthly and seasonal prediction system•Improvement in the use of ensemble forecasting systems•Deployment of a new SQL in –house development system to finish automation of CLIMOS•Participation in airborne pollution monitoring over air pollution hotspots in South Africa

Play an active role in improving relationships with international communities

•Continuous participation in the Global Atmospheric Watch programme and we achieved continuous collection, archiving and analyses of long term data sets of atmospheric trace gases and solar radiation as per laid down international guidelines. Certified data sets were provided to international data centers

PERFORMANCE AGAINST GOALSGOAL Performance Result

Maintain and improve existing partnerships with institutions of higher learning and to forge new partnerships

•5 of 6 forecasting students passed •10 Observers completed training and were placed within SAWS•15 staff members completed Management Advanced Programme (MAP)•7 staff members graduated to the next level of ABET

Generate revenue streams that will ensure the sustainability and profitability of SAWS

•Generated R 60.2 million commercial revenue which is an increase of 12.5 % form 2004-05.

Reduce the vulnerability of communities against adverse weather conditions in partnership with other players

•Daily forecasts to public and specialised communities were issued •Over 400 severe weather advisories were issued through the media.

Invest in cutting edge technology

•Achieved a 98.8% communication network uptime between regional offices and international hubs•Capturing of 92.2% of available data into climate databank to ensure improved quality of climate data•Introduced an ICT helpdesk

CHALLENGES

Capacity constraints – ICT and Science

Transfer of land – lack of office space

Aviation debt – ongoing dispute

Commercialisation – lack of contractsOld radars – awaiting financingSAWS corporate brandTurnover in top managementDelay in installation of Skukuza Radar

2006 Audit Report

AUDIT REPORT

2006 2005 ImprovementEmphasis of matters *** 3 5 40%Significant matters 0 5 100%

***

Title deed of land - (28) 1 Certificate from land affairs outstanding

Policies formulation - All done

Performance information - Improvement in new strategic targets

2006 Financial Results

2006 2005R R Variance

Revenue 167.2 153.8 8.7% Aviation Income 7.8%, Grant 7%

Administrative Expenses (2.4) (1.8) 33.3% Increased executive functions by Board

Employee benefits expense (70.7) (65.4) 8.1% Increases and vacancies

Armortisation (0.2) (0.2) 0.0%

Depreciation (9.8) (6.4) 53.1% Recap plan

Other operating expenses (80.8) (58.8) 37.4% Detail to follow

Finance costs (0.2) (100%)

Operating surplus 3.30 21.00 (84.3%) Improved reduction

Revaluations of land 3.3 20.3 Garsfontein land

Suplus for the year 6.60 41.30 (84%)

2006 Financial Results

Commercial: Automatic Weather Stations and Aviation 12.5 %

REVENUE

2006 2005 Variance

Rm Rm %

Government Grant 103.7 96.9 7.0%

Commercial and Other 60.2 53.5 12.5%

Project Income 1.2 (100%)

Investments 3.3 2.2 50.0%

Total Income 167.2 153.8 8.7%

2006 Financial Results

Operating Expenses 2006 2005IncreaseIncrease

Rm Rm Rm %

Radiosondes 10.4 4.5 131.1% Increased accuracy of forecasting

Conference Costs 2.1 0.3 600.0% CAS conference hosting

Consulting Fees 5.7 8.2 (30.5%) Due to completion of baseline policies and procedures

Repairs and Maintenance 2.5 1.4 78.6% Aircrafts

Legal costs 2.5 0.9 177.8% Legal retainer - CFO dismissal, contracts, corp. governance

Training 4.2 0.9 366.7% Bursaries and management development

Vat deregistration 8.20 - 100.0%

Travelling 6.40 3.80 68.4% Manage international relationships in fullfillment of WMOand ICAO obgligations

2006 Financial Results

Note: 2005 – Reduction in Aviation income due to tariff adjustments retrospectively for 2004

Commercial Income (R million)

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2002 2003 2004 2005 2006

Aviation Income

Commercial and Other Income

2006 Financial Results

Operating surplus (deficit)

-10

-5

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15

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25

2002 2003 2004 2005 2006

R million

Huge improvement in budget management and control for 2006, obtained approval from National Treasury to roll over surplus cash for recap plan implementation

2006 Financial Results

SAWS Ratio Analysis R'000 R'000 R'000

2005/6 2004/5 2003/4

Current Ratio 2.86 1.78 1.45

Total Income / Total Expenses 1.02 1.16 1.15

Employee costs / Total costs 43.1% 49.2% 48.0%

Employee costs/ Total revenue 42.3% 42.5% 41.6%

Debt (current) to revenue 10.7% 23.9% 20.9%

Revenue growth rate 8.7% 8.9% 50.0%

Internal revenue growth rate 12% -6% 283%

External income as % of total income 62% 63% 57%

Internal income as % of total income 38% 37% 43%

Solvency ratio 3.79 2.78 2.49

Debt collection days 64 89 117

Creditor payment days 21 54 44

Top management remuneration % of staff costs 3.3% 3.6% 3.2%

Goals 2006/2007

STRATEGIC OBJECTIVES

Strategic Objective 1: Ensure financial viability and sustainabilityManage operational costIncrease revenue baseInfrastructure modernisation

Strategic Objective 2: Ensure corporate governance and strategic leadershipDevelop and implement a Corporate Communication StrategyPlan Review and consolidate organisational policies and proceduresDevelop and implement a Management CharterTransformation strategiesAmend and improve delegation of authority

Strategic Objective 3: Ensure SAWS becomes a learning organizationPursue scientific and business excellence Knowledge management strategy (KMS)

Strategic Objective 4: Create a client-centric organizationExternal Customer Relationship Management Internal Customer Relationship Management Technology that supports customer needs

Strategic Objective 5: Improve internal business processesQuality ManagementModernisation PlanClient safety and well being

Recapitalisation Plan

RECAPITALISATION PLAN

  2005/6R'000

2006/7R'000

2007/8R'000

2008/9R'000

2009/10R'000

2010/11R'000

2011/12R'000

TOTAL Five year

Surface observations 2,238 3,152 5,225 6,518 6,938 7,066 7,241 32,988

Weather radars 900 7,083 91,405 83,600 55,805 42,415 78,431 351,656

Lightning detection 14,000 1,700 1,500 500 1,000 500 0 3,500

Aircraft instrumentation 1,500 1,460 500 500 1,000

Upper air observations 1,500 5,120 5,500 3,000 3,000 3,000 2,000 16,500

Software display systems 2,000 2,012 2,000 1,000 2,000 0 2,000 7,000

Computer System 1,000 3,143 0 0 0 0 0 0

Satellite receiving systems 680 0 1,000 500 500 500 1,000 3,500

Other (office, furniture   2,430 2,576 2,730 2,894 3,068 3,252 14,519

Total 23,818 26,100 109,705 98,348 72,137 56,549 93,924 430,664

Critical additional capital investment from Government 0 0 85,000 80,000 52,000 39,000   256,000

Current capital investment funding 5,000 5,000           5,000

Future capital funding needs             75,000 75,000

Contribution from SAWS 18,818 21,100 24,705 18,348 20,137 17,549 18,924 120,763

COVERAGE WITH NEW RADARS

END