DEPARTMENT OF PUBLIC ENTERPRISES ANNUAL REPORT 2000 PRESENTATION TO PUBLIC ENTERPRISES PORTFOLIO COMMITTEE Venue: CAPE TOWN Date: 14TH November 2001 Time: 11h00 – 13h00

ANNUAL REPORT 2000 CONTENT VISION AND MISSION OBJECTIVES ORGANISATIONAL STRUCTURE INTERNAL AND EXTERNAL ACHIEVEMENTS KEY PROGRAMS: MINISTRY ACHIEVEMENTS RESTRUCTURING OF SOE’s ACHIEVEMENTS PERFORMANCE MONITORING ACHIEVEMENTS STRATEGIC ANALYSIS ACHIEVEMENTS ATERNATIVE SERVICE DELIVERY ACHIEVEMENTS CORPORATE SERVICES ACHIEVEMENTS FINANCIALS KEY CHALLENGES

STATE OWNED ENTERPRISES GLOBALLY COMPETITIVE ENVIRONMENT PROMOTING VISION RESTRUCTUREd STATE OWNED ENTERPRISES IN A GLOBALLY COMPETITIVE ENVIRONMENT PROMOTING ECONOMIC GROWTH AND A BETTER LIFE FOR ALL

STATE OWNED ENTERPRISES MISSION DIRECT AND MANAGE THE ACCELERATED RESTRUCTURING OF STATE OWNED ENTERPRISES TO MAXIMIZE SHAREHOLDER VALUE

OBJECTIVES DEVELOP AND DIRECT COHERENT APPROACH TO THE RESTRUCTURING AND TRANSFORMATION OF SOE’s CREATE AND IMPLEMENT RESTRUCTURING FRAMEWORKS DEVELOP SYSTEMATIC METHOD FOR MONITORING SOE PERFORMANCE DEVELOP A COMPREHENSIVE APPROACH TO ALTERNATIVE SERVICE DELIVERY

ORGANISATIONAL STRUCTURE

INTERNAL ACHIEVEMENTS (Some Highlights) UNQUALIFIED AUDIT REPORT 2000-2001 INTERNAL AUDIT COMPONENT AND AUDIT COMMITTEE FORMED PERFORMANCE MANAGEMENT SYSTEM UPGRADING IT INFRASTRUCTURE LOGIS PROVISIONING SYSTEM IN PLACE HIV/AIDS COMMITTEE GENDER COMMITTEE

EXTERNAL (Some Highlights) Restructuring of Transnet’s debt burden Eskom Conversion Act passed July Divisionalisation of Portnet in preparation for Restructuring Preparations and Cabinet approval for the introduction of SEP for Denel Signing of Shareholder Compact with Transnet

MINISTRY ACHIEVEMENTS Stakeholder participation and interaction with Government through effective use of the National Framework Agreement (NFA) Created an enabling environment for SOEs to explore business opportunities in Africa and abroad, through political support and facilitation for participation in BiNational Commissions, access to major overseas Government contracts especially in the defense sector and support for NEPAD

MINISTRY ACHIEVEMENTS Created capacity and institutional mechanisms to leverage resources and support from SOEs for Government’s Integrated Rural Development Strategy (IRDS) Key milestones include: Arrivia.kom: The Botswana National Identification Project and the Malawi National Transport Information System Spoornet: Agreement was reached with CFM of Mozambique on the Ressano Garcia Rail Line Locomotives leased to Pointe Noire in Congo Brazzaville and Sudan to help stimulate economic activities No outstanding Parliamentary questions

RESTRUCTURING OF SOE’s ACHIEVEMENTS Transport Sector: Ports Progress in finalising Ports policy enabling the restructuring of the port operations Ports Policy Steering Committee produced Ports policy framework, public consultation to finalise policy year end Separating Regulatory functions of the Ports Authority from the National Ports Authority –transition model until National Ports Authority is separated from Transnet Apron Services Divesture of 30% interest to an SEP transaction in progress Spoornet Restructuring model for Spoornet freight business submitted to Cabinet

../ RESTRUCTURING cont. ACHIEVEMENTS Energy Sector: Eskom Conversion Act passed July converting Eskom into a public company Rotek Industries RFP’s have been issued to solicit interest from potential Strategic equity partners for Rotek Engineering and Roshcon Defence Sector: Denel Cabinet approval for introduction of SEP Transactions launched February 2001 Due diligence March – May 2001 BAE Systems and Turbomeca negotiations current

../ RESTRUCTURING cont. ACHIEVEMENTS Forestry Sector Eastern Cape North transaction concluded August 2001 Kwazulu Natal transaction completed October 2001 Northern Province and Mpumalanga transaction in negotiation with final preferred bidders

IPO OFFICE ACHIEVEMENTS Closed the sale of 3% equity stake to Ucingo Finalising the transfer of 2% equity to the Trust representing Telkom employees. Extensive media and education campaign ready for a launch Structured the retail offer – targeting both HDI and General investors Listing locations of Johannesburg and New York approved by Cabinet and discussions underway with JSE and NYSE Made significant progress on the negotiations with the SEP to secure their support and protect government’s shareholder interest

TELCOMMS ACHIEVEMENTS M-Cell In July, Government sold 75 million shares in M-Cell shares for R2, 45 billion. Significant progress on the Phase 2 sale include: Performing both financial and legal due diligence. Information memorandum & RFP is ready. Share sale & purchase agreements prepared.

PERFORMANCE MONITORING ACHIEVEMENTS Developed shareholder compacts Signed by Transnet Popularized protocol at SOEs Developed and implemented the Financial Performance Evaluation model to evaluate SOEs Developed a Board Appointment Policy as an instrument for good governance in SOEs

STRATEGIC ANALYSIS ACHIEVEMENTS Donor Funds secured: Corporate Governance study Database Enhancement (for the SOE Audit) ESOP Study Ports Sector specialist Internal Research: Policy Framework Study into Regulatory Regimes Input into Ports Policy and Rail Policy  

ALTERNATIVE SERVICE DELIVERY ACHIEVEMENTS Translated the Communication strategy into a Campaign strategy for all ASD initiatives Project to ensure that SOE Procurement Policy is aligned to Government policy, is currently underway

CORPORATE SERVICES ACHIEVEMENTS Internal Policies Developed for DPE Affirmative action and employment equity Sexual harassment Performance management Leave Job evaluation Resettlement Overtime Cell phone usage Working hours & working arrangement transport HIV/Aids awareness programs Implementation of gender consideration programs Implementation of a Senior Management System Service Appointment of a Security Manager (M.I.S.S)

FINANCIALS SALIENT FEATURES Unqualified Audit Report No roll-over of funds Greater utilisation of donor funds Despite underspending by R12.5 million, DPE achieved goals set out in 2000/01 business plan

../ FINANCIALS cont. ACHIEVEMENTS Income statement 31 March 2001 Voted funds 47,079 Other receipts 000 Total income EXPENDITURE 34,312 NET SURPLUS 12,767 TRANSFERRED TO NRF

../ FINANCIALS cont. ACHIEVEMENTS Cash Flow Statement 31 March 2001 Cash Flows from Operating activities R’000 Net cash flow – operating activities including capital items 10,994 Cash Flows from Investing activities (3,996) Purchase of Plant and Equipment Net cash Flows from Operating and Investing activities 6,998 Cash Flows from Financing activities (16,447) Movements on receivables, pre-payments, advances, payables and provisions Net increase /(decrease) in cash and cash equivalents (9,449) Cash and cash equivalents at beginning of period (9,986) Cash and cash equivalents at end of period (19,435)

../ FINANCIALS cont. ACHIEVEMENTS Balance Sheet as at 31 March 2001 ASSETS R’000 Current Assets 26,440 Unauthorised, irregular, fruitless and wasteful expenditure 26,165 Receivables 207 Pre-payments and advances 68 Non-current assets 14,872,309 Investments Total Assets 14,898,749 LIABILITIES Current Liabilities Cash and cash equivalents 19,435 Revenue to be surrendered ,0 Voted funds to be surrendered 6,998 Payables 7 Non-Current Liabilities Provisions Total liabilities

Stakeholder liaison and consultation KEY CHALLENGES Market volatility Stakeholder liaison and consultation