1. GOVERNMENT PRINTING WORKS
Building a New Government Printing Works
GOVERNMENT PRINTING WORKS
STRATEGIC PLAN
PRESENTATION TO PORTFOLIO COMMITTEE
9 June 2009

2. AGENDA Background Key Priorities Going Forward
Progress with Conversion Process
Progress with Key Projects
New Facilities
Funding Requirements
Summary and Closing Remarks

3. The objective of our presentation is as follows...
Firstly, we would like to thank the Portfolio Committee for the opportunity and hope that we can give the Committee an insight into the progress and developments at GPW for the 2009/10 financial year and beyond
Provide insight into the key priorities going forward
Provide an update on the conversion processes to date
Provide the Portfolio Committee with a high level overview of the funding requirements going forward
Provide an overview of some of the achievements to date
The success of GPW is key to the turnaround of DHA and the sanctity of the State, as GPW is the mandated security printer

4. The background and discussions to date indicate whilst a lot has to be done, the sustainability of GPW still remains a challenge (1/2)
GPW was established in 1888 as the Government Printer but asset stripping has occurred over many years due to Governments lack of investment in the printing infrastructure
In 1976 GPW was established as a Trading Entity under DHA but has been unable to secure adequate revenues to capitalise and invest in modern facilities and equipment required of a state-of-the-art security printer
A business case was prepared and presented to NT and DPSA in May 2007 for conversion but NT and DPSA raised several issues and the business case was never finalised
GPW is key to the delivery of security printing to DHA (and other National Departments) and therefore the efficient, secure functioning of GPW is critical to RSA’s external image, performance and commitment to its Stakeholders
Whilst the conversion process received attention, the organisation was bleeding operationally and at the heart has been the loss of skills due to uncompetitive salaries, poor working conditions and restructuring fatigue
GPW facilities are not conducive to a “manufacturing” type environment and hence inefficient and costly production processes
There was no capital available initially for proper and modern facilities and equipment

5. The background and discussions to date indicate whilst a lot has to be done, the sustainability of GPW still remains a challenge (2/2)
The AG raised various qualifications issues and these have not been fully addressed
DHA charged public for printing of documents but funds flow to national fiscus and not GPW
“Profits” could not be retained for future investment in the assets and infrastructure of GPW – therefore resulted in asset stripping
Opportunities presented itself for printing services outside RSA but could not be maximised and capitalised on due to capacity and other constraints
Although some funds has been provided in the MTEF, GPW still requires additional government funding but this is inadequate to meet its capitalisation requirements and there is uncertainty on future allocations
GPW therefore ventured into other printing areas to remain viable but these are non-core to its mandate
There is no proper governance structure in place to guide and advise GPW and it’s Shareholders on the print environment, operations and best practices
DHA fully understands these issues and committed to implement a turnaround strategy that meets all stakeholder aspirations, while ensuring a logical and phased process and sustainable GPW

6. Going forward, the GPW has set certain key priorities, including the conversion of the GPW into a GC (1/4)
Financial Management
Accurate planning and forecasting
Maintain optimal cash flows and working capital
Manage financial risks
Develop new financial system for print environment
Reduce AG findings and qualifications
Cost Management
Change/review the cost/product pricing system/strategy
Reduction in wastage and spoilage
Operations Management
Replacement of dated technology and machinery
Optimisation of production capacity and efficiencies
Achieve product/service excellence

7. Going forward, GPW has set certain key priorities, including the conversion of GPW into a GC (2/4)
ICT Management
Master System Plan and ICT strategy
Develop Disaster Recovery Plan
Ensure compliance testing for all new initiatives
Review and update policies
Upgrade and integration of ICT systems for printing environment
Supply Chain Management
Reduce Stock Levels
Phase out slow moving items and redundant stocks
Strategic supplier management
Update and develop electronic suppliers database and order information
Contract and SLA management

8. Going forward, GPW has set certain key priorities, including the conversion of GPW into a GC (3/4)
HR, Strategy and Transformation
Develop and Implement Human Capital Strategy
Policy Development and Strategy alignment
Align HRM Practices and Strategies
IPC in place
Trained, skilled and service oriented staff in place
Security
Security risk assessment
New and updated physical, personnel, production and documentation security systems in place
Introduce vetting system for key personnel

9. Going forward, GPW has set certain key priorities, including the conversion of GPW into a GC (4/4)
Internal Audit
Development of internal audit and risk management plans
Monitor compliance with PFMA and related regulations
Marketing
Develop GPW Brand
Local Customer Retention
Local Business Development
Develop an aggressive regional marketing strategy on face value documents
However, key to the above is the turnaround and conversion of GPW in the MTEF period

10. We have also made substantial progress with the conversion process despite delays and challenges, and a phased process is planned
A business case has been prepared in consultation with NT and DPSA and it was evaluated by a panel in September 2008, addressing the issues raised by NT and DPSA originally
We have consulted with the Minister, Deputy Minister, NIA, SAPS, GCIS and Labour and received full support for the process and model
A S36 (3) application has been approved by NT and has been implemented
An application was been made to the Minister (DHA) for delegations to the CEO and was granted
The Ministers of Finance and DPSA have concurred with the conversion to a Government Component and we are awaiting the signing of Notices and Presidential Minute by the President
The relevant Government and Establishment Notices has been prepared and will be gazetted once the President signs the Notices and Presidential Minute.
The financial delegations as required by the PFMA have been prepared
DHA has committed certain resources via the Turnaround Project to assist with the burning issues at GPW and an Acting CFO has been appointed to assist with the financial affairs at GPW
We therefore need to ensure that the notices are gazetted as soon as possible and that the key activities are implemented with speed

11. In addition GPW has also embarked on certain key projects, the new passport processes being one of them and the status is as follows
The equipment has been delivered and commissioned.
Employees have been trained on the passport machine
The equipment was installed at the new facilities at the “Old Mint”, which was refurbished and the site was finally handed over during April 2009
The new South African passport was launched on the 8th April 2009 and production commenced the following week
A total capital investment of R307m has been paid to date towards the new passport facility
The above equipment will be the first in a series of upgrades to modernise and ensure a secure print environment

12. We have also identified the future “home” of GPW and negotiations are in progress to expedite this matter
We had originally envisaged building a brand new facility at R700m (2005 prices) but the new facilities can be done at a substantially lower price
The new site will be the “Old Mint” and we are finalising the plans and handover of this site to GPW
The costs thus far were funded by DPW, but GPW will be funding some of the future expenses
GPW will enter into a concession of years dependent on building costs funded by DPW and the monthly rentals
The building development should commence in 2009/10 financial year and be ready for completion on 2010/11
The additional lease costs to GPW will be R3-4m per month
The new facilities will be key to improvement in the production environment and production processes and should also boost employee morale and productivity

13. This excludes the cost of the new facility
Finally, the transformation and modernisation will require additional capital injection by the State to ensure conversion and success of GPW
DETAILS
2009/10
R 000’s
2010/11
Asset Replacement - Machinery
69 216
New IT System
75 000
Transformation/Conversion Costs
56 800
93 661
This excludes the cost of the new facility

14. The Income estimates can be summarised as follows:
Statement of Financial Performance
(R million)
Audited Outcome 2005/06
Audited Outcome 2006/07
Audited Outcome 2007/08
Unaudited Estimate 2008/09
Medium-Term Estimate 2009/10
Medium-Term Estimate 2010/11
Medium-Term Estimate 2011/12
Revenue
466.2
482.4
470.0
571.7
605.5
658.5
717.1
Transfers Received
0.2
110.2
137.4
331.2
93.0
123.3

15. The Expenditure estimates can be summarised as follows:
Statement of Financial Performance
(R million)
Audited Outcome 2005/06
Audited Outcome 2006/07
Audited Outcome 2007/08
Unaudited Estimate 2008/09
Medium-Term Estimate 2009/10
Medium-Term Estimate 2010/11
Medium-Term Estimate 2011/12
Employee Benefits
61.2
78.9
80.2
82.9
165.5
172.3
180.9
Administrative Expenditure
23.9
16.2
27.6
27.4
34.9
35.7
37.5
Production & Stores
13.3
20.6
36.4
55.8
25.6
55.2
94.0
Equipment
0.8
0.9
1.1
1.5
1.7
1.8
1.9
Professional Services
17.1
14.9
18.4
28.4
21.1
15.5
16.3
Sundry Expenditure
4.5
1.0
49.0
1.3
1.4

16. There are challenges ahead but hope that this presentation highlights the support/resources required from Government at this critical juncture
We urge you to please provide us with the necessary advise and support during the transformation process
Critically evaluate our plans going forward
Support us by ensuring that the requisite funds are forthcoming, as this is always key to any turnaround initiative
WE THANK YOU KINDLY!