1. NECSA GROUP CORPORATE PLAN (2011/12 - 2013/14) By: Rob Adam Necsa CEO 24 June 2011 Parliament Portfolio Committee on Energy

2. Index 2 1.Necsa’s Achievements 2.Nuclear Power Cluster 3.Radiation Science and Application Cluster 4.Necsa as Host of Nuclear Programmes Cluster 5.Key Risk for Necsa Group 6.Key Performance Indicators 7.Budget Assumptions 8.Government Grant Budget 2012 9.Government Grant Reduction 10.Necsa Group Revenue 2011/12 11.Necsa Group Expenditure 2011/12

3. Index 3 11.Necsa Group Capital Expenditure Plan 12.Necsa Corporation Revenue 2011/12 13.Necsa Corporation Expenditure 2011/12 14.Necsa Corporation Government, Grants vs. Personnel Costs Continues…

4. Necsa’s Achievements in 2010 - 2011

5. 5 Necsa Group revenues from products and services reach R1,17 billion, approximately 15% up from last year. NTP Radioisotopes (Pty) Ltd, the SAFARI-1 Reactor and the Necsa MTR Fuel department combined forces to successfully address the global medical radioisotopes supply crisis during the period 2009-2010. In doing so the NTP Group achieved record sales and became the world leader in the supply of medical isotopes for quite some time until the Canadian NRU reactor was returned to operation. The Nuclear Skills Development Centre was established successfully, received accreditation from three SETAs and also recognition as a Decentralised Trade Test Centre to do the final trade testing of apprentices. Necsa’s Achievements

6. 6 The successful conversion of the SAFARI-1 reactor to low enriched uranium (LEU) fuel, together with the irradiation of LEU target plates for Molybdenum- 99 production, saw NTP becoming the only company in the world with the proven ability to produce Mo-99 on a commercial scale using a fully LEU process. A project for the establishment of LEU silicide fuel fabrication and LEU target plate manufacturing facilities are well on track. The Necsa Visitor Centre, as the first phase of the envisaged Nuclear Science Centre, was successfully completed and opened to the public. Necsa is one of the first Corporations in Africa to obtain the American Society for Mechanical Engineers (ASME) certificate. We are now in a position to manufacture any class 1 (NB) class 2 (NC) or class 3 (ND) AMSE III components without any design responsibilities. Necsa’s Achievements Continues…

7. 7 A comprehensive set of feasibility studies relating to the re- establishment of nuclear fuel cycle programmes in South Africa was completed. In the process Necsa developed excellent relationships with all major international suppliers of fuel cycle technologies and products, which will be of great importance during the implementation of the Nuclear Energy Policy. The project to establish development and test facilities for uranium enrichment technologies are on track. Necsa enhanced its SHEQ System by adopting and including all the quality management system requirements of the National Nuclear Regulator as prescribed in RD-0034: Quality and Safety Management Requirements for Nuclear Installations. Necsa’s Achievements Continues…

8. 8 Necsa contributed to a range of policy making and public participation processes relating to the energy planning, nuclear energy R&D and related topics, and maintained participation in national and international collaborative programmes in the field of nuclear R&D and Generation IV nuclear energy systems. For the first time since 1963, Necsa has reached the point where we can dispose low level radioactive waste that complies fully with the Vaalputs Waste Acceptance Criteria. The first shipment of Necsa low level radioactive waste was recently transported to the National Radioactive Waste Disposal Facility at Vaalputs in the Northern Cape Province. The Necsa Group continued to receive unqualified audit reports from the Auditor General Necsa’s Achievements Continues…

9. 9 Transport Truck at the Vaalputs Disposal Site Necsa’s Achievements

10. 10 Transport Truck at the Vaalputs Disposal Site Necsa’s Achievements

11. Corporate Plan 2011 - 2013

12. Nuclear Power Cluster Long Term Objective: To expand and industrialise Necsa’s nuclear and related technologies to, amongst others, establish NFC capabilities and plants and to ensure self-sufficiency of nuclear fuel cycle activities for the RSA. Nuclear power cluster comprises: –Uranium Beneficiation; –MTR fuel and target plate production; –PWR fuel programme; –Nuclear Manufacturing; –Components of Applied Chemistry; and –Pelchem (Pty) Ltd. 12

13. Nuclear Power Cluster Medium-Term Objectives include: –To progress with preparations for the development or demonstration of required nuclear fuel cycle processes and technologies –To achieve the necessary project targets for establishment of MTR and PWR fuel fabrication capabilities –To increase nuclear manufacturing sales from current R52m to R98m by 2013/14 –To diversify Pelchem’s product portfolio and increase current sales of R169m to R232m by 2013/14 13 Continues…

14. Radiation Science and Applications Cluster Long term Objectives: –Radiation Sciences R&D outputs: To grow outputs of new technology, products and services in alignment with applicable national priorities and imperatives in science and technology; and to drive Necsa’s commercial growth objectives. –Reactor utilisation: To optimally utilise the SAFARI-1 reactor for isotope production and research purposes by ensuring reliability and availability; and to plan for the eventual replacement of the reactor and/or the establishment of an additional neutron source for research and production. –Revenue growth: To maintain Necsa/NTP’s dominant status in the global radioisotope market and further grow its market share. 14

15. This cluster comprises of: –Radiation Science and components of Applied Chemistry –SAFARI-1 –NTP Radioisotopes Medium-Term Objectives include: –To increase Necsa’s research, development and innovation outputs –To maintain the full operational capability of SAFARI-1 and to progress with studies on future irradiation facilities –To grow NTP Group current year sales of R851m by 47.5% to R1,255m by 2013/14 15 Radiation Science and Applications Cluster Continues…

16. Necsa as Host of Nuclear Programmes Cluster Long Term Objective: To continuously strengthen Necsa’s ability to host nuclear programmes, through the nuclear compliance portfolio of functions and support services including human resource management, financial management and site and infrastructure services. This cluster comprises of: –Licensing –Nuclear safeguards management –SHEQ –Security –Technical Services 16

17. –Human Resources –Finance and Information Management –Strategy and Performance –Marketing and Communication Medium-Term Objectives include: –To constantly improve SHEQ management performance –To increase the percentage of black technical staff and black professionals –To maintain investment in training of staff 17 Necsa as Host of Nuclear Programmes Cluster Continues…

18. Key Risks for the Necsa Group –Financial resource constraints, including misalignment of funding required to deliver timeously on the role Necsa has to play in terms of the NEP and challenging market conditions; –Shortage of appropriately skilled staff to execute and expand Necsa’s core technical programmes; –Ageing equipment (particularly the SAFARI-1 reactor) and infrastructure as well as production plant availability; –Business sustainability (particularly of Pelchem); and –Lack of public awareness and knowledge of nuclear technologies. –Fragmented nuclear industry. 18

19. Key Risks for the Necsa Group It should be noted that the reducing trend of the Government grant allocated to Necsa over the past two MTEF budget processes, together with more challenging market conditions for its commercial subsidiaries, place Necsa at risk of not fulfilling its core legislative and policy mandate. It is also pertinent to highlight here that although the NTP Group has produced excellent results in the recent past, that its markets are likely to stabilise going forward and that its envisaged Dedicated Isotopes Production Reactor (DIPR) project will require significant contributions from its reserves until around 2021/22. 19 Continues…

20. Key Performance Indicators 20 Output KPAKPI2010/11 Actual2011/12 Target2012/13 Target2013/14 Target 1.Necsa Group annual income Annual % growth in Group income 19.90%11.60%14%6.30% 2.Necsa corporate core grant Annual % growth in core grant 6.70%5% 3.Necsa Group other grant income Annual % growth in other grant income 10.40%109%127%(33.2)% 4.Refereed research publications Number of refereed research publications 17222832 5.Innovation value chain Number of innovation disclosures 31101214 Number of priority patent applications 1346 Number of PCT or equivalent applications 4334 Number of granted international patents 12 158 6.Nuclear fuel cycle (PWR) programme implementation Achievement of strategic project objectives Concept design for NFC development facilities completed and included in various study reports Necsa approved as supplier of PWR fuel components Techno-economic study for U from Usi completed Stage 1 of U-plant refurbishment commissioned Basic design for U recovery from Mo production residue and U from Usi submitted to NNR Procurement and construction of U from Usi facility

21. Key Performance Indicators 21 Output KPAKPI2010/11 Actual2011/12 Target2012/13 Target2013/14 Target 7.Black technical professionals Black technical professionals as a % of all technical professional staff 29%30%31%32.60% 8.Investment in training Investment in training as % of staff budget 8%7.60%7.80%8% 9.Public dose impact of annual releases and events Reduction in releases (3- year moving average) 9µSv6.3µSv 5.8µSv 10.Unqualified audit: Compliance to GAAP accounting, auditing and PFMA requirements Number of annual report qualifications 0000 11.National key point reportable security incidents No NKP events0000 12.Marketing and communication programmes to stimulate public awareness on nuclear energy (ito NEP policy principle 14) Improve public perceptions of nuclear technologies as measured by the social development component of the Emex rating 15 points Promote and grow the Necsa brand as measured by the MSA rating 62%60%62%64% Advertising volume equivalent R15.8 millionR25.7 millionR35.4 million Continues…

22. Budget Assumptions 22

23. Government Grant Budget 2012 (Excl. VAT) 23 ACTUALBUDGETPLAN 20112012201320142015 ACTIVITIES 416.2 431.3 422.0 407.8 428.1 SECURITY SERVICES 8.2 8.4 8.2 7.9 8.3 LEU Conversion 11.0 11.1 10.9 10.5 11.0 D & D 68.2 63.2 61.9 59.8 62.8 TOTAL 503.6 514.0 503.0 486.0 510.2 Baseline Budget 2011 Nov. 2009 503.6 528.0 517.3 548.4 575.8 Reduction (R) - (14.0) (14.3) (62.4) (65.6) Reduction %0.0%-2.7%-2.8%-11.4%

24. Government Grant Reduction Budget 2010 to Budget 2012 24 20112012201320142015TOTAL Baseline Budget 2010 Nov. 2008 522.3 550.9 584.0 619.1 650.1 2,926.4 Baseline Budget 2012 Feb. 2011 503.6 514.0 503.0 486.0 510.2 2,516.8 Reduction (R) (18.7) (36.9) (81.0) (133.1) (139.9) (409.6) Reduction %-3.6%-6.7%-13.9%-21.5% -14.0%

25. NECSA Group Revenue 2011/12 25

26. NECSA Group Expenditure 2011/12 26

27. Necsa Group Capital Expenditure Plan 27 BudgetPlan 2012201320142015 R’000 Land & Buildings26 7129 5021 860592 Plant125 338241 627340 995166 384 Furniture & Fittings770591586631 Motor Vehicles and Transport Containers 8 0191 6471 232180 IT Equipment7 1103 5732 5093 032 Machinery and Equipment 72 51856 52460 24260 217 Component Spares2 2822 7791 2881 372 Total242 749316 243408 712232 408

28. NECSA Corporation Revenue 2011/12 28

29. NECSA Corporation Expenditure 2011/12 29

30. NECSA Corporation Government Grant vs. Personnel Cost 30

31. 31 Thank You!!!