1. PRESENTATION TO THE PORTFOLIO COMMITTEE FOR HOME AFFAIRS ANNUAL REPORT 2012 9 October 2012 GOVERNMENT PRINTING WORKS

2. 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

3. 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

4. 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

5. 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

6. 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 5Financial Management Ensure strong financial management 6

7. 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street – for completion by end 2015 Asset recapitalisation process :R388 million over the MTEF period to replace outdated technology and machinery Business process : Enterprise resource planning (ERP) system – went live 1 October 2012 Print and media company : ID Smartcard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

8. 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

9. BUSINESS UNITS Operations & Production Strategic Management Financial Services Human Resource Management Marketing Information and Communications Technology Internal Audit Security 9

10. PRODUCTION STATISTICS 10

11. 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

12. 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

13. ID SMARTCARD PROJECT PLAN : TENTATIVE BUDGET ITEMCOSTPAYMENT DUE 1Card personalisation machines and mailing system : 2 for pavilion 1 at Visagie Street 1 for disaster recovery site at CSIR R 60 millionFebruary 2013 21 or 2 million blank polycarbonate cards held in stock R 100 millionFebruary 2013 3Infrastructure alterations in pavilion 1 for personalisation machines R 12 millionNovember 2012 4Polycarbonate card manufacturing plant in pavilion 3 at Visagie Street R 100 million2013/2014 13

14. The two ID Smartcard personalisation machines will be placed in space reserved for them in the passport factory 14

15. 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

16. 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

17. 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

18. KEY PERFORMANCE INDICATOR 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

19. KEY PERFORMANCE INDICATOR 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 _ BRANCH : HUMAN RESOURCES 19

20. KEY PERFORMANCE INDICATOR 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 _ BRANCH : HUMAN RESOURCES 20

21. 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 days 2 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

22. KEY PERFORMANCE INDICATOR 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

23. KEY PERFORMANCE INDICATOR 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 31 st March 2012 In progress _ INFORMATION COMMUNICATIONS TECHNOLOGY BUSINESS UNIT 23

24. KEY PERFORMANCE INDICATOR 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

25. KEY PERFORMANCE INDICATOR 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

26. KEY PERFORMANCE INDICATOR 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) issues 1 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

27. STATEMENT OF FINANCIAL PERFORMANCE 27

28. INCOME AND EXPENDITURE ESTIMATES Statement of Financial Performance (R million) Audited Outcome 2008/09 Audited Outcome 2009/10 Audited Outcome 2010/11 Audited Outcome 2011/12 Medium- Term Estimate 2012/13 Medium- Term Estimate 2013/14 Medium- Term Estimate 2014/15 Medium- Term Estimate 2015/16 Revenue487,0639,0753,4693,0755,51 216,51 381,91464,8 Transfers Received 160,9334,597,4129,0135,2143,50,0 Gross Profit83,3142,0279,6237,4221,3333,3376,2431,2 Operating Expenditure 102,6109,3128,3114,4158,8236,2251,3283,6 Net Profit15,293,0214,8191,8138,6212,3259,3294,1 28

29. SELECTED PROJECTED BALANCE SHEET ITEMS Statement of Financial Performance (R million) Audited Outcome 2008/09 Audited Outcome 2009/10 Audited Outcome 2010/11 Audited Outcome 2011/12 Medium- Term Estimate 2012/13 Medium- Term Estimate 2013/14 Medium- Term Estimate 2014/15 Medium- Term Estimate 2015/16 Bank & Cash 103,3390,9645,5958,5830,2742,2667,0660,7 Trade Receivables 139,5152,6212,0164,3177,5311,4329,0390,0 Debtors Days Outstanding 8363618870 Property, Plant & Equipment 348,7359,4351,1337,9370,4452,1400,3340,9 Lease Improve- ments 44,041,7138,8309,7538,4677,7 29

30. ASSET REPLACEMENT PROGRAMME AND OTHER CAPITAL EXPENDITURE DETAILS2012/13 R 000’s 2013/14 R 000’s 2014/15 R 000’s 2015/16 R 000’s Asset Replacement - Machinery101 057170 88051 47665 000 IT, Furniture & Equipment20 000 21 00012 000 Facilities99 000180 000250 000171 000 30

31. NEW GPW ESTABLISHMENT 31 Levels2011/20122012/132013/142014/152015/2016 Levels 13 -16 7 40 38 Levels 9 - 11 32 555781 Artisans (all levels) 93 127115130 Levels 7 - 8 41 525354 Levels 3 - 6 345 372357337 Levels 1 - 2 16 0000 Learners/Interns 3 152030 Total537661642670

32. STAFF EXPENDITURE Description (R million) Medium-Term Estimate 2012/13 Medium-Term Estimate 2013/14 Medium-Term Estimate 2014/15 Medium-Term Estimate 2015/16 Remuneration 145,1 239,9 242,9271,0 Overtime 10,0 Training1,710,3 12,8 32

33. 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

34. 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

35. 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

36. 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

37. 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 37

38. 38 We thank you kindly