PRESENTATION TO THE PORTFOLIO COMMITTEE FOR HOME AFFAIRS
ANNUAL REPORT 2012
9 October 2012
GOVERNMENT PRINTING WORKS
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
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
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
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
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
5 Financial Management
Ensure strong financial management
6
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the MTEF period to replace outdated technology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
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
BUSINESS UNITS
Operations & Production
Strategic Management
Financial Services
Human Resource Management
Marketing
Information and Communications Technology
Internal Audit
Security
9
PRODUCTION STATISTICS
10
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
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
ID SMARTCARD PROJECT PLAN :TENTATIVE BUDGET
ITEM COST PAYMENT DUE
1 Card personalisation machines and mailing system : •2 for pavilion 1 at Visagie Street •1 for disaster recovery site at CSIR
R 60 million February 2013
2 1 or 2 million blank polycarbonate cards held in stock
R 100 million February 2013
3 Infrastructure alterations in pavilion 1 for personalisation machines
R 12 million November 2012
4 Polycarbonate card manufacturing plant in pavilion 3 at Visagie Street
R 100 million 2013/2014
13
The two ID Smartcard personalisation machines will be placed in space reserved for them in the passport factory
14
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
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
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
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
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
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
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 days2 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
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
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 31st March 2012
In progress
_
INFORMATION COMMUNICATIONS TECHNOLOGY BUSINESS UNIT
23
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
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
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) issues1 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
STATEMENT OF FINANCIAL PERFORMANCE
27
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
Revenue 487,0 639,0 753,4 693,0 755,5 1 216,5 1 381,9 1464,8
Transfers Received
160,9 334,5 97,4 129,0 135,2 143,5 0,0 0,0
Gross Profit 83,3 142,0 279,6 237,4 221,3 333,3 376,2 431,2
Operating Expenditure
102,6 109,3 128,3 114,4 158,8 236,2 251,3 283,6
Net Profit 15,2 93,0 214,8 191,8 138,6 212,3 259,3 294,1
28
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
103,3 390,9 645,5 958,5 830,2 742,2 667,0 660,7
Trade Receivables
139,5 152,6 212,0 164,3 177,5 311,4 329,0 390,0
Debtors Days Outstanding
83 63 61 88 70 70 70 70
Property, Plant & Equipment
348,7 359,4 351,1 337,9 370,4 452,1 400,3 340,9
Lease Improve-ments
44,0 41,7 138,8 309,7 538,4 677,7
29
ASSET REPLACEMENT PROGRAMME AND OTHER CAPITAL EXPENDITURE
DETAILS 2012/13R 000’s
2013/14R 000’s
2014/15R 000’s
2015/16R 000’s
Asset Replacement - Machinery 101 057 170 880 51 476 65 000
IT, Furniture & Equipment 20 000 20 000 21 000 12 000
Facilities 99 000 180 000 250 000 171 000
30
NEW GPW ESTABLISHMENT
31
Levels 2011/2012 2012/13 2013/14 2014/15 2015/2016
Levels 13 -16 7 40 40 38 38
Levels 9 - 11 32 55 57 81 81
Artisans (all levels)
93 127 115 130 130
Levels 7 - 8 41 52 53 54 54
Levels 3 - 6 345 372 357 337 337
Levels 1 - 2 16 0 0 0 0
Learners/Interns 3 15 20 30 30
Total 537 661 642 670 670
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 145,1 239,9 242,9 271,0
Overtime 10,0 10,0 10,0 10,0
Training 1,7 10,3 10,3 12,8
32
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
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
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
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
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
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We thank you kindly