Annual Report and Financial Statements Presentation to the Portfolio Committee on Minerals and Energy Presented by: Senti Thobejane Chief Executive 03 November 2004 Capitalising on nuclear technology’s ability to enhance life.
Vision and Mission • Necsa’s long term growth strategy, Vision 2010, seeks “to pursue nuclear technology excellence for sustained social and economic development”. • Its mission is to develop, utilise and manage nuclear technology for national and regional socio-economic development. • Values that are strived for: • Partnership • Life enhancement • Entrepreneurship • Excellence • Leadership; and • responsibility
Chairman’s review Necsa is committed to its national responsibility Necsa will continue to provide a range of products and services critical to many other industries and services in the country and abroad.
Necsa’s structure Board of Directors Security Strategic Bus. Dev. Prodit Transformation
Restructuring and Corporatisation • Restructuring of the Necsa Group • Consolidation of Necsa into seven management units: • Nuclear Services • Nuclear Technology • Nuclear Technology Products (NTP • Corporatisation of NTP Radioisotopes (Pty) Ltd
Skills development and training • R1.6m invested in staff training and skills advancement • Successful joint venture partnership with Areva, a French company: Arecsa Human Capital (Pty) Ltd • Necsa’s intellectual capital • Participation in the learnership programme with the CHIETA
Total BEE spend of R54,8m (23% increase from last year) Out of 2217 suppliers, 315 are BEE which represents a growth of 24% Necsa supports Nepad through science and technology development Cost of material and services purchased was R185m compared to R194,4m for 2002/2003 Personnel expenses amounted to R279m (previous period was R263m) Interest paid on borrowings amounted to R3,3m as opposed to R19,5 in 2002/2003 Cash flow pressures necessitated the utilisation of overdraft facility Funding from DST R1,6m past year R4,06m to end March 2004 Balance R5,6m Economic Performance Indicators
Net increase of 4.91% of permanent staff complement Previous year Space Creation Programme was successful 12 New managers were appointed Designated people were appointed into technical jobs Organised labour and management relations HIV/Aids Wellness Programme Cancer Breakfast Health, Safety and environment Behaviour Based Safety Necsa Bursary Scheme Necsa has 15 bursars, of which 93% are from designated group Science and Technology Education Fund (STEF) Necsa Retirement Fund and Medical Aid Social Performance Indicators
Environmental Performance Indicators • Nuclear Licence • Compliance and approval of projects • HSE Auditing • Environmental performance • Water permit • Air permit • Iodine occurrence • Vaalputs environmental monitoring • Biodiversity • Security – upgrade of security fence and installation of surveillance cameras • Emergency services – Contract with Madibeng was renewed.
CHIEF EXECUTIVE OFFICER CEO OFFICE CORPORATISED NUCLEAR CORPORATE SERVICES NTP NUCLEAR TECHNOLOGY CORPORATE SERVICES FINANCIAL SERVICES HTP NUCLEAR SERVICES FACILITY MANAGEMENT
NECSA LTD BOARD OF DIRECTORS CEO Commercial HTP NTP NUCLEAR TECHNOLOGY NUCLEAR SERVICES FINANCIAL SERVICES CORPORATE SERVICES FACILITY MANAGEMENT
Organisational reportingNuclear Services • Product and services • Operation of SAFARI-1 reactor for commercial and institutional applications. • Management of nuclear waste and operation of Vaalputs National Radioactive Waste Disposal Facility. Decommissioning and decontamination of closed nuclear facilities. • Provision of Nuclear Safeguards function on national level as required by NTP. • Coordination and administration of IAEA Technical Cooperation activities and AFRA on national level. • Management of corporate HSE matters including Necsa’s nuclear license and quality service.
Organisational reportingNuclear Services • Challenges • Conversion of SAFARI-1 to locally produced LEU fuel. • Growing SAFARI-1 involvement in commercial applications including PBMR service. • Establishment of new Waste Management Agency within Necsa structures. • Upgrading and renovation of ageing nuclear waste processing facilities. • Grow radioactive waste service in South Africa and Africa. • Participate in development of technology for final disposal (deep geological) of nuclear waste. • Improve cooperation between AFRA and NEPAD. • Maintain Necsa’s excellent nuclear safety record. • Achieve the above within constraints of limited resources.
2003/2004 Achievements Conversion of SAFARI-1 to locally produced LEU fuel. Growing SAFARI-1 involvement in commercial applications including PBMR service. Establishment of new Waste Management Agency within Necsa structures. Upgrading and renovation of ageing nuclear waste processing facilities. Grow radioactive waste service in South Africa and Africa. Participate in development of technology for final disposal (deep geological) of nuclear waste. Improve cooperation between AFRA and NEPAD. Maintain Necsa’s excellent nuclear safety record. Achieve the above within constraints of limited resources. Organisational reportingNuclear Services
Organisational reportingNuclear Technology • Services • Establishment of PBMR fuel manufacturing and quality control capabilities on laboratory scale • Radiation and reactor theory calculation services to Necsa and PBMR • Measurement of radioactivity for Necsa, mining and agricultural industry, environmental monitoring, etc. • Non-invasive investigations of petrochemical and mining plants and processes by using radioisotopes • Extensive support to NTP Radioisotopes
Organisational reportingNuclear Technology • Research and Development • Development of radiopharmaceuticals in collaboration with local and overseas partners • Upgrading of SAFARI-1 neutron beam-line research facilities • New neutron tomography capability found many applications • Expansion of locally developed reactor modelling computer codes for international applications
Organisational reportingNuclear Technology • Collaboration • Further growth in participation in IAEA and AFRA programmes; strong contribution towards enhanced sustainability of African nuclear institutions • Growing research and training collaboration with higher education institutions
Organisational reportingNuclear Technology • Challenges • Accelerated expansion of capacity (staff, skills, experimental facilities) to perform research, development and training for Necsa’s growth • Expansion of collaborative networks • Accessing additional funding sources
Organisational reportingCorporate Services • Services • Commercial legal services • Human capital management, administration and development • Corporate Communication and Public Relations • Procurement and provisioning • Provision of information technology services
Organisational reportingCorporate Services • Challenges • Business transformation i.r.o social equity and world class business practices. • Removal of ±R200m Post-Retirement Medical Aid (PRMA) liability from the Necsa balance sheet. • Retention of skilled human capital in the nuclear field. • Leave liability valued at R31,5m • Human resource development. • Employment creation.
Organisational reportingCorporate Services • Milestones • Commercialisation of NTP • Restructuring and/or realignment of Necsa in line with vision 2010. • Necsa-wide recovery plan to achieve Growth
Services Property support, include among others: Property management Telecommunication Security Mechanical and electrical maintenance Maintenance Services Mechanical and electrical Heavy vehicle maintenance Utilities Services Process Water Drinking water Compressed air Sewerage Electricity Technical Services Maintenance Planning Electrical Engineering Design and Drafting Projects Organisational reportingFacilities Management
Organisational reportingFacilities Management • Challenges • Corporatisation • Strategic partnership (negotiations in progress) • ISO 9001 certification • BBS implementation • Enhancement of Information Management systems • Maintenance management system • Building management system • Utilities optimization and energy management • Hartbeespoort dam water treatment
Organisational reportingFacilities Management • Achievements • Ventilation optimization: R 96k p.a. • Reduction of vehicles: R 118k p.a. • Electricity savings due to timers on HVAC systems : R 94k p.a. • Pelindaba East commissioning of reverse osmosis plant: R 180k p.a. in effluent treatment • Small capital items (tols): R 143k for 2004 financial year • Phase in of Rand water tariff increase through DTI intervention – savings still to be realised • Maintenance schedule optimization (task and frequency review)
Products and services Radiochemicals include the following: Molybdenum-99 Iodine-131 Sulphur-35 Phosphorus-32 Phosphorus-33 Yttrium-99 Radioactive sources Irridium-192 used for non-destructive testing of welds, process vessel walls and piping. Cobalt -60 Caesium used for process control instrument application. Specialised transport, transfer and process control containers are designed, manufactured and licensed by NTP. NTP performs contract manufacturing operations, and It produces a comprehensive range of radiopharmaceuticals. Organisational reportingNTP Radioisotopes (Pty) Ltd
Organisational reportingNTP Radioisotopes (Pty) Ltd • Achievements • Built and commissioned the first Yttrium-90 radiochemical production facility • Developed the technology for production of the isotopes Re-186 and Lu-177 • Radiopharmaceutical MIBG has been successfully produced and made available in SA • Improvements were made to the PELTEK-F generator • Introduced a behaviour based safety programme (LEBO)
Organisational reportingHTP • Product • This business division house the non-nuclear commercial activities of Necsa, which comprises three units, namely: • Pelchem – houses the chemical marketing and manufacturing unit • Peldev - houses the flourochemical development unit • PTS - is the engineering and manufacturing unit
Organisational reportingHTP • Challenges • Re-structuring and re-engineering the division • Hive off Profitable units and market BEE partners • Implementation of the Turnaround Strategy • Improveand meet budget obligations to Necsa
Organisational reportingFinancial Services • FINANCIAL PERFORMANCE AT YEAR END • The strong rand had a very negative impact on the performance of the group. • The export sales dropped, our net profitability, cash flow position were down by R57.4m compared to budget. • Necsa sold its operating division NTP to NTP Radioisotopes (Pty) Ltd as a going concern realising a profit of R199m. • The above profit was eliminated by the provision for post retirement medical aid of R290m.
Organisational reportingFinancial Services NECSA RESOURCE COSTS: MAR 2004 RELATIVE SHARE OF EXPENSES OPERATING CAPITALCOSTS MATERIAL COSTS 5% 9% "OTHER" 33% OPERATIONAL 53% COSTS LABOUR COSTS
Necsa’s current challenges • Implementation of a Necsa-wide Recovery Plan • Financial constraints led to a decision on no salary increase for 2004/05 review period • annual salary increases • HTP turnaround strategy
Austerity Approach • Reduction of Expenditure. • Reduce over-head cost • ESOP Scheme. • Manage down leave liability • Manage austerity measures stringently • Special Performance Reward. • Combat fraud and corruption • Services rendered within Necsa, to be sourced within first before external contractors are commissioned.
Projects • Build Strategic Function • Marketing: Gvt, Corporate, Banking Sector, Local & international • Oversight: Audit and Investigation • Strategic Projects • PBMR: Join BoD • Project “ithemba lethu” • Peldev to CSIR: • PRMA Liability: Jointly with CS & FS • Silicon Beneficiation • Fund Raising • Corporate: R 250 m • NTP: R 25 m • Security: R 9 m • Fluorine R 92 m (less R21M included under HTP) • STEF R 25 m • PSI R 5 m
VISION 2010 : Strategy for growth The challenge ahead….. Sustaining profitability & growth
NECSA : Vision 2010 Where are we … Phase 1 Phase 2 Phase 3 Turn around consolidation growth 1988 2002 2004 2007 2010
CHALLENGES FOR THE FUTURE • Growth and Development • Business development to exploit opportunities • PBMR • Sun energy silicon systems • Expansion of radiation based products • Expansion of Fluorine based chemical products • Contract R&D • RERTR program—SAFARI-1 conversion • Green coal • Corporatisation and growth of HTP and NTP • Skills development and training • Improvement of productive application of resources • Restructuring and Transformation
Necsa’s Positioning • Alignment to DME • Other Departments • Political Positioning via interaction with Parliamentary Portfolio Committee and other entities • Funding • Necsa requires approx R 236 million additional governmental funding over next three years to address expanded institutional activities • Legislative and Policy Matters • PFMA • King II • Companies Act • Upgrading of Site Security
Political Intervention • Financial Support for the Infrastructure Regeneration • Security Upgrade • SAFARI I Conversion • Funding for PRMA Liability • Support for Necsa”s Participation in the PBMR • Funding for Skills Transfer and Redevelopment
Imagine……….A world where people stopped shaking in the boots at the mention of radioactivity. ………A world where nuclear didn’t conjure up emotions of danger and fear of the unknown…………… Where nuclear didn’t mean secrecy, Hiroshima, and weapon of massdestruction But rather nuclear equaledlife………………….Imagine
We are an example to the world We co-operate across Africa and the globe to promote the safe application of nuclear technology
We help unlock mysteries of our creation Using nuclear analytical technology, we help unravel the history of our universe
We ensure that your children will see today’s endangered species tomorrow We provide facilities in support of nature conservation
We create tomorrows technology leaders Skills development is a priority at Necsa, and we transfer our vast scientific skills to future leaders
We work relentlessly to improve your health With our range of medical products, we help your doctor to diagnose and treat diseases