Presentation to the Portfolio Committee on Minerals and Energy

1
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 technologys ability to
enhance life.
2
Vision and Mission

• Necsas 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

3
Chairmans 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.

4
Necsas structure
Board of Directors
Security
Strategic Bus. Dev.
Prodit
Transformation
5
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

6
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
• Necsas intellectual capital
• Participation in the learnership programme with
  the CHIETA

7
Economic Performance Indicators

• 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

8
Social 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

9
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.

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CHIEF EXECUTIVE OFFICER
CEO OFFICE
CORPORATISED
NUCLEAR
CORPORATE SERVICES
CORPORATE SERVICES
NTP
NUCLEAR TECHNOLOGY
FINANCIAL SERVICES
HTP
NUCLEAR SERVICES
FACILITY MANAGEMENT
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NECSA LTD BOARD OF DIRECTORS
CEO
Commercial
NUCLEAR SERVICES
NUCLEAR TECHNOLOGY
HTP
NTP
FINANCIAL SERVICES
FACILITY MANAGEMENT
CORPORATE SERVICES
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Organisational
reporting Nuclear
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
  Necsas nuclear license and quality service.

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Organisational reporting
Nuclear 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 Necsas excellent nuclear safety record.
  

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Organisational reportingNuclear Services

• 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 Necsas excellent nuclear safety record.
  
• Achieve the above within constraints of limited
  resources.

15
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

16
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

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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

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Organisational reportingNuclear Technology

• Challenges
• Accelerated expansion of capacity (staff, skills,
  experimental facilities) to perform research,
  development and training for Necsas growth
• Expansion of collaborative networks
• Accessing additional funding sources

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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

20
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.

21
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

22
Organisational reportingFacilities Management

• 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

23
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

24
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)

25
Organisational reportingNTP Radioisotopes (Pty)
Ltd

• 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.

26
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)

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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

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Organisational reportingHTP

• Challenges
• Re-structuring and re-engineering the division
• Hive off Profitable units and market BEE partners
• Implementation of the Turnaround Strategy
• Improve and meet budget obligations to Necsa

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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.

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Organisational reportingFinancial Services
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Organisational reportingFinancial Services
32
Organisational reportingFinancial Services
33


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Organisational reporting
Financial Services
NECSA RESOURCE COSTS MAR 2004
RELATIVE SHARE OF EXPENSES
OPERATING
CAPITAL COSTS
MATERIAL COSTS
5
9
"OTHER"
33
OPERATIONAL
53
COSTS
LABOUR COSTS
35
Organisational reportingFinancial Services
36
Necsas 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

37
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.

38
Recovery Plan process
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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

40
VISION 2010 Strategy for growth
The challenge ahead.. Sustaining profitability
growth
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NECSA Vision 2010 Where are we
Phase 1
Phase 2
Phase 3
Turn around
consolidation
growth
1988
2004
2002
2007
2010
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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 RD
• RERTR programSAFARI-1 conversion
• Green coal
• Corporatisation and growth of HTP and NTP
• Skills development and training
• Improvement of productive application of
  resources
• Restructuring and Transformation

43

• Necsas 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

44
Political Intervention

• Financial Support for the Infrastructure
  Regeneration
• Security Upgrade
• SAFARI I Conversion
• Funding for PRMA Liability
• Support for Necsas Participation in the PBMR
• Funding for Skills Transfer and Redevelopment

45
Imagine.A world where people stopped shaking
in the boots at the mention of radioactivity.
A world where nuclear didnt conjure up
emotions of danger and fear of the unknown
Where nuclear didnt mean secrecy, Hiroshima,
and weapon of mass destruction But rather
nuclear equaled life. Imagine
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We are an example to the world
We co-operate across Africa and the globe to
promote the safe application of nuclear
technology
47
We help unlock mysteries of our creation
Using nuclear analytical technology, we help
unravel the history of our universe
48
We ensure that your children will see todays
endangered species tomorrow
We provide facilities in support of nature
conservation
49
We create tomorrows technology leaders
Skills development is a priority at Necsa, and
we transfer our vast scientific skills to
future leaders
50
We work relentlessly to improve your health
With our range of medical products, we help your
doctor to diagnose and treat diseases
51
We connect you
Irradiated silicon and specialized gases from
NECSA, are used in the production of microchips,
which make your cell phone and computer
smarter

52
We help bring you the best things life has to
offer
Products from Necsa are used in the production
of luxury items such as crystal glass,
diamonds and sports cars
53
We make your car more environmentally friendly
With fuel tanks treated at NECSA, your car is
friendlier to the environment
54
We help you find your way
Our luminescent lights help you find your way
at the movies, and in the event of a power
failure
55
We uplift your community
Through the establishment of the Necsa
Eco-Industrial Technology Park, we attract
businesses, which provide employment to our
surrounding communities
56
Partner
Respect
dedicated
Professional
Teamwork
Engage
Open
Dedicated
Trust
Reliable
We value the contribution of each and every one
in the NECSA team We include our communities and
our actions are transparent We build our
relationships through respect and trust

57
Excellence
Perseverance
World-class
Meticulous
Dedicated
Cutting Edge
Quality
We are dedicated to excellence in all of our
efforts We exceed expectations
58
Life Enhancing
innovative
Imaginative
Impact
Progressive
Visionary
Proactive
empower
Our actions impact positively on life We add
value in all that we do
59
Entrepreneurial
Solutions driven
Customer focused
Ambitious
agile
Passionate
successful
resilient
We are passionate about our business We
tirelessly strive to meet our customers needs
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Leader
Expert
Benchmark
Knowledge driven
Confident
Proven
We are a proven source of authority We are
leaders in the development and application of
standards and benchmarks
61
Responsible
conscience
Protective
Accountable
Commitment
Vigilant
Nurturing
Nurturing and personal
Integrity
We practice sound governance We are the trusted
custodians of safety, health and the environment
62
QUESTIONS