DEPARTMENT OF PUBLIC ENTERPRISES

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DEPARTMENT OF PUBLIC ENTERPRISES
ANNUAL REPORT 2000
PRESENTATION TO PUBLIC ENTERPRISES PORTFOLIO
COMMITTEE
Venue CAPE TOWNDate 14TH November
2001Time 11h00 13h00
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ANNUAL REPORT 2000
CONTENT

• VISION AND MISSION
• OBJECTIVES
• ORGANISATIONAL STRUCTURE
• INTERNAL AND EXTERNAL ACHIEVEMENTS
• KEY PROGRAMS
• MINISTRY ACHIEVEMENTS
• RESTRUCTURING OF SOEs ACHIEVEMENTS
• PERFORMANCE MONITORING ACHIEVEMENTS
• STRATEGIC ANALYSIS ACHIEVEMENTS
• ATERNATIVE SERVICE DELIVERY ACHIEVEMENTS
• CORPORATE SERVICES ACHIEVEMENTS
• FINANCIALS
• KEY CHALLENGES

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VISION

• RESTRUCTUREd
• STATE OWNED ENTERPRISES
• IN A
• GLOBALLY COMPETITIVE ENVIRONMENT PROMOTING
• ECONOMIC GROWTH
• AND A
• BETTER LIFE FOR ALL

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MISSION

• DIRECT AND MANAGE
• THE ACCELERATED
• RESTRUCTURING OF
• STATE OWNED ENTERPRISES
• TO MAXIMIZE
• SHAREHOLDER VALUE

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OBJECTIVES

• DEVELOP AND DIRECT COHERENT APPROACH TO THE
  RESTRUCTURING AND TRANSFORMATION OF SOEs
• CREATE AND IMPLEMENT RESTRUCTURING FRAMEWORKS
• DEVELOP SYSTEMATIC METHOD FOR MONITORING SOE
  PERFORMANCE
• DEVELOP A COMPREHENSIVE APPROACH TO ALTERNATIVE
  SERVICE DELIVERY

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ORGANISATIONAL STRUCTURE
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INTERNAL ACHIEVEMENTS (Some Highlights)

• UNQUALIFIED AUDIT REPORT 2000-2001
• INTERNAL AUDIT COMPONENT AND AUDIT COMMITTEE
  FORMED
• PERFORMANCE MANAGEMENT SYSTEM
• UPGRADING IT INFRASTRUCTURE
• LOGIS PROVISIONING SYSTEM IN PLACE
• HIV/AIDS COMMITTEE
• GENDER COMMITTEE

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EXTERNAL (Some Highlights)

• Restructuring of Transnets debt burden
• Eskom Conversion Act passed July
• Divisionalisation of Portnet in preparation for
  Restructuring
• Preparations and Cabinet approval for the
  introduction of SEP for Denel
• Signing of Shareholder Compact with Transnet

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MINISTRY ACHIEVEMENTS

• Stakeholder participation and interaction with
  Government through effective use of the National
  Framework Agreement (NFA)
• Created an enabling environment for SOEs to
  explore business opportunities in Africa and
  abroad, through political support and
  facilitation for participation in BiNational
  Commissions, access to major overseas Government
  contracts especially in the defense sector and
  support for NEPAD

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MINISTRYACHIEVEMENTS

• Created capacity and institutional mechanisms to
  leverage resources and support from SOEs for
  Governments Integrated Rural Development
  Strategy (IRDS)
• Key milestones include
• Arrivia.kom
• The Botswana National Identification Project and
  the Malawi National Transport Information System
• Spoornet
• Agreement was reached with CFM of Mozambique on
  the Ressano Garcia Rail Line
• Locomotives leased to Pointe Noire in Congo
  Brazzaville and Sudan to help stimulate economic
  activities
• No outstanding Parliamentary questions

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RESTRUCTURING OF SOEsACHIEVEMENTS

• Transport Sector
• Ports
• Progress in finalising Ports policy enabling the
  restructuring of the port operations
• Ports Policy Steering Committee produced Ports
  policy framework, public consultation to finalise
  policy year end
• Separating Regulatory functions of the Ports
  Authority from the National Ports Authority
  transition model until National Ports Authority
  is separated from Transnet
• Apron Services
• Divesture of 30 interest to an SEP transaction
  in progress
• Spoornet
• Restructuring model for Spoornet freight business
  submitted to Cabinet

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../ RESTRUCTURING cont.ACHIEVEMENTS

• Energy Sector
• Eskom Conversion Act passed July converting Eskom
  into a public company
• Rotek Industries
• RFPs have been issued to solicit interest from
  potential Strategic equity partners for Rotek
  Engineering and Roshcon
• Defence Sector
• Denel
• Cabinet approval for introduction of SEP
• Transactions launched February 2001
• Due diligence March May 2001
• BAE Systems and Turbomeca negotiations current

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../ RESTRUCTURING cont.ACHIEVEMENTS

• Forestry Sector
• Eastern Cape North transaction concluded August
  2001
• Kwazulu Natal transaction completed October 2001
• Northern Province and Mpumalanga transaction in
  negotiation with final preferred bidders

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IPO OFFICE ACHIEVEMENTS

• Closed the sale of 3 equity stake to Ucingo
• Finalising the transfer of 2 equity to the Trust
  representing Telkom employees.
• Extensive media and education campaign ready for
  a launch
• Structured the retail offer targeting both HDI
  and General investors
• Listing locations of Johannesburg and New York
  approved by Cabinet and discussions underway with
  JSE and NYSE
• Made significant progress on the negotiations
  with the SEP to secure their support and protect
  governments shareholder interest

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TELCOMMS ACHIEVEMENTS
M-Cell

• In July, Government sold 75 million shares in
  M-Cell shares for R2, 45 billion.
• Significant progress on the Phase 2 sale include
• Performing both financial and legal due
  diligence.
• Information memorandum RFP is ready.
• Share sale purchase agreements prepared.

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PERFORMANCE MONITORING ACHIEVEMENTS

• Developed shareholder compacts
• Signed by Transnet
• Popularized protocol at SOEs
• Developed and implemented the Financial
  Performance Evaluation model to evaluate SOEs
• Developed a Board Appointment Policy as an
  instrument for good governance in SOEs

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STRATEGIC ANALYSIS ACHIEVEMENTS

• Donor Funds secured
• Corporate Governance study
• Database Enhancement (for the SOE Audit)
• ESOP Study
• Ports Sector specialist
• Internal Research
• Policy Framework
• ESOP Study
• Study into Regulatory Regimes
• Input into Ports Policy and Rail Policy
•  

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ALTERNATIVE SERVICEDELIVERY ACHIEVEMENTS

• Translated the Communication strategy into a
  Campaign strategy for all ASD initiatives
• Project to ensure that SOE Procurement Policy is
  aligned to Government policy, is currently
  underway

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CORPORATE SERVICESACHIEVEMENTS

• Internal Policies Developed for DPE
• Affirmative action and employment equity
• Sexual harassment
• Performance management
• Leave
• Job evaluation
• Resettlement
• Overtime
• Cell phone usage
• Working hours working arrangement
• transport
• HIV/Aids awareness programs
• Implementation of gender consideration programs
• Implementation of a Senior Management System
  Service
• Appointment of a Security Manager (M.I.S.S)

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FINANCIALS
SALIENT FEATURES

• Unqualified Audit Report
• No roll-over of funds
• Greater utilisation of donor funds
• Despite underspending by R12.5 million, DPE
  achieved goals set out in 2000/01 business plan

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../ FINANCIALS cont. ACHIEVEMENTS Income
statement 31 March 2001
INCOME R 000
Voted funds 47,079
Other receipts 000
Total income 47,079
EXPENDITURE 34,312

NET SURPLUS 12,767 TRANSFERRED TO NRF
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../ FINANCIALS cont. ACHIEVEMENTS Cash Flow
Statement 31 March 2001
Cash Flows from Operating activities R000
Net cash flow operating activities including capital items 10,994

Cash Flows from Investing activities (3,996)
Purchase of Plant and Equipment (3,996)
Net cash Flows from Operating and Investing activities 6,998

Cash Flows from Financing activities (16,447)
Movements on receivables, pre-payments, advances, payables and provisions (16,447)
Net increase /(decrease) in cash and cash equivalents (9,449)
Cash and cash equivalents at beginning of period (9,986)
Cash and cash equivalents at end of period (19,435)
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../ FINANCIALS cont. ACHIEVEMENTS Balance Sheet
as at 31 March 2001
ASSETS R000
Current Assets 26,440
Unauthorised, irregular, fruitless and wasteful expenditure 26,165
Receivables 207
Pre-payments and advances 68
Non-current assets 14,872,309
Investments 14,872,309
Total Assets 14,898,749
LIABILITIES
Current Liabilities 26,440
Cash and cash equivalents 19,435
Revenue to be surrendered ,0
Voted funds to be surrendered 6,998
Payables 7
Non-Current Liabilities 14,872,309
Provisions 14,872,309
Total liabilities 14,898,749
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KEY CHALLENGES

• Market volatility
• Stakeholder liaison and consultation