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GPW PresentationPortfolio Committee on Home
AffairsAnnual Report for the Year ended 31
March 2007Tom Moyane - CEOCape Town 12
February 2008
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Overview of the Year under Review

1. Contextualise the strategic role and position of
   GPW to service delivery programmes of DHA.
2. Review and report on the Corporitisation and
   transformation agenda within GPW.
3. Review the operating environment.
4. Review and report and the appropriate measures
   taken to address management weaknesses identified
   by the Office of the Auditor General during the
   audit in the context of 3 above .

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MANDATE

• To provide security printing needs of Government
• to print all enabling face value documents
• birth certificates,
• identification documents
• passports,
• visa labels
• Permits and licenses.
• to produce and distribute central Government
  information products
• Government gazettes,
• Tender bulletins
• Annual Reports

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BACKGROUND

• GPW is a Trading Account operating within the DHA
  vote
• Received R199 000
• GPW operates purely on commercial basis
• Generates its revenue to defray costs.
• Surplus is paid over to Revenue Fund at National
  Treasury.
• Surplus retention is in place after consultation
  with approval by National Treasury.

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PRODUCTS AND SERVICES

• Security Printing
• Passports,
• IDs,
• Permits
• licenses
• examinations (questions memoranda),
• voters roll etc
• Certificates (Road Worthy Certificates, etc)
• Distribution dissemination of Government
  Information
• Government Gazettes
• Tender bulletins
• Annual Reports
• Supply of stationery

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GPW STRATEGIC PLAN
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Strategic Objective 1Corporitisation

• Preparation of a draft business case
• Prepare a draft Security printers bill
• Develop the Legal Transformation Process towards
  reconstituted organisation as public entity
• Development of Holistic all encompassing
  conversion plan and accountabilities
• Development of a new corporate identity and logo
  around 'brand promise'

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Strategic Objective 2Organisational Alignment
and Staffing

• Restructure organisation into a flatter
  organisation on going.
• Develop a health and safety strategy
• Conduct skills assessment on going

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Strategic Objective 3Develop a Marketing
Strategy

• Quantitative Market Survey and Analysis
• Qualified and quantified present and future print
  market trends
• Detailed competitor analysis
• Benchmark against similar operations/ technology

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Strategic Objective 4Business Systems and
Technology Improvements

• Select and implement effective and efficient
  business systems on going
• Upgrade infrastructure and environment
• Procurement of state of the art printing presses
• Create capacity for proper Management Information
  and Business Intelligence

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On Going Developments Corporitisation

• Successful printing and delivery of
• Draft Business Case - completed
• Draft Security Printers Bill - completed
• 1st Presentation to joint DPSA Treasury
  Panel - 7 May 2007
• Review of the recommendations of the panel by
  TAP - On going
• 2nd Final Presentation to joint DPSA Treasury
  Waiting

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Strategic Vulnerability Areas

• People
• Staff turnover - inability to attract the best
  skills including artisans, remuneration
  incompatible with industry norms.
• Management
• Leadership in terms of strategic operational
  depth lacking.
• Technology
• Very old machines average age 40 years
  (efficiency and quality affected and compromised)
• Location
• Current location not ideal very old
  inappropriate

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AUDIT OPINION

• Auditor General expressed an ADVERSE AUDIT
  opinion for the financial year ended 31/03/07.

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MATTERS THAT GAVE RISE TO THE ADVERSE OPINION

• Management of debtors.
• Inventory.
• Creditors (Payables).
• Plant and Property.
• Investigation.
• Basic Conditions of Employment.
• Information Systems Control and Communication.
• Control Environment.

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MATTERS THAT GAVE RISE TO THE ADVERSE OPINION

• Management of debtors
• Lack of effective and efficient steps to collect
  outstanding debts
• Corrective measures
• Identity top 10 defaulter with a view to take
  corrective measures on payments
• Verification of the correctness of invoices
  issued
• Monthly letters of demand and acknowledgement of
  debt to be sent Departmental CFOs and DGs
• Last resort - consider termination of services to
  defaulting departments
• Outstanding debt as of 31st March 2007 R135,4
  million
• To date Jan 2008 outstanding debt - R138,3

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MATTERS THAT GAVE RISE TO THE ADVERSE OPINION

• Management of debtors - continued
• Suspense account resolved on a monthly basis
• Debtors age analysis exceeded approved credit
  limits
• Policy on long outstanding debtors
• Debtors reconciliations systems generated age
  analysis do not agree at year end
• Corrective measures
• On a daily basis these accounts will be cleared
  as and when departments provide remittance
  advices.
• Request collaboration of departmental CFOs to
  submit remittance advises.
• GPW will request departments to apply and agree
  on credit limits during the course of the year.
• Formal policy on outstanding debts is in place
  and signed off 2006 and will be rigorously
  implemented
• Age analysis on PECAS is real time!

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MATTERS THAT GAVE RISE TO THE ADVERSE OPINION

• Inventory Management
• Thorough analysis of the system and processes
  will be done by the service provider to address
  inconsistencies between report and job tickets.
• GPW relies on the PECAS software to evaluate its
  semi-finished products which are reflected in WIP
• In the interim the profit margin on labour will
  be removed from WIP

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MATTERS THAT GAVE RISE TO THE ADVERSE OPINION

• Payables
• To comply with IAS 39 on payables not recognised
  at fair value, the follow will be done
• GPW will bring consultants to train our people in
  order to address this problem.
• Reconciliation of goods received account will be
  finalised by the end of February 2008.
• Payment of all the suppliers within 30 days will
  be implemented with immediate effect.
• Appoint a person to manage Creditors by April 2008

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MATTERS THAT GAVE RISE TO THE ADVERSE OPINION

• Property, Plant and Equipment
• A thorough stock take will be conducted on assets
  for revaluation.
• Write off and dispose of all unserviceable or
  obsolete equipment.
• Update the asset register to be completed by the
  28 March 2008.
• In the next financial year all assets will be
  bar-coded.

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MATTERS THAT GAVE RISE TO THE ADVERSE OPINION

• Special Investigation
• On-going
• Gobodo Forensic Report pointed towards possible
  wasteful or fruitless expenditure occurred
  between 1 April 2003 and 31 December 2004.
• Management has sought second opinion from Special
  Investigation Unit (SIU) to check on possible
  materiality if any, in order to proceed with the
  final closure.

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MATTERS THAT GAVE RISE TO THE ADVERSE OPINION

• Basic Condition of Employment Act
• Compliance to Section D.2(c) overtime concern
• Major contributory factors
• Staff turnover and high levels of resignations
• Shortages in qualified artisans and machine
  minders
• Incompatible remuneration policy
• Pressure to deliver on time exacerbates need to
  increase overtime in contravention of section
  D.2(c).

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MATTERS THAT GAVE RISE TO THE ADVERSE OPINION

• Audit Committee Internal Audi
• Fraud prevention plan
• A fraud prevention committee has been formed to
  implement the fraud prevention policy which was
  officially signed off in November 2007.
• In December 2007 a draft Whistle blowing policy
  completed which has been circulated for inputs
  before being signed off and implementation.

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MATTERS THAT GAVE RISE TO THE ADVERSE OPINION

• Audit Committee Internal Audit - cont
• Risk Assessment
• The Audit Committee approved the previous risk
  assessment plan.
• A risk plan was approved in November 2007.
• Audit committee and internal function
• In March 2007 a fully fledged GPW Audit Committee
  was established and has met regularly.

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MATTERS THAT GAVE RISE TO THE ADVERSE OPINION

• Internal Control Information Systems
  Communication
• Specific initiatives have been undertaken to
  improve IT control and communication environment
• A strategic business plan has been formulated
  circulated for comments, discussion and adoption
  by Exco before end of this financial year.

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Achievements 2006/07

• Successful printing and delivery of
• South African Examinations for Grades 9,10, 11
  12 (Exam papers)
• Qty R
• Limpopo 10,5mn 17,01mn
• North West 0,92mn 1,48mn
• Gauteng 1,13mn 3,87mn
• Total Revenue generated 22.36mn

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Achievements 2006/07

• Successful printing and delivery of
• Ministry of Finance (Lesotho)
• Revenue Stamps 8,500 sheets R130 462,00

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Achievements 2006/07

• Passport production
• 2006/07 2005/06
• Qty 1 041 478 1 013 724
• Value R18 746 604 R16 006 702
• Identity Cards produced
• 2006/07 2005/06
• Qty 2 079 114 2 255 225
• Value R9 480 760 R9 020 900

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Achievements 2006/07

• Procurement - Contract Printing
• Orders Value
• BEE 720 R89,4 mn 92
• Non BEE 66 R 7.7 mn 8
• To date BEE R130m
• Procurement Print Branch
• Value
• In House R168,6 mn 64
• Outsource R 97.1 mn 36

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BALANCE SHEET AS AT 31 MARCH 2007

• 2007 2006
• R000 R000
• ASSETS
  
• Non-current assets 25 520 35 723
• Property, plant equipment 25 520 35
  723
• CURRENT ASSETS 406 004 392 488
• Inventories 96 022 103 338
• Trade other receivables 143 025 170 941
• Cash Cash equivalents 166 957 118 209
• Total Assets 431 524 428 211
• EQUITY AND LIABILITIES
• Funds 346 314 346 093
• Capital fund 189 098 189 098
• Machinery Equip Fund 152 911 95 932

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COMPARATIVE ANALYSIS 2005/06 vs 2006/07

• Bank Balance
• 2006/07 R166,9 million
• 2005/06 R118,2 million
• Growth 29,1
• Profitability
• 2006/07 R61,0 million
• 2005/06 R 4,3 million
• Decrease (92,9)
• Debtors
• 2006/07 R143,0 million
• 2005/06 R170,9 million
• Decrease in debts (16,3)

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• THANK YOU