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  1. 1. Necsa REPORT TO MINERALS AND ENERGY PORTFOLIO COMMITTEE 4 NOVEMBER 2005 Presented by: Schalk de Waal: Interim CEO Ms Nomfuyo Galeni: CFO
  2. 2. ACKNOWLEDGEMENT – ANNUAL REPORT 2004/05 • Mr Senti Thobejane was the Chief Executive Officer during the reporting period. He resigned on 31 March 2005. • The CFO of Necsa, Ms Nomfuyo Galeni was the Acting CEO from 1 April 2005 until 24 October 2005.
  3. 3. • [PMG note: graphic not included, please]
  4. 4. 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, utilize and manage nuclear technology for national and regional socio-economic development. • Values that are strived for: - Partnership - Life enhancement - Entrepreneurship - Excellence - Leadership; and - responsibility
  5. 5. NECSA’s INTERIM ORGANISATIONAL STRUCTURE S de Waal Interim Chief Executive Officer Nuclear Services & Technology (NS & NT) Corporate Services (CS) Financial Services (FS) Facilities Management (FM) High Technology Products (HTP) Nuclear Technology Products (NTP) Nuclear Security Internal Audit Corporate Planning SHEQ Nuclear Safeguards
  6. 6. CHAIRMAN’S REPORT • Necsa has to position itself to be a serious player in nuclear matters in terms of: - active involvement in the international nuclear arena. - establishing Necsa as a recognized centre of excellence in nuclear technology and related fields. - becoming a major contributor towards the national agenda of developing people of South Africa.
  7. 7. CHAIRMAN’S REPORT HIGHLIGHTS AND CHALLENGES • SAFARI-1 reactor achieved 40 years of safe and successful operation. • Necsa continued to experience a negative impact from the strengthening of the rand which resulted in net operating loss of R29m • To reverse the financial challenge, a Recovery Plan was launched in consultation with labour. • Reduced discretionary spending through the implementation of strict austerity measures. • Necsa experts continued to play a pivotal role in the International Atomic Energy Agency/African Regional Co-operative Agreement for Research, Development and Training Related to Nuclear Science and Technology collaborative research, development and training programmes.
  8. 8. CHAIRMAN’S REPORT: LOOKING AHEAD • Need to empower and re-organize Board of Directors • Board intends to take SA’s nuclear science and technology to new highs of development and invention • Necsa to be established as a centre of excellence • Necsa needs additional funding support to: - remove balance sheet encumbarances - recapitalise and turn Necsa around
  9. 9. MANAGEMENT REPORT: HIGHLIGHTS • Necsa experienced a turbulent time during 2004/05 but maintained its positive image and remained balanced. • Management and staff remained committed to safe and secured nuclear operations. • Group revenue increased by 2,2% from previous year. • Made good progress to curb the escalating cost of post-retirement medical aid liability. • Success in improving gender equity quota - woman now 23% in 3 critical categories Continue
  10. 10. MANAGEMENT REPORT: HIGHLIGHTS • A woman was appointed as CFO of Necsa and acted as CEO from April to October 2005. • Target that 40% of workforce will be women by 2010. • Provide products regularly and reliably to 50 countries mainly through NTP Radioisotopes (Pty) Ltd (a fully Necsa owned subsidiary). • Implemented a staff retention strategy to protect core skills. • Necsa has numerous collaborative research projects with the high education sector including universities and research institutions. • Necsa engaged in various awareness and public relations programmes to educate stakeholders on nuclear matters.
  11. 11. SAFARI-1 1965-2005
  12. 12. SAFARI-1 (SA FUNDAMENTAL ATOMIC REACTOR INSTALLATION) • SAFARI-1 is the mainstay of Necsa’s nuclear programme and will render at least a further 20 years service to the country. • Research reactor also utilized for production of medical radioisotopes mainly during last 10 years. • Annually ~60 000 SA and 2,3 million patients across the world benefit from isotopes originating from SAFARI-1. • Experimental beam line facilities are used extensively for research and training. • ISO9001 and ISO14001 accredited (this is an exceptional achievement which only a few reactors in the world received) • SAFARI-1 currently one of most efficiently operated and best utilized reactors in the world. • The Government has approved that the reactor be converted to utilize low enriched uranium together with dedicated funding for this purpose (R12m/a for 3 years).
  13. 13. PRODUCTS AND SERVICES Major products and services: • Radiopharmaceuticals used in nuclear medicine • Radiochemicals used for medical and agricultural purposes • Radioactive sources used in industry • Irradiation services and radiation technology products • Fluorine-based chemical products and services • Specialised engineering products and services • Operation of SAFARI-1 nuclear reactor • Management of the institutional obligations on behalf of the State such as decommissioning, decontamination, storage and disposal of radioactive waste • Management of the State’s programme of safeguarding nuclear material to prevent proliferation of nuclear weapons • Provision of a support structure for African Regional Co-operative Agreement for Research, Development and Training • Development of nuclear fuel production technology for PBMR • Radiation and reactor theory; research and services to Necsa and the PBMR Programme • Radiochemistry and radioanalytical services for Necsa • Utilisation of existing infrastructure and buildings • Research collaboration with SA and international universities and research institutions
  14. 14. ECONOMIC PERFORMANCE INDICATORS • Approximately 14,8 per cent suppliers listed as black suppliers • 33% of Necsa’s budget was spent on black suppliers • 42% of Necsa’s expenditure comprised personnel expenses • 69,6% of our workforce comprises designated employees • Due to a moratorium on appointments, we lost 235 employees who was replaced with 168 new appointees
  15. 15. SKILLS DEVELOPMENT • Strong alliance with the Chemical Industries’ Education and Training Authority SETA. • About 70 learnerships were trained in various occupations such as engineering, chemistry, apprenticeships. • Though the Necsa bursary scheme, 24 previous disadvantaged students are being sponsored for their studies in science and technology. • A total of 1409 employees received training, some of whom attend more than one course in various disciplines, including leadership development, health and safety and technical training. • ARECSA is a joint venture between five SA companies, namely, Eskom, Necsa, PBMR, NNR, Koeberg and Areva (France) for the training of especially previously disadvantaged individuals in the much sought-after nuclear and related skills.
  16. 16. Necsa: CURRENT SITUATION Salient issues • Deficit recorded for 2004/05 – R29,8m - cumulative R95,6m • Vacancy of key personnel - 183 • Austerity measures due to cash constraints • HSE & security risk profile deteriorated • Management systems inadequate Contributing factors • Declining market conditions • Economy of scale problems and operational inefficiencies • Volatility of exchange rates • Limited funding of institutional obligations by shareholder
  17. 17. LOOKING TO THE FUTURE • Necsa received an additional allocation of R56m for the current year to implement urgent HSE-related projects and to meet its commitments. • Possible DST financial support for specific R&D projects. • Additional funding envisaged from 2006/07 financial year onwards. • Turnaround Plan submitted to Government.
  18. 18. TURNAROUND PLAN Projects to focus on:  Nuclear technology R&D expansion and upgrading.  Restructuring and recapitalisation of commercial activities.  Human capital development programmes.  Infrastructure and HSE upgrading.  High Temperature Reactor/PBMR Advance Fuel Development. Continue
  19. 19. Necsa TURNAROUND PROGRAMME • The Turnaround Plan to run over 5 years. • Necsa will prioritise projects within available funding allocations. • The plan will be aimed at the renewal of Necsa to take advantage of the re-emerging nuclear market. • The plan will require significant commitment from Necsa, the Board and Government. • Necsa is confident that the implementation of the plan will yield the desired results to ensure that Necsa could fulfill its mandate and be looked upon as a centre of excellence for the nuclear industry.