NECSA GROUP CORPORATE PLAN (2013/14 - 2015/16)

By:

Ambassador Mochubela Seekoe, Chairperson

Mr Phumzile Tshelane, CEO

Mr Daniel Moagi, Group Executive: Human Resources

Ms Mbali Mfeka, Acting Group Executive: Finance and Information Management

Ms Chantal Janneker, Group Executive: Marketing and Communication

30 April 2013

Index

1. Necsa’s Legislative and Policy Mandate

2. Alignment to Government Policy

3. Necsa’s Achievements in 2012/13

4. Key objectives of the Necsa Group

5. Cross-cutting Management Priorities

6. Key Risks for the Necsa Group

7. Critical Success Factors for the Necsa Group

8. Government Grant Budget 2014

9. Government Grant Reduction Trend

2

Continues…

Index

8. Group Revenue Graph 2013/14

9. Group Expenditure Graph 2013/14

10. Necsa Group Capital Expenditure Plan

11. Necsa Corporation Revenue Graph 2013/14

12. Necsa Corporation Expenditure Graph 2013/14

13. Human Resources

14. Necsa Group Predetermined Objectives and Key performance Indicators for

2013/14 - 2015/16

3

Necsa’s Legislative and Policy Mandate

Necsa’s Main Functions (in terms of the Nuclear Energy Act, 1999)

To undertake and promote research and development in the field of nuclear energy

and radiation sciences and technology and .… to make these generally available.

To process source material, special nuclear material and restricted material and to

reprocess and enrich source material and nuclear material.

To co-operate with any person or institution in matters falling within these functions.

Also: Execute institutional responsibilities on behalf of government, e.g. operation and

utilisation of SAFARI-1, decommissioning and waste management, international

obligations.

5

Necsa in the Nuclear Energy Policy (2008)

Necsa shall serve as the anchor for nuclear energy research, development and

innovation in South Africa. Necsa shall be encouraged to participate in the uranium value chain. Government, through Necsa, shall undertake/investigate...

– the development of uranium conversion capabilities,

– the viability of developing its own uranium enrichment capabilities and

simultaneously seek to obtain access to established uranium enrichment

programmes,

– a strategy to develop nuclear fuel fabrication capabilities.

Government’s intention is to…establish a modern nuclear technology industry

including manufacturing and construction capabilities as well as services.

6

Alignment with Government Policy

National Development Plan

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NDP Priority Area Necsa Group AlignmentProviding Quality Health Care NTP Radioisotopes produces medical radioisotopes, some of which are utilised in the South

African health system for diagnostic studies and cancer treatments.An Economy that will Create More Jobs & Improving the Quality of Education, Training and Innovation

NTP and Pelchem product sales on world markets contributes to SA balance of payments Apprenticeship training offered by Necsa Skills Development Centre (trained 442 people

during 2012/13) DTTC 33 pre-test, 246 trade test preparation and 232 artisans trade test Security learnerships launched in 2011/12 (9 graduates in 2012/13) Necsa Bursary Programme (Graduate-in-training programme 11 students, Undergraduates

15 and 5 postgraduates for 2012/13); Internship programme (36 students for 2012/13); post-graduates and post-doctoral fellows supported with research projects at Necsa (62 for 2012/13) and Universities (36 for 2012/13)

Expanding Infrastructure Necsa has embarked on several key infrastructure projects, including: the manufacturing plant for low enriched uranium (LEU) material test reactor (MTR) fuel;the SAFARI-2 research reactor project;achieved ASME III accreditation for its nuclear manufacturing centre (NMC) so that South Africa may procure localisation benefits arising out of its nuclear energy expansion programme; preparations for a pressurised water reactor (PWR) fuel component manufacturing facility; and The Minister of Energy officially launched the Necsa Visitor’s Centre in February 2011 to assist in improving public understanding of nuclear technologies.

National Development Plan

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NDP Priority Area Necsa Group Alignment

Transitioning to a Low-Carbon Economy

Recognising the role nuclear energy can play in reducing SA’s greenhouse gas emissions as well as the importance of raw material beneficiation for the SA economy and based on the requirements of the NEP Necsa has drafted a report showing the status of local uranium reserves and how these resources can be locally beneficiated through the production of nuclear fuel which is especially pertinent to SA’s nuclear energy expansion programme.

South Africa in the Region and the World

Necsa continues to be extensively involved in technical cooperation projects of the IAEA’s African Regional Cooperative Agreement for Research, Development and Training related to Nuclear Science and Technology Programme (assisted Ghana with site characterisation for its first Borehole Disposal unit for disused sealed radioactive sources. Also undertook successful conditioning missions to Sudan and Tanzania for sealed high activity radioactive sources (SHARS), a world first Necsa developed and designed technology).

Government’s Programme of Action

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Government Outcomes and Outputs Necsa Group Outputs

Outcome 2: Health Output 1: Improve life expectancy

NTP Radioisotopes produces medical radioisotopes, some of which are utilised in the South African health system for diagnostic studies and cancer treatments.

Outcome 4: Decent Employment through inclusive economic growth Output 4: Increased competitiveness, to raise net exports, grow trade as a share of world trade and improve its composition

NTP and Pelchem product sales on world markets contributes to SA balance of payments

Outcome 5: Skills Output 3: Access to occupationally directed programmes in needed areas and thereby expand the availability of intermediate level skills (with a special focus on artisan skills)Output 5: Research, development and innovation in human development for a growing knowledge economy

Apprenticeship training offered by Necsa Skills Development Centre (trained 442 people during 2012/13) DTTC 33 pre-test, 246 trade test preparation and 232 artisans trade testSecurity learnerships launched in 2011/12 (9 graduates in 2012/13) Necsa Bursary Programme (Graduate-in-training programme 11 students, Undergraduates 15 and 5 postgraduates for 2012/13); Internship programme (36 students for 2012/13); post-graduates and post-doctoral fellows supported with research projects at Necsa (62 for 2012/13) and Universities (36 for 2012/13)

Government’s Programme of Action

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Government Outcomes and Outputs

Necsa Group Outputs

Outcome 6: An efficient, competitive and responsive infrastructure network

Necsa has embarked on several key infrastructure projects, including: the manufacturing plant for low enriched uranium (LEU) material test reactor (MTR) fuel;the ‘dedicated isotopes production reactor’ (DIPR)achieved ASME III accreditation for its nuclear manufacturing centre (NMC) so that South Africa may procure localisation benefits arising out of its nuclear energy expansion programme; preparations for a pressurised water reactor (PWR) fuel component manufacturing facility; and The Minister of Energy officially launched the Necsa Visitor’s Centre in February 2011 to assist in improving public understanding of nuclear technologies.

Outcome 10: Environmental Assets and Natural Resources Protected and Continually Enhanced

Recognising the importance of raw material beneficiation for the SA economy and based on the requirements of the NEP Necsa has drafted a report showing the status of local uranium reserves and how these resources can be locally beneficiated through the production of nuclear fuel which is especially pertinent to SA’s nuclear energy expansion programme.

Government’s Programme of Action

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Government Outcomes and Outputs

Necsa Group Outputs

Outcome 11: Create a Better South Africa and Contributing to a Better and Safer Africa in a Better World Output 5: Enhanced African Agenda and Sustainable Development

As the focal point for technical cooperation between the IAEA and the Government, Necsa continues to facilitate the implementation of the African Regional Cooperative Agreement for Research, Development and Training related to nuclear science (assisted Ghana with site characterisation for its first Borehole Disposal unit for disused sealed radioactive sources. Also undertook successful conditioning missions to Sudan and Tanzania for sealed high activity radioactive sources (SHARS), a world first Necsa designed technology.

Alignment with IPAP 2013/14-2015/16

Pharmaceuticals – The Government supported Ketlaphela project to manufacture

active pharmaceutical ingredients for antiretroviral treatment of patients with HIV-

AIDS will be implemented in partnership between Pelchem, the IDC and Swiss

company Lonza. Nuclear Energy – Necsa participates in the Nuclear Energy Sub-working Group

(NESWG) on Skills, Localisation and Industrialisation which is tasked with the

development of localisation strategies and plans to support local industry.

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Alignment to SIPs

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Electricity expansion• SAFARI-2 provides infrastructure for fuel to nuclear fleet

• SAFARI-2 implementation provides test-case for nuclear localisation

• NECSA sustains SA skills for nuclear build

NECSA infrastructure

investment

SIP 10

SIP 14SIP 4

Economic Opportunity – North West Province

• NECSA second largest employer of high level skills (2000 employees) to North West University in NW Province

• Large portion (approx 90%) of NECSA outputs exported from province and SA

Higher Education Infrastructure

• NECSA provides research platform to scientists and engineers from a cross-section of sectors

• NECSA sustains nuclear skills capability in SA

• NECSA works closely with a number of universities and DST

Necsa’s Achievements

Achievements Necsa Group revenue in the 2011/12 financial year amounted to R1.11 billion (including

grants and investment income this equals R1.64 billion). The group revenue for the

2012/13 financial year is forecast to be R1.66 billion. NTP Radioisotopes (Pty) Ltd, the SAFARI-1 Reactor and the Necsa MTR Fuel

Department managed to maintain the Necsa Group in a strong position in the

radioisotope market. During the 2012/13 financial year the NTP Group achieved sales

of R842 million. The Necsa R&D division continues to meet and exceed innovation (17 innovation

disclosures for 2012/13) value chain outputs with the number of peer-reviewed

publications (34 for 2012/13) being doubled in the last 3 years.

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Achievements

NTP donated a

PET-CT scanner to

the Tygerberg

hospital to assist

with oncology

diagnoses.

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Achievements Necsa’s Radiochemistry group using NTP’s

cyclotron produced a prostrate cancer imaging agent for use in a collaborative study by Prof. Mike Sathekge of the Steve Biko Academic hospital (SBAH) and the Pretoria University.

Other on-going R&D collaboration between Necsa/NTP and SBAH includes:

– TB vs co-occurring cancer and TB diagnosis and treatment planning

– HIV-AIDS imaging and therapy– Infection imaging

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Achievements Comprehensive feasibility studies relating to the re-establishment of nuclear fuel cycle

programmes in South Africa was completed during 2011. Excellent relationships with

most major international suppliers of fuel cycle technologies and products were

developed. Significant capital investment is required if the vision of a future local fuel

supply to the power reactor fleet is to be achieved. The Nuclear Skills Development Centre received accreditation from various SETAs and

recognition as a Decentralised Trade Test Centre for the final trade testing of

apprentices and is currently in strong demand. Necsa contributed to a range of policy making and public participation processes relating

to the energy planning, nuclear energy R&D and related topics, and maintained

participation in national and international collaborative programmes in the field of nuclear

R&D and Generation IV nuclear energy systems.

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Achievements

The Necsa Visitor Centre continues playing a significant role in improving public

understanding of nuclear science and technology.

The Necsa Group continued to demonstrate compliance to good corporate governance

by receiving unqualified audit reports from the Auditor General.

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International Collaboration

Necsa to establish the Comprehensive Test Ban Treaty Organisation

(CTBTO) Radionuclide Monitoring Station in the Western Cape.

Continued international R&D collaboration.

Establishment of NTP Europe.

Business collaboration between NTP and their Australian counterpart the

Australian Nuclear Science and Technology Organisation (ANSTO).

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Necsa Group Corporate Plan 2014-2016

Key Objectives of the Necsa Group

Nuclear Power Cluster

To establish the Nuclear Manufacturing Centre as a viable entity.

To implement Pelchem’s strategy for growth and sustainability, including an

increase of income from R203.5m (2012/13 forecast) to R376.1m by

2016/17.

To assess the viability of a future nuclear fuel cycle (front end) services

industry in South Africa and to progress towards the development or

demonstration of required processes and technologies.

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Key Objectives of the Necsa Group

Radiation Science and Applications Cluster

To maintain full operational capability of SAFARI-1 and implement the reactor’s ageing

management programme.

To expand SAFARI-1 based R&D facilities and outputs.

To achieve the project targets for the establishment of an LEU fuel and target plate

manufacturing plant.

To continue with the feasibility study on a multipurpose research reactor to replace

SAFARI-1 at the end of its operational lifetime.

To grow NTP Group income from R952.5m (2012/13 forecast) to R1563.9m by 2016/17.

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Key Objectives of the Necsa Group

Necsa as Host of Nuclear Programmes Cluster

To increase Necsa’s research, development and innovation outputs.

Maintain and improve the Necsa Group safety culture, SHEQ processes and

procedures, audit and reporting practices to ensure full compliance with all

regulatory and best practice requirements.

To achieve a reduced but sustainable salary bill within existing funding

constraints.

To maintain infrastructure at a suitable level.

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Cross-cutting Executive Management Driven Priorities

In addition to the strategic objectives already listed Necsa Executive management

has selected the following main management priorities for the near term:

– Obtaining early Shareholder support for key strategic projects.

– Raising the performance of R&D, NMC, NURAD, the NTP Group

(specifically its off-shore subsidiaries) and the Pelchem Group.

– Increasing the awareness of Necsa research and production outputs and

the positive impact thereof.

– Finding sustainable funding models for the expansion and enhanced

viability of Necsa subsidiaries.

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Cross-cutting Executive Management Driven Priorities

– Expanding R&D collaboration with iThemba LABS and the rest of the

National System of Innovation, including government departments such

as DST.

– Future proofing of Necsa activities through the SAFARI-2 feasibility study,

ensuring LEU fuel and target plate security of supply and commercial

sustainability, and driving SAFARI-1 life extension within a proper

regulated framework.

– Maintenance of site infrastructure based on the risks and potential

liabilities associated with such infrastructure.

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Cross-cutting Executive Management Driven Priorities

– Strengthening Necsa’s project management and business development

capabilities.

– Skills development and transformation by advancing employment equity,

growing the pipeline of graduates and lowering the average age of

researchers.

– Ensuring optimisation and efficiency of all Necsa resources

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Key Risks for the Necsa Group

Growing financial constraints experienced by Necsa Corporation. The fixed

cost base which increased at a higher rate than the government grant and

self-generated income;

Ageing equipment and infrastructure as well as production plant availability;

Business sustainability challenges and extremely tough global market

conditions experienced by both the NTP Group and the Pelchem Group,

which are being addressed though a range of interventions aimed at the

restoration of Pelchem’s financial viability and removing some constraints

among offshore subsidiaries of NTP;

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Critical Success Factors for the Group

Improved sustainability of Necsa

Expand efforts to access research based and other grants from the DST and

its entities

Obtain external funding for commercial projects.

Optimise the business relationship between NTP and its subsidiaries to

ensure that the required growth and profitability targets are achieved within an

appropriate governance framework

External direct investment in Pelchem is vital for its future development and

sustainability

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Government Grant – Total 2010/11 to 2016/17R’000

31

NECSA Group Total Income 2013/14

32

Necsa Group Income: Per category (Rm)

33

NECSA Group Expenditure 2013/14

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Necsa Group Capital Expenditure 2013/14 to 2016/17 – Classification

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Classification

Budget Plan Plan Plan

2013/14 2014/15 2015/16 2016/17

R’000 R’000 R’000 R’000

Necsa Group Consolidated        

         

Land & Buildings 5 195 10 200 6 000 6 000

Plant 86 126 99 664 85 052 49 934

Furniture & Fittings 984 314 331 342

Motor vehicles and transport containers 3 418 422 3 815 425

Office Equipment 492 192 415 379

IT equipment 12 649 2 701 2 648 1 619

Research Facilities 50 - 200 -

Leasehold improvements 43 125 - -

Machinery and equipment 38 891 32 804 25 212 20 776

Component spares - - - -

Startup Costs - - - -

Intangible assets 804 1 813 269 227

Total 148 652 148 234 123 940 79 703

Necsa Group Capital Expenditure 2013/14 to 2016/17 – Per company

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Company

Budget Plan Plan Plan 2013/14 2014/15 2015/16 2016/17

R’000 R’000 R’000 R’000

South African Nuclear Energy Corporation SOC Limited 81 298 66 835 51 813 45 015 AEC Amersham SOC Ltd 534 180 701 99

Gammatec Aseana NDT Supplies 221 12 13 13

Gammatec Middle East Trading 152 16 18 19 Gammatec NDT Supplies SOC Ltd 2 192 1 257 1 092 898

Lectromax Australia 51 342 236 219 NTP Europe 3 187 - - - NTP Logistics SOC Ltd 274 85 855 295 NTP Radioisotopes SOC Ltd 48 643 44 507 34 212 33 145 Pelchem SOC Ltd 12 100 35 000 35 000 -0

Total 148 652 148 234 123 940 79 703

Necsa Corporation Capital Expenditure 2013/14 to 2016/17 Classification

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ClassificationBudget Plan Plan Plan

2013/14 2014/15 2015/16 2016/17R’000 R’000 R’000 R’000

The South African Nuclear Energy Corporation Limited Land & Buildings 5 035 10 200 6 000 6 000 Plant 36 290 26 917 19 827 19 459 Furniture & Fittings 187 179 189 192 Motor vehicles and transport containers 421 - - - Office Equipment 194 127 141 156 IT equipment 8 152 1 536 1 602 840 Research Facilities 50 - 200 - Leasehold improvements - - - - Machinery and equipment 30 969 27 877 23 856 18 367 Component spares - - - - Startup Costs - - - - Intangible assets - - - - Total 81 298 66 835 51 813 45 015

PFMA s54 (2) (d) APPROVALS REQUIRED FOR CAPEX

The following capital projects are above the significance level as per the significance and materiality framework, and will be subject to a section 54 approval process. All of these projects are scheduled to be undertaken over the MTEF period:

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Item Classification Company Total estimated Cost over MTEFRm

The LEU Fuel and Target Plate Manufacturing Facility

Plants Necsa SOC Ltd R50.5

SAFARI-2 Plants Necsa SOC Ltd R 19.8

HEU Recovery from NTP Tailings Plants Necsa SOC Ltd R5.5

1701 HVAC System Plants NTP Radioisotopes SOC Ltd R43.1

New Radiopharmaceutical production facilities

Plants NTP Radioisotopes SOC Ltd R35

Kabelo II Plants Pelchem SOC Ltd R50

SAFARI-1 Ageing Management Programme

Mainly Machinery and Equipment

Necsa SOC Ltd R80.8

Ketlaphela (Pelchem only a 10% shareholder)

Plants Pelchem SOC Ltd R1 553

Necsa Corporation Income: per category (Rm)

39

Necsa Corporation Expenditure: Per Category

40

Human Resources

Human Resources

The Human Resources department plays a key support role in Necsa to ensure availability of personnel that meet nuclear industry requirements and standards, as well as affordability and sustainability in terms of the corporate resources.

The implementation of the new organisational structure, stabilisation of the HR environment, transformation and the implementation of the business plan for the Nuclear Learning Academy (NLA) are the key priorities for the financial year.

42

Human Resource Development Priorities

Increase the ratio’s of technical staff in regard to support staff.

Increase the number of Previously Disadvantaged Individuals (PDI) technical

staff.

Increase the number of researchers with Masters and PHD degrees.

Establish a nuclear education and training unit within the Necsa Learning

Academy.

Establish an advance manufacturing skills welding centre of excellence.

Launch the Radiation Protection Training Centre.

4343

Human Resource Development Priorities Cont …

ProgramNumber of Beneficiaries

2012/2013 2013/2014Study Assistance Scheme (SAS) 165 190 Mentoring & Coaching 96 110 Adult Education and Training (ABET) 76 88 Necsa Graduate Support Program (NGSP): Graduates-in-Training Scheme (GiTS) 11 7 Undergraduates 15 10 Postgraduates 5 6 Necsa Internships 76 85 Necsa Skills Development Centre: Apprentices and Learnerships 442 450 Toolmakers Apprentices 46 90 Safety & Security Learnerships 10 0Decentralised Trade Test Centre (DTTC): Pre-test preparation for Trade Tests 33 30 Trade Test Preparation required by SETAs 246 240 Artisan Trade Tests 232 240

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Human Resource Development Priorities Cont …

Increase the ratio’s of technical staff in regard to support staff, as well as increase the number of Previously Disadvantaged Individuals (PDI)

Targets for Appointment of Black Professionals and Technical Staff 2011-2014

DescriptionActual

31/03/2012Actual

31/03/20132010/11 2011/12 2012/13 2013/14

Percentage of technical staff in total staff 45.80% 48.40% 46.36% 47.16% 48.16% 49.76%

Black technical staff as percentage of all technical staff 41.63% 46.23% 41.59% 42.39% 43.39% 44.99%

Black technical professionals as percentage of all technical professional staff

29.38% 31.88% 29.17% 29.97% 30.97% 32.57%

Amended NSD Centre training output – Number of full-time semester students trained per annum through NSD

487 229 292 218 218 218

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Necsa Learning Academy (NLA)

Apprenticeships and Learnerships

• The NSD plans to train 218 at its facilities.

• NSD was accredited as the preferred training provider to train the Master Tooling

artisans for Industry (DTI project). The first 46 students are enrolled and the number

will be extended to 96 during the year.

• Due to the need to train quality Coded Welders for industry, NSD has extended it’s

welding division to accommodate Coded Welding which will be launched in August.

The project is funded by Alstom.

4646

Necsa Learning Academy (NLA) Cont …

Nuclear Skills Development Centre (NSD)

• The NSD continues to grow and fulfill its mandate in terms of the National Skills

Development Strategy and has increased the number of students in its facility by

catering for the following clients: – Department of Public Works (42 students)– Development Bank of South Africa (46 students) – Grinaker LTA (96 students)– Sesto (55 students)– NTIP (46 students)– Others (157 students)

4747

Necsa Learning Academy (NLA) Cont …

Decentralised Trade Test Centre (DTTC)

The target for the DTTC is to increase the number of people coming to 2880 for the

following:

• pre-tests to determine the readiness of candidates for the final trade

tests

• Trade test preparation required by the SETAS, and

• trade tests assessments and

• Those who pass their trade tests (53%).

4848

Necsa Group Predetermined Objectives and Key Performance

Indicators

Necsa Group Predetermined Objectives and KPIs for 2013/14 - 2015/16

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Necsa Group Predetermined Objectives and KPIs for 2013/14 - 2015/16

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Necsa Group Predetermined Objectives and KPIs for 2013/14 - 2015/16

52

Abbreviations ANSTO – Australian Nuclear Science and Technology Oragnisation CTBTO – Comprehensive Test Ban Treaty Organisation D&D – Decontamination and Decommissioning DST – Department of Science and Technology IAEA – International Atomic Energy Agency iThemba LABS – Ithemba Laboratory for Accelerator Based Sciences LEU – Low Enriched Uranium MTR – Material Test Reactor NMC – Necsa’s Nuclear Manufacturing Centre NURAD – Necsa’s Nuclear and Radiation Services Division PWR – Pressurised Water reactor R&D – Research and Development SETA – Sector, Education and Training Authority SHARS – Sealed High Activity Radioactive Source SHEQ – Safety, Health, Environment and Quality SIP – Strategic Infrastructure Project of the Presidential Infrastructure Coordinating Council

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Thank You!!!