STRATEGIC PLAN AND BUDGET 2007/8

PRESENTED BY:

MARTIN KUSCUS, CEO

2 2007-03-07

OUTLINE OF PRESENTATION

OVERVIEW OF SABS

MANDATE AND MISSION

CORE FUNCTION AND KEY PROCESSES

STRATEGIC OBJECTIVES AND CHALLENGES

OPERATIONAL AND CAPEX BUDGETS

3 2007-03-07

WHAT IS SABS?

SABS is the premier standardization body in Africa:

Prepares and publishes National Standards (>5000 in total)

Provides information on national, regional and international standards (>500 000 in library)

Provides WTO/TBT enquiry point

Tests products against standards (>70 laboratories)

Certifies products and systems against standards

Regulates to Compulsory Specifications

Provides Legal Metrology Services

Promotes innovation and excellence in design

4 2007-03-07

SABS SUPPORTS DTI OBJECTIVES

Regional Integration & Capacity Development: Supports NEPAD framework Participation and leadership in SADC SQAM activities

Broader participation, equity and redress in economy: Objective standards, developed transparently Building confidence through testing and certification Targeted support to SMMEs

Raising exports and promoting equitable global trade Intensive international standardization participation Harmonization of national with international standards

5 2007-03-07

OVERVIEW

SABS is a statutory body established by Standards Act (No 24 of 1945) currently Standards Act (No 29 or 1993)

Agency of the dti funding via Treasury allocation to EIDD

Governed by 8-member Council appointed by Minister

Head Office in Groenkloof, Tshwane also offices in Cape Town, Durban, PE, and many more

Total staff 1543 persons 876 at Head Office

6 2007-03-07

SABS MISSION

To offer value-added standardisation services on an ethical and principled basis

that uplift the African standard and empower South African industry to compete

vigorously towards increased market access. In so doing SABS contributes to the

economic growth of South Africa and Africa as a whole within a framework that protects

consumers and the environment by promoting uncompromised quality of

products and services

7 2007-03-07

CORE FUNCTIONS AND KEY PROCESSES

Standards

Regulatory

Conformity Assessment

Design Institute

8 2007-03-07

STANDARDS

Prepares national standards and related documents based on consensus in representative technical committees 400 new or revised standards to be provided in this year

Supports extensive international participation to maximise harmonization of national standards

in line with WTO/TBT requirements

Publishes national standards, and provides information on all standards, world-wide

paper (print on demand), electronically, web store 36 000 standards enquiries targeted for this year

Supports regional standards initiatives SADCSTAN, ARSO

9 2007-03-07

REGULATORY

Minister declares certain national standards to be compulsory (Compulsory Specifications) based on health, safety, environment and consumer protection

Administers Compulsory Specifications: inspections, approvals and sanctions

Wide range of products covered: Food, electrotechnical, automotive, etc

Also provides Legal Metrology services as per Trade Metrology Act

Provides regulatory services to other Government Departments at their request

10 2007-03-07

CONFORMITY ASSESSMENT (COMMERCIAL)

Conformity assessment supports business world-wide market in SA is competitive in some areas

These services are ring-fenced from State funds SABS Commercial (Pty) Ltd

Services include: testing assaying inspection system certification (ISO 9000, etc) product certification (SABS Mark) commercial training

11 2007-03-07

CONFORMITY ASSESSMENT (“GOOD OF THE NATION”)

NETFA

Biodiesel

Solar Panel Research

Accoustics Laboratory

Research and Development

12 2007-03-07

DESIGN INSTITUTE

Promotion of excellence in South African design by:

Building youth design leadership through Design Achiever Programme

Building network of Africa designers culminating inPan-Africa Design day

Design Institute of SA Awards (to be aligned closer to dti and Export Africa initiatives)

Prototype Award Scheme to expand design advice in partnership with Tshumisano Trust and Technology Stations

13 2007-03-07

STRATEGIC DIRECTION & CHALLENGES

Regional and international involvement

World-class best practice

Service delivery

Human capital development

Brand expression

Upgrading of facilities

14 2007-03-07

REGIONAL INVOLVEMENT

Main focus is South African market, however: interdependency with the needs of Africa strong African SQAM infrastructure needed for trade

SADCSTAN (SADC cooperation in standardization) Secretariat and coordinator + 5 technical committees

SADCMEL (SADC cooperation in legal metrology) Secretariat and coordinator 63 Standards harmonized 25 to be approved at SADCSTAN AGM in April 2007

ARSO (African Standards Organization) Full member since 2006 Leading role in reshaping the organization

15 2007-03-07

INTERNATIONAL INVOLVEMENT

Objective is to attain management positions within international organizations in order to leverage advantage for South Africa

ISO (currently): Council member Finance Committee member Technical Management Board member

OIML (currently): Vice-President

IEC

16 2007-03-07

WORLD CLASS BEST PRACTICE

Importance of attaining internationally accepted accreditation of services

this guarantees worldwide acceptance of certificates, inspections and test reports for >15 000 clients

SABS has clients in 43 different countries Dual accreditation to RvA & SANAS

Shift in market emphasis away from manufacturing towards services

standards used demonstrate compliance to health, safety, environmental and social policies

strong focus on local government

17 2007-03-07

SERVICE DELIVERY

Competitive environment and scarce resources demands innovative and entrepreneurial solutions

Earlier divisionalised structure resulted in silos and tunnelled response to clients. Service delivery was lacking

Several programmes introduced to address this: improved customer interfaces business process re-engineering and better usage of technology improved management controls supported by ICT refurbishment

of R30m

18 2007-03-07

HUMAN CAPITAL DEVELOPMENT

Human capital is SABS' principal asset

Specialised skills and knowledge in this field are not readily available in the market

they need to be developed in-house

Human capital development programmes include: competency development programme retention performance management system Internships – currently 28 (2007 forecast 40)

19 2007-03-07

BRAND EXPRESSION

Need for revitalization of the SABS brand

Best accomplished from "inside out" involving all staff

5-year programme known as "SABS Roadmap 2010" is guiding all strategic initiatives, aimed at:

sustainable growth, leverage of SABS brand stakeholder involvement/partnerships R&D, knowledge management, market intelligence technology catch-up and innovation service delivery and customer focus reduction in bureaucracy high performance culture regional involvement

20 2007-03-07

UPGRADING OF FACILITIES

Technical infrastructure of buildings needs upgrading

Head Office buildings over 30 years old structurally sound support facilities (aircon, power, chilled & heated water)

are at the end of their design life and are temperamental frequent service breakdowns disrupt production in

laboratories

Refurbishment is a major capital project (>R140 million) various financing options are being considered

21 2007-03-07

OPERATIONAL BUDGET

BUDGETED INCOME STATEMENTForecast 06/07 Budget 07/08 Variance Variance

R'000 R'000 R'000 %

Revenue 395,618 449,244 53,626 13.6%Core funding & govt grants 126,087 130,850 4,763 3.8%

Total income 521,705 580,094 58,389 11.2%Less: Admin & operating expenses (481,916) (538,662) (56,746) 11.8%

Staff costs 320,080 361,554 41,474 13.0%Travel 23,230 27,440 4,210 18.1%Repairs & maintenace/ contract sevices 29,636 26,961 (2,675) -9.0%Other 108,970 122,707 13,737 12.6%

Operating profit 39,789 41,432 1,643 4.1%Depreciation & impairment of assets (21,073) (19,420) 1,653 -7.8%Medical aid & pension costs (4,941) (4,470) 471 -9.5%Other expenses (2,045) (2,219) (174) 8.5%Other income 10,248 7,778 (2,470) -24.1%

Profit before taxation 21978 23101 1,123 5.1%Taxation (13) - 13 -100.0%

Profit after taxation 21,965 23,101 1,136 5.2%

SABS (Consolidated)

22 2007-03-07

CAPEX BUDGET

SUMMARY CAPEX BUDGET 2007/08 2008/09 2009/10 R'000 R'000 R'000

COMMERCIAL

Chemical 1,155 5,221 1,603

Transportation 3,253 8,225 5,800

Electrotechnical 5,966 3,680 -

Food and health 5,117 6,906 6,250

Mechanical and materials 3,456 6,310 6,425

Mining and minerals 8,773 4,839 942

Regional affairs 1,649 1,312 34

29,369 36,493 21,054 NON-COMMERCIAL 20,250 10,555 12,078

TOTAL GROUP 49619 47048 33132Less: - IT equipment - Rental option (7,418) (6,555) (7,077)

TOTAL 42,201 40,493 26,055

RAISING THE AFRICAN STANDARD