PRESENTATION TO PARLIAMENT BY ACTING CHIEF EXECUTIVE OFFICER PAUL MOEKETSANE.

PRESENTATION TO PRESENTATION TO PARLIAMENTPARLIAMENT

BY BY

ACTING CHIEF EXECUTIVE ACTING CHIEF EXECUTIVE OFFICER OFFICER

PAUL MOEKETSANEPAUL MOEKETSANE

HISTORICAL BACKGROUNDHISTORICAL BACKGROUND

PACOFS was founded in 1963 and operated PACOFS was founded in 1963 and operated as a section 21 company until 2003. The as a section 21 company until 2003. The current facilities were built from 1979 current facilities were built from 1979 onward culminating in the official opening of onward culminating in the official opening of the Sand du Plessis Opera Theatre in 1985 the Sand du Plessis Opera Theatre in 1985 which was at that time the most advanced which was at that time the most advanced theatre complex in the southern hemisphere.theatre complex in the southern hemisphere.

After 1994 PACOFS gradually changed from After 1994 PACOFS gradually changed from a production house into a playhouse / a production house into a playhouse / facilitating house and was changed from a facilitating house and was changed from a section 21 company into a cultural institution section 21 company into a cultural institution in 2003 subject to the public finance in 2003 subject to the public finance management act.management act.

PACOFS’ core business is to host, PACOFS’ core business is to host, facilitate and present artistic events. facilitate and present artistic events.

In order to perform these functions, In order to perform these functions, certain support services are required. certain support services are required. The following support services are The following support services are therefore essential: Administration, therefore essential: Administration, Financial Management that includes Financial Management that includes Supply Chain Management, Human Supply Chain Management, Human Capital Management, Marketing, Capital Management, Marketing, Maintenance, Stage Services, Security Maintenance, Stage Services, Security Services, Transport, Asset Management Services, Transport, Asset Management and Venue and Facilities. and Venue and Facilities.

Although there are many positive Although there are many positive and exciting things to say about and exciting things to say about PACOFS it is also important to be PACOFS it is also important to be realistic.realistic.

There are many challenges There are many challenges facing PACOFS that we are facing PACOFS that we are addressing as we go along.addressing as we go along.

The 2007/2008 financial year The 2007/2008 financial year commenced with PACOFS having a commenced with PACOFS having a salary budget component of salary budget component of approximately 65% of its total grant, approximately 65% of its total grant, received from the National Department received from the National Department of Arts & Culture. PACOFS received a of Arts & Culture. PACOFS received a letter from the department of Public letter from the department of Public Works for non-paid electricity services Works for non-paid electricity services from 2001 till January 2008 amount due from 2001 till January 2008 amount due of R5 million. The forensic investigations of R5 million. The forensic investigations and legal fees caused R5,6 million and and legal fees caused R5,6 million and the pension liability also increased the pension liability also increased during the previous financial year with during the previous financial year with R3,3 million which contributed to a R3,3 million which contributed to a financial deficit of R10,9 million. financial deficit of R10,9 million.

INTRODUCTIONINTRODUCTION

This was unexcitable. The PACOFS board This was unexcitable. The PACOFS board and management decided to change and management decided to change this scenario and started implementing this scenario and started implementing strict and stringent financial discipline. strict and stringent financial discipline. The financial department started The financial department started budgeting for electricity services. In budgeting for electricity services. In each department we managed to each department we managed to enforce this financial discipline and enforce this financial discipline and adopted a conservative approach in all adopted a conservative approach in all procurement to eradicate the deficit.procurement to eradicate the deficit.

All executive positions have been All executive positions have been advertised. Employees in top advertised. Employees in top management are all acting in various management are all acting in various positions.positions.

Through a natural process of Through a natural process of resignations and employees going on resignations and employees going on pension we managed to curb costs in pension we managed to curb costs in such a way that we managed such a way that we managed estimated savings of R500 000. estimated savings of R500 000.

All the profit generated in venue All the profit generated in venue rentals department we direct it to rentals department we direct it to Artistic department for shows. In this Artistic department for shows. In this current financial year we have current financial year we have budgeted R 4,2 million for Artistic budgeted R 4,2 million for Artistic department. department.

It is important to note that in the It is important to note that in the Free State we only rely on the grant Free State we only rely on the grant from DAC who is our major from DAC who is our major stakeholder at this stage. We do not stakeholder at this stage. We do not receive any funding from the Free receive any funding from the Free State Government nor do we receive State Government nor do we receive any financial support from any any financial support from any municipality in the Free State.municipality in the Free State.

Money received from various Money received from various stakeholders are being earmarked stakeholders are being earmarked for specific project.for specific project.

In 2007/2008 we were not able to In 2007/2008 we were not able to structure a proper artistic budget structure a proper artistic budget from within PACOFS to present from within PACOFS to present artistic projects with the grant we artistic projects with the grant we received from the National received from the National Department of Arts & Culture Department of Arts & Culture because some of artistic money was because some of artistic money was used to pay for forensic used to pay for forensic investigations . We did however investigations . We did however present many productions due to present many productions due to three factors.three factors.

Firstly, we entered into many Firstly, we entered into many collaboration agreements with artists collaboration agreements with artists and promoters to ensure that we and promoters to ensure that we have as many artistic events as have as many artistic events as possible and to share our resources.possible and to share our resources.

Secondly, we rented out most of our Secondly, we rented out most of our facilities at market related prices to facilities at market related prices to generate income to ensure future generate income to ensure future financial sustainability.financial sustainability.

Thirdly, we facilitated, presented or Thirdly, we facilitated, presented or co-presented festivals such as VUKA, co-presented festivals such as VUKA, the Volksblad Arts Festival and the the Volksblad Arts Festival and the Basha Youth Arts Festival.Basha Youth Arts Festival.

All of the abovementioned assisted All of the abovementioned assisted PACOFS to have a busy artistic PACOFS to have a busy artistic programme in total.programme in total.

2007/20082007/2008

The 2007/2008 financial year The 2007/2008 financial year commenced with PACOFS having commenced with PACOFS having reduced the salary budget reduced the salary budget component from approximately component from approximately 70% to 65% of its total grant 70% to 65% of its total grant received from the National received from the National Department of Arts & Culture.Department of Arts & Culture.

This was still unexcitable but we This was still unexcitable but we are positive that we can turn are positive that we can turn around the situation within time. around the situation within time. PACOFS management continued PACOFS management continued implementing strict and stringent implementing strict and stringent financial discipline.financial discipline.

As employees resigned their As employees resigned their respective positions were still not re-respective positions were still not re-advertised unless it was a position of advertised unless it was a position of critical nature. We continued to critical nature. We continued to absorb the workload.absorb the workload.

Through this continued natural Through this continued natural process of resignations and process of resignations and employees going on pension who employees going on pension who were not replaced, we managed to were not replaced, we managed to curb costs. curb costs.

Yes, PACOFS achieved many positive goals in the past financial year and yes, it has many good qualities and the most wonderful facilities, but we also have our fair share of problems.

In the spirit of good corporate governance the PACOFS Board of Directors requested that a forensic investigation be conducted.

2007/20082007/2008During April 2007 three senior PACOFS officials During April 2007 three senior PACOFS officials (Dr. Nathan Bagarette - Chief Executive Officer, (Dr. Nathan Bagarette - Chief Executive Officer, Mr. Steven Murison - Acting Chief Financial Mr. Steven Murison - Acting Chief Financial Officer and Mr. Johnny Jansen-Manager Human Officer and Mr. Johnny Jansen-Manager Human Resources) were served with suspension Resources) were served with suspension notices pending further investigations. I can notices pending further investigations. I can inform the house that Dr. Nathan Bagarette andinform the house that Dr. Nathan Bagarette and

Mr. Steven Murison were dismissed in January Mr. Steven Murison were dismissed in January 2008. PACOFS negotiated a settlement with Mr. 2008. PACOFS negotiated a settlement with Mr. Johnny Jansen and he accepted it and in total Johnny Jansen and he accepted it and in total the forensic cost PACOFS R5,6 million. The the forensic cost PACOFS R5,6 million. The former acting CEO Mr. Barry Swanepoel former acting CEO Mr. Barry Swanepoel resigned in March 2008.resigned in March 2008.

The 2008/2009 financial year The 2008/2009 financial year commenced with PACOFS having commenced with PACOFS having a salary budget component of a salary budget component of approximately 65% of its total approximately 65% of its total grant received from the National grant received from the National Department of Arts & Culture. Department of Arts & Culture. We have the current Artistic We have the current Artistic budget of R4,2 million.budget of R4,2 million.

PACOFS management continues to PACOFS management continues to comply with the rules & regulations comply with the rules & regulations of the public finance management of the public finance management act that includes responsible act that includes responsible financial management.financial management.

PACOFS must always be the centre PACOFS must always be the centre of what we as employees to ensure of what we as employees to ensure the livelihood of Arts & Culture in the the livelihood of Arts & Culture in the Free State.Free State.

We live in exciting times because we We live in exciting times because we have a wonderful window of have a wonderful window of opportunity to confirm PACOFS as opportunity to confirm PACOFS as the one major exponents of arts & the one major exponents of arts & culture in the Free State.culture in the Free State.

In this financial year we will continue In this financial year we will continue to play a role in the co-presenting of to play a role in the co-presenting of festivals such as the Volksblad Arts festivals such as the Volksblad Arts Festival, Vuka Festival & Workshops Festival, Vuka Festival & Workshops and the Basha Youth Arts Festival.and the Basha Youth Arts Festival.

The way forward is to The way forward is to secure secure partnerships with all provincial partnerships with all provincial government departments, government departments, municipalities and the business municipalities and the business sector to ensure additional income sector to ensure additional income through renting out of facilities and through renting out of facilities and services. This will ensure additional services. This will ensure additional income, which will assist with our income, which will assist with our various programmes.various programmes.

I THANK YOUI THANK YOU

BUDGET - 3 YEAR - APRIL 2008/2009

SUMMARY BUDGET APRIL 2006/ MARCH 2007

BUDGET APRIL2007/ MARCH 2008

BUDGET APRIL 2008/ MARCH 2009

INCOME - GENERAL 20,657,529 23,831,970 26,670,779

TOTAL EXPENSES 20,657,529 23,831,970 26,670,779

INCOME STATEMENT

Subsidy - DACTS 19,646,000 22,665,000 25,414,000 Income/Welkom Theatre 313,029 313,029 - Interest Received 500,000 624,938 1,000,000 Sundry Income 198,500 229,003 256,779

Total 20,657,529 23,831,970 26,670,779

INCOME/EXPENSE TOTALArtistic 4,044,916 4,666,498 4,196,800 Marketing - - 1,562,004 Box Off -367,692 -424,196 131,316 Catering -103,634 -119,559 105,318 Central 1,353,935 1,561,994 2,317,196 Civic 15,500 17,882 - Cleaning 876,079 1,010,706 1,112,216 Finance 4,990,335 5,757,200 7,087,745 Flats -187,000 -215,736 -72,853 Human Resource 842,020 971,413 1,127,931 Information Technology 241,000 278,034 360,100 Maintenance 3,971,028 4,581,256 3,671,232 Risk 40,000 46,147 17,500 Security 1,228,102 1,416,824 1,254,428 Stage 2,079,439 2,398,986 2,498,167 Sterrewag 32,200 37,148 56,100 Store 407,142 469,707 449,199 Theatre Management -456,420 -526,558 -377,979 Theatre Management - Liquor157,557 181,769 850 Transport 909,646 1,049,431 749,812 Wardrobe 186,791 215,495 155,770 Workshop 396,585 457,528 267,928

Total 20,657,529 23,831,970 26,670,779