Annual report 201011 financial year Presentation to Portfolio

Annual report 2010/11 financial year Presentation to Portfolio committee on science and technology 12 OCTOBER 2011

Content of the Presentation 1. Background – – – 2. Evolution of TIA Operationalisation Key Investments, Projects, Platforms and Technology Stations Financial Results as per Auditor - General – – – FY 2009/10 last quarter of the Innovation Fund FY 2010/11 TIA The Opinion by Auditors Other issues raised by Auditors Action plans

The Evolution of tia

Innovation policy impetus and milestones NSI Challenges: Existence of innovation “Chasm” Fragmentation of instruments Narrow definition of Innovation OECD Review Foundation for Technological Innovation (FTI) R&D Strategy S&T White Paper 1996 Technology Foresight Studies 2000 TIA Act 2008 2002 10 Year Innovation Plan Creation of DST TIA Board 07/2009 & CEO 01/09/2010 The “Knowledge Economy”: Knowledge = basic form of capital Economic growth driven by innovation 2004 2007 2008 4 2009/10

Merged entities that formed TIA BIOTECHNOLOGY REGIONAL INNOVATION CENTRES (BRICS) 5

Current national footprint of investments and interventions 6

THE INNOVATION CHALLENGE

Context

The innovation chasm- the strategic challenge continued COMMERCIAL INDUSTRIES AND MANUFACTURING THE IDEAS, RESEARCH AND DEVELOPMENT VALLEY OF DEATH 9

Bridging the innovation chasm THE IDEAS, RESEARCH AND DEVELOPMENT COMMERCIAL INDUSTRIALISTRIES AND MANUFACTURING 10

Funding Value Chain Phase 4 Expansion Phase 3 Phase 2 Phase 1 Basic research Start-up Early expansion Seed Idea Generati on & Develop ment Proof of concept technical developme nt / commercial planning Product & business develop ment Busines s start-up (science Based) Universities Science Councils Industry DST, Do. E & TIA Support IDC Other Busi ness growt h

STRATEGIC PILLARS OF THE MANDATE Appropriately structured financial and non-financial interventions Development and maintenance of human capacity for innovation Building a culture of innovation Leveraging local and international partnerships 12

STRATEGIC PARTNERSHIPS • • Local Bilateral Setup : – NRF – CSIR – IDC – ARC – SANSA – OBP – SABS External MOUs – OSEO (France) – French Technical Advisor has started – FINEP (Brazil) – CDTI (Spain) – GTZ/Gti (Germany) – NTBC (Zambia)

Investment Framework Policy 14

Investment Instruments HEIs / Science Councils/ NPC Large Companies SMEs Fledgling Companies Entrepre-neurs 15

TIA OPERATIONALISATION

Team Integration IT IS SIGNIFICANT TO NOTE THAT IN HER BUDGET SPEECH ON APRIL 2010, THE MINISTER OF SCIENCE AND TECHNOLOGY, THE HONOURABLE PANDOR INTIMATED THAT: The TIA’s priority in the 2010/2011 financial year will be to build a high-performance organization from the merger of the seven entities. 17

Team Integration Cessation of all contracts (i. e. Assets & Liabilities of all merged entities, including dissolution of Trusts) 1. 2. Formal appointment of all staff members from April 2010 to June 2010. 3. Cabinet approval of CEO appointment on 18 August 2010 effective 01 September 2010. 4. Workshop of ± 200 of TIA employees, resulting in : – Development of TIA processes – Development of TIA Values – Development of a TIA culture – Induction of all TIA employees of the organization – Teambuilding 5. TIA formal launch in Gauteng, KZN, Western Cape and Eastern Cape 6. Relocation to a permanent Head Office 7. Consolidation of Investments and Project Portfolio 8. Consolidation of the Organisational Structure and Business Plans 18

Values Teamwork “Together we can do more”. Fostering teamwork is creating a work culture that values collaboration Professionalism In the manner TIA conducts its business, in its interactions with stakeholders; and amongst colleagues Excellence Acknowledged by all stakeholders for exceptional standards and performance Integrity Honesty of purpose and conduct Transparency Openness, communication, and accountability in all TIA’s engagements 19

Larger organisation with greater reach 20

Governance -The TIA Board Dr Mamphela Ramphele (Chair) Ms Cheryl Carolus Prof. Susan Harrison Dr Nhlanhla Msomi Dr Patrick Ngwenya (Deputy Chair) Dr Steven Cornelius Ms Helen Brown Mr Craig Venter Mr Ilan Lax Mr Ross Norton Simphiwe Duma (CEO)

THE EXECUTIVE COMMITTEE (EXCO) Click to edit Master subtitle style

STRATEGY IMPLEMENTATION A Sector Driven Approach

Biotechnology Sectors • • • Agriculture Health Industrial Biotech

Industrial Sectors • • Advance Manufacturing Energy ICT Mining

SIGNIFICANT PROJECTS

The Adept Aircraft Engine that uses Biofuels Design, development and manufacture of a range of general aviation engines for the light aircraft market ØFunding required: R 18 million for commercialisation and production facility ØImpact: 125 Jobs created with potential for more direct and indirect with creation of production facility Ø 27

Artificial Insemination of the Nguni Cattle Technology aimed at improving access to commercial farming for rural subsidence farmers Funding required: R 15 million for commercialisation Impact: 15 current jobs, national roll out, rural development, 500 jobs to be created 28

Citro. Gold Plant Breeders rights’ management and exploitation company ØFocuses on commercialisation of South African breeders rights internationally ØTurnover 14. 5 million in 2010 ØCreated ten direct jobs ØInvested R 200 million in Comprehensive Rural Development Program (CRDP) initiative that created 200 permanent jobs in Northern Cape region of Riemvasmaak Ø 29

Xsit environmentally friendly pesticide Citrusdal area produces 220 000 tonnes of citrus products, of which 76% is exported, predominantly to the USA. This represents more than R 400 million in foreign exchange earnings for the area. The project has created 43 jobs of which 35 where PDI’s and 100 new jobs should the new facility in the Eastern Cape be set up. 30

Entrepreneurial Support Through Technology stations 15 Stations and 14 Platforms ØPartnerships with IDC and local governments ØThree provinces that have already had consultations with TIA are Mpumalanga, Northern Province and Limpopo ØAt least 2000 new permanent jobs can be created by the new Agro-processing industries established in these provinces. Ø 31

Technology Stations and Centers of Competence • • • SMEs assisted grew by 227% from 448 to 1594 in 2009/10, Projection 2500 in 2010/11 (56%) 59 exports facilitated in 2010/11 Increase in female owned SME’s from 100 to 467 (367%) 179 SME’s entering new/larger markets 238 SME’s becoming technologically innovative 121 companies secured 605 new jobs for their companies

FY 2009/10 last quarter of the Innovation Fund

FY 2009/10 External Audit Issue 1. q The 3 months business (Jan - March 2010) of IF had been transferred to TIA Qualified Opinion with respect to investments as per requirements of section 54 of the PFMA Action taken by Management q Exemptions on the need to comply with the requirements of section 54 of the PFMA was granted by the National Treasury's Accountant General as per the request of TIA Management Team based on the impossibility to comply. q The same exemption was granted for the FY 2010/11. q A list of all investments were sent to National Treasury via the 3434 office of the Minister of

FY 2010/11 FINANCIALS

THE AUDITOR’S OPINION

FY 2010/11 Audit Opinion A combined portfolio of 126 investments from all entities was inherited with 43 representing shareholding, including loans q Some investments resulted in being subsidiaries – > 75% majority shareholding with significant influence and had to be consolidated to TIA q Some investments resulted in being associates - >20% but less than 50% q Some investments had been dormant for years but companies were never liquidated q q q • Most of the investee companies have been last audited in the years between 2005 to 2008 Some loans were incorrectly classified as equity from previous entities and vice versa Some entities were recording investments at cost which is not in line with the provisions of GRAP Due to inadequate time and resources, the Agency was unable to consolidate all the 126 investments in time for them to be audited by the Auditor General. Hence the Adverse Opinion (i. e. TIA’s financials are 3737 INCOMPLETE).

OTHER ISSUES RAISED BY AUDITORS

OTHER ISSUES RAISED BY AUDITORS q Lack of skills in critical areas (especially finance) q A 3 year rolling internal audit plan was not available q Report on performance information was not submitted q Significance and materiality framework not signed with the Minister q Irregular and fruitless and wasteful expenditure was identified q Material misstatements were identified on the financial statements due to opening balances absorbed from previous entities q Declaration of interests was not done by all the employees 3939

ACTION PLANS

Action Plan 1. 2. Action Plan was tabled and approved by the Board on 25 August 2011 New SGM: Finance, GM: Finance and other supporting skills are being recruited to TIA to strengthen the Finance Unit. 3. Internal Task teams lead by the Head of Legal Services and SGM: PPM&E have been set up to restructure all 41

KEY RIDING MESSAGE

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