PRESENTATION TO PARLIAMENT BY ACTING CHIEF EXECUTIVE OFFICER

PRESENTATION TO PARLIAMENT BY ACTING CHIEF EXECUTIVE OFFICER PAUL MOEKETSANE

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

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

PACOFS’ core business is to host, facilitate and present artistic events. In order to perform these functions, certain support services are required. The following support services are therefore essential: Administration, Financial Management that includes Supply Chain Management, Human Capital Management, Marketing, Maintenance, Stage Services, Security Services, Transport, Asset Management and Venue and Facilities.

Although there are many positive and exciting things to say about PACOFS it is also important to be realistic. There are many challenges facing PACOFS that we addressing as we go along. are

INTRODUCTION The 2007/2008 financial year commenced with PACOFS having a salary budget component of approximately 65% of its total grant, received from the National Department of Arts & Culture. PACOFS received a letter from the department of Public Works for non-paid electricity services from 2001 till January 2008 amount due of R 5 million. The forensic investigations and legal fees caused R 5, 6 million and the pension liability also increased during the previous financial year with R 3, 3 million which contributed to a financial deficit of R 10, 9 million.

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

All executive positions have been advertised. Employees in top management are all acting in various positions. Through a natural process of resignations and employees going on pension we managed to curb costs in such a way that we managed estimated savings of R 500 000.

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

It is important to note that in the Free State we only rely on the grant from DAC who is our major stakeholder at this stage. We do not receive any funding from the Free State Government nor do we receive any financial support from any municipality in the Free State. Money received from various stakeholders are being earmarked for specific project.

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

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

Secondly, we rented out most of our facilities at market related prices to generate income to ensure future financial sustainability. Thirdly, we facilitated, presented or co-presented festivals such as VUKA, the Volksblad Arts Festival and the Basha Youth Arts Festival. All of the abovementioned assisted PACOFS to have a busy artistic programme in total.

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

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

As employees resigned their respective positions were still not readvertised unless it was a position of critical nature. We continued to absorb the workload. Through this continued natural process of resignations and employees going on pension who were not replaced, we managed to 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.

2007/2008 During April 2007 three senior PACOFS officials (Dr. Nathan Bagarette - Chief Executive Officer, Mr. Steven Murison - Acting Chief Financial Officer and Mr. Johnny Jansen-Manager Human Resources) were served with suspension notices pending further investigations. I can inform the house that Dr. Nathan Bagarette and Mr. Steven Murison were dismissed in January 2008. PACOFS negotiated a settlement with Mr. Johnny Jansen and he accepted it and in total the forensic cost PACOFS R 5, 6 million. The former acting CEO Mr. Barry Swanepoel resigned in March 2008.

The 2008/2009 financial year commenced with PACOFS having a salary budget component of approximately 65% of its total grant received from the National Department of Arts & Culture. We have the current Artistic budget of R 4, 2 million.

PACOFS management continues to comply with the rules & regulations of the public finance management act that includes responsible financial management. PACOFS must always be the centre of what we as employees to ensure the livelihood of Arts & Culture in the Free State.

We live in exciting times because we have a wonderful window of opportunity to confirm PACOFS as the one major exponents of arts & culture in the Free State. In this financial year we will continue to play a role in the co-presenting of festivals such as the Volksblad Arts Festival, Vuka Festival & Workshops and the Basha Youth Arts Festival.

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