PACOFS PRESENTATION TO THE PORTFOLIO COMMITTEE ON ARTS

1
PACOFS PRESENTATIONTO THE PORTFOLIO COMMITTEE
ON ARTS CULTURE MS. THANDIWE KGOSIDINTSI
(CHAIRPERSON OF THE PACOFS BOARD)AND MR.
BARRY SWANEPOEL (ACTING CHIEF EXECUTIVE OFFICER
PACOFS)
2
HISTORICAL BACKGROUNDPACOFS 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.
3
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.
4

• 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, Artistic, Marketing, Maintenance,
  Stage Services, Security Services, Transport,
  Health and Safety, Asset Management and the
  rental of Venue and Facilities.

5

• 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
  are addressing as we go along.

6
INTRODUCTION

• The 2005/2006 financial year commenced with
  PACOFS having a salary budget component of
  approximately 80 of its total grant, received
  from the National Department of Arts Culture.
  The medical aid liability also increased during
  the previous financial year with R1,4 million
  which resulted in a financial deficit of R1,1
  million because we did not budget for this
  amount.
• This was unacceptable. The PACOFS board and
  management decided to change this scenario and
  started implementing strict and stringent
  financial discipline. In each department we
  managed to enforce this financial discipline and
  adopted a conservative approach in all
  procurement to eradicate the deficit.

7

• As employees resigned their respective positions
  were not re-advertised unless it was a position
  of critical nature. Instead we tried to absorb
  the work load which later proved to have its
  disadvantages.
• Through a natural process of resignations and
  employees going on pension we managed to curb
  costs in such a way that we managed savings
  effecting to R 4,1 million and managed to reduce
  the salary budget component by 10 to 70 of the
  total grant received from DAC.

8

• These surpluses were channeled to the artistic
  programme of 2006/2007 and much needed provisions
  for medical and leave payouts.
• It is important to note that we rely heavily on
  the grant from DAC who is our major stakeholder
  at this stage. We do receive project-funding
  from the Free State Provincial Government and
  from municipalities in the Free State.

9

• One of our challenges is to source more funding
  from the business community.
• In 2005/2006 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. We did however present many productions
  due to four factors.

10

• Firstly, we received a grant of R750 000 from
  the National Arts Council, R1,1 million from the
  National Lotteries Distribution Trust Fund and
  R500 000 from the Transnet Foundation.
• Secondly, 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.

11

• Thirdly, we rented out most of our facilities at
  market related prices to generate income to
  ensure future financial sustainability.
• Fourthly, we facilitated, presented or
  co-presented festivals such as MACUFE with the
  Free State Provincial Government and the business
  community, the Volksblad Arts Festival and the
  Basha Youth Arts Festival with the Free State
  Youth Commission.
• All of the abovementioned assisted PACOFS to
  have a very busy artistic programme in total.
• This would be the last year that MACUFE was
  presented in the format as we came to know it.
  Annually we would enter into a service level
  agreement with the Free State Department of
  Sport, Arts Culture to present MACUFE and to
  stage it on their behalf.

12
2006/2007

• The 2006/2007 financial year commenced with
  PACOFS having reduced the salary budget component
  from approximately 80 to 70 of its total grant
  received from the National Department of Arts
  Culture. We still did not have enough provisions
  for medical and leave payouts.

13

• This was still unacceptable but we were positive
  to rectify these problems within a twelve-month
  period. PACOFS management continued implementing
  strict and stringent financial discipline.
• In each department we continued to enforce this
  financial discipline and continued a conservative
  approach in all procurement.

14

• As employees resigned their respective positions
  were still not re-advertised unless it was a
  position of critical nature. We continued to
  absorb the workload, which now started creating
  logistical problems.
• Through this continued natural process of
  resignations and employees going on pension who
  were not replaced, we managed to curb costs in
  such a way that we managed estimated savings of
  R2 million.

15

• We managed to reduce the salary budget component
  by a further 10 from 70 to 60 of the total
  grant received from DAC.
• These surpluses were channeled to the artistic
  programme and much needed provisions for medical
  and leave payouts.
• In 2006/2007 we were able to structure an
  artistic budget of R2,6 million to present
  artistic projects from the grant we received from
  the National Department of Arts Culture. We
  continued to present many other productions due
  to collaborations and rentals.

16

• The National Lotteries Distribution Trust Fund
  indicated that they would consider future funding
  once their current funded projects were all been
  presented.
• In this financial year we continued to play a
  role in presenting MACUFE. PACOFS only
  facilitated payments from sponsored money that we
  generated and that were secured before the Free
  State Tourism Authority were mandated by the Free
  State Provincial Government to present MACUFE.

17

• PACOFS continued to present or co-presented
  festivals such as the Volksblad Arts Festival,
  VUKA Music Festival Workshops and the Basha
  Youth Arts Festival.
• All of the abovementioned assisted PACOFS to
  have a very busy artistic programme in total.
• By the end of this financial year we managed to
  eradicate the financial deficits with regard to
  an artistic budget and provisions for leave and
  medical payouts but we faced new challenges with
  regard to human resources related problems.

18
Yes, PACOFS achieved many positive goals in the
past two financial years and yes, it has many
good qualities and the most wonderful facilities,
but we also have our fair share of problems.
The PACOFS Board of Directors received
allegations of corruption and in response to
these allegations the Board requested that a
forensic investigation be conducted in the spirit
of good corporate governance.
19
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 accepted a
request by the PACOFS board of directors to act
as Chief Executive Officer until further notice.
20

• The 2007/2008 financial year commenced with
  PACOFS having a salary budget component of
  approximately 60 of its total grant received
  from the National Department of Arts Culture.
  We now have enough provisions for medical and
  leave payouts and we have an artistic budget of
  R6 million.

21

• PACOFS management continues to comply with the
  rules regulations of the public finance
  management act that includes responsible
  financial management.
• We will however have to address the outcomes of
  the still pending forensic investigation.

22

• We live in exciting times because we have a
  wonderful window of opportunity to confirm PACOFS
  as the one major facilitator of arts culture in
  the Free State.
• In this financial year we will continue to play
  a role in the presentation of MACUFE 2007. PACOFS
  will also continue to present or co-presented
  festivals such as the Volksblad Arts Festival,
  Vuka Music Festival Workshops and the Basha
  Youth Arts Festival.

23

• 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