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Transformation of Eskom Enterprises

Transformation of Eskom Enterprises. Presenter: JUSTICE MAVHUNGU:DIRECTOR ENERGY & TELECOMMUNICATIONS Venue : CAPE TOWN Date : 18 JUNE 2003 Time :. EE is facing significant challenges. R’ millions. Revenue: 2001 – R2 370 m 2002 – R 2 906 m.

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Transformation of Eskom Enterprises

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  1. Transformation of Eskom Enterprises Presenter: JUSTICE MAVHUNGU:DIRECTOR ENERGY & TELECOMMUNICATIONS Venue:CAPE TOWN Date : 18 JUNE 2003 Time :

  2. EE is facing significant challenges R’ millions Revenue: 2001 – R2 370 m 2002 – R 2 906 m * IBM report stated that EE would require cash in approx. 18 months Our goal is to maximise value for the Group, and for our customers, through the provision of total solutions across the energy industry value chain.

  3. E E structure diagram Board of Directors Committees of the Board: — Management — Audit — Remuneration — Investment & Procurement — Finance Eskom supplied services: — Internal Audit — Treasury — Confidential Investigations — Safety H / O H / R Manager Finance Manager Co. Secr/ Legal Gvt Liaison # # * * * * * * * * Esk Ent Africa TSI Consulting Rotek Industries Primary Energy Investment Roshcon PBMR Commercial Telecomms IT Services Coal EE Africa: Regions Sapphire Exec Air Rotek Engineering Venture Development Roshcon Division Electricity Africa EE~KOM Arivia.kom Golang Coal ESI~TEL RVS Division ALS Trans Afr Projects e-Commerce TEL~ENG Amazing Amanzi Roshprop Division EE Marketing SDCT Equity Management EON Solutions Bonesa EE Global West Africa Ltd (Nigeria) FBC RVS Dormant Natural Gas Mountain Comm’s TSI Operating PTM Roshprop Dormant GESCO ELGAS Tele-Com Lesotho HEM~KOM Eskom Energie Manantali Waste Energy SKI Lunsemfwa (Zambia) #: Co-ordination, Marketing, Deal Making, Funding : Execution *

  4. Current analysis shows net EVA “loss” 2002 Results Manantali EON Enerweb Roshcon Rotek EskomHead Office PTN Mountain Comms Sapphire Exec Air & Helicopter TSI ALS Rest of BU’s Rotek and Roshcon are the primary value creators while head office and the telecomms businesses alone destroy more value than is created.

  5. Project Lambda: Transformation Programme

  6. The challenge is to prepare Eskom Enterprises for the next stage of its evolution as a multi-business corporate • Initial objectives: • Formation • Exploration • Early growth • New challenges: • Consolidation • Transformation • Repositioning EE Business Value Time 1999 / 2000 Jan 2003 2006 & beyond . . . where the key challenges for corporate & business strategy are consolidation, transformation and repositioning

  7. EE vision & strategy needs to be aligned to that of EH and ER, recognising key intra-group relationships Eskom Holdings Eskom Holdings - focus on industry & external Stakeholder Management • Shareholder - Investment relationship • Principal - Agent relationship Eskom Enterprises - focus on Asset & Value Management Eskom Regulated - focus on Supply & Operations Management Eskom Regulated Eskom Enterprises • Customer - Supplier relationship

  8. Strategy analysis stream will develop corporate and Business Unit strategy • Objectives: • Develop a coherent and compelling business vision for EE • Develop the high level strategy for EE to achieve this vision: • At corporate level • At business unit level • Ensure the EE vision and strategy is integrated with the broader Eskom strategy (EH and ER)

  9. Three strategic themes defined for overall direction of EE Provision of Support Services for the ESI Development of a Globalisation capability to drive the growth of EE and Eskom as a whole New Enterprise Development and Management

  10. The 3 pillar structure will allow us to focus on our different strategic objectives

  11. The transformation project will design and drive necessary changes We have engaged Gemini Consulting to assist in the process.

  12. Strategic decisions will affect the portfolio and structure The Strategy and Value Analysis streams will drive these decisions.

  13. Business Case translates transformation benefits into financial statements Understanding the company’s financial levers Focus stream efforts at points of greatest leverage Profit & Loss Impacts Revenue enhancement Cost reduction Cost avoidance Capital reduction Capital avoidanceInvestment required Time to realise Balance Sheet Impacts Understanding the impact of identified benefits on company financials Cash flow Implications Gross benefit Net benefit Investments The analysis will allow EE to weigh up the benefits of transformation versus the investment required.

  14. The result . . . a business case for EE’s future to be presented to the Board Investment required Go / no go decision Proposed Strategy Impact on financial performance returns Risk profile Potential business benefits

  15. We are now in week 6 of the business analysis and transformation design phase Business Analysis and Transformation Design (12 weeks) Implementation Planning Scoping Analysing Weeks 1 2 3 4 5 6 7 8 9 10 11 12 Vision and strategy overview Developing corporate strategy Validating and finalising corporate strategy TSI strategy review Business unit strategy review Strategy Value analysis – opportunities and enterprise value EVA analysis Org Design Scoping Organisation Design Organisation Design and Development Mgmt Profiling Scoping Management Profiling Bal. Scorecard - draft Balanced Scorecard Validation (Level 1 – 3) Comms baseline & readiness Ongoing Communications Roll-out Transformation Enablement Business case development Project management Complete We are here

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