Annual Performance Plan 2021/22 -CAV

ANNUAL PERFORMANCE PLAN 2021 - 2022

CONFIDENTIALITY AND DISCLAIMER The text in this document may be reproduced free of charge in any format or medium providing that it is reproduced accurately and not used in a misleading context or used for commercial gain. The material must be acknowledged as CAV copyright and the title of the document specified.

Any enquiries relating to the copyright in this document should be addressed to the CAV. CAV Copyright, 2021

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TABLE OF CONTENTS CONFIDENTIALITY AND DISCLAIMER TABLE OF TABLES TABLE OF FIGURES GLOSSARY OF TERMS AND CONCEPTS 1 2 3 4 5 6 7

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OFFICIAL SIGN OFF 8 THE MANDATE OF THE CAV 9 FOREWORD BY THE DEPUTY DIRECTOR-GENERAL (DDG: IDD) OF the dti 10 OVERVIEW BY THE ACCOUNTING AUTHORITY 11 GOVERNANCE STRUCTURE 12 ORGANISATION STRUCTURE 13 STRATEGIC OVERVIEW 14 7.1 Linking the CAV Vision, Mission and Objectives 14 7.2 Vision Statement 14 7.3 Mission Statement 14 7.4 Strategic Objectives 14 7.5 Our Values 15 7.6 Company Profile 15 SITUATIONAL ANALYSIS 17 8.1 Contextual Environment 17

8.1.1The Aerospace and Defence Industry: Global Context 17

8.1.2 Aerospace and Defence Industry: African context 18

8.1.3 Aerospace and Defence Industry: South African context 19

8.1.4 The Aerospace and Defence Industry: Clusters and Industrial Parks 21 LEGISLATIVE MANDATE 23 9.1 Institutional Arrangements 23 9.2 CAV’s incorporation into the Gauteng Provincial Government 23 OVERVIEW OF PAST AND FUTURE DEVELOPMENT ACTIONS 24 10.1 Infrastructure, Services’ and Facility Development 24 10.2 Strategic Partnership and interested tenants 24 PROGRAMMES PLANS 24 11.1. PROGRAMME 1: ADMINISTRATION 25 11.2. PROGRAMME 2: CORPORATE SUPPORT SERVICES 25 11.3. PROGRAMME 3: BUSINESS DEVELOPMENT 25 11.4. PROGRAMME 4: INDUSTRIAL PARK DEVELOPMENT & OPERATIONS

MANAGEMENT 31

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12 13 14

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QUARTERLY PERFORMANCE TARGET 2021/22 RISK MANAGEMENT AND MITIGATION FINANCIAL PLAN 14.1. Introduction 14.2. CAV Budget Allocation for 2021/22 to 2023/24 14.3. CAV Funding Shortfall for 2021/22 financial year 14.4. CAV Budget Allocation per programme for 2021/22 to 2023/24 14.5. CAV Budget Allocation per Quarter for 2021/22 Financial Year 14.6. Capital Funding Projection for 2021/22- 2023/24 IMPLEMENTATION PLAN

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TABLE OF TABLES Table Table Table Table Table Table Table Table

1: 2: 3: 4: 5: 6: 7: 8:

Values of the CAV Team Programmes and Sub-programme Quarterly Target per programme and sub programme Risk Management and Mitigation CAV Current Expenses Expenditure per Programme CAV Quarterly Operational Expenses’ Projection Capital Funding Requirements

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TABLE OF FIGURES Figure 1: Governance Structure Figure 2: Organisational Structure Figure 3: The Vision, Mission & Objective Statement

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GLOSSARY OF TERMS A&D AFB Wtklf AG ASDP AISI AM AMD A&RC ASP ATC ATCC B-BBEE BEWI BoD BOT CAPEX CAV CEO CGS CoT CSIR DDG DOD DPE DPWI DST Dtic, the EIA ERP GDED GDP GGDA GIDZ GPG HR HR&REMCO IATA ICT IDC IDD IDZ IPAP JASC MoA MoI

AEROSPACE AND DEFENCE (INDUSTRIES) AIR FORCE BASE WATERKLOOF AUDITOR GENERAL AEROSPACE SECTOR DEVELOPMENT PLAN AEROSPACE INDUSTRY SUPPORT INITIATIVE ADDITIVE MANUFACTURING SOUTH AFRICAN AEROSPACE, MARITIME AND DEFENCE INDUSTRIAL ASSOCIATION AUDIT AND RISK COMMITEE AUTOMOTIVE SUPPLIER PARK AIR TRAFFIC CONTROL AEROSPACE TRAINING AND CERTIFICATION CENTRE BROAD-BASED BLACK ECONOMIC EMPOWERMENT BULK EARTHWORKS AND INFRASTRUCTURE BOARD OF DIRECTORS BUILD OPERATE TRANSFER CAPITAL EXPENDITURE CENTURION AEROSPACE VILLAGE CHIEF EXECUTIVE OFFICER COUNCIL FOR GEO-SCIENCES CITY OF TSHWANE COUNCIL FOR SCIENTIFIC AND INDUSTRIAL RESEARCH DEPUTY DIRECTOR GENERAL DEPARTMENT OF DEFENCE DEPARTMENT OF PUBLIC ENTERPRISES DEPARTMENT OF PUBLIC WORKS AND INFRASTRUCTURE DEPARTMENT OF SCIENCE AND TECHNOLOGY DEPARTMENT OF TRADE, INDUSTRYAND COMPETITION ENVIRONMENTAL IMPACT ASSESSMENT ENTERPRISE RESOURCE PLANNING GAUTENG DEPARTMENT OF ECONOMIC DEVELOPMENT GROSS DOMESTIC PRODUCT GAUTENG GROWTH DEVELOPMENT AGENCY GAUTENG INDUSTRIAL DEVELOPMENT ZONE GAUTENG PROVINCIAL GOVERNMENT HUMAN RESOURCES HUMAN RESOURCES AND REMUNERATION COMMITTEE INTERNATIONAL AIR TRANSPORT ASSOCIATION INFORMATION AND COMMUNICATION TECHNOLOGY INDUSTRIAL DEVELOPMENT CORPORATION INDUSTRIAL DEVELOPMENT DIVISION INDUSTRIAL DEVELOPMENT ZONE INDUSTRIAL POLICY ACTION PLAN JOINT AEROSPACE STEERING COMMITTEE MEMORANDUM OF AGREEMENT MEMORANDUM OF INCORPORATION

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MoU MEMORANDUM OF UNDERSTANDING MRO MAINTENANCE, REPAIR AND OVERHAUL MTEF MEDIUM TERM EXPENDITURE FRAMEWORK NEF NATIONAL EMPOWERMENT FUND NIPF NATIONAL INDUSTRY POLICY FRAMEWORK NPC NOT FOR PROFIT COMPANY OEM ORIGINAL EQUIPMENT MANUFACTURER OPEX OPERATIONAL EXPENDITURE PFMA PUBLIC FINANCIAL MANAGEMENT ACT PPP PUBLIC PRIVATE PARTNERSHIP PPPFA PREFERENTIAL PROCUREMENT POLICY FRAMEWORK ACT Q QUARTER R&D RESEARCH AND DEVELOPMENT ROI RETURN ON INVESTMENT SAAF SOUTH AFRICAN AIR FORCE SANDF SOUTH AFRICAN NATIONAL DEFENCE FORCE SADI SOUTH AFRICAN DEFENCE INDUSTRY SAMI SAUDI ARIABIA MILITARY INDUSTRY SDP SECTOR DEVELOPMENT PLAN SEDA SMALL ENTERPRISE DEVELOPMENT AGENCY SEZ SPECIAL ECONOMIC ZONE SMME SMALL MICRO AND MEDIUM ENTERPRISE SPD SUPPLIER PARK DEVELOPMENT SPV SPECIAL PURPOSE VEHICLE TEDA TSHWANE ECONOMIC DEVELOPMENT AGENCY TIA TRAFFIC IMPACT ASSESSMENT UAV UNMANNED AERIAL VEHICLES USD UNITED STATES DOLLAR VR VIRTUAL REALITY WTTC WORLD TRAVEL & TOURISM COUNCIL

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1. OFFICIAL SIGN OFF It is hereby certified that this Annual Performance Plan: • • •

was developed by the management of the CAV under the guidance of the Board of Directors; was prepared in line with the current strategic plan of CAV; and accurately reflects the performance targets which the CAV endeavour to achieve given the resources made available in the budget for 2021/22 to 2023/24

_____________________________ Sandile Ndlovu Chairperson of the Board

Stephen Hanival Acting DDG: ICG Oct 11 2021 _____________________________

DDG (Acting): IC&G (the dtic)

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2. THE MANDATE OF THE CAV The Centurion Aerospace Village (CAV) is the mandated implementation arm of the Department of Trade, Industry and Competition (the dtic) in developing a sustainable Aerospace, Defence and Advanced Manufacturing Industrial Park to attract small and new entrants to contribute to making South Africa a Global Player in the Aerospace, Defence and Advanced Manufacturing Industry value chains.

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3. FOREWORD BY THE DEPUTY DIRECTORGENERAL (DDG: IDD) OF the dtic I am delighted to write the foreword for this edition of Centurion Aerospace Village (CAV) Annual Performance Plan. the dtic recognised the need for an aerospace and defence industrial park to be a key component in the industrialization plan, hence the birth of the CAV. The CAV is intended to offer a complete array of industrial real estate solutions to hand-picked selection of national and global industrial aerospace and defence leaders.

I am proud to state that the CAV Value Proposition approach has already yielded some results where at least pre-lease agreements and letters of intents were signed. This renewed interest is because of increased marketing activities combined with bulk infrastructure construction activities taking place on the Landside Development site. The CAV will welcome several advanced precision companies, as new tenants, in its soon to be finished Aerospace Training and Certification Centre building. the dtic will continue to devote increased resource and policy support in pursuit of the huge ambitions we all have for the CAV. In the coming year, focus will be the finalisation of incorporation of the CAV into the Gauteng Growth Development Agency and getting the power of attorney from the DPWI, to unlock processes for the expedition of the Landside Development milestones. These processes are critical to support the CAV to secure Capital Funding to service the growing needs of interested tenants. It is my expectation that the experienced CAV board and management team will continue to make 2021/22 another year of great achievements.

Stephen Hanival Acting DDG: ICG Oct 11 2021 _____________________________

Deputy Director-General (Acting) Industrial Competitiveness and Growth Department of Trade, Industry and Competition

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4. OVERVIEW BY THE ACCOUNTING AUTHORITY As an initiative of the dtic, the CAV has been established to conceptualize, develop and operationalize SA first and only Aerospace and Defence Industrial Park with the primary aim of facilitating the optimal integrating South African sub-tier suppliers into the global supply chains by bringing them in proximity to one another and close to Tier 1 suppliers.

Conceptualized as a strategic high-tech and advanced manufacturing as well as MRO (manufacturing, repair & overhaul) industrial park, the CAV will develop the landside over the short, medium and longer-term and I am happy to say that the BEWI for internal utility services and infrastructure, as well as the external core bulk services on the landside developments that is envisaged to be completed in the 2020/21 financial year. We continue to work with the dtic, the DPWI and the DOD to firm up the requirements for the activation of the airside access as a second phase of the project for the benefit of those tenants who require such airside access as part of their offering.

The aspirations of South Africans for a better life rest on the effectiveness of our collective efforts to facilitate enterprise development and encourage the private sector to create jobs.

The CAV intends to act as a catalyst to aerospace and defence industrial development by creating an environment that enables equitable transformation, trade and investment.

I would like to thank the dtic, CoT, DPWI, GGDA and other stakeholders for their invaluable cooperation and support. In order to realise our potential, we recognise the importance of a highly performing and motivated staff and over the next decade, we intent to put people at the centre of our strategy.

_____________________________ Sandile Ndlovu Chairperson of the Board

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5. GOVERNANCE STRUCTURE The Board is accountable for the strategic direction as well as for the governance and oversight of the project whilst the Management is responsible for the day-to-day operations of the entity. The organizational reports to the Executive Authority, the Minister of the dtic, through the Industrial Development Division (IDD) division.

The CAV currently has two governance committees, the Audit and Risk Management Committee and the Human Resources and Remuneration Committee. These established committees advise the Accounting Authority, the Board, on matters assigned to them as per their respective Terms of References. The Accounting Authority functions by way of a formal Board Charter.

Due to the size of the CAV as an entity the responsibilities of the Social and Ethics committee are incorporated in the Audit & Risk Committee and those of the Nominations Committee are incorporated in the Human Resources & Remuneration Committee.

The following structure represents the governance structure of the CAV: Figure 1: CAV Governance Structure Minister the dtic

Board of Directors

Executive Authority

Accounting Authority

Governance Audit & Risk Committee

Human Resources & Remuneration Committee

Governance Committee

*A&RC also includes Social, Ethics & Governance Responsibilities **HR&Remco also includes Nominations Responsibilities

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6. ORGANISATIONAL STRUCTURE The organisational structure is shown below.

CAV organistational structure Board of Directors ** HR & Remuneration Committee

* Audit and Risk Committee Chief Executive Officer

HR Office

Executive Assistant

Monitoring & Evaluation Officer

General Administrator

Legal Counsel & Company Secretary

Cleaner

Interns

Financial Manager

Business Development Manager

Financial Assistant

Investment Analyst

Operations Manager

Board of Directors Sub Committees

Facilities Officer

Executive Management Managers

Procurement Officer

Incentive Specialist

Dev & Cons Officer

Vacant Positions Filled Positions

Financial Clerk

Marketing & Com Officer

Technology Officer

Interns

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7. STRATEGIC OVERVIEW 7.1. Linking the CAV Vision, Mission and Objectives The Vision, Mission and Objective statements are displayed here: Figure 3: The Vision, Mission and Objective Statement VISION Is to develop a world-class industrial park promoting competitiveness and sustainability.

OBJECTIVE

MISSION To support the growth of a sustainable aerospace, defence and advanced manufacturing industry and to contribute to making South Africa a global player in the aerospace, defence and advanced manufacturing industry value chains

CAV

To stimulate economic development through the establishment and operation of an Industrial park

7.2. Vision Statement To develop a world-class industrial park promoting competitiveness and sustainability of the Aerospace, Defence and Advanced Manufacturing Sectors.

7.3. Mission Statement To support the growth of a sustainable aerospace, defence and advanced manufacturing industry and to contribute to making South Africa a global player in the aerospace, defence and advanced manufacturing industry value chains.

7.4. Strategic Objectives The strategic objectives of the CAV, in order to stimulate economic development through the establishment and operation of an Industrial park, are as follows: • To become a hi-tech advanced manufacturing industrial park in support of the Aerospace, Defence and advanced manufacturing industry; and CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

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• To provide facilities, services and a technical environment to complement and promote the common interests of the Aerospace, Defence and Advanced Manufacturing industries in South Africa.

7.5. Our Values The Values of the CAV team are as follows: RESPECT TEAMWORK OPEN AND HONEST COMMUNICATION CLIENT FOCUSED WORK WITH PURPOSE BELIEVE IN OUR ABILITIES

We respect one another’s views, opinions, cultures and work ethics.

Dedicated teamwork is core to our culture.

We uphold open, candid and honest two-way communication that fosters relationship building between the employees.

Seek to add value to our partners and clients through innovation, synergies and partnerships.

We are passionate about the aerospace, defence and advanced manufacturing industries and consciously seek to improve and develop our sector to ensure its continued success.

Strive for excellence and international best practice in all aspects of our business.

Table 1: Values of the CAV Team 7.6. Company Profile 7.6.1. The Company The CAV is an initiative of the Department of Trade, Industry and Competition (the dtic).

It was incorporated as a company not for gain in 2006 in terms of section 21 of the Companies Act, Act 61 of 1973, which now is a Non-Profit Company in terms of the new Companies Act, Act 71 of 2008.

This Industrial Park is aimed at strengthening the supply chain by bringing aerospace and defence industry suppliers in proximity to one another and to co-locate them next to tier1 supplier companies and anchor partners.

The CAV is being developed on State-owned land provided by the Department of Public Works and Infrastructure (DPWI) for which a Head Lease Agreement was signed between the dtic and DPWI with agreed terms and conditions.

The CAV was designed to unlock the growth potential of the aerospace and defence sectors in order to contribute to the above objectives in a meaningful way, amongst others, the following: CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

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• The local (national) aerospace and defence Industry will benefit from the development of the CAV that will contribute to the industry remaining internationally competitive.

• Local Original Equipment Manufacturer (OEM) representatives: OEM suppliers of components, parts and tools, as well as service providers will likewise benefit from synergistic and economy of balanced applications; and • The Small, Medium and Micro-sized Enterprise (SMME) sector will likewise benefit from a numerous opportunity that will be identified for further development.

The project consists of two areas mainly: Landside Development and Airside Development.

• Landside Development: The Landside is envisaged to house industry sub-tier suppliers who do not require runway access that specifically conduct design and manufacturing operations; and • Airside Development: The Airside is envisaged to house industry sub-tier suppliers who require runway access that specifically do upgrades, aircraft maintenance, repair and overhaul (MRO) and aircraft refurbishments.

Both Landside and Airside developments are planned to be implemented in phases. Both developments are to be made possible by the application of sourced funding that would be supportive of the industrial policy of the dtic, and will accordingly be aligned with the following key elements thereof: • Plan, develop and operate the Landside Development Phase of the CAV as an Industrial Park: The CAV strives to balance the pursuit and achievement of business objectives and compliance with the principles of good governance.

• Unlock the Airside Development Phase to be developed in collaboration with the South African Air Force (SAAF) and the Air Force Base Waterkloof (AFB Wtklf). Explore alternative opportunities with the GIDZ, to gain access to OR Tambo International Airport.

• Ensure transformation through the participation and development of B-BBEE entities • Skills Development and Training is part of the CAV’s support programmes.

• Focused on the encouragement of new small and medium (SMME) sized entrants; and • Directed towards innovation, technology development and support for associated infrastructure development.

7.6.2. Location CAV is located along the eastern boundary of the Waterkloof Air force Base (Farm Waterkloof 378 JR: portion 11, 97,98,34,29 and the remainder of portion 28) in Centurion.

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8. SITUATIONAL ANALYSIS 8.1. Contextual Environment 8.1.1 The Aerospace and Defence Industry: Global Context The commercial aerospace sector has been significantly affected by the COVID-19 pandemic, which has led to a dramatic reduction in passenger traffic, in turn affecting aircraft demand. As a result, the commercial aerospace sector is expected to recover slowly, as travel demand is not expected to return to pre–COVID-19 levels before 20241 .

In 2021, global commercial aircraft deliveries are estimated at 950 aircraft, a decline of 41% from 2018, the peak year for deliveries2. Though the commercial aircraft order backlog stood firm at about 13,421 at the end of December 2020, it was down 8.7% from the peak backlogs of about 14,700 at the end of 20183. Apart from commercial aircraft, deliveries for rotorcraft are also expected to remain nearly 15% below pre pandemic levels in 2021, at 750 units4. As new orders are likely to remain subdued in 2021 and airlines continue with order cancellations, aircraft backlog could decline further. Moreover, OEM rate reductions would continue to adversely affect the extended commercial aerospace manufacturing supply chain, especially the mid-to-lower-tier suppliers. Which may struggle due to lower earnings and cash flows.

According to the 2020 Deloite global aerospace and defense industry outlook report, the demand for military equipment is on the rise as governments across the globe focus on military modernization, given increasing global security concerns. The uncertainty and sustained complexity of the international security environment worldwide is likely to boost global defense spending over the next five years. Global defense spending is expected to grow at a CAGR of about 3 percent over the 2019–2023 period to reach US$2.1 trillion by 20235. However, some countries are diverting spending to other social programs to revive the economy and reduce the repercussions of the pandemic. For example, Russia plans to reduce military spending by 5% between 2021 and 2023 due to the impact of the pandemic on economic growth6.

International Air Transport Association (IATA), “Deep Losses Continue Into 2021,” November 24, 2020.

Deloitte analysis based on The Boeing Company, “Order and deliveries”; Airbus Group, “Orders and deliveries”; International Air Transport Association (IATA), Industry Statistics: Fact Sheet; Barclays, “US Aerospace & Defense – The Weekly Scope.”

3 Deloitte analysis based on Forecast International, “Airbus and Boeing Report December and FullYear 2020 Commercial Aircraft Orders and Deliveries,” January 18, 2021; Financial Times, “China’s commercial jet ambitions shaken as US blacklists Comac,” January 27, 2021; and FlightGlobal, “MC21 deliveries to start ‘by the end’ of 2021,” September 23, 2020.

4 Deloitte estimates and Deloitte analysis based on General Aviation Manufacturers Association, General Aviation Aircraft Shipment Report: Q2 2020, September 14, 2020.

5 Deloitte analysis of data from SIPRI Military Expenditure Database; Deloitte estimates.

6 Reuters, “Russia, hit by coronavirus crisis, considers military spending cuts,” September 8, 2020.

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Despite the demand in the defense industry being relatively stable and the space industry experiencing increased opportunities, primarily in satellite broadband internet access, the pandemic led to a breakdown of many essential A&D supply chains. The challenge is accentuated as many suppliers serve both commercial aerospace and defense, and any spill over from the commercial side could leave defense OEMs vulnerable with regard to sourcing critical parts for their programs and platforms.

It is believed that in 2021 A&D companies are likely to shift toward transforming supply chains into more resilient and dynamic networks and collaborate with regional players to build capabilities and shift manufacturing capacity when needed in order to manage business disruptions. In a recent survey conducted by Deloitte, 72% of industry executives said they are investing in supply chain ecosystems to leverage external alliance partners7.

This new trajectory in the global value chains of A&D, places CAV in an advantages position, to focus on strengthening capabilities and diversification of tier suppliers located at the village, through technological developments, such as: • Advanced aerial mobility (AAM): The technology for AAM is already being elaborated by industry partners and government agencies like the National Aeronautics and Space Administration (NASA) and the Federal Aviation Administration (FAA), and industry players are focusing on safely transitioning AAM into the daily commute globally • Electric propulsion: As technology evolves rapidly, several companies globally are developing electric propulsion systems, which could reduce carbon emissions, make flights quieter, and decrease costs. Apart from large aerospace propulsion companies, there are various technology start-ups also involved in the development of electric propulsion engines.

8.1.2 Aerospace and Defence Industry: African context COVID-19 has devastated African economies and brought air connectivity across the continent to a virtual standstill. The economic consequences resulting from a disconnected continent are severe, with millions of jobs and livelihoods at risk in family-run enterprises and large corporations along the entire travel and tourism value chain.

Air transport supported 7.7 million jobs and $63 billion in African economic activity.

That is 2.2% of all employment and 2.7% of all GDP in African countries in 20188.Every person directly employed in the aviation sector and in tourism made possible by aviation supported another 16.5 jobs elsewhere in Africa. Similarly, $6 of economic activity was

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2020 Deloitte and MAPI smart manufacturing ecosystem study. https://aviationbenefits.org/media/167129/abbb20_africa.pdf

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supported elsewhere in Africa for every $1 of gross value added directly created by the air transport sector.

The International Air Transport Association (IATA) released new data indicating that the impact of COVID-19 on Africa’s aviation industry and economies has worsened sharply since the previous assessment. It is believed that: • Job losses in aviation and related industries could increase by up to 3.5 million. That is more than half of the region’s 6.2 million aviation-related employment and 400,000 more than the previous estimate.

• GDP supported by aviation in the region could fall by up to $35 billion. IATA previously estimated a $28 billion decline9.

However there is a silver lining for the industry, in Africa. The fast-growing African space industry is expected to hit $10 billion by 2024 with a current value of more than $7 billion10. Not only the African Aerospace industry is growing in the space sector but also in the aviation/air transport contributing to more than $55.8 billion in the African economy11.

According to Airbus’s White Paper report, the top most countries in the African Aerospace industry are South Africa with $1.8 billion, Morocco with $1.1 billion, and Tunisia with $430 million in industry sizes. In the global aerospace industry ranking, South Africa and Morocco rank in the top 4012.

8.1.3 Aerospace and Defence Industry: South African context A case for South African MRO: In 2016, South Africa ranked 76, after Greece, for global U.S. aircraft parts exports. However, the growth of commercial and general aviation in southern Africa has slowed down significantly; high operating costs and a sluggish economy are taking their toll on discount airliners and general aviation. The launch of the African Union’s Single African Transport Air Market, which comprises 28 countries including South Africa, in 2018, provided airlines an opportunity to increase their operations on the continent. The biggest growth is expected in other Sub-Saharan African states as they ramp-up up their capacity to meet long-term growth in passenger travel and air freight.

There has been a downturn in airborne off-shore utility and mineral deposit surveying done

https://www.iata.org/en/pressroom/pr/2020-08-13-03/ Press Release, Space In Africa, 2019. https://africanews.space/african-space-industry-now-generatingover usd-7-billion-annually-to-exceed-usd-10-billion-by-2024/ 11 Air transport contributes 6.2m jobs, $55.8bn to Africa GDP – ICAO, The Aviation & Allied Business Journal, 2019. https://aviationbusinessjournal.aero/2019/11/13/air-transport-contributes-6-2m-jobs55-8bn-to-africa-dp-icao/ 12 Air Bus’s White Paper, The Great Enabler: Aerospace in Africa, 2018. https://www.airbus.com/content/ dam/corporatetopics/publications/brochures/TheGreatEnable_AerospaceinAfrica.pdf 9

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by South African operators in southern and central Africa over the past years. Unmanned aerial systems (UAVs) / drones are however making steady progress for a host of utility and security applications.

The single most important aviation procurement, the long-anticipated upgrade of the national carrier South African Airways (SAA) fleet amounting to as many as 20 jetliner aircraft is still in question, with the statutory appointed Business Practitioner Rescue (PBR) process under close scrutiny by both National Treasury and organized labor. The SAG is still hoping that a turn-around strategy will succeed by finding an equity partner.

Due to a shortage of skilled technicians and a low throughput from training institutions, there are opportunities in training systems to upgrade the skills pool. There is also demand for commercial and general aviation solutions from the United States in the following fields: • Engine Management Systems • Precision Tooling • Maintenance, Repair, and Overhaul (MRO) Certification • Flight Training Systems Trends highlight some immediate opportunities for the South African A&D industry such as: • Given the increased overlap between products intended for defence and civilian use, the aerospace industry includes companies that produce defence equipment or products by making use of civilian technologies, or which manufacture dual-use products that are saleable in both defence and non-defence markets. The technological intensity of the aerospace and defence sector acts as a driver for new technologies and technical skills to be developed in the country, that are diffused to other sectors thereby intensifying industrialisation and contributing to the evolution towards a knowledge economy. Of real importance to the role of the Cav, is the increased use of digital technologies, such as blockchain and Additive Manufacturing, artificial intelligence, virtual reality and other visualisation technologies creates an opportunity for CAV to reach out to high technology start-ups and create an enabling environment for these companies to engage with the OEM suppliers and MRO companies in the local and international A&D industries; and • The introduction of new technologies in manufacturing (e.g. AM) and digitalisation (e.g.

VR and autonomous platforms, cyber security etc.) could also be an opportunity for CAV to establish a high tech industrial park that will serve to support the whole domestic industry by providing support for high bandwidth communication using broadband fibre optic networks, incubation centres for high technology start-ups and conference and training facilities geared to support high tech entrepreneurs and engineers, IT specialists and material scientists.

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Challenges of the South African Aerospace and Defence Industry • The previously mentioned Aerospace Industry Sector Development Plan (the AISDP) as well as the current Aerospace and Defence Master Plan, noted the specific challenges that must be addressed in the formulation of a future strategy for the CAV. The development of CAV Landside and Airside facilities and services will allow CAV to capitalise on some challenges that are mentioned below: • The SA market for aerospace services is too limited to offer marketable justification for the existence of an SA industry, and the industry must thus position itself for continental and global participation. The most accessible clients, and those that are best accessed through the Industrial Participation strategy of the dtic, are the major aerospace OEMs; • The major aerospace OEMs are all attempting to reduce costs and to simplify their supply chain logistics through outsourcing functions that are niche and do not have an economic justification to retain them to the SMMEs. The SMME-type companies could successfully establish direct supply to these OEMs by physical positioning themselves closer to the OEMs and share supply chain logistics, thus rationalising the establishment of an industrial park such as the CAV; • The aerospace industry is characterised by the necessity for stringent regulatory controls, mainly as a consequence of safety standards. Global supply chains also require that major suppliers invest heavily in quality and process approvals standards and certification and associated specialist training. The costs of such approvals in many instances acts as a barrier to entry for smaller companies; • The aerospace industry is exceedingly dependent upon specialized competencies. These competencies are strongly dependent upon track record and having and established experience base. These competencies are also often as a result of years of Research and Development and significant intellectual property (IP) generation. It is therefore not realistic to base a strategy upon an expectation that new entrants will immediately acquire the core competency necessary for participation in especially the higher tiers of the overall supply chain. Core competency are historically vested in a few existing companies, not all of which can presently be considered B-BBEE-compliant, hence the strategic need to support and create new sustainable SMMEs and B-BBEE compliant companies to achieve broadening economic participation and equity in the sector; • The industry is competing in the international arena and for it to be able to make inroads in this global industry, the local industry requires an Industrial Park Development of a scale that should be able to allow a supplier competing in the local industry to market itself as an international role player through an association with such a Park Development; • Further to the above challenges, the limited government stewardship in the South African industry is currently perceived to be the biggest issue by aerospace industry players, followed by sporadic demand. Accordingly, government must strengthen its participation in supporting the aerospace industry by various means, including leveraging on Public Procurement and other methods of funding. In this regard, the Joint Aerospace Steering Committee (JASC) was established many years ago to coordinate the aerospace industry. for collective gain; CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

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• The aerospace industry also requires significant investment in infrastructure (at the level of physical infrastructure, machinery and plant equipment. This is all the more important, if a move towards new high technology manufacturing methods such as Additive Manufacturing (AM) and high speed machining, is already an established need for domestic sector sustainability and growth. In order for South Africa to be able to deepen its manufacturing capabilities and move into knowledge-intensive value chain, a tremendous amount of industry upgrading will be necessary. The various governmental incentive schemes such as the Industrial Policy Action Plan (IPAP), the Black Industrialist Program, Invest SA, the Aerospace Industry Support Initiative (AISI) as well as, financing opportunities offered by agencies such as Industrial Development Corporation (IDC) and National Empowerment Fund (NEF) at national, provincial and local government levels are very handy in strengthening and upgrading the technological and industrial manufacturing capabilities, and must be utilised to their fullest; • Slow progress has been made toward transformation in the sector. The industry is not as yet representative of the South African population and the new B-BBEE codes require a more aggressive approach to Broad-Based Black Economic Empowerment.

• High barriers to entry for new entrants into the market due to various reasons such as access to funding, inherently high system complexity vs. that within the low volumebased sectors. Plus, the sector in South Africa is relatively small and insular.; and • Finally, there is an insufficient pipeline of incubated sub-tier supplier companies and skilled personnel (both at the artisan and engineering levels) to absorb current knowledge and experience, and an insufficient intra-governmental co-ordination for industry-specific and structured support.

The limited availability of funding for the development of infrastructure, bulk services and facilities at CAV needs to be evaluated and challenged for the CAV Landside and Airside Developments to succeed in contributing to the selected sectors of the economy meeting the mentioned challenges

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9. LEGISLATIVE MANDATE 9.1. Institutional Arrangements CAV is a Non-Profit Company in terms of the new Companies Act, Act 71 of 2008. It applies the governance principles encapsulated in the King Report on Corporate Governance in South Africa, (“King IV”) and continues to further entrench the recommended practices in its governance structures, systems, processes and procedures.

The CAV strives to balance the pursuit and achievement of business objectives and compliance with the principles of good governance. In determining good corporate governance and business practices, the Board is guided by: • Companies Act, 71 of 2008 and supporting Regulations.

• The Public Finance Management Act, No. 1 of 1999 (PFMA) and supporting Treasury Regulations; and • King IV report on corporate governance.

9.2. CAV’s incorporation into the Gauteng Provincial Government The Centurion Aerospace Village (CAV) has been unsuccessful in its attempts to access funding due to its current form as a Non-Profit Company funded by the Department of Trade, Industry & Competition (the dtic). For the CAV to fast-track development a request was by the Minister of the dtic to the Premier of Gauteng requesting that consideration be given to the transfer of the CAV from the dtic to the Gauteng Provincial Government (GPG).

The intention of incorporation of the CAV as a Schedule 3C entity under the Gauteng Provincial Government is to support the entity to secure Capital Funding as it will then be able to tap into the suite of incentives that is available under the dtic.

The incorporation of the CAV into the GPG structures require a Due Diligence exercise be undertaken to define a roadmap that addresses the following processes: • Technical processes, • Financial requirements, • Legal processes; and • Institutional requirements.

The most appropriate vehicle that was identified is the Gauteng Growth Development Agency (GGDA) as a GPG structure under the Department of Economic Development (DED). The due diligence process has defined the roadmap that will have to be followed to implement the incorporation. The discussions on Incorporation are ongoing and expected to be concluded within the current financial year.

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10. OVERVIEW OF PAST AND FUTURE DEVELOPMENT ACTIONS 10.1. Infrastructure, Services’ and Facility Development CAV’s Management has and will continue to interact with Government Department that are stakeholders to the park development. These Departments are Department of Public Works & Infrastructure (DPWI), Department of Employment & Labour (DOLE), Department of Water & Sanitation (DWS) and the Gauteng Department of Environmental Affairs (GDEA). The CAV liaison with City of Tshwane (CoT) is an ongoing process as CoT has and will approve drawings in future and issue the Section 82 Certificate for all utility services being connected as well as the building occupancy certificates for all structures within the park. CAV will continue liaising with the following Government Entities as they form part of approval processes towards park development; Council for Geoscience (CG), South African National Roads Agency (SANRAL) and Rand Water (RW).

During the last financial year, CoT issued the following to CAV. • The drawings for construction of Gatehouse 1 (Aerosud gatehouse) were approved by CoT; • The drawings for construction of Park Perimeter Fence were approved by CoT; and • The Basic Assessment for Environmental Authorisation (EA) was approved by GDEA. During the current financial year, the strategic focus will be to obtain the required power of attorney from the DPWI in order to complete the township establishment process, and subsequently to obtain a Section 82 certificate, which would then lead to COT issuing an occupation certificate for the existing ATCC building. The next two financial years, the intention is to construct new facilities/ buildings in an approved municipal township, i.e., construction of Mini-Factories, SMME facilities and incubation centre.

10.2. Strategic Partnership and interested tenants.

A significant amount of tenant interest was generated in the CAV over the past two (2) years. This renewed interest is as a direct result of increased marketing and business development activities combined with bulk earth works and infrastructure activities taking place on the Landside Development site. Several Letters-of-Intent (LOIs’) were signed with industry partners interested to explore the CAV as a potential investment destination.

During the coming year focus will be given to initiate the process for the incorporation of the CAV into the GGDA. This process is critical to support the CAV to secure Capital Funding to service the growing needs of interested tenants.

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11. PROGRAMMES PLANS In order to achieve the objectives, the following programmes are identified below: 11.1. PROGRAMME 1: ADMINISTRATION 11.1.1. Purpose Provide the organisation with strategic direction, leadership and management, as well as overall administration and performance oversight.

The purpose of this programme is to ensure that effective leadership and administrative support continues to refine the organisational strategy and structure in compliance with the appropriate legislation and international best practice.

This programme will cover the following: • Strategy planning, Monitoring and Evaluation.

11.1.2. Description of the Functional Areas 11.1.2.1. Strategy Planning, Monitoring and Evaluation The Board of Directors of CAV, as the Accounting Authority, is responsible for providing strategic direction to CAV, in keeping with the Memorandum of Incorporation (MoI), Memorandum of Agreement (MoA) concluded between the dtic and CAV, and all other applicable laws and regulations governing the organisation. Through its Chief Executive Officer (CEO), as accounting officer, CAV’s management is responsible for the day-to-day implementation and control of the organisation’s strategic plan.

11.2. PROGRAMME 2: CORPORATE SUPPORT SERVICES 11.2.1. Purpose The purpose of this programme is to oversee the provision of good governance, financial management, legal and company secretariat and human resources management function.

This programme will cover the following: • Governance and Legal Services.

• Financial Management.

• Human Resources Management.

• Risk Management • Information & Communication Technology Management.

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11.2.2. Description of the Functional Areas 11.2.2.1. Governance and Legal Services Legal services provide legal support to CAV on a regular basis on contractual, litigation, operational and managerial legal matters. Legal service also adopts a proactive approach by ensuring that the legal implications of proposed decisions are examined in order to mitigate any future risks.

The Company secretariat function, as the overseer of corporate governance, is responsible for assisting the Board of Directors to ensure adherence to sound corporate governance principles. This function continues to provide guidance to the Board on governing legislation, regulations and policies that affect CAV, as well as providing secretariat services to the Board and its subcommittees.

11.2.2.2. Financial Management The financial management will continue to focus on ensuring compliance with all relevant financial standards and regulations, as well as overseeing the supply chain management function. It will also focus on the financial planning, capital budgeting, financial reporting, treasury & working capital management.

11.2.2.3. Human Resources Management Human Resources Management is responsible for ensuring that CAV has the human resources capacity to deliver on its mandate. Its activities will focus on staffing, development, remuneration, health and safety and talent management.

11.2.2.4. Risk Management The Company has adopted a continuous, systematic Enterprise Risk Management Process, which aims to ensure that material risks are identified, evaluated and addressed. The risk management policy and strategy set out the responsibilities and duties of the Board, Management and Staff in the identification, monitoring and mitigation of risks affecting the CAV and having the potential to affect the future roll out of the CAV. The Board set the risk appetite of the Company, which lead to the development of key risk indicators, which are monitored regularly to assess the Company’s risk exposure.

11.2.2.5. Information and Communication Technology Management The ICT sub-programme is responsible for enabling CAV’s operations by aligning the ICT goals with the organisation’s strategic objectives through the identification of appropriate

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technologies, as well as by designing, developing, implementing and maintaining the ICT infrastructure. The tasks of the sub-programme include the provision of reliable ICT infrastructure through the on-going refinement of support services and delivering business value in compliance with legislation and best practices.

During this three-year period, the ICT Programme will focus on ICT strategy, design Implement and configuration of server client network datacentre to house the CAV critical IT infrastructure and communication systems ; core network appliances inclusive of network patch panels, core network and distribution switches, internal and external network routers, servers for domain controllers, disaster recovery plan for business continuity for on-site and off-site, Enterprise application and enterprise antivirus and firewall for network infrastructure security, Enterprise storage and back-up, migration and/or implementation of a new integrated Enterprise resource planning (ERP) system, migration of exchange mail service, intranet and internet services to cloud hosting platform.

11.3. PROGRAMME 3: BUSINESS DEVELOPMENT 11.3.1. Purpose The purpose is to provide the organisation with business development management that is focused on the sustainability of the CAV as well as marketing and communication activities that are focused on building a best-in-class brand of the CAV in the marketplace.

The programme will cover the following: • Tenant acquisition and retention, which is to include the below mentioned areas: o Value Proposition. o Alternative Funding Options. o Cluster Programmes. o Stakeholder Management. o Investment Management including Tenant Acquisition and Retention. o Marketing Management including Communications, Public relations, Events and Conferences.

11.3.2. Description of the Programme 11.3.2.1. Tenant acquisition and retention This programme consists of the following components. a) The CAV Value Proposition The CAV Value Proposition captures a basket of services offered to potential investors and/ or tenants to consider when developing an investment business case to present to decision CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

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makers and funders. These services can be broken down into various categories of services aimed at providing a strong business case to potential investors and/or tenants.

Whilst the investment decision of a domestic investor might be slightly biased towards a specific region identified as an investment destination of choice, the decision-making process for a Multi-National Organisation is vastly different. Multi-national organisations interested in either investing in infrastructure or manufacturing or service provision, not only compare different Industrial Parks within a specific region of a country, they also compare Industrial Parks in other regions of the country as well as other countries (global offerings) before defining their decision where (global location) to invest.

These investors and/or tenants considers various factors that ranges from: • The macro economic environment of the country including the economic stability of the country, value of the Rand, exchange rates, import and export duties, taxes, etc.

• The political stability of the country.

• The Industrial Park’s ability and readiness to deliver facilities in a short space of time.

• The strategic location of the Industrial Park with regards to access to supply routes.

• and rebates on offer through national and provincial government Incentives or local municipalities.

• Shared services on offer that will enhance their operations.

• Any other support initiatives that positively impact on their cost of doing business.

The CAV process will follow a needs assessment, followed by soliciting a Letter of Intent, Non-Disclosure Agreements, negotiations that will follow to craft Pre-lease and Lease Agreements and lastly Service Level Agreements for the provisioning of shared services.

Both Domestic and Foreign Direct Investment will be targeted. b) Funding Options Currently two funding options exists for interested tenants and these options are described below: • BOT – Build-Operate-Transfer Option: This option will allow an interested tenant to fund the top structure for their operations themselves. On this model a longer-term land lease agreement will be affected and all levy fees including a park management levy fee will be applied. After the lease expiration date, the property will be transferred to the CAV (landlord) and a normal lease agreement for the facilities will then be applicable.

This option will allow the tenant the flexibility to reap the benefit from a longer-term land lease agreement.

• BTL – Build-To-Lease Option: This option will allow the CAV to fund the top structure and recuperate the investment through a monthly rental price/m². The lease duration is typically between 10-12 months and normal levy fees will apply. There will not be a management levy fee.

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c) Cluster Programmes The CAV is committed to support the continuous development of the broader aerospace, defence and advanced manufacturing sector. To this end various cluster programmes will be conceptualised and developed to be established in the CAV. The idea is to allow the market to own and operate these facilities and for the CAV to keep focused on our core strength namely landlord services. The cluster programmes will include: • Incubation Centre – Focused on the following services: 1) The development of new black owned businesses to enter the aerospace and defence markets, 2) To offer Research and Development equipment and services to CAV tenants interested in developing new service offerings and 3) To incubate new concepts that stems from the Tshwane based Universities from concept generation through to commercialisation.

• Skills Development and Training Centre – To develop a skills development and training centre to focus on technical and vocational training services to both the sector and the CAV tenants.

• Central Shared Logistics Centre – For the provision of logistics services such as contract logistics including warehousing, freight consolidation and forwarding services as well as a milk-run service inside the park for collection and delivery of raw material and finished goods.

• Shared SMM facility (mini factory) – Based on a flexible lease model where SMME share common infrastructure such as warehousing space, central reception desk, shared office space, shared boardroom facilities, shared ablution facilities as well as shared services. The model will allow for flexibility in the space rented from the CAV. d) Stakeholder Management The purpose of this programme is to ensure institutional arrangements provides for all of the strategic stakeholders to engage, interact and inform the strategic direction of the CAV and to play a meaningful role in respect of the provision of equity, support or the attraction of the requisite investment. Stakeholders can be classified as Key Accounts ranging from our shareholder, strategic partners, tenants, service providers through to CAV internal accounts. e) Investment Management Investment Management for an Industrial Park Development such as CAV is of the utmost importance to ensure the long-term success and sustainability of the development. In order to achieve long term sustainability, the CAV Industrial Park Development is dependent on Capital Investment required and investment from Tenants taking up facilities and shared services.

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All investment management activities such as: • Investment Promotion – Investment promotion is linked to international and national promotion activities that promote the CAV as an investment destination for consideration.

• Investment Attraction – In order to successfully attract an investor into the Park consideration must be given to investor and/or tenant requirements and challenges.

These requirements are addressed by focusing attention on the investment support offered by all spheres of government (incentive schemes, one-stop-shop offerings, etc.) and to offer a competitive advantage to an investor and/or tenant through the CAV Value Proposition.

• Investment Facilitation – Entails all the activities from the first (1st) point of contact and discussions through to all four decision gates and stages to formulating contractual agreements and ultimately signing of the final lease agreement.

• Investment Retention and Aftercare – Investment retention and aftercare is as important to the development as closing the deal and signing up investments or tenants.

A happy tenant is a long-term tenant. Our approach will be to forge partnerships rather than having a landlord/tenant relationship. It is important that tenants remain cost competitive and the way that the CAV can influence this is to continuously look at how they can reduce the cost of doing business for its tenants. f) Communications, Media and PR Media and Public Relations plays a critical and important role to ensure that the correct messages are communicated to various stakeholders within CAV’s target market. It is vital that the CAV’s brand equity and image is improved from the negative publicity in the past to a positive image for the future. The CAV will focus on using media platforms and partners to our advantage to position and promote the CAV to foreign and domestic direct investors.

It is imperative that the strategic objectives of the Marketing Department are executed diligently to: • Support Business Development and growth of the CAV through focused Media and PR Activities.

• Promote the CAV as a strategic location and investment destination of choice to investors/tenants in the Aerospace, Defence and Advanced Manufacturing Sectors through targeted Communication Activities.

• Instil excellence in business and resource management of the CAV. g) Events and Conferences Conferences and Events are used as important tools to ensure that the CAV’s brand receives as much exposure as possible. Conference and Event Management as part of the

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Marketing and Communications Strategy will assist in guiding the Marketing Department activities to ensure that the CAV brand gains much needed exposure in the marketplace that will restore confidence.

These activities are aligned to the objectives of the Conference and Event Management Strategy which include: • Support Business Development and growth of the CAV through participation at targeted Conferences and Events; • Promote the CAV as a strategi location and investment destination of choice to investors/ tenants in the Aerospace, Defence and Advanced Manufacturing Sectors through targeted Communication Activities; and • Instil excellence in business and resource management of the CAV. 11.4. PROGRAMME 4: INDUSTRIAL PARK DEVELOPMENT & OPERATIONS MANAGEMENT 11.4.1. Purpose The purpose is to provide the organisation with industrial park development, construction, operations’ management and performance oversight: The sub-programmes that fall under this programme include the following: • Landside Development (short, medium and longer term); and • Airside Development (longer term) 11.4.2. Description of the Programme 11.4.2.1. Landside Development (Short, Medium and Long term) This programme covers the Bulk Earthwork and Infrastructure, Bulk Utility services and Infrastructure work, township establishment process as well as development and construction of buildings on CAV Landside.

11.4.2.2. Airside Development (Long Term) The strategic focus under this programme will be explore offsite airside access, such as GIDZ, Wonderboom in parallel to the ongoing discussions with AFB Wtklf. The objective is to have airside access to cater for potential tenants who require airside access.

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PROGRAMME 1: ADMINISTRATION Strategic Goal: Goal Statement:

Strategic Objectives

Lead and monitor organisational performance Optimise organisational performance through the establishment of strategic direction, compliance monitoring and evaluation.

Performance Indicator

Baseline target

Medium Term Targets

2020/21

2021/22

2022/23

2023/24

Annual Performance Plan for 2022/23 approved by the Board and submitted to the dtic: Q4 2021/22

Annual Performance Plan for 2023/24 approved by the Board and submitted to the dtic: Q4 2022/23

Annual Performance Plan for 2024/25 approved by the Board and submitted to the dtic: Q4 2023/24

Strategy Planning, Monitoring and Evaluation

Establishment and Implementation of Strategic Direction for the organisation

Annual Performance Plan approved by the Board and submitted to the dtic as per statutory time frames

Annual Performance Plan for 2021/22 approved by the Board and submitted to the dtic: Q4 2020/21

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Performance Indicator

The reports are: 1. 4* Quarterly report (Submitted within 30 days after the quarter ended) 2. Annual report (Q2)

Number of reports submitted to relevant authorities in line with the timeframes prescribed by PFMA: A&R Committee, Board and the dtic

3. Human Resources and Remuneration Terms of Reference

The documents are: 1. Board charter 2. Audit and Risk Committee Terms of Reference

Number of governance documents reviewed and approved by the Board on an annual basis.

Percentage achievement of B-BBEE procurement target as reported to the CEO on an annual basis.

75% of the procurement spend to black participants (Level 4 or higher) as reported to the CEO: Q4 2020/21.

1* Annual report for the period 2019/20 to relevant authorities: Q2 2020/21

5* reports (quarterly reports and annual report) in line with the timeframes prescribed by PFMA submitted to relevant authorities: A&R Committee, Board and the dtic.

4* Quarterly reports within 30 days after the quarter ended to relevant authorities.

75% of the procurement spend to black participants (Level 4 or higher) as reported to the CEO: Q4 2021/22.

The reports are: 1. 4* Quarterly reports (Submitted within 30 days after the quarter ended).

2. 1* Annual report for 2020/21: Q2 2021/22

Number of reports submitted to relevant authorities in line with the timeframes prescribed by PFMA: A&R Committee, Board and the dtic

75% of the procurement spend to black participants (Level 4 or higher) as reported to the CEO: Q4 2022/23.

The reports are: 1. 4* Quarterly reports (Submitted within 30 days after the quarter ended).

2. 1* Annual report for 2021/22: Q2 2022/23

Number of reports submitted to relevant authorities in line with the timeframes prescribed by PFMA: A&R Committee, Board and the dtic

1. Board charter 2. Audit and Risk Committee Terms of Reference 3. Human Resources and Remuneration Terms of Reference

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75% of the procurement spend to black participants (Level 4 or higher) as reported to the CEO: Q4 2023/24.

The reports are: 1. 4* Quarterly reports (Submitted within 30 days after the quarter ended).

2. 1* Annual report for 2022/23: Q2 2023/24

Number of reports submitted to relevant authorities in line with the timeframes prescribed by PFMA: A&R Committee, Board and the dtic

1. Board charter 2. Audit and Risk Committee Terms of Reference 3. Human Resources and Remuneration Terms of Reference

The documents are:

The documents are:

The documents are: 1. Board charter 2. Audit and Risk Committee Terms of Reference 3. Human Resources and Remuneration Terms of Reference

Number of documents reviewed and approved by the Board. Q4 2023/24

2023/24

Number of documents reviewed and approved by the Board. Q4 2022/23

2022/23

Number of documents reviewed and approved by the Board. Q4 2021/22

2021/22

2020/21 1* Board Charter and 2* Terms of References Annual review and approval for (1) Audit & Risk Committee, (2) HR & Remuneration Committee by the Board: Q4 2020/21

Medium Term Targets

Baseline target

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Ensure Sound financial management and compliance.

Financial Management

Number of reports (quarterly CAV reports and annual report) submitted to relevant authorities in line with the timeframes prescribed by PFMA: A&R Committee, Board and the dtic

Build capacity to deliver good governance and effective administration

Governance & Legal Services

Strategic Objectives

Strategic Goal: Good governance and efficient administration Goal statement: To foster good governance within CAV through ethical behaviour, socially responsible environment, transparent financial management, adequate and appropriate legal and HR support.

PROGRAMME 2: CORPORATE SERVICES

-

Number of risk management 4* Risk management reports submitted to the Board on a reports submitted in line quarterly basis with the approved risk management strategy to the Board on a quarterly basis

ICT Master Plan established & reviewed by management and approved by the Board on a biennial basis

1* Human Resources strategy and plan for 2021/22 recommended by HR & Remuneration Committee and approved by Board: Q4 2020/21

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Efficient integrated risk management system

Risk Management

Harness the use of technology for effective and efficient operations.

Information and Technology Management

The documents are: 1. HR strategic plan 2. HR Policy manual

Number of Human Resources documents reviewed and approved by the Board/ HR & Remco or the CEO in line with the delegation of authority (DoA) on an annual basis:

Human Resources Management

Build Capacity to deliver Operational Excellence.

75% management action plans for Internal Audit & External Audit findings implemented by management as reported to the A&RC: Q3 2020/21 & Q4 2020/21.

Clean audit outcome achieved Achieve clean audit outcome on annual financial on annual financial statement for 2019/20 financial year. statements.

Q2 2020/21.

Percentage of management action plans for Internal Audit & External Audit findings implemented by management as reported to the A&RC on a biannual basis.

4* Risk management reports submitted to the Board on a quarterly basis

4* Risk management reports submitted to the Board on a quarterly basis

-

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4* Risk management reports submitted to the Board on a quarterly basis

ICT Master Plan reviewed by management and approved by the Board: Q4 2022/23

The documents are: 1. HR strategic plan. Q4 2023/24 2. HR Policy manual, Q2 2023/24 The documents are: 1. HR strategic plan. Q4 2022/23 2. HR Policy manual, Q2 2022/23

The documents are: 1. HR strategic plan. Q4 2021/22 2. HR Policy manual, Q3 2021/22 ICT Master Plan approved by the Board: Q4 2021/22

Number of Human Resources documents reviewed and approved by the Board/ HR & Remco or the CEO in line with the delegation of authority (DoA) on an annual basis:

Clean audit outcome achieved on annual financial statement for 2022/23 financial year. Q2 2023/24

Number of Human Resources documents reviewed and approved by the Board/ HR & Remco or the CEO in line with the delegation of authority (DoA) on an annual basis:

Clean audit outcome achieved on annual financial statement for 2021/22 financial year. Q2 2022/23

Clean audit outcome achieved on annual financial statement for 2020/21 financial year. Q2 2021/22

75% management action plans for Internal Audit & External Audit findings implemented by management as reported to the A&RC: Q3 2023/24 & Q4 2023/24.

Number of Human Resources documents reviewed and approved by the Board/ HR & Remco or the CEO in line with the delegation of authority (DoA) on an annual basis:

75% management action plans for Internal Audit & External Audit findings implemented by management as reported to the A&RC: Q3 2022/23 & Q4 2022/23.

75% management action plans for Internal Audit & External Audit findings implemented by management as reported to the A&RC: Q3 2021/22 & Q4 2021/22.

Performance Indicator 2021/22

2020/21

-

Establishment of a Business case to formulate a business strategy to ascertain alternative business models including airside access for submission to the Board: Q3 2021/22

-

-

-

Number of Pre-Lease Agreements signed with potential tenants on an yearly basis

100% conversion of PreLease Agreements to Lease Agreements on an annual basis.

Establishment of a Business case to formulate a business strategy to ascertain alternative business models including airside access for submission to the Board: Q3 2021/22

-

Medium Term Targets

Baseline target

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Establishment of an efficient business development strategy and plan

Tenant acquisition and retention

Strategic Objectives

-

-

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100% conversion of PreLease Agreements to Lease Agreements. Q3 2023/24

Two Pre-Lease Agreements potential tenants: Q4 2023/24

2023/24

-

One Pre-Lease Agreement signed with potential tenant: Q4 2022/23

2022/23

Strategic Goal: Investment management to attract and retain tenants.

Goal Statement: To provide effective and efficient business development activities to support the sustainability of the CAV and to contribute towards the development of the aerospace and defence industry supply chain by focusing on the CAV’s value proposition, alternative funding options, cluster programme development, stakeholder management and investment management including tenant acquisition and retention.

PROGRAMME 3: BUSINESS DEVELOPMENT

1. Roads and Storm water Services (Q2 2019/20) 2. Water and Sanitation Services (Q2 2019/20)

1. Roads & Stormwater: Phase 1 (van Ryneveld & van der Spuy intersection upgrades)

1. Roads and Stormwater (Van Ryneveld & van der Spuy intersection upgrade) a) Drawings approved by CoT Q3:2021/22 b) Environmental Authorisation (EA) approved by Gauteng Department of Environmental Affairs (GDEA) Q3:2021/22

Commence the external utility services for Landside Development Phase through the following:

2021/22

2020/21 Conclude (issuing of Final Acceptance Certificate signed off by CAV) construction for External work for the following bulk utility services for Landside phase 1A:

Medium Term Targets

Baseline target

Conclude the external utility services for the Landside Development Phase by issuing of a practical completion certificate for the following services:

Performance Indicator

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Industrial Park Development, Construction and Operations Management

Landside Development

Strategic Objectives 2023/24

1. Roads and Stormwater (Van Ryneveld & van der Spuy intersection upgrade Q1: 2022/23

Conclude the external utility services for Landside Development Phase by issuing of a practical completion certificate for:

2022/23

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Strategic Goal: Develop and operate the industrial park.

Goal statement: To develop a sustainable Aerospace, Defence and Advanced Manufacturing Industrial Park Development to attract small and new entrants to contribute to making South Africa as a Global Player in the Aerospace and Defence Industry value chain.

PROGRAMME 4: INDUSTRIAL PARK DEVELOPMENT AND OPERATIONS MANAGEMENT

2. Water and Sanitation

Performance Indicator

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Strategic Objectives 2021/22

2020/21

1. Water and Sanitation a) Environmental Authorisation (EA) approved by Gauteng Department of Environmental Affairs (GDEA) Q3: 2021/22 b) General Authorisation (GA) approved by the Department of Water & Sanitation (DWS) Q3:2021/22 c) Water Use Licence Application (WULA) approved by the Department of Water & Sanitation (DWS) Q3:2021/22

Commence the external utility services for Landside Development Phase through the following:

c) Wayleave application for construction approved by CoT Q3:2021/22 d) Commencement of construction Q4: 2021/22

Medium Term Targets

Baseline target

1. Water and Sanitation Q1: 2022/23

Conclude the external utility services for Landside Development Phase by issuing of a practical completion certificate for:

2022/23

2023/24

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3. Roads & Stormwater: Phase 2 a) Intersection upgrade: van Ryneveld & Jim Verster. b) Signal timing: van Ryneveld & Theron Street

Performance Indicator

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

Strategic Objectives 2022/23

1. Water and Sanitation a) Environmental Authorisation (EA) approved by Gauteng Department of Environmental Affairs (GDEA) Q3: 2021/22 b) General Authorisation (GA) approved by the Department of Water & Sanitation (DWS) Q3:2021/22 c) Water Use Licence Application (WULA) approved by the ii.

Design preparation and engineering estimates concluded, Q3 2021/22 iii. Contractor procured for construction, Q4 2021/22 iv. Commencement of construction, Q4 2021/22

Conclude the external utility services for Landside Development Phase by issuing of a practical completion certificate for: 1. Roads & Stormwater a) Intersection upgrade: van Ryneveld & Jim Commence the external Verster, Q1 2022/23. utility services for Landside b) Signal timing: van Development Phase Ryneveld & Theron through the following: Street, Q1 2022/23.

2021/22

2020/21 c) Wayleave application for construction approved by CoT Q3:2021/22 d) Commencement of construction Q4: 2021/22

Medium Term Targets

Baseline target 2023/24

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1. Renewal of the Section 7 (6) approval by CoT for ATCC Building (Q2: 2021/22) 2. Concluding Roads & Stormwater services (Q1: 2022/23) Concluding Water & Sanitation Services (Q1: 2022/23)

Conclusion of the township establishment for CAV Landside Development by obtaining Section 82 certificate from CoT through the following:

Performance Indicator

1. Renewal of the Section 7(6) approval by CoT for ATCC Building Q2:2021/22

1. By obtaining Section 82 Certificate from CoT. Q2 2022/23

Conclusion of the township establishment for the CAV Landside Development by obtaining Section 82 certificate from CoT through the following:

The following township establishment milestones are achieved from the CoT for the Landside development: 1. Section 101 Certificate (Q2 2019/20) 2. Section 82 Certificate (Q4 2019/20)

Conclusion of the township establishment for CAV Landside Development by obtaining Section 82 certificate from CoT through the following:

2021/22

2020/21

2023/24

2022/23

Medium Term Targets

Baseline target

13

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Certification by the Municipality that the applicant has fulfilled all pre-proclamations as set out in the conditions of Establishment and that the attorneys may submit the township register documentation to the Deeds Office.

14 Certification by the municipality that all conditions have been met with regards to the establishment of the township, including the proclamation ant the arrangements for the installation of service. This certificate has the effect to transfer of stand being authorised and building plans being accepted for approval.

Strategic Objectives

The buildings are: 1. Aerosud Gatehouse 2. CAV Gatehouse 3. Perimeter Fencing 4. SMME Building 5. Mini-Factory 6. Incubation Centre

Number of building constructed in line with the tenant requirements on an annual basis:

Performance Indicator

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

Strategic Objectives 2021/22

2020/21 5* Milestones commenced Number of building with or concluded for the constructed in line with the tenant requirements following: on an annual basis by 1. Concept and design conducting the following: development approved

by CAV for the 1. Aerosud Gatehouse following buildings: a) Commencement of a. Building A (Q2 construction, Q1 2019/20) 2021/22 b. BoT Platform b) Practical Completion construction (Q1 certificate for 2019/20) construction, Q4 c. Perimeter Fence (Q3 2021/22 2019/20) d. Office Block (Q3 2. Perimeter Fencing 2019/20) a) Commencement of construction, Q1 2. Procurement of the 2021/22 building contractors b) Practical Completion completed, SLA signed certificate for off by CAV and the construction, Q4 Contractors for the 2021/22 following buildings: a. Building A (Q3 2019/20) b. Gatehouse: (Q2 2019/20)

Medium Term Targets

Baseline target

2. SMME Building a) Design preparation and QS estimates concluded, Q2 2022/23

1. CAV Gatehouse a) Design preparation and QS estimates concluded, Q2 2022/23 b) Contractor procured for construction Q3 2022/23 c) Commencement of construction Q4 2022/23

Number of building constructed in line with the tenant requirements on an annual basis by conducting the following:

2022/23

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2. SMME Building a) Practical Completion for construction, Q1 2023/24

1. CAV Gatehouse a) Practical Completion certificate for construction, Q1 2023/24

Number of building constructed in line with the tenant requirements on an annual basis by conducting the following:

2023/24

Performance Indicator

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

Strategic Objectives 2021/22

2020/21

4. Concluding construction of buildings: a. Gatehouse (Q4 2019/20) b. BoT Platform construction (Q3 2019/20) 5. Concluded post construction (Occupation Certificate): a. (ATCC) including Services (Q4 2019/20) b. Gatehouse (Q4 2019/20)

3. Commenced construction: a. Building A (Q4 2019/20) b. Gatehouse (Q3 2019/20) a) BoT Platform construction (Q2 2019/20)

c. Perimeter Fence (Q4 2019/20) d. Office Block (Q4 2019/20)

Medium Term Targets

Baseline target b) Contractor procured for construction Q3 2022/23 c) Commencement of construction Q4 2022/23

2022/23

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1. Mini-Factory 2. Incubation Centre a) Design preparation and QS estimates concluded, Q2 2023/24 b) Contractor procured for construction Q3 2023/24 c) Commencement of construction Q4 2023/24

Number of building constructed in line with the tenant requirements on an annual basis by conducting the following:

2023/24

Performance Indicator

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

Table 2: Programmes and Sub-programme

Property Development and Seek approval for the Construction development of the CAV Airside Phase from the Department of Defence, the South African Air Force, the Air Force Base Waterkloof and the Department of Public Works during 2022/23 and develop a joint business case and master plan to be approved by CAV Board and Steering Committee by 2023/24

Airside Development

Strategic Objectives

-

2021/22

2020/21 -

Medium Term Targets

Baseline target

3* Milestones to be achieved in support of the CAV Airside development.

The milestone is:

2023/24

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1. To seek approval for 1. Development of a the development of joint Business case to a business case from be approved by the the Department of Steering Committee Defence, the South (Q2 2023/24) African Air Force, 2. Design and develop the Air Force Base CAV Airside Master Waterkloof and the Plan to be approved Department of Public by the CAV Board (Q4 Works (Q3 2022/23).

2023/24).

2. To establish a Steering 3. Airside Master Plan to Committee and be approved by the Working Committee Steering Committee for the development of (Q4 2023/24) a joint business case (Q4 2022/23).

2* Milestones to be achieved in support of the CAV Airside development.

The milestones are:

2022/23

Quarterly targets Q1 (April-June 2021)

Annual target

2021/2022

Annual Performance Plan for 2022/23 approved by the Board and submitted to the dtic: Q4 2021/22

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

Annual Performance Plan approved by the Board and submitted to the dtic as per statutory time frames

Strategy Planning, Monitoring and Evaluation

Performance Indicator

PROGRAMME 1: ADMINISTRATION

-

Q2 (July-Sep 2021)

12. QUARTERLY PERFORMANCE TARGET 2021/22

-

Q3 (Oct-Dec 2021)

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Annual Performance Plan for 2022/23 approved by the Board and submitted to the dtic

Q4 (Jan-Mar 2022)

-

The report is: 1* Quarterly report (Submitted within 30 days after the quarter ended).

The reports are: 1. 4* Quarterly reports (Submitted within 30 days after the quarter ended) 2. 1* Annual report for 2020/21: Q2 2021/22

75% of the procurement spend to black participants (Level 4 or higher) as reported to the CEO: Q4 2021/22.

Number of reports submitted to relevant authorities in line with the timeframes prescribed by PFMA: A&R Committee, Board and the dtic

Number of reports submitted to relevant authorities in line with the timeframes prescribed by PFMA: A&R Committee, Board and the dtic

The documents are: 1. Board charter 2. Audit and Risk Committee Terms of Reference 3. Human Resources and Remuneration Terms of Reference.

-

Q1 (April-June 2021)

2021/2022

Number of documents reviewed and approved by the Board in line with the renewal requirements. Q4 2021/22

Quarterly targets

Annual target

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

Percentage achievement of B-BBEE procurement target as reported to the CEO on an annual basis.

Financial Management

Number of reports (quarterly CAV reports and annual report) submitted to relevant authorities in line with the timeframes prescribed by PFMA: A&R Committee, Board and the dtic

Number of Board Charter and Terms of References reviewed and approved on an annual basis

Governance & Legal Services

Performance Indicator

PROGRAMME 2: CORPORATE SERVICES

-

-

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Report submitted to the CEO on procurement spend 75% to black participants (Level 4 or higher)

The report is: 1. 1* Quarterly report (Submitted within 30 days after the quarter ended).

The report is: The reports are: 1. 1* Quarterly report 1. 1* Quarterly report (Submitted within 30 (Submitted within 30 days after the quarter days after the quarter ended). ended).

2. 1* Annual report (for 2020/21 financial year).

The documents are: 1. Board charter 2. Audit and Risk Committee Terms of Reference 3. Human Resources and Remuneration Terms of Reference.

Number of documents reviewed and approved by the Board.

Q4 (Jan-Mar 2022)

Number of reports submitted to relevant authorities in line with the timeframes prescribed by PFMA: A&R Committee, Board and the dtic

-

Q3 (Oct-Dec 2021)

Number of reports submitted to relevant authorities in line with the timeframes prescribed by PFMA: A&R Committee, Board and the dtic

Number of reports submitted to relevant authorities in line with the timeframes prescribed by PFMA: A&R Committee, Board and the dtic

-

Q2 (July-Sep 2021)

The documents are: 1. HR strategic plan. Q4 2022/23 2. HR Policy manual, Q3 2022/23

-

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

-

-

1* Risk management report 1* Risk management report submitted to the Audit & submitted to the Audit & Risk Committee Risk Committee

ICT Master Plan established & reviewed by management and approved by the Board: Q4 2021/22

Number of risk 4* Risk management management reports reports submitted to the A&RC submitted in line with the approved risk management strategy to the A&RC on a quarterly basis

Risk Management

ICT Master Plan approved by the Board on a biennial basis

Information and Technology Management

Number of Human Resources documents reviewed and approved by the Board/ HR & Remco or the CEO in line with the delegation of authority (DoA) on an annual basis:

Number of Human Resources documents reviewed and approved by the Board/ HR & Remco or the CEO in line with the delegation of authority (DoA) on an annual basis:

Clean audit outcome achieved on annual financial statement for 2020/21 financial year. Q2 2021/22

Achieve clean audit outcome on annual financial statements.

Human Capital Management

-

-

75% management action plans for Internal Audit & External Audit findings implemented by management as reported to the A&RC: Q3 2021/22 & Q4 2021/22.

Clean audit outcome achieved on annual financial statement for 2020/21 financial year.

Q2 (July-Sep 2021)

Q1 (April-June 2021)

2021/2022

Quarterly targets

Annual target

Percentage of management action plans for Internal Audit & External Audit findings implemented by management as reported to the A&RC on a biannual basis.

Performance Indicator

1* Risk management report submitted to the Audit & Risk Committee

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1* Risk management report submitted to the Audit & Risk Committee

ICT Master Plan approved by the Board

The document is: 1. HR strategic plan The document is: 1. HR Policy manual

-

Number of Human Resources documents reviewed and approved by the Board/ HR & Remco or the CEO in line with the delegation of authority (DoA) on an annual basis:

-

-

Number of Human Resources documents reviewed and approved by the Board/ HR & Remco or the CEO in line with the delegation of authority (DoA) on an annual basis:

75% management action plans for Internal Audit & External Audit findings implemented by management as reported to the A&RC

Q4 (Jan-Mar 2022)

50% management action plans for Internal Audit & External Audit findings implemented by management as reported to the A&RC

Q3 (Oct-Dec 2021)

Quarterly targets Q1 (April-June 2021)

Annual target

2021/2022

Establishment of a Business case to formulate a business strategy to ascertain alternative business models including airside access for submission to the Board: Q3 2021/22.

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

Establishment of a Business case to formulate a business strategy to ascertain alternative business models including airside access for submission to the Board: Q3 2021/22

Tenant acquisition and retention

Performance Indicator

PROGRAMME 2: BUSINESS DEVELOPMENT

-

Q2 (July-Sep 2021)

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Q4 (Jan-Mar 2022)

Establishment of a Business case to formulate a business strategy to ascertain alternative business models including airside access for submission to the Board

Q3 (Oct-Dec 2021)

Q1 (April-June 2021)

2021/2022

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a. Drawings approved a. Commencement of

by CoT construction b. Environmental Authorisation (EA) approved by Gauteng Department of Environmental Affairs (GDEA) c. Wayleave application for construction approved by CoT

1. Roads & Stormwater (Van Ryneveld & van der Spuy intersection upgrade) by:

Commence the external utility services for Landside Development Phase for:

Q4 (Jan-Mar 2022)

a. Drawings approved by CoT Q3:2021/22 b. Environmental Authorisation (EA) approved by Gauteng Department of Environmental Affairs (GDEA) Q3:2021/22 c. Wayleave application for construction approved by CoT Q3:2021/22 d. Commencement of construction Q4: 2021/22

Commence the external utility services for Landside Development Phase for:

Q3 (Oct-Dec 20201

1. Roads & Stormwater (Van Ryneveld & van der Spuy intersection upgrade) by:

-

Q2 (July-Sep 2021)

1. Roads and Stormwater (Van Ryneveld & van der Spuy intersection upgrade)

Commence the external utility services for Landside Development Phase through the following:

Quarterly targets

Annual target

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

1. Roads & Stormwater: Phase 1 (van Ryneveld & van der Spuy intersection upgrades)

Conclude the external utility services for Landside Development Phase by issuing of a practical completion certificate for the following services:

Landside Development

Performance Indicator

PROGRAMME 4: INDUSTRIAL PARK DEVELOPMENT AND OPERATIONS MANAGEMENT

Q1 (April-June 2021)

2021/2022

2. Water and Sanitation a. Environmental Authorisation (EA) approved by Gauteng Department of Environmental Affairs (GDEA) Q3: 2021/22 b. General Authorisation (GA) approved by the Department of Water & Sanitation (DWS) Q3:2021/22. c. Water Use Licence Application (WULA) approved by the Department of Water & Sanitation (DWS) Q3:2021/22. d. Wayleave application for construction approved by the City of Tshwane (CoT) Q3:2021/22 e. Commencement of construction Q4:2021/22

Quarterly targets

Annual target

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

2. Water and Sanitation

Performance Indicator Q2 (July-Sep 2021)

Q4 (Jan-Mar 2022)

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2. Water and Sanitation 2. Water and Sanitation; a. Environmental by Authorisation (EA) approved by Gauteng a. Commencement of Department of construction Environmental Affairs (GDEA) b. General Authorisation (GA) approved by the Department of Water & Sanitation. c. Water Use Licence Application (WULA) approved by the Department of Water & Sanitation (DWS). d. Wayleave application for construction approved by CoT

Q3 (Oct-Dec 20201

3. Roads & Stormwater a) Intersection upgrade: van Ryneveld & Jim Verster. b) Signal timing: van Ryneveld & Theron Street; by: i. Design preparation and engineering estimates concluded ii. Contractor procured for construction iii. Commencement of construction

1. Roads & Stormwater a) Intersection upgrade: van Ryneveld & Jim Verster. b) Signal timing: van Ryneveld & Theron Street; by: i. Memo submitted to CoT to update bulk services agreement

Q3 (Oct-Dec 20201 Commence the external utility services for Landside Development Phase through the following:

Q2 (July-Sep 2021)

Commence the external utility services for Landside Development Phase through the following:

Q1 (April-June 2021)

2021/2022

3. Roads & Stormwater a) Intersection upgrade: van Ryneveld & Jim Verster; and b) Signal timing: van Ryneveld & Theron Street; by: i. Memo submitted to CoT to update bulk services agreement, Q1 2021//22 ii. Design preparation and engineering estimates concluded, Q3 2021/22 iii. Contractor procured for construction Q4 2021/22 iv. Commencement of construction Q4 2021/22

Quarterly targets

Annual target

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

3. Roads & Stormwater: Phase 2 a) Intersection upgrade: van Ryneveld & Jim Verster. b) Signal timing: van Ryneveld & Theron Street

Performance Indicator

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3. Roads & Stormwater a) Intersection upgrade: van Ryneveld & Jim Verster. b) Signal timing: van Ryneveld & Theron Street; by: i. Contractor procured for construction ii. Commencement of construction

Commence the external utility services for Landside Development Phase through the following:

Q4 (Jan-Mar 2022)

-

2. Perimeter Fencing a) Commencement of construction, Q1 2021/22 b) Practical Completion certificate for construction, Q4 2021/22

1. Aerosud Gatehouse a) Commencement of construction, Q1 2021/22 b) Practical Completion certificate for construction, Q4 2021/22

Number of building constructed in line with the tenant requirements on an annual basis by conducting the following: 1. Aerosud Gatehouse a) Commencement of construction

Number of building constructed in line with the tenant requirements on an annual basis by conducting the following:

CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

Table 3: Quarterly Target per programme and sub programme

The buildings are: 1. Aerosud Gatehouse 2. CAV Gatehouse 3. Perimeter Fencing 4. SMME Building 5. Mini-Factory 6. Incubation Centre

Number of building constructed in line with the tenant requirements on an annual basis:

1. Roads & Stormwater a) Intersection upgrade: van Ryneveld & Jim Verster. b) Signal timing: van Ryneveld & Theron Street; by: i. Memo submitted to CoT to update bulk services agreement

Commence the external utility services for Landside Development Phase through the following:

Q1 (April-June 2021)

2021/2022

Conclusion of the township establishment for the CAV Landside Development by obtaining Section 82 certificate from CoT through the following:

Q2 (July-Sep 2021)

Quarterly targets

Annual target

1. Renewal of the Section 1. Renewal of the Section 7 (6) approval by CoT 7 (6) approval by CoT for ATCC Building (Q2: for ATCC Building 2021/22) Q2:2021/22 2. Concluding Roads & Stormwater services (Q1: 2022/23) 3. Concluding Water & Sanitation Services (Q1: 2022/23)

Conclusion of the township establishment for CAV Landside Development by obtaining Section 82 certificate from CoT through the following:

Performance Indicator

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1. Aerosud Gatehouse a) Practical Completion certificate issued for construction.

2. Perimeter Fencing a) Practical Completion certificate issued for construction

Number of building constructed in line with the tenant requirements on an annual basis by conducting the following:

-

-

-

Q4 (Jan-Mar 2022)

Q3 (Oct-Dec 20201

13. RISK MANAGEMENT AND MITIGATION PROGRAMME 1: ADMINISTRATION The CAV’s board of directors is responsible for the total process of risk management, as well as for forming its own opinion on the effectiveness of the process. Executive Management is accountable to the board for designing, implementing and monitoring the process of risk management and integrating it into the day-to-day activities of the CAV. The Board is tasked with overseeing the management team in executing policies and procedures which seek to ensure the integrity of the CAV’s risk management and internal controls, as well as maintaining and monitoring the organisation’s systems of internal control and risk management.

The ultimate outputs of any business risk identification exercise are to: • Identify and prioritise business risks that have the highest potential to impact (positively or negatively) on the achievement of the company’s strategic objectives.

• Provide a valuable tool and reference source for management, assisting them with identifying and/or managing strategic risks including financial, operational, compliance and reputational risks; and • Provide an assessment of the risk profile, which will usually form the basis for ongoing review that will assist with:

o The determination of the proposed focus of a detailed risk management approach (i.e. risk management plan) for the organisation; and

o The development and rollout of controls and an action planning process to address an appropriate risk response / amelioration strategy for significant risks.

CAV acknowledges the definition of “risk” as the chance of an event or outcome happening in the future that may have an adverse impact or effect on the Company.

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The following has been identified as the Top 7 Risks for CAV. RISK CATEGORY

MITIGATING ACTIONS

1. Strategy Planning, Monitoring and Evaluation: • 1.1. Inadequate leadership recruitment; selection and retention across all levels in the organisation.

1.2. Lack of certainty regarding the sustainability of the organization.

• •

2. Information and Communication Technology Management

• •

2.1. Inadequate ICT Infrastructure and capacity. .

• • •

3. Financial Management

•

3.1. Inadequate financial management within the organization.

•

4. Human capital management

•

4.1. Inadequate talent management

• • •

5. Landside Management

•

5.1. Delays in the implementation of the industrial park development.

• • • • 6. Airside Development

•

6.1. Lack of CAV airside development access.

• • •

Implement appropriate performance evaluation system for all levels of leadership including the Board.

Secure interim capital funding from the dtic until completion of potential incorporation to identified institution, e.g., IDP, TASEZ, GGDA. ‘Review CAV’s value proposition and how it can offer services to the advance manufacturing sector including the mobility sector and automotive industry.

Implementation of ICT strategy and systems architecture.

Establish relationship with SITA, to do a High level needs assessment for CAV Appointment of ICT service provider for document management system.

Procurement of ICT cabling infrastructure and server for the ATCC facility.

Investigate Cloud based solutions as a backup solution. Cyber security plan including firewall, anti-virus package, email security and encryption.

Benchmarking of the finance function to similar type organization.

Filling of vacant positions in the finance division.

Ensure the implementation of the Talent Management Strategy and Plan.

Study support to be provided in line with HR policies.

Outline a Succession Planning Roadmap for the organization.

Job Grading assessment of all positions.

Follow up with CoT on, approval of Plans, Section 82 Certificate and ATCC Building Occupancy Certificate.

Follow up with DWS, GDEA, RW, SANRAL and CGS regarding all pending approval processes.

Follow up with both DPWI National Office and DPWI Regional Office with regards to the Power of Attorney (PoA).

Finalise requirements, e.g. roads upgrading, to obtain Township Proclamation.

Engage with DPWI to secure land for the C side development Engage key stakeholders i.e. DoD, DPWI, the dtic, GGDA, GIDZ and various airport authorities including CoT with Wonderboom Airport.

Investigate the use of existing facilities, e.g., ORTIA and Wonberboom Airport to fastrack CAV”s airside development objectives Commit stakeholder to binding stakeholder compacts (agreements).

Continuous improvement of the value proposition to attract tenants.

Table 4: Risk Management and Mitigation CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

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14. FINANCIAL PLAN PROGRAMME 1: ADMINISTRATION 14.1. Introduction The table contained in this chapter indicate the CAPEX and OPEX requirements of the CAV to set it on a path to achieve a state of self-sustainability. The financial plan has been developed to ensure that the CAV is financially sustainable for the period covered by the Medium-Term Expenditure Framework (MTEF). It incorporates practical, realistic plans to: • Ensure that the operational function is strategically positioned to achieve the mandate of the CAV, provided capital expenditure funding is made available; and • Maintain effective controls.

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14.2. CAV Budget Allocation for 2021/22 to 2023/24 The CAV Operational Budget includes the following for the MTEF period:

Table 5: CAV Current Expenses

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14.3. CAV Funding Shortfall for 2021/22 financial year The CAV operational expenditures are funded by the dtic even though the long-term plan is that the total operational budget would be funded through rental income generated. For the 2021/22 financial year the budget includes a transfer of R5.4m from deferred income (Q1: R 3.0m, Q2: R 1.6m, Q3: 224k and Q4: R621k), which was accumulated over the previous years. It is mainly because of the budget revision by the dtic during the previous financial year and the anticipated increase in expenses during the current financial year. The investment income is expected to be R2m during the year and it has been taken into account in the current expenditure. The current funding that is available would contribute towards minimum infrastructure development in Landside Phase 1a and a portion of bulk external services (roads and storm water, water and sanitation, etc.) to secure an occupation certificate for the existing building. The target to build buildings would depend on securing more funds from the dtic.

Negotiations are on-going with the dtic in order to find a funding mechanism to access more funding for the capital project for the current year and going forward.

To that end: • The underlying strategy is to initially build the balance sheet of CAV to ensure its long-term sustainability; and • This strategy would require a further funding for CAV operational expenses.

14.4. CAV Budget Allocation per programme for 2021/22 to 2023/24 The CAV Budget includes the following for the MTEF period:

Table 6: Expenditure per Programme The Non-project capital expenses is mainly to fund the ICT infrastructure, including purchasing of servers and its configuration.

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14.5. CAV Budget Allocation per Quarter for 2021/22 Financial Year The CAV Operational Budget includes the following for the period:

Table 7: CAV Quarterly Operational Expenses’ Projection

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14.6. Capital Funding Projection for 2021/22- 2023/24 The CAPEX requirements for the period 2021/22-2023/24 is set out in Table 9. The CAPEX requirements for the development of the Landside and ultimately the Airside include undertaking the following: • Further development of the CAV Landside Phase 1a, 1b and 2 Bulk Earthworks and Infrastructure (BEWI) which include inter alia bulk utility services’ infrastructure, surveys, township establishment, design work, etc.; • Park design fees for facilities for interested parties as potential new tenants; • Specific Tenant Building design and development, including SMME, common area and sub-tier supplier and service provider tenant facilities and buildings; and • Construction of SMME and other CAV common area (e.g. the intended business centre) buildings.

The financial planning philosophy underpinning the capital expenditure requirements and any other future buildings that will be constructed in the CAV is that: • Rental levels for buildings financed by the CAV should be able to service at least 50% of a 10- year bond on the building, covering the building costs not included in the infrastructure definition. The balance of the building cost should be funded with equity funding, which initially will be state funding and in subsequent years when the balance sheet has been strengthened, from the balance sheet; • This principle dictates that the balance sheet of the Centurion Aerospace Village should be built in the first number of years to enable CAV to operate independently from year 6 onwards; • The preferred Return on Investment (ROI) is 7.5%, which translates to a rental level for a typical industrial use building consisting of up to 30% office space. The rental is based on a Triple A net lease. The tenants are therefore responsible for all operational cost including insurance, rates and short-term maintenance of buildings; and • Should the building cost per m² increase due to tenant requirements, such as a higher office component, special foundations required for equipment, special installations, etc., then the rental will have to be increased to maintain the 7.5% ROI level.

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CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

Table 8: Capital Funding Requirements | 58

15. IMPLEMENTATION PLAN Considering the global economic climate, the South African Aerospace and Defence industry has been declining in terms of production and sales for some considerable time as a result of a number of factors. These include a major decline in Defence spending (and budget allocations to procurement, acquisitions, maintenance and more); significant regulatory barriers; the impact of COVID 19 on commercial and civil air travel and related industries and slow responses to industry conditions The past financial year due to the pandemic had an impact on all areas of the CAV operations, including cashflow. It is in this view that the CAV will in the new financial year look at formalising it’s township establishment process and securing the portion of land known as C side from the Department of public works and infrastructure. This will enable the CAV to attract more investors and possible PPP’s. The CAV will also look at the diversification of its objectives, to explore synergies of suppliers hosted at the village, integrating in the automotive and mobility value chains’.

Awareness raising of CAV will also be driven by the launching the new website and participating in CAMAASA meetings. The biggest constraint for the CAV is the ability to access Capital Funding. It is the intention that the CAV’s request for Capital Funding to service the current tenant requirements for which Letters-of-Intent (LOI) were received from potential tenants.

These projects can only materialise if capital funding is made available so that these LOI’s can be migrated to signed pre-lease and lease agreements.

Operational Actions for 2021/22 • Management Objectives as extracted from the key actions: o Confirm incorporation with Institution, such as IDP, GGDA, TASEZ, GIDZ. • Develop business case to enhance CAV’s value proposition • Initiation of the incorporation process by the executive authority the dtic o Head-Lease Agreement and Power of Attorney (POA) - DPWI • Review the Head-Lease Agreement with DPWI • Fast Track PoA to continue with the CAV Township Proclamation process • Operations Functional Area (Implementation):

o Completion of the Township Proclamation processes of the Landside Development Phase o Complete all the external works to service the Landside Development site • Environmental Authorisations (EA) for external works • General Authorisation (GA) & Water Use License (WULA) for external works • Water, Stormwater, Sanitation and Road Intersection upgrades o Construct of the Aerosud Gatehouse: • Finalisation of the offer and acceptance for Aerosud Gatehouse.

• Gatehouse construction and completion. o Upgrades to the remainder of the external Roads Projects: • van Reyneveld Avenue & van der Spuy Street (Intersection Upgrades).

• van Reyneveld Avenue & Jim Verster Avenue (Intersection Upgrades).

• van Reyneveld & Theron Street (Signal Timing) CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

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CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

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CENTURION AEROSPACE VILLAGE NPC I APP I 2021/22

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Physical Address Cnr Van Ryneveld Avenue & Van der Spuy Street Pierre van Ryneveld Park Centurion 0045 Postal Address Post Net Suite # 69 Private Bag X25723 Monumentpark 0105 Contact Details Tel: (+27) 1 2 662 5379 info@cav.org.za www.cav.org.za RPXXX/XXXX ISBN: XXX-X-XXX-XXXXX-X