CAV Annual Report 2022

ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC “Hi-Tech Industrial Park Development for the Aerospace, Defence and Advanced Manufacturing Sector”

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, 2022

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

THE MANDATE OF THE CAV

The Centurion Aerospace Village (CAV) is the mandated implementation arm of the Department of Trade and 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 Industries value chain.

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

1

TABLE OF CONTENTS CONFIDENTIALITY AND DISCLAIMER

IFC

THE MANDATE OF THE CAV

1

TABLE OF CONTENTS

2

TABLE OF TABLES

4

TABLE OF FIGURES

4

4.1. The Aerospace and Defence Industry: Global Context 4.2. Aerospace and Defence Industry African context South African context

5 6

EXECUTIVE DIRECTOR’S REPORT

7

PART A: GENERAL INFORMATION

9

GENERAL INFORMATION

10

GLOSSARY OF TERMS AND CONCEPTS

11

19

4.4. The Aerospace and Defence Industry:

FOREWORD BY THE CHAIRPERSON OF THE CAV BOARD

18

4.3. Aerospace and Defence Industry:

FOREWORD BY THE DEPUTY DIRECTOR-GENERAL OF THE DTIC

17

5.

Clusters and Industrial Parks

21

ORGANISATIONAL STRUCTURE

23

5.1. Institutional Capacity – Organisational Environment

1. STATEMENT OF RESPONSIBILITY AND

23

5.2. Functional Structure

23

5.3. Organisational Core Activities

24

5.4. The CAV Organisational Structure

24

CONFIRMATION OF ACCURACY OF THE ANNUAL REPORT 2. STRATEGIC OVERVIEW

14 15

PART B: PERFORMANCE INFORMATION

25

1.1. Performance Information by Programme

26

PART C: GOVERNANCE

32

1.

CORPORATE GOVERNANCE REPORT

33

1.1. Introduction

33 33

2.1. Linking the CAV Vision, Mission and Objectives

15

2.2. Vision of the CAV

15

2.3. Mission of the CAV

15

2.4. Strategic Objectives

15

2.5. Our Values

16

1.2. Governance Structure

2.6. Company Profile

16

1.3. Compliance with laws, rules, codes and standards

3. LEGISLATIVE MANDATE

17

1.4. Drivers of good governance

34

3.1. Institutional Arrangements

17

1.5. Board Composition

34

3.2. Corporate Governance

17

3.3. Capital Development

17

1.6. Tenure of the Board

35

4. SITUATIONAL ANALYSIS

17

1.7. Skills, Knowledge, Experience, Diversity and Attributes of Directors 1.8. Board Sub-committees

2

34

35 35

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

1.9. Code of Ethics

36

5.

1.10. Board Attendance

36

ACTIONS

1.11. Board Induction

37

5.1. Infrastructure, Services’ and Facility Development

1.12. Attendance of Board and Subcommittee Meetings

5.2. Interaction with Interested Parties

37

50

50 52

5.3. Strategic Partnership and interested

1.13. Compliance with Laws and

2.

OVERVIEW OF PAST DEVELOPMENT

Regulations

37

1.14. Conflicts of Interest

37

1.15. Minimising Conflicts of Interest

37

1.16. External Audit

38

1.17. Internal Audit

38

RISK MANAGEMENT

38

tenants.

6.

THE CAV AS A VIABLE BUSINESS

52 52

6.1. Creating a Commercially Viable Entity 52 6.2. Creating a Responsible South African Company

52

7.

FUTURE OUTLOOK

53

8.

IMPLEMENTATION PLAN

53

PART D: HUMAN RESOURCES MANAGEMENT 41 1.

HUMAN RESOURCES OVERVIEW

42

2.

THE CORE HR FUNCTIONAL AREAS

44

PART F: FINANCIAL INFORMATION

55

Directors’ Responsibilities and Approval

56

Independent Auditor’s Report

57

PART E: PROJECT INFORMATION

46

Directors’ Report

60

1.

THE CAV CLUSTER DEVELOPMENT

47

Statement of Financial Position

61

2.

CAV – A CONCENTRATION OF SUB-TIER

Statement of Comprehensive Income

62

INDUSTRY SUPPLIERS

47

Statement of Changes in Equity

63

2.1. Technical and Specialist Team

48

Statement of Cash Flows

64

2.2. Service Providers

49

Accounting Policies

65

Notes to the Annual Financial Statements

69

3.

CAV AT A GLANCE

49

Detailed Income Statement

85

4.

CAV OVERVIEW OF THE YEAR UNDER REVIEW

49

4.1. CAV Institutional Form and Structure

49

4.2. Project delivery

50

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

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TABLE OF TABLES Table 1: Annual Performance Reporting

31

Table 2: Attendance of Board Meetings

37

Table 3: Top 7 Risks for CAV

39

Table 4: Labour Relations

43

TABLE OF FIGURES Figure 1: The Vision, Mission and Strategic Objective Statement

15

Figure 2: CAV Values

16

Figure 3: CAV Functional Structure

23

Figure 4: CAV Organisational Structure

24

Figure 5: CAV Governance Structure

33

Figure 6: HR Functional Areas

44

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CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

FOREWORD BY THE DEPUTY DIRECTOR-GENERAL (DDG: IC&G) OF the dtic

The CAV is intended to be a specialised industrial development tool focussing on advanced manufacturing. Its mandate is that of an industrial park and will be central in promoting South Africa as a global player in the aerospace, defence and advanced manufacturing industry value chains.

Despite numerous challenges, the CAV has managed to achieve several milestones which include: the completion of the gate house and perimeter wall; an additional tenant is occupying the ITCT2 building; and have capacitated the board leading to improved governance. In the coming year, the focus will be given in attaining the Special Power of Attorney and construction of selected infrastructure. This process is critical in pursuing the CAV dream and to secure private Capital Funding to service the needs of interested tenants.

the dtic, through the Industrial Competitiveness and Growth Division, will continue to devote increased resource and policy support to strengthen the development of a self-sustainable CAV project. In this context, the dtic, will regularly review and update its support of the CAV project to take account of new developments and evolving trends in the domestic and global developments including industrial landscape, as well as inputs from our stakeholders and partners.

It is my expectation that the experienced CAV board and management team will continue to make 2022/23 another year of great achievements. It is also my expectations that they will continue to facilitate the implementation of the CAV project, attracting additional tenants into the CAV.

Nimrod Zalk Deputy Director-General (Acting) Industrial Competitiveness and Growth the dtic

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

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FOREWORD BY THE CHAIRPERSON OF THE CAV BOARD I am pleased to report that CAV’s project is growing from strength to strength towards realisation of a goal to have a fully established Industrial Park. During the 2021/22 financial year the CAV team continued with critical development processes to initiate the township establishment programme. I am proud to say CAV continues to have good working relations with National Government Departments, Gauteng Provincial Government Departments and Government Entities. The National Government Departments that CAV interacted with during the year under review were the dtic as the shareholder, The Department of Public Works & Infrastructure (DPWI) and the Department of Water & Sanitation (DWS). The engagements with DPWI related to CAV obtaining a Power of Attorney (PoA) from DPWI as the landowners. The PoA from DPWI is a requirement for township proclamation processes. There were Technical Reports submitted to DWS and relate to the General Authorisation (GA) to approve the installation of the bulk water pipeline. In addition, the DWS pending approval is on the already submitted Technical Report for Water Use Licence Application (WULA) and this relates to the installation of the bulk sewer pipeline for CAV. The Gauteng MEC for the Department of Economic Development (GDED) was also engaged towards the realisation of the incorporation of CAV into GGDA. The Gauteng Department of Agriculture & Rural Development (GDARD) was also engaged by CAV within the year under review. Based on these engagements, GDARD therefore approved the submitted Environmental Authorisation Technical Report for Bulk Water Services. The other report for Bulk Sewer services should be approved by GDARD within the first quarter of the next Financial Year.

CAV also engaged Rand Water an entity of DWS, and this resulted in Rand Water approving a Wayleave extension that will allow CAV to install a new bulk water pipe above the existing bulk pipeline of Rand Water. There were also engagements with the Council for Geoscience (CGS) an entity of the Department of Mineral Resources & Energy (DMRE).

CGS is responsible for the approval of the conditions of construction site. CGS gave CAV a Record of Decisions (RoD) of approving the submitted technical

report for the construction of the Aerosud Gatehouse.

The strategic outlook for the CAV future activities can be captured as follow: • • • •

Completion of the Township Establishment processes; Initiation of the external utility services and infrastructure works for water, stormwater, roads and sanitation; Start the construction of a Shared SMME MultiTenant Facility.

Start the construction of the first tenant occupied manufacturing facilities.

My sincere appreciation goes to the stakeholders that make up the CAV project - the National, Provincial and Local Government and the aerospace and defence industries and its associations. A word of thanks is extended to all the contracted consultants and partners that have worked tirelessly to take this initiative forward. I would like to extend my gratitude to the CAV Board, the Audit & Risk Committee, and the Human Resources and Remuneration Committee (RemCo) as well as the Internal and External Auditors for their assurance in supporting the CAV Board in discharging its duties towards exercising its oversight role. It is indeed an honour to serve as a member of the Board in conjunction with committed board members I also extend my gratitude, on behalf of the CAV Board, to the CAV employees for their continued performance, dedication and support while the CAV’s mandate was executed over the past year despite the challenges that were faced.

With the continued commitment of all the mentioned stakeholders and interested parties, CAV will be taken into full scale development as the next phase of project marks the preparation of the land to cater for tenant requirements.

_______________________________________ Sandile Ndlovu Chairperson of the Board

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CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

EXECUTIVE DIRECTOR’S REPORT The Centurion Aerospace Village (CAV) continued to make steady progress during the past year on several construction activities in our quest to support growth of the Aerospace, Defence and Advanced Manufacturing Sectors. Several construction and non-construction related activities support the CAV to deliver on our mandate to establish an Industrial Park to support the growth and integration of local manufacturing into global supply chains. Our construction activities for Landside Development Phase are still ongoing. This phase will service tenants without a direct need to an airstrip and that offer products or services used in the manufacture of aircraft or defence related equipment, components and sub-assemblies. The minimum internal Bulk Earth Works and Infrastructure (BEWI) to support the future construction of manufacturing facilities in phase 1a and b has already been completed, with the remainder of the BEWI programme still to follow in future Financial Years. The minimum infrastructure includes internal water reticulation, storm water channelling, electrical works and the first section of road infrastructure. External utility services works are underway and applications for various environmental approvals such as Water Use License approvals and Basic Assessment and General Authorisations for bulk and bulk sewer were submitted. The Gauteng Department of Agriculture & Rural Development (GDARD) approved the Technical Report for water services. The Technical report for sewer services was being assessed by GDARD at the end of the Financial Year under review. The Department of Water and Sanitation was still busy with the assessments for the already submitted Technical Report for General Authorisation (water services study) and the Technical Report for Water Use Licence Application (WULA) (a sewer services study).

CAV’s Management has and will continue to interact with Government Departments that are stakeholders to the park development. These Departments are Department of Public Works & Infrastructure (DPWI), Department of Employment & Labour (DOEL), Department of Water & Sanitation (DWS) and the Gauteng Department of Agriculture & Rural development (GDARD). The CAV liaison with City of Tshwane (CoT) is an ongoing process as they approve: (1) drawings for the current and future buildings, (2) issue wayleave approvals for all bulk external utility services, (3) issue Section 82

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Certificate for all utility services being connected to the internal services and finally issue 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 (CGS), South African National Roads Agency (SANRAL) and Rand Water (RW).

During the 2021/22 financial year, the following approvals were obtained towards the landside development: • • • • • • • • •

The drawings approvals for construction of Gatehouse 1 (Aerosud gatehouse) from CoT, The drawings approvals for construction of Park Perimeter Fence from CoT; The final occupation certificate has been obtained for both Gatehouse 1 and Perimeter Fence development from the CoT; The Basic Assessment approvals for external sanitation services from GDARD; The Water Use License (WUA) approvals for external sanitation services from DWS; The environmental assessment approvals for external water services from GDARD; The Water Use License (WUA) approvals for external water services from DWS; The wayleave approval for water and sanitation services from CoT; and The wayleave approval for water and sanitation services from Rand Water.

During the current financial year, the strategic focus will be to obtain the required power of attorney from the DPWI towards completing the township establishment process, and subsequently complete all external utility services 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.

The focus is on finalising the external water and sanitation services implementation processes and seeking necessary approvals to implement the external streets and stormwater services, which would then pave the way for the finalisation of Section 82 Certificate. The 7

Contractor for the construction of external water and sanitation services was appointed in October 2018, and price negotiations are underway to complete the water and sanitation services. The construction of these services was delayed by the COVID-19 outbreak and delays in the Roads and Stormwater Department of the City of Tshwane approving the pipe crossing of the R21.

The following processes are underway or are being initiated in finalising necessary approvals for external street and stormwater services: • • •

•

The environmental consultants have been appointed to conduct the studies for General Authorisation/Water Use License from DWS; The environmental consultants have been appointed to conduct the studies for Basic Assessment approval from GDARD; A new Traffic Impact Assessment is being initiated and will be used as an addendum to the already submitted comprehensive TIA to CoT for the street and stormwater drawings approvals; A revised bulk services report to be submitted to the CoT in finalising the updated Bulk Services Agreement (BSA) for external street and stormwater services. The revised BSA would determine the number of intersections to be upgraded because of CAV development. This is required as a result of recent developments such as the Castle Gate Shopping Centre in the area.

Non-construction related activities included continuous engagements with Gauteng Provincial Government and more specifically, to the Department of Economic Development (GDED) in relation to the proposed incorporation of CAV into the GGDA. This request was made to support the entity to secure Capital Funding that is required to address the attraction and retention of interested investors. The Inter-Governmental Relations (IGR) will undoubtedly strengthen support for investment as it will allow the CAV to access the suite of incentives that is available under the dtic, and in addition with a view on accessing SEZ incentives.

(CoT) Municipality continues as CoT assists the CAV to unlock critical development approvals and processes that facilitated the occupation of the new tenants in our existing building.

The CAV will continue to forge strong partnerships with all the relevant role-players and departments at the National, Provincial and Local levels of Government as well as with the Aerospace and Defence industry as this will facilitate the development of the CAV’s future phases to support the medium to long-term stability of the local aerospace industry. The CAV’s future phases consist of an Airside Development Phase for tenants that require direct access to an airstrip as well as tenants offering Maintenance, Repair and Overhaul (MRO) services and an in addition to the Landside Development Phase, the CAV has identified land adjacent to its current development that could serve the long-term needs should the industry require more land for expansion purposes.

In conclusion, I would like to thank each member of the CAV for their hard work and dedication. For belief in our mission and unwavering support towards our cause. I also thank our executive authority, the CAV Board of Directors and our value industry partners for their patience, extremely valuable advice, oversight, support and guidance. The organisation is steadily progressing into a development that will see the Landside Development Phase of the CAV ready to support construction of new facilities in the coming year.

_______________________________________ Binu Sam Executive Director

The CAV has furthermore continued to receive strong support from our main member, the dtic and would not have achieved any success without this crucial partnership. The relationship with the City of Tshwane

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CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

PART A GENERAL INFORMATION

GENERAL INFORMATION Registered Name:

Centurion Aerospace Village

Registration Number:

2000/006996/08

Physical Address: C/o Van Ryneveld Avenue and Van der Spuy Street Pierre Van Ryneveld Park Centurion 0045 Postal Address: Postnet Suite # 69 Private Bag X25723 Monument Park 0105 Telephone Number:

(+27) 12 662 5379

Email Address:

info@cav.org.za

Website Address:

www.cav.org.za

External Auditors: A2A Kopano Inc. Registered Auditors Bankers: Investec Bank Limited

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CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

GLOSSARY OF TERMS AND CONCEPTS

A&D

AEROSPACE & DEFENCE

CGS

COUNCIL FOR GEOSCIENCE

A&RC

AUDIT AND RISK COMMITTEE

DDG

DEPUTY DIRECTOR GENERAL

AD

ACTIVE DIRECTORY

DoA

DELEGATION OF AUTHORITY

AG

AUDITOR GENERAL

DoD

DEPARTMENT OF DEFENCE

AISI

AEROSPACE INDUSTRY SUPPORT INITIATIVE

DPWI

DEPARTMENT OF PUBLIC WORKS AND INFRASTRUCTURE

AISDP

AEROSPACE INDUSTRY SECTOR DEVELOPMENT PLAN

dtic

DEPARTMENT OF TRADE, INDUSTRY COMPETITION

AM

ADDITIVE MANUFACTURING

EA

ENVIRONMENTAL AUTHORISATION

ANDTc

AFRICAN NON-DESTRUCTIVE TESTING CENTRE

GDARD

GAUTENG DEPARTMENT OF AGRICULTURE & RURAL DEVELOPMENT

AEROSPACE INDUSTRY DEVELOPMENT PLAN

GDED

GAUTENG DEPARTATMENT OF ECONOMIC DEVELOPMENT

AEROSPACE TRAINING AND CERTIFICATION CENTRE

GGDA

GAUTENG GROWTH AND DEVELOPMENT AGENCY

BROAD-BASED BLACK ECONOMIC EMPOWERMENT

HR

HUMAN RESOURCES

HRM

HUMAN RESOURCES MANAGEMENT

HSE

HEALTH, SAFETY AND ENVIRONMENTAL

ASDP ATCC B-BBEE BEWI

BULK EARTHWORKS AND INFRASTRUCTURE

BoD

BOARD OF DIRECTORS

BOT

BUILD OPERATE TRANSFER

IAC

INTERNATIONAL AUDIT CHARTER

BTS

BUILD TO SUIT

IATA

INTERNATIONAL TRANSPORT ASSOCIATION

BTL

BUILD TO LEASE ICT

CAV

CENTURION AEROSPACE VILLAGE

INFORMATION AND COMMUNICATION TECHNOLOGY

CEO

CHIEF EXECUTIVE OFFICER

IDC

INDUSTRIAL DEVELOPMENT CORPORATION

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

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IDD

INDUSTRIAL DEVELOPMENT DIVISION

OEM

ORIGINAL EQUIPMENT MANUFACTURER

IDZ

INDUSTRIAL DEVELOPMENT ZONE

OPEX

OPERATIONAL EXPENDITURE

IFRS

INTERNATIONAL FINANCIAL REPORTING STANDARDS

POA

POWER OF ATTORNEY

PFMA IIA

INSTITUTE FOR INTERNAL AUDITING

PUBLIC FINANCE MANAGEMENT ACT

IPAP

INDUSTIAL POLICY ACTION PLAN

Q

QUARTER

JASC

JOINT AEROSPACE STEERING COMMITTEE

REMCO

REMUNERATION COMMITTEE

KPAs

KEY PERFORMANCE AREAS

R&D

RESEARCH AND DEVELOPMENT

MoA

MEMORANDUM OF AGREEMENT

SACPCMP

SOUTH AFRICAN COUNCIL FOR PROJECT AND CONSTRUCTION MANAGEMENT PROFESSIONS

MoI

MEMORANDUM OF INCORPORATION

SAMI

SAUDI ARABIAN MILITARY INDUSTRIES

MoU

MEMORANDUM OF UNDERSTANDING

SHRQ

SAFETY, HEALTH, RISK AND QUALITY

MRO

MAINTENANCE, REPAIR AND OVERHAUL

SITA

STATE INFORMATION TECHNOLOGY AGENCY

SLA

SERVICE LEVEL AGREEMENT

MTEF

MEDIUM TERM EXPENDITURE FRAMEWORK

SMME

SMALL MICRO AND MEDIUM ENTERPRISE

WTTC

WORLD TRADE AND TOURISM COUNCIL

NEF

NATIONAL EMPOWERMENT FUND

NPC

NOT FOR PROFIT COMPANY

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CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

GLOSSARY OF CONCEPTS

SUPPLIER TENANTS: Parts or component suppliers, as manufacturers or assemblers of

components or parts of aircraft according to OEM specifications and

delivery of such parts and components to the OEMs, leasing and using facilities from CAV SERVICE PROVIDERS: Providers of non-production services to OEMs and suppliers, e.g., waste

removal, cleaning, transport and logistics, machinery maintenance, ICT, facilities management, etc.

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

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1. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY OF THE ANNUAL REPORT

We confirm that to the best of our knowledge all information and amounts disclosed in this Annual Report is consistent with the Annual Financial Statements audited by the Independent External Auditors.

The Annual Report is complete, accurate and free from any omissions and has been prepared in accordance with the guidelines issued by National Treasury.

The Annual Financial Statements (Part F) have been prepared in compliance with the applicable requirements of the Companies Act of South Africa, 71 of 2008 and in accordance with International Financial Reporting Standards (IFRS).

The Accounting Authority is responsible for the preparation of the Annual Financial Statements and judgements made in this information. The Accounting Authority is also responsible for establishing and implementing a system of internal control designed to provide reasonable assurance about the integrity and reliability of the performance and human resources information and the Annual Financial Statements.

The External Auditors are engaged to express an independent opinion on the annual financial statements.

In our opinion, the Annual Report fairly reflects the operations, performance and human resources information and the financial affairs of Centurion Aerospace Village for the financial year ended 31 March 2022.

______________________________________ _____________________________________ Binu Sam Sandile Ndlovu Executive Director Chairperson of the Board

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CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

2. STRATEGIC OVERVIEW

2.1. Linking the CAV Vision, Mission and Objectives The CAV’s Vision, Mission and Objective statements are displayed here:

VISION To develop a worldclass Industrial park promoting competitiveness and sustainability

MISSION

STRATEGIC OBJECTIVE

To support the growth of a sustainable aerospace, defence, and advanced manufacturing industry

To stimulate economic development by the formation of an industrial Park cluster

Figure 1: The Vision, Mission and Strategic Objective Statement

2.2. Vision of the CAV

2.4. Strategic Objectives

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

The strategic objectives of the CAV, in order to stimulate economic development through the establishment and operation of an Industrial Park, are as follows: •

2.3. Mission of the CAV 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.

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

• •

To become a hi-tech advanced manufacturing industrial park in support of the Aerospace, Defence and advanced manufacturing industry; and 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.

15

2.5. Our Values The Values of the CAV team are as follows: RESPECT

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

TEAMWORK

Dedicated teamwork is core to our culture.

OPEN AND HONEST COMMUNICATION

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

CLIENT FOCUSED

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

WORK WITH PURPOSE

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

BELIEVE IN OUR ABILITIES

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

Figure 2: CAV Values

2.6. Company Profile

representatives: OEM suppliers of components, parts and tools, as well as service providers will likewise benefit from synergistic and economy of balanced applications; and

2.6.1. The Company & its Development The CAV is an initiative of the Department of Trade and 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, defence and other advanced manufacturing industry suppliers into proximity with one another and to co-locate them next to tier 1 supplier companies and anchor partners.

The CAV is being developed on State-owned land provided by the Department of Public Works (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: •

• 16

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)

•

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 namely: •

Landside Development (Short, Medium and Longer term): Phase 1 CAV Landside is envisaged to house firms who do not require runway access that specifically conduct design and manufacturing operations; and

•

Airside Development (Longer Term): Phase 2 CAV Airside is envisaged to house industry sub-tier firms who require runway access that specifically do upgrades, aircraft maintenance, repair and overhaul (MRO) and aircraft refurbishments.

Both Phases of developments are planned to be implemented over multiple reporting periods. 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: CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

•

•

• • • •

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 Waterkloof Air force Base.

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.

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.

3. LEGISLATIVE MANDATE

• •

3.3. Capital Development The development planning, construction and operations of the CAV are conducted within the prescribed statutory prescripts provided by the relevant levels of government.

4. SITUATIONAL ANALYSIS 4.1. The Aerospace and Defence Industry: Global Context Global and African Aerospace and Defence (A&D) Industry trends1 are of significant importance for the South African aerospace and defence industry and will influence the strategic outlook for CAV as it opens up new opportunities to provide support to the South African Aerospace and Defence sectors.

The key findings of the report reveal that:

3.1. Institutional Arrangements

•

The commercial aircraft order backlog is at its peak of more than 14,000 with approximately 38,000 aircraft expected to be produced globally over the next 20 years. Manufacturers are ramping up production to accommodate growing aircraft demand and as OEMs increase production rates, suppliers are at risk to fail in ramping up production.

•

Geopolitical tensions are continuing to intensify and demand for military equipment is on the uptick, driving defence spending across the globe.

•

Changes in international trade agreements are likely to disrupt the global supply chains and increase costs. OEMs are seeking new solutions to develop international best-of-breed suppliers. Many of the latest breakthroughs and the most adaptable advances in new technologies are driven by and available not

CAV is a Non-Profit Company in terms of the 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.

3.2. Corporate Governance 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, 1

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

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

https://www2.deloitte.com/global/en/pages/manufacturing/articles/global-a-and-d-outlook.html 17

from A&D companies, but from the innovation clusters that are expanding their influence in virtually every large global seat of power.

•

Mergers and Acquisitions (M&A) activity remains strong as pressure on suppliers to reduce costs and increase production rates continues.

•

Though A&D industry growth is primarily led by the United States, few other regions including China, France, India, Japan, the Middle East, and the UK, will be contributing to the industry’s performance in the near term. Africa is predicted by the International Air Transport Association (IATA) to become one of the fastest growing aviation regions in the next 20 years with an annual expansion rate of nearly 5%.2 Other regional A&D trends include3: China’s defence industry spend projected to grow by 9%-10% in the future; France intends to increase military spending by 5% per annum; India has a demand for more than 2000 singleaisle aircraft; Japanese air traffic projected to grow sluggishly by 3,2% per annum; Middle East air traffic projected to grow by 5,2% creating a demand for almost 3,000 new wide-body aircraft; in the United Kingdom Brexit is expected to disrupt supply chains and the country’s aviation industry would seek new trade agreements with supplying countries.

to date, supports around 6.9 million jobs and USD 80 billion in economic activities. Commercial airlines, in particular, can capitalize and attain a significant market share in this vast market by taking advantage of the booming leisure and business travel and tourism.

In 2018, the World Travel & Tourism Council (WTTC) declared Africa as the second-fastest growing tourism region next to Asia-Pacific.

Challenges in the African Aerospace Industry: •

• •

•

4.2. Aerospace and Defence Industry: African context Over4 the recent years, opportunities in the dynamic African aviation industry is steadily rising, thanks to the continent’s growing political stability and tourism potentials. The International Air Transport Association (IATA) has predicted that Africa will become one of the fastest growing aviation communities in the world over the next 20 years at a yearly increase of almost 5%.

The continent continues to strengthen its aviation industry as it is considered one of the key drivers of Africa’s future economic development. Today, Africa accounts for around 3% of the global air transport sector, running 731 airports and 419 airlines. Aviation, 2

https://www.africanaerospace.aero/african-carriers-seefastest-growth-of-any-region-in-august-for-air-freight.html

3

Deloitte: 2019 global aerospace and defense industryoutlook: Robin Lineberger; 2018

4

https://www.atqnews.com/ng/opportunities-and-chalenges-in-african-aviation-industry/

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5

While5 it is evident that aviation in Africa has the potential to fuel economic growth, several barriers exist. Weak infrastructure, high ticket prices, poor connectivity and lack of liberalisation rank amongst the many challenges.

Safety and security. Safety is the most pressing challenge facing the aviation industry.

Airport infrastructure in most African countries is outdated and not built to serve the growing volume of passengers or cargo. Airlines and airports are often managed by government entities or regulatory bodies and foreign investment is discouraged. Modernising infrastructure and operations require investment and expertise, ideally from public-private partnerships. Africa needs to open its doors for private capital investment.

Regulation and government actions: Despite growing awareness of the role that the aviation industry could play in the development of the continent, this industry is still not a priority of Africa governments. Liberalisation will bring strong outcomes – new routes, more frequent flights, better connections and lower fares.

These improvements will increase the number of passengers, which will have both direct and indirect positive effects on trade, business travel and tourism. In turn, this has impacts for the broader economy, generating more tourism revenues, jobs and productivity. They will enhance the GDP of African countries and uplift the welfare of ordinary Africans. According to an IATA survey, if just 12 key African countries opened their markets and increased connectivity, an extra 155,000 jobs and USD 1.3 billion in annual GDP would be created in those countries.

A study by InterVISTAS Consulting shows that in South Africa, liberalisation could yield an estimated 15,000 new jobs and generate USD 284 million contribution to national GDP’s. https://oecd-development-matters.org/2018/10/29/ unlocking-africas-aviation-potential/

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

In the African A&D industry, the Leonardo and Airbus are challenging the Hercules tactical airlift supremacy in Africa and making their presence felt in North Africa.

Chinese military equipment is growing in Africa with two thirds of African countries operating some Chinese equipment. USA, Russia and Israel as well as Europe are the other key players in the African A&D industry.

•

•

4.3. Aerospace and Defence Industry: South African context

•

A case for South African MRO:The growing African aerospace industry raises the question on whether the airline operators can continue to afford spending their maintenance budgets abroad while establishing their own MRO facilities is prohibitively expensive. It is evident from the above evidence that Africa embodies great potential in the establishment of aircraft MRO and a number of international operators are moving in to fullfil the continents needs by investing in facilities and skills development: •

• • •

•

Nigeria’s Aero Contractors is engaged with the Nigerian government to attract private sector partners in a build-operate-transfer (BOT) MRO facility in Nigeria, Ghana is proceeding with a US$400 million MRO project in Kumasi, ST Engineering (Singapore) has announced contracts with national airline customers in Ivory Coast, Senegal and Mauritania, Estonia-based MRO is expanding in Africa through Direct Maintenance (Dutch) with bases in Kenya, Zambia, Zanzibar, Tanzania and Kenya, and Kenya MRO is supported by most West African countries for the maintenance of their Boeing 737 and Embraer aircraft. Kenya Airways does line maintenance in a growing number of other African airports.

•

In terms of technologies, Additive Manufacturing (AM) is seen as having great application in MRO. This disruptive technology, also known as 3D printing, holds promise as a cost-effective way to reproduce legacy spares, reduce inventory and manufacture parts in situ. Lufthansa Technik has already embraced the technology and set up a facility in Hamburg to expand its MRO competence and experience in this technology.

These trends highlight some immediate opportunities for the South African A&D industry such as: •

Commercial Aerospace movements in South Africa: •

Solenta Aviation is moving into freight conversions with Swiss specialist IPR conversions. Solenta is looking at establishing a freight conversion facility in Johannesburg,

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Canadian airframer, Bombardier, plans to get closer to its customers in SA by relocating is Q Series regional support to Airways Park, close to OR Tambo International Airport, Lufthansa Technik (LHT) is the first foreign MRO provider to set up shop in South Africa to support the Comair fleet. LHT has set-up bases in Johannesburg and Cape Town in 2019 with plans for further expansion to other national airports, and The Paramount Group is active in the South African A&D industry and is engaged with the Saudi Arabian Military Industries (SAMI) to develop technologies and capabilities across land, sea and air-based based platforms and systems integration.

SAA Technical has all but collapsed as a maintenance organisation. Some of this failure may be attributed to the recent significant dropp in air traffic movements caused by the Covid-19 pandemic. This decline provides opportunities for the development of a replacement capacity, potentially located at CAV.

6

The opportunity for South Africa to become a supplier country to the world A&D OEMs. The South African A&D industry is ranked 40th in a geographic assessment of manufacturing attractiveness by PwC6, above countries such as Turkey (41st), Saudi Arabia (45th) and Brazil (53rd). The attractiveness of South Africa as an investment destination for A&D players opens https://www.pwc.com/us/en/industrial-products/ publications/assets/pwc-aerospace-manufacturingattractiveness-rankings-2019.pdf

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the opportunity to attract international OEMs and Tier 1 suppliers to CAV, •

•

•

The increased demand for air traffic in Africa increases the demand for MRO and maintenance of aircraft at a suitable destination on the continent. South Africa is ideally positioned with its good infrastructure and skills base to provide such a service to several African airlines. The strategic plan of CAV is therefore also focussed on the establishment of supporting infrastructure (runway access) to MRO companies wishing to establish in South Africa, 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 be an opportunity for CAV to establish the high tech industrial park to support the industry by providing support for high bandwidth communication using broadband fibre optic network, 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.

Industrial Participation strategy of the dtic, are the major aerospace OEMs, •

The 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 most stringent regulatory controls, mainly because of safety standards. Global supply requires of supplier’s major investment in quality and process approvals and specialist training. The costs of such approvals sometimes act as a barrier for smaller companies operating in isolation,

•

The aerospace industry is exceedingly dependent upon specialized competencies. These competencies are strongly dependent upon track record and established experience base. It is not realistic to base a strategy upon new entrants to immediately acquire the core competency necessary for participation in the higher tiers of supply. Core competency is historically presently vested in a few existing companies, not all of which can presently be considered B-BBEE-compliant, hence the need to support and create such 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 scale that should be able to allow a supplier competing in the local industry to market itself as an international role player,

•

Further to the above challenges, the limited government stewardship in the South African industry is currently perceived to be the biggest issue by aerospace

Challenges of the South African Aerospace and Defence Industry

The previously mentioned Aerospace Industry Sector Development Plan (the AISDP) is characterised by specific challenges that will 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: •

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The SA market for aerospace services is too limited to offer marketable justification for the existence of a SA industry, and the industry must thus position itself for global participation. The most accessible clients, and those that are best accessed through the

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

industry players, followed by sporadic demand. Accordingly, government should 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) has been established to coordinate the aerospace industry for collective gain, •

The aerospace industry also requires a significant investment in terms of machinery plant and equipment. 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,

•

Slow progress within the made toward transformation.

The sector is not 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, high complexity vs. low volume-based sector, sector in South Africa is relatively small, etc., and

•

Finally, there is an insufficient pipeline of incubated sub-tier supplier companies and skilled personnel to absorb current knowledge and experience, and an insufficient intra-governmental co-ordination for industryspecific 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

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Landside and Airside Developments to succeed in contributing to the selected sectors of the economy meeting the mentioned challenges.

4.4. The Aerospace and Defence Industry: Clusters and Industrial Parks Cluster type developments in South Africa include the development of Industrial Development Zones (IDZs), e.g. Coega and East London IDZ as established IDZs, as well as the new generation IDZs at Saldanha in the Western Cape, Dube Trade Port in Kwa-Zulu Natal (KZN) and the Maluti-A-Phofung (MAP) IDZ in the Eastern Free State. The IDZs are expected to migrate to Special Economic Zones (SEZs). The Aerotropolis (Aerospace + Metropolis) type developments that are being undertaken at Ekurhuleni (around the OR Tambo Airport) and the Dube Trade Port seek to leverage off the combined and synergistic economic and demographic developments in an area.

The development of industrial parks across a variety of industries and areas have taken place to attract investors, tenants and users of facilities and to leverage off local and foreign investment, availability of shared services and phased development of infrastructure and utility services. Benchmarked industrial park type developments are the Automotive Supplier Park in Rosslyn (Northern part of the City of Tshwane’s geographical Area) and the Nelson Mandela Bay Logistics Park at Uitenhage (near Port Elizabeth in the Eastern Cape).

A cursory glance at experiences both locally and internationally indicate that there is more scope of commercial sustainability of cluster and industrial park developments if projects of this nature are operated outside of government administration structures albeit with government initiation and even funding of the process, at least initially with infrastructure and services’ development funding.

The following examples of global industrial parks of cluster concept developments with comparable mandates and similar goals were identified as follow: •

Hi-Tech Industrial Parks with a similar focus on the Aerospace, Defence and Advanced Manufacturing Sectors: − Aeropolis, Aerospace Technology Park of 21

Andalusia in the province of Seville, in the South of Spain, − − −

7

22

Advanced Manufacturing Sectors8: − PIEMONTE AGENCY, − LAZIO CONNECT, − Moravian Aircraft Cluster, and

Aerospace cluster in Chihauhau, Mexico, Aerospace Valley in Toulouse, France and Midparc Casablanca Free Zone in Morocco.

•

Hi-Tech Industrial Parks where a close working relationship exists between a private development and the Department of Defence or Country’s Airforce7: − Northolt Airforce Base, and − Edward’s Airforce Base.

•

Aerospace Cluster Concepts as a ValueAdded service to the Aerospace, Defence and

−

8

Hamburg Aviation.

These clusters are often structures in support of infrastructure developments and operate autonomously as in the case of Piemonte and Lazio.

Both these Industrial Parks were developed by the military with a strong focus on supporting the strengthening of military supply chains – both are good supporting developments in support of the CAV’s future Airside Development Phase.

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5. ORGANISATIONAL STRUCTURE 5.1. Institutional Capacity – Organisational Environment Our team is composed of highly trained and experienced staff, who are working together to achieve our goal of becoming the number one aerospace and defence Industrial Park in Southern Africa.

The CAV team is committed to excellence, ethics, and integrity, which improves our business performance and serve the interest of our stakeholder.

5.2. Functional Structure CENTURION AEROSPACE VILLAGE CEO

OPERATIONS FUNCTION

BUSINESS DEVELOPMENT AND MARKETING FUNCTION

FINANCE FUNCTION

HUMAN RESOURCES FUNCTION

CORPORATE GOVERNANCE FUNCTION

Park Development and Construction

Tenant and Investment Management

Treasury and Working Capital Management

Human Capital

Company Secretariat and Legal Counsel

Park Operations

Marketing and Communication

Financial Reporting and Control

Payroll

Monitoring and Evaluation

Facilities Management

Financial Planning and Analysis

Compliance

Supply Chain Management

Operations Management Function

Business Development Function

Bookkeeping and Payables/ Receivables

Corporate Services Function

Figure 3: CAV Functional Structure

The functional structure of the CAV includes three main areas of focus namely: “Business Development”, “Operations” and “Support” functions. The intention is to appoint a responsible manager in each area CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

who would drive the function to ensure that the CAV continues to deliver world-class, result oriented services and facilities.

23

5.3. Organisational Core Activities The Organisation’s core activities are intended to develop, construct and operate the CAV Landside development phase and to unlock and initiate the conceptual design for the Airside development phase and other planned phases. In rolling-out the core activities, the nature and the extent of the following sub areas are acknowledged and supported: • •

Property Development and Construction Services; Shared Services (ICT, Security, Landscaping & Business Support services, etc.);

• • •

Property and Facilities Management Services; Centre Management Services (Business, Conference and Exhibition Centre); and Cluster Support Programmes.

The development, provisioning and operational capacity and capabilities of the mentioned functional sub-areas are key to the successful deployment of the CAV Development, as well as to provide the platform to achieve the set aims, objectives and targets of the CAV.

5.4. The CAV Organisational Structure BOARD OF DIRECTORS **HR and Remuneration Committee

*Audit and Risk Committee

CHIEF EXECUTIVE OFFICER Executive Assistant

HR OFFICER

Monitoring & Evaluation Officer

General Administrator

Legal Counsel & Company Secretary

Cleaner

Interns

FINANCIAL MANAGER

BUSINESS DEVELOPMENT MANAGER

Financial Assistant

Investment Analyst

Facilities Officer

Procurement Officer

Incentive Specialist

Dev & Cons Officer

Financial Clerk

Marketing & Communication Officer

Technology Officer

Board of Directors

Vacant Position

Sub-Committee

Filled Positions

Executive Committee

Interns

Managers

OPERATIONS MANAGER

Project Administrator

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

Figure 4: CAV Organisational Structure 24

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

PART B PERFORMANCE INFORMATION

PERFORMANCE INFORMATION BY PROGRAMME

Programme 1: Administration Performance Indicator

Annual target 2021/22

Actual Achievements 2021/22

Deviation from planned target to actual achievements 2021/22

Achieved Stakeholder management report was approved by the Board during the quarter.

No Deviation

Strategy Planning, Monitoring and Evaluation Stakeholder management Stakeholder management plan strategy and plan approved by the Board: Q4 approved by the Board 2021/22 on an annual basis.

Programme 2: Corporate Services Performance Indicator

Actual Achievements 2021/22

Annual target 2021/22

Deviation from planned target to actual achievements 2021/22

Governance & Legal Services Number of governance documents reviewed and approved by the Board on an annual basis.

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

Number of governance documents reviewed and approved by the Board in line with the renewal requirements: Q4 2021/22 The documents are: 1. Board Charter 2. Audit and Risk Committee Terms of Reference 3. Human Resources and Remuneration Terms of Reference

Achieved 1* Board Charter and 2* Terms of References were reviewed and approved by the Board during the quarter.

No Deviation

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

The reports are: 1. 4 Quarterly reports (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.

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

Achieved 4* Quarterly performance reports were submitted to the Board and the dtic on a quarterly basis.

1* Annual report for the period 2020/21 financial year was submitted to the relevant authorities.

No Deviation

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CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Actual Achievements 2021/22

Deviation from planned target to actual achievements 2021/22

Performance Indicator

Annual target 2021/22

Number of contract management reports submitted to the CEO/ Board on each contract (including leases and SLAs) entered into by the CAV on a bi-annual basis.

Contract management report submitted to the CEO/Board on each contract (including leases and SLAs) entered into by the CAV: Q4 2021/22

Achieved A contract management report was submitted to the CEO/Board on each contract (including leases and SLAs) entered-into by the CAV.

No Deviation

Appointment of additional Board members to the CAV Board and reestablishment of the following Committees: 1. Audit and Risk 2. Human Resources.

Q3: 2021/22

Appointment of additional Board members to the CAV Board and re-establishment of the following Committees: 1. Audit and Risk 2. Human Resources Q3: 2021/22

Achieved Four additional Board members were appointed to the CAV Board and the 2 Board Committees were re-established in Q3 2021/22.

No Deviation

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 2021/22.

Achieved Reports submitted to the CEO on procurement spend for the 2021/22 financial year with an actual Achievement of 90% spend on black participants.

No Deviation

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

100% management action plans for Internal Audit & External Audit findings implemented by management as reported to the A&RC: Q3 2020/21 & Q4 2020/21.

Not Achieved 75% of the External audit findings and 52% of the management action plans for the Internal Audit have been implemented by management.

Deviation The unimplemented findings mainly related to the ICT infrastructure and services. An ICT officer has been appointed to resolve the ICT issues.

The unimplemented action plans are being attended to and would be completed in the 2022/23 financial year.

Achieve clean audit outcome on annual financial statements.

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

Achieved Clean audit outcome achieved for 2020/21 financial year

No Deviation

Financial Management

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Performance Indicator

Annual target 2021/22

Long-term sustainability of the CAV development is determined through a reliable financial modelling, which is to be approved by the Board in Q4 of 2021/22 financial year.

The financial modelling to show the following aspects: 1. Equity funding 2. Operational funding 3. Third party funding

A financial modelling is performed to determine longterm sustainability of the CAV development project, which is to be approved by the Board: Q4 2021/22.

The financial modelling to show the following aspects: 1. Equity funding 2. Operational funding 3. Third party funding

Actual Achievements 2021/22

Deviation from planned target to actual achievements 2021/22

Achieved The financial modelling was drafted which showed equity funding, operational funding, and third-party funding requirements

No Deviation

Achieved A Human Resource Strategic plan for 2022/23 financial year was approved by the Board during the quarter.

No Deviation

Not Achieved A Service Provider was appointed to assist in reviewing the HR Policy Manual.

Deviation The HR policy reivew is being finalised and the updated document would be submitted to the HR Committee and the Board in the first quarter of 2022/23 financial year.

Not Achieved An ICT master plan was submitted to the Board, but it was requested that additional information such as ICT Enterprise Architecture to be completed and incorporated into the Master plan prior to the approval of the Master plan

Deviation A service provider is being appointed for the development of ICT Enterprise Architecture, including ICT strategic plan.

It is anticipated that the entire process of finalising the masterplan would be concluded in Q3 of 2022/23 financial year.

Achieved 4* Risk management report were submitted to the Board on a quarterly basis.

No Deviation

Human Capital 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.

1. The documents are: 2. HR strategic plan: Q4 3. HR policy manual: Q3

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.

The documents are: 1. HR strategic plan: Q4 2021/22 2. HR policy manual: Q3 2021/22

Information and Technology Management ICT Master plan established & reviewed by management and approved by the Board on a biennial basis: The following are steps to be finalised for ICT Master plan: 1. ICT governance 2. Risk Assessment 3. Onsite environmental assessment 4. Processes and Policies assessment 5. Desktop assessment

ICT Master plan established & reviewed by management and approved by the Board on a biennial basis: The following are steps to be finalised for ICT Master plan: 1. ICT governance (Q4 2021/22) 2. Risk Assessment (Q4 2021/22)

Risk Management Number of risk 4* Risk management reports management reports submitted to the Board on a submitted in line with the quarterly basis. approved risk management strategy to the Board on a quarterly basis 28

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Programme 4: Industrial Park Development and Operations Management Annual target 2021/22

Actual Achievements 2021/22

Deviation from planned target to actual achievements 2021/22

Conclude the external utility services for the Landside Development Phase by issuing of a practical completion certificate for the following services: 1. Roads & Stormwater: Phase a. Intersection upgrade: van Ryneveld & Jim Verster; and. b. Signal timing: van Ryneveld & Theron Street

Commence the external utility services for Landside Development Phase through the following: Commence the external utility services for Landside Development Phase through the following: 1. Roads & Stormwater a) Intersection upgrade: van Ryneveld & Jim Verster; and. b) Signal timing: van Ryneveld & Theron Street by conducting: i) Memo submitted to CoT to update bulk services agreement Q1: 2021/22

Not Achieved An Addendum to TIA 2017, indicating the impact of the Castle Gate Shopping Centre on the intersections mentioned in TIA 2017 was submitted to the CoT in November 2021. In response to the submission, the CoT has requested additional information regarding the analysis and the impact of the traffic.

Additional information (Revised Traffic Impact Assessment (TIA) requested by the CoT has not been submitted due to Power of Attorney from the DPWI not been finalised.

Deviation Additional information requested by the CoT has not been submitted due to Power of Attorney from the DPWI not been finalised. Power of Attorney will result in the township proclamation process to be concluded and a revised TIA will be initiated and submitted to the CoT. Thereafter, Bulk Service Agreement (BSA) will be finalised between the CoT and CAV. Revised drawings will be submitted to CoT for approval once the TIA and BSA have been approved.

The Bulk Roads and Stormwater Services upgrades process is expected by CoT to start from planning phase once again.

Conclusion of the township establishment for CAV Landside Development by obtaining Section 82 certificate from CoT through the following: 1. Renewal of the Section 7 (6) approval by CoT for ATCC Building (Q2: 2021/22)

Conclusion of the township establishment for the CAV Landside Development by obtaining Section 82 certificate from CoT through the following: 1. Renewal of the Section 7(6) approval by CoT for ATCC Building Q2:2021/22

Not Achieved CoT is yet to respond to CAV’s request for an extension of Section 7(6) approval for temporary occupation of the ATCC building.

Deviation CAV is in the process of following up with the CoT in securing a temporary occupation certificate for the ATCC building.

Performance Indicator Landside Development

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Annual target 2021/22

Actual Achievements 2021/22

Deviation from planned target to actual achievements 2021/22

Number of buildings constructed in line with the tenant requirements on an annual basis: The buildings are: 1. Aerosud Gatehouse 2. Perimeter Fencing

Number of buildings constructed in line with the tenant requirements on an annual basis by conducting the following: 1. Aerosud Gatehouse a) Commencement of construction, Q1 2021/22 b) Practical Completion certificate for construction, Q4 2021/22 2. Perimeter Fencing a) Commencement of construction, Q1 2021/22 b) Practical Completion certificate for construction, Q4 2021/22

Achieved Practical completion was achieved for both the Aerosud Gatehouse and Perimeter fencing construction was achieved on 30 November 2021.

No Deviation

Number of projects handed over to the contractor for execution phase(construction): The following is the project: 1. External Water and Sanitation services (Q4: 2021/22)

Number of projects handed over to the contractor for execution phase(construction):

Not Achieved Completion delayed by Environmental approvals stemming from Bridges Division changes to water pipe design, which resulted in seeking WUA and EA. Initial design was for the water pipe to be attached to the bridge, and the approvals were received from Water and Sanitation department. However, the CoT Bridge department was not in favour of this design and have requested the pipes not to be attached to the bridge and requested it to be excavated across the stream, which resulted the activation of environmental approvals from GDARD and DWS.

Deviation All required environmental approvals from both the DWS and GDARD have been received. Wayleave approvals has also been granted by the CoT and Rand Water.

The construction of the work would commence once the price negotiation with the Contractor is concluded as the Contractor was appointed to install the water and sanitation services in October 2018.

Performance Indicator Landside Development

30

The following is the project: 1. External Water and Sanitation services (Q4: 2021/22)

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Performance Indicator

Annual target 2021/22

Actual Achievements 2021/22

Deviation from planned target to actual achievements 2021/22

Number of jobs opportunities created for: 1. Aerosud Gatehouse & Perimeter Fencing (30 Jobs) (Q4 2021/22) 2. External water and sanitation services (20 jobs) (Q4 2021/22)

Not Achieved It is assumed that during the construction of Aerosud Gatehouse and Perimeter Fencing, at least 30 jobs were created. However, the information provided by the supplier could not be verified by the external audit firm.

Deviation This target is treated as not achieved as the authenticity of the information provided by the Contractor is deemed insufficient.

CAV will draft template for reporting such targets in future and would be communicated to Contractors for future reporting.

Not Achieved The contract for External Water and Sanitation was not handed over to the Contractor due to pending approvals from DWS, GDARD and CoT, which was subsequently received in Q3 of the current financial year.

Deviation The construction of the work would commence once the price negotiation with the Contractor is concluded as the Contractor was appointed to install the water and sanitation services in October 2018.

Landside Development Number of job opportunities created during the construction phase of the following projects.

The projects are: 1. Aerosud Gatehouse & Perimeter Fencing (Q4 2021/22) 2. External water and sanitation services (Q4 2021/22)

Percentage of compliance with local content requirements for construction materials for submission to the CEO on an annual basis

100% compliance with the local content requirements for construction materials: Q4 2021/22

Achieved No Deviation 100% compliance with the local content requirements for construction materials during the Aerosud Gatehouse and Perimeter Fencing Construction as per the official confirmation from the Contractor

Table 1: Annual Performance Reporting

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PART C GOVERNANCE

1. CORPORATE GOVERNANCE REPORT 1.1. Introduction Corporate governance is the set of rules, practices, processes, customs, policies, laws and regulations that influences the way a company is controlled, directed and managed. The CAV’s Board of Directors acts as the focal point for and custodian of corporate governance for the company. The Board has reaffirmed its commitment to align CAV’s corporate governance with national and international best practices.

The CAV’s Board subscribes to the principles of good corporate governance and business practices. The principles of honesty, fairness, integrity, responsibility, accountability and transparency guide all its decisions and activities. CAV is committed to effective corporate governance to ensure that the interests of the organisation and its stakeholders remain paramount.

The Board’s function is to direct the organisation’s strategy to achieve sustainable economic, social and environmental performance. The Board Members have extensive experience and skills required to enable them to exercise their fiduciary duties effectively. They are responsible for ensuring that the organisation is financially sustainable and led by an independent non-executive Chairperson that reports to the dtic.

They strive to balance the pursuit and achievement of business objectives and compliance with the principles of good governance.

1.2. Governance Structure The CAV Board Charter sets out the specific responsibilities to be discharged by the Board members collectively and the individual roles and responsibilities, membership requirements, and procedural conduct expected from them to guide its effective functioning.

The Board is accountable for the strategic direction as well as the governance and oversight of the CAV project whilst the CAV Management is responsible for the day-to-day operations of the entity. The CAV reports to the Executive Authority, the Minister of Trade, Industry and Competition (the dtic), through the Industrial Development Division (“IDD”).

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 on matters assigned to them as per the Terms of Reference.

The following structure represents the governance structure of the CAV:

Minister of the dtic

Executive Authority

Board of Directors

Accounting Authority

GOVERNANCE Human Resources & Remuneration Committee Including Nominations Responsibilities

Audit and Risk Committee Including Social Ethics Responsibilities

Governance Committee

Figure 5: CAV Governance Structure

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

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1.3. Compliance with laws, rules, codes and standards

stated as follows: •

The Board is responsible for ensuring that the Company complies with applicable laws and regulations and considers adhering to rules, codes and standards.

Compliance with all applicable legislation, regulations, standards and codes is imperative to the Board, not as a tick box exercise, but because there is inherent business or governance value in doing so: •

•

•

Public Finance Management Act The CAV is a Non-Profit Company (NPC) as per the Companies Act, Act 71 of 2008.

Compliance to the Public Finance Management Act, 1999 is based on a Memorandum of Agreement (MOA) signed between the dtic and CAV. Every effort is being made by the Board and Management to comply with sections of PFMA. There were no findings of material non-compliance that were identified during the period under review.

Companies Act The CAV continued to revise governance requirements and practices in accordance with the Companies Act of 2008. The Company strives to comply with applicable sections of the Companies Act and the Board is of the opinion that no material non-compliance was identified during the period under review.

Alignment to King IV The Board has adopted the principles of openness, integrity and accountability as adopted in the King IV code on corporate governance. The Company’s Board undertook that it’s charter, the terms of reference of each Committee of the Board, as well as the policies and procedures should bear witness to this commitment.

The annual Board evaluation, as per the King IV Report on Corporate Governance, was not concluded due to the majority of the Board Members being newly appointed. The Board Members are not remunerated for their services.

1.4. Drivers of good governance The CAV Board ascribes to the fundamentals that establish effective corporate governance that are 34

• • • • •

Investor and Stakeholder confidence through transparent engagement with, recognition of legitimate expectations and accountability for meeting commitments (an inclusive stakeholder approach); Leadership through ensuring effective and ethical leadership in an organisation; Balance of power through diversity of views and protection against abuse; Sustainable organisational performance; Relevant, useful and transparent communication; and Efficient legal and regulatory compliance.

The ethical values of good corporate governance are the four primary pillars of responsibility, accountability, fairness and transparency. Every effort is being made by the CAV to value the highest standards of corporate governance.

1.5. Board Composition The CAV has a unitary Board which is constituted as provided for in its Memorandum of Incorporation (“MOI”). The Board includes both executive and nonexecutive directors and has a flat structure under the guidance of a chairperson.

As at 31 March 2022, the Board consisted of five directors: Four non-executive directors and one executive director. The non-executive directors are appointed by the dtic.

The Board is fully committed to maintaining the highest standards of integrity, accountability and openness necessary to achieve effective corporate governance.

Its primary responsibility would include amongst others: • • • • • •

Providing Strategic direction and leadership to the organisation and its Management; Ensuring good corporate governance and ethics in determining policy; Identifying key risk areas and key performance indicators for the organisation; Monitoring the development of CAV as an advanced High-Tech Manufacturing Cluster for the Aerospace and Defence Sectors; Making decisions on key financial matters; and Reviewing the performance of executive management against business plans, budgets and Key Performance Areas (KPAs).

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

The CAV had an Independent Non-Executive chairperson at the helm of the Board during the year under review. The Chairperson is appointed by the dtic. The Board is governed by a formal written Board Charter, which provides a framework of how the board operate as well as the type of decisions to be taken by the board and which decisions should be delegated to other Sub-Committees and Management.

The Board retains full and effective control over the operations of the organisation and has delegated some of its powers to the Board Sub-Committees.

1.6. Tenure of the Board Each director shall be required to hold office for a maximum period (a term) of three (3) years, unless the Member/s extend the term of office of such a director.

Unless the director’s term is extended, at the expiry of three (3) years, such director shall automatically retire from office and newly elected directors shall assume office as Director(s).

Retiring directors shall be eligible for re-election up to a maximum of one Board term.

1.7. Skills, Knowledge, Experience, Diversity and Attributes of Directors The Board considers that the skills, knowledge, experience, diversity and attributes of the directors as a whole are appropriate for their responsibilities and the Company’s activities. The directors bring a range of skills to the board including: • • • •

Aerospace and Defence Industry experience; Understanding of the economics of the sector in which the Company operates; Knowledge of the regulatory environments in which the Company operates; and Human Resources, Financial, supply chain, infrastructure development, strategy and policy development experience and knowledge

The skills and experience profile of the Board and its committees are to be reviewed to ensure an appropriate and relevant composition from a governance, succession and effectiveness perspective.

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1.8. Board Sub-committees In exercising control of the Company, the directors are empowered to delegate to various board committees.

The committees have specific terms of references, appropriately skilled members and access to specialist advice when necessary.

The delegation of authority to Sub-Committees or Management does not in any way mitigate or dissipate the discharge of their duties and responsibilities of the Board. Notwithstanding these delegations, the Board has reserved for itself certain decisions to ensure that it retains proper direction and control, in particular regarding significant strategic, financial, statutory and regulatory matters.

Each Board Committee acts within approved terms of reference and the Chairperson of each committee reports on the activities of the committee to the Board.

The Chairperson of each committee is a Non- Executive Director.

The Board had two sub-committees during the year under review, namely: • •

Audit and Risk Committee; and Human Resources and Remuneration Committee

a) Audit and Risk Committee The Audit and Risk Committee is an independent committee appointed by the Board.

This Committee is responsible for the recommendation of financial policies, budgets and goals to the Board. It reviews the Company’s financial performance against its set objectives and risk and operates in accordance with an approved Terms of Reference. The Board is in the process of appointing an independent member to serve on this Committee. The terms of reference stipulate the membership and tenure of the members of the Committee. Executive Management is required to attend the committee meetings by invitation.

Roles and Responsibilities: • • •

Review and approve the internal audit plan, ensuring that all material risks areas are adequately covered; Review and approve the internal audit charter; Review internal audit reports and effectiveness of internal audit; 35

• • • • • •

Recommend the appointment of external auditor and oversee the external audit process; Review and recommend the annual financial statements as well as the accompanying reports to the Board for approval; Ensure compliance with PFMA, PPPFA, Companies Act and related regulations; Ensure effective communication between the internal auditors, external auditors and management; Oversee functions related to Social and Ethics; and Oversee the company’s risk management, including but not limited to oversight of the development and implementation of the company’s risk framework and strategy.

The Audit and Risk Committee did not meet during the current financial year, as there were considered insufficient Board Members to establish the Committee.

CAV is in the process of appointing additional board members and the audit & risk committee members. The audit and risk committee work was carried out by the Board.

b) Human Resources and Remuneration Committee

The HR & RemCo has an independent role, operating as a custodian of HR related matters and making recommendations to the board for its consideration and final approval. The HR & RemCo does not assume the functions of management and involve themselves with operational HR responsibilities. The membership of the committee comprises of three non-executive directors. The Chairperson is appointed by the Board.

The terms of reference stipulate the membership and tenure of the members of the Committee. Executive Management is required to attend the committee meetings by invitation.

Roles and responsibilities The HR & Remuneration Committee’s tasks include the following: • •

•

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Overseeing overall human resources policies; Ensuring that the CAV complies with labour legislation and regulations and advising the Board on human resources and labour relations matters; Formulating the Human Resources Strategic Plan that supports the achievement of the CAV’s strategy and business plans;

• • •

Reviewing and making recommendations on remuneration policies for the CAV; Oversee functions of Nominations and consider board succession; and Determine the Board’s continuing development programme.

All HR & Remuneration Committee activities were performed by the Board during the year.

Non-Executive Directors Remuneration and Evaluation

No remuneration was paid to Non-Executive Directors during the period under consideration as the remunerate/on was being considered by the Board and the dtic. No formal board evaluation was conducted during 2021/22 financial year.

1.9. Code of Ethics CAV has a Code of Conduct and a Code of Ethics which defines a set of values and behavioural principles expected of its directors, employees and contractors.

These documents are intended to assist in ensuring a high ethical standard of business practice. The values encapsulated in the Code of Conduct are continuously instilled through on-going communication.

Furthermore, all employees are required to continually declare interests.

The Centurion Aerospace Village is committed to maintaining high standards of business integrity and ethics across all its activities. The Code of Ethics provides direction on the minimum standards to be followed or expected from the Board, the employees, the suppliers and all persons who come into contact with the organisation.

1.10. Board Attendance The Board is regularly supplied with appropriate and timely information relating to all aspects of the CAV. In addition, members of the Board are free to seek any further information they consider necessary in order to discharge their duties effectively and efficiently. The collective responsibility of the Board ensures that all members of the Board are involved in the process of arriving at significant decisions. The Board met as per the table below during the period under review:

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Attendance by members of the Board during the financial year ended 31 March 2022 is shown: Name

31/05/2021

28/07/2021

08/12/2021

30/03/2022

Mr. Sandile Ndlovu









Dr. Anneline Chetty





-

N/A

Mr. Shaun Moses







N/A

Mr. Tervern Jaftha

-

-

-



Mr. Nnditsheni Madavha

N/A







Mr. Chuene Ramphele

N/A





-









Mr. Binu Sam

Table 2: Attendance of Board Meetings ***Mr Shaun Moses & Dr Anneline Chetty (Term ended in December 2021 ): Mr Chune Ramphele & Mr Nnditsheni Madavha were appointed in May 2021

As of 31 March 2022, the Board consisted of the following members; • Mr. Sandile Ndlovu (Chairperson); • Mr. Tervern Jaftha; • Mr. Nnditsheni Madavha; • Mr. Chuene Ramphele; and • Mr. Binu Sam (Executive)

1.11. Board Induction

1.14. Conflicts of Interest

Newly appointed members of the Board received induction. The induction process includes an information pack that is provided to each member and attendance of a session regarding the operations of the CAV to enable them to obtain a good understanding of the core business of the organisation.

Members of the Board are advised, on an on-going basis, to declare any interests that could potentially conflict with those of the CAV. Where the Board believes that a conflict exists regarding a specific item under consideration, the conflict is clearly recorded in the Board minutes and, if considered appropriate by the rest of the Board, the Board member concerned is required to recuse themselves whilst the item is considered and discussed.

1.12. Attendance of Board and Subcommittee Meetings The attendance of Board and Subcommittee meetings is vital. Board and Subcommittee members must contribute meaningfully and constructively to the business of the organisation and to the discussions at meetings. This enables informed and credible decisionmaking.

1.13. Compliance with Laws and Regulations Assurance of compliance with and the effectiveness of systems of internal control is obtained through regular management reviews, internal audit reviews and testing of certain aspects of the internal financial control systems by the external auditors during the course of their statutory examinations.

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1.15. Minimising Conflicts of Interest CAV’s procurement process requires that all staff complete a declaration of interest form. All Supply Chain Management employees and others involved in supply chain activities sign the declaration (whether or not they have anything to declare) at each meeting.

Care is taken to prevent conflict of interest within the procurement unit. Should conflict exists, the affected official is excused from the process. Suppliers and Service Providers also declare their interest by completing the necessary documentation. Procurement personnel renew their declaration of interest annually.

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1.16. External Audit A2A Kopano Inc. was appointed as the external auditor for the 2021/22 financial year.

1.17. Internal Audit Mandate CAV’s Internal Audit is an independent and objective assurance and consulting function that is guided by a philosophy of adding value to improve the operations of the company. It assists CAV in accomplishing its objectives by bringing a systematic and disciplined approach to evaluating and improving the effectiveness of the company’s governance, risk management and control processes.

Internal Audit’s Responsibilities The internal auditor performed its duties according to an Internal Audit Charter (IAC), Annual Audit Plan and Strategy which was approved in the 2021/22 financial year. The Internal Audit function operates under the direction of the Audit and Risk Committee, which approve the scope of the work to be performed. The Internal Audit reports were presented to the Audit & Risk Committee. As a critical assurance provider within the combined assurance framework of the business, internal and external audits co-ordinate efforts and ensure that there is an optimal level of overlap between these assurance providers.

During the 2021/22 financial year, the internal audit successfully conducted internal audit assignments based on a “risk-based audit approach”, which is outlined in the approved internal audit plan.

The Internal Audit function is governed by the Companies Act, PFMA, King IV, Treasury Regulations, International Standards for the Professional Practice of Internal Auditing (IIA Standards) and the Code of Ethics of the Institute of Internal Auditors.

Conclusion The Board believes that good corporate governance is a dynamic process that requires on-going review and improvement. As such, CAV will continue to regularly review and update its governance practices and structures.

2. RISK MANAGEMENT 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-today 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 on-going review that will assist with: −

−

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

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

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.

• •

7. Stakeholder Management 7.1. Lack of benefit from stakeholder engagements

• •

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

Secure interim capital funding from the dtic until completion of potential GGDA incorporation.

Implementation of ICT strategy and systems architecture.

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 upo with DPWI regarding issuing the Power of Attorney and finalising the Township Establishment.

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

Set-up focused meetings with all stakeholders namely the CAV technical team, CoT officials, DWS, GDARD, Rand Water and CAV management to manage the project as a “drop dead” project.

Investigate the implementation of measures for poor performance by service provider.

Engage key stakeholders i.e. DoD, DPWI the dtic, GGDA and various airport authorities including CoT with Wonderboom Airport.

Engage with the relevant structures within the DoD such as the Military Command Council to solicit support for the CAV Airside Development Phase.

Commit stakeholder to binding stakeholder compacts (agreements).

Continuous improvement of the value proposition to attract tenants.

Table 3: Top 7 Risks for CAV

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Fraud Prevention The CAV has the fraud prevention strategy and plan that assist the entity in managing fraud, corruption, theft, maladministration, and any other dishonest activities of a similar nature in accordance with the provisions of the PFMA and treasury regulations.

It is the responsibility of the CAV employees to report all incidents of fraud or any other dishonest activity of a similar nature to their managers. If employees are uncomfortable in reporting such matters to their managers, they should report the matter to the CEO. Employees may also report such matters to the Audit and Risk Committee Chairperson if they wish to remain anonymous or for any other reason.

All managers are responsible for the detection, prevention and investigation of fraud or any dishonest activities of a similar nature within their areas of responsibility.

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The CAV fraud prevention strategy is focused on the following areas: • • • •

• • • •

Formalisation and Implementation of a zerotolerance culture to fraud and corruption within CAV; A high level of fraud awareness; and Management and control of an environment that proves difficult to misappropriate assets.

There are essentially four pillars to a fraud prevention strategy, which have been used as the basis for the CAV Fraud Prevention Plan.

They are as follows: Creating an anti-fraud environment; Understanding and managing the risks; Being proactive in defence; and Reacting swiftly to suspected or known crimes.

In the coming performance cycle, CAV plans to further enhance its fraud prevention measures, saving the company from potential losses from fraud and reducing the risk of reputational damage associated with the acts of fraud, corruption, sabotage, and other related threats.

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PART D HUMAN RESOURCES MANAGEMENT

1. HUMAN RESOURCES OVERVIEW

HR plays a key role in developing, reinforcing and changing the culture of an organisation. The Human Resources department is responsible for recruiting, screening, interviewing and placing workers within the organisation. It also oversees employee relations, payroll, benefits, training and development. The department also plan, direct and coordinate the administrative functions of an organization. In doing so, the function is guided by its vision of working in partnership with other functional areas in the organisation.

The Human Resources Department is responsible for ensuring that the CAV has the human resources capacity to deliver on its mandate. The department supports employee morale and helps employees develop a deeper commitment to the company and its goals.

The Human Resource Department is committed to providing strategic and quality HR services to the company’s internal and external stakeholders. The Key HR objective is the attraction and retention of staff. To realise our mission and vision as an entity, the following HR strategic imperatives will be considered:

Strategic Partnerships Through strategic partnership the HR department is committed to enhance and expand the strategic direction and focus of HR Services in alignment with the CAV’s mission and strategic plan. By facilitating the development and implementation of human resource strategies the department promote an inclusive and welcoming workplace throughout the organisation and enhance employee engagement and recognition.

By doing this the department has develop Standard Operating Procedures and Performance Standards for all HR processes, and partner with service providers for the wellbeing of staff through a Wellness program.

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Equity, Diversity and Inclusion The CAV is strongly committed to equality, inclusion and diversity. We believe this helps us build a more productive and innovative workforce that reflects our candidate and client base, and the society in which we work. In support of the CAV’s goals on equity, diversity and inclusion, the HR department is committed to creating an inclusive workplace of choice in which the value of diversity is recognized, and a culture of diversity is promoted and supported through continuous investment in leadership development and management of change and promoting a culture of dignity and respect for everyone.

Professional Development Professional Development enhance the employment experience for all employees through a comprehensive orientation process, an assessment-based professional development initiative and increased opportunities to highlight appreciation to and recognition for achievements and accomplishments. This was achieved by conducting needs assessment for the professional development of CAV staff; addressing need for specialized training for skilled positions; and strengthens supervisory support for staff to attend training.

Policies and Procedures To ensure that the organisation has an updated set of employment governance document, the department develop, review and implement institution wide Human Resources policies that meet the evolving needs as the organisation grows. By doing this a standard operating procedure for all HR functional areas including performance standards were reviewed and all changes communicated.

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Talent Management

Terminations/Resignations

Through Talent Management, the HR department was able to design strategies and programs to hire, deploy, develop and retain the best people in their respective fields. This was achieved through establishing discipline and best practices around a culture of talent management through a comprehensive and competitive recruitment focus and competing for top talents. Diversity was identified as a key pillar to our talent management strategy, as a result, the department strategically define the organisation’s workforce in order to attract and retain the best and brightest talent and help them become successful. The wellness and work/life programs were strengthened to enhance retention.

Three terminations/resignations were reported during the reporting period:

Engaging employees to achieve results.

To achieve this the CAV concluded a series of highly visible internal awareness campaigns and reminders on the values and beliefs through various workshops.

The focus is to ensure that employees actively engage with the values and beliefs of day-to-day business; to connect and engage employees from all departments to champion the values in their immediate teams and areas of influence. Furthermore, the team also agreed to honour employees “Living the CAV Values”, which recognise employees who stand out for achieving business through championing the values and demonstrating exemplary behaviour.

• • •

The contract of the Personal Assistant to the CEO was terminated in February 2022 after following a disciplinary process.

The contract of the Operations Manager ended on 31 January 2022.

The Financial Assistant resigned in November 2021.

Labour relations (misconduct and disciplinary enquiry) Verbal Warning 1

Written Warning 0

Final Written Dismissal Warning 0

1

Table 4: Labour Relations

Employment Changes The organisation’s manpower capacity will be determined by the outcomes of the Organisation Structure Review. Additionally, retention strategies are being put in place to mitigate talent flow out of CAV. The following additions were made to the organisation’s manpower capacity: •

Financial Assistant

Ms Palesa Kuhale was appointed as the Financial Assistant for CAV on 01 March 2022.

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2. THE CORE HR FUNCTIONAL AREAS The Human Resource Department is the Human Capital Heartbeat of the organisation. The way the CAV attract, develop, engage and retain its employees is best visualized in the diagram below:

Recruitment and Selection

Employee Wellness

Training and Development Human Capital Heartbeat

Human Resource

Performance Management Compensation and Benefit

Recruitment

Figure 6: HR Functional Areas

The recruitment and selection of employees can contribute towards the longevity of any business. Finding a good fit when it comes to recruiting talent is one of the most important aspects of HR. The CAV aims to attract, recruit and retain people who are capable of effectively dealing with and responding to rapidly changing circumstances and whose values and beliefs match our own. We have a policy of hiring and promoting the best person for the job, based on proven performance and potential assessment.. Although the CAV regularly attract new employees from outside the organisation to bring in new expertise and experience when required, we continue to focus on developing our own employees 44

to fill roles internally. Our on boarding process further ensures that new recruits settle in their positions quickly and commence their contribution to the organisation’s performance in the shortest time possible.

Training and Development Having a trained workforce means employees are learning new skills that can improve production, reduce costs, reduce mistakes, build confidence and create a better working environment. In consultation with employees and their line manager, the Human CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Resource department provides a variety of training and development opportunities aimed at building employee capacity to deliver and meet strategic objectives. The performance management system is used to assess training needs to ensure that staff attain the right training relevant to their jobs.

Performance Management At CAV, we see employee development as a shared responsibility. It is our aim to have a well-embedded and standardised process for managing and evaluating performance. At the beginning of every financial year, employees engaged with their managers to set themselves individual goals linked to business objectives. This is to ensure that each employee is responsible for delivering according to the CAV’s business plan. Besides regular business and performance reviews, employees also get together with their managers on a regular basis for a constructive, future-focused conversation in which they receive feedback and coaching.

Compensation and Benefits Compensation plays an integral role in the successful delivery of CAV’s strategic objectives. Attracting and retaining talent is central to the CAV’s compensation strategy. The process of compensation and benefits ensures that the organisation is remunerating its employees competitively in accordance with market trend. As the organization seeks to align compensation to evolving external and internal expectations, reward structures are reviewed annually and adjusted as required.

HR Compliance

is fundamental to our roles as a corporate citizen in the business world and being a trusted HR partner.

We strive to avoid compliance breaches to laws and regulations. When developing new business models or concepts, our Legal department is consulted to ensure compliance. Upon joining our company, our employees receive a copy of and training in the business principles and acknowledge that they will comply with them.

Periodic refresher training on core values, business principles, and relevant compliance policies is also in place.

Employee Wellness CAV recognises that the pace and pressures of today’s corporate environment is such that employees do need wellness support on occasion to cope. CAV has the wellness of employees at heart, and in support of this caring organisational culture and in terms of the employee wellness policy, a service provider has been contracted to assist employees with a wide range of personal and work-related problems.

Plans for the Future HR plays an instrumental role in securing the future success of the CAV. The function is guided by its long-term vision of working in partnership to create an environment where employees can thrive and are enabled to deliver sustainable organisational performance. In doing so the HR department seek to further enhance its human capital to support the organisation; to strengthen its role as a control function for the organisation’s human capital risks; and to continuously build the capabilities of managers and staff.

Promoting best practices and raising awareness of relevant laws and policies is an ongoing process within the CAV. Adherence to laws and regulations

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PART E PROJECT INFORMATION

1. THE CAV CLUSTER DEVELOPMENT 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 milkrun service inside the park for collection and delivery of raw material and finished goods.

•

Shared SMME 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.

CAV’s Strategic Objectives are aligned to the industry’s challenges and our services offerings are crafted with a solution-based focus. These objectives include: •

• • • • • • •

The formation of a Hi-Tech Industrial Park that business will prefer to locate in, in order to gain a competitive and cost-effective advantage from, Support to further develop a sustainable supplier base through co-location, Attraction and retention of key industry players as anchor tenants and service providers, Promotion of Broad-Based Black Economic Empowerment (B-BBEE) and mentoring SMMEs, Facilitation of opportunities for new entrants to the industry that can be harnessed through B2B collaboration, Provision of facilities and services to complement high levels of technical competency, Stimulation of Hi-Tech Innovation, Research & Development including the promotion of 4IR, and Creation of economies of scale & agglomeration to develop and sustain these clustering effects.

2. CAV – A CONCENTRATION OF SUB-TIER INDUSTRY SUPPLIERS Since its inception in 2006/07 the CAV, as a Supplier Park Development, was intended to provide manufacturing, maintenance, repairs and overhaul (MRO) capability infrastructure for ‘anchor tenants’ as well as a range of large to small enterprises, sub-tier CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

suppliers to the Aerospace Industry (later the Defence Industry was added to this).

This includes the earlier stated vision for CAV to support the following: 47

•

•

Phase 1: CAV Landside Development CAV Landside was envisaged to house industry sub-tier suppliers who specifically would conduct design and manufacturing operations, but do not require runway access and could be extended to developments below; and Phase 2: CAV Airside Development CAV Airside was envisaged to house industry sub-tier suppliers who required airside runway access to specifically conduct upgrades, aircraft maintenance, repair and overhaul (MRO) and aircraft refurbishment activities and could be expanded to other airports and selected local developments.

There was an earlier understanding between the dtic, DPWI and the Waterkloof Air Force Base for accessing parts of the existing Airforce Base land for this purpose.

•

Phase 3: East Campus Development Phase 3, the East Campus, a portion of DPWI land, immediately to the east of CAV Landside and next to the R21 roadway was envisaged to (e.g.) house office buildings, conference facilities and possibly the head office complex of a corporate business entity.

Initially Landside and Airside developments were planned to be implemented in phases. Both developments were to be made possible by the application of sourced funding that would be supportive of the industrial policy of the dtci, and would accordingly be aligned with the following key elements thereof: • • • • •

Planning, development and operation of the Landside and Airside Developments of the CAV as an Aerospace and Defence Supplier Park, Generally directed towards B-BBEE and Human Resource Development, Focusing on the encouragement of new small and medium (SMME) sized entrants with the establishment of Multi-Tenant SMME Facilities, Contributing to skills development; and Directed towards innovation, technology development and support for associated infrastructure development.

improved processes, increased productivity, and cost competitiveness of local manufacturers. These services are not exhaustive and include: • • • • • •

Central Shared Logistics Centre with a Bonded Facility and other contract logistics options are planned, Shared services such as canteen, medical, conference facilities, security and landscaping, etc., will be provided from the Central Hub, Infrastructure and facilities maintenance services will be available, Access to a state-of-the-art ICT infrastructure, “One-Stop-Shop” services related to all regulatory and government requirements, and Market access support services were provided by government as part of international trade missions.

2.1. Technical and Specialist Team The past year saw engagements between the Technical Team and City of Tshwane increasing as the project steadily progresses into full scale development. The Town Planners continued planning for the Section 101 Certificate for all utility bulk services agreements signed as a result of progress made. The CAV appointed Conveyancers proceeded to run the process of opening the township register. The CAV operations and technical team is preparing to construct the gatehouses for both the CAV and Aerosud and the Geotechnical Engineers had to conduct soil reclassification assessments resulting from changes in the regulations of the Council for Geo-Science (CGS). The Geotechnical Engineers completed the drilling process and submitted to CGS for approval of the recommendations of type of foundations to be constructed. Environmental Control Officer (ECO) was appointed during the period under review.

As per statutory requirements Safety Agents, registered with South African Council for Project and Construction Management Professions (“SACPCMP”), were appointed to monitor compliance regarding issues of construction safety, health, risk and quality (“SHRQ”).

The technical team is led by the Principal Agent, the rest of the team comprises of electrical, mechanical’ structural engineers, architects and quantity surveyors.

A comprehensive shared services model will be developed to support these industries by benefiting from economies of scale and agglomeration, 48

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

2.2. Service Providers The stated intention for the development of the CAV as a long-term sustainable entity, running and operating the Centurion Aerospace Village, was to develop the concept of partnering with capable service partners, and not solely by developing internal resources. The service providers to be appointed for operations and maintenance of ATCC include the following:

• •

•

For Facilities Management, For Health, Safety and Environmental (HSE) control given the expected occupancy certification of the CAV Landside infrastructure, bulk services and the initial tenant building; and For security management services.

3. CAV AT A GLANCE An overview of the intentions with the development of CAV since its inception in 2006 paints a compelling picture that needs to be aggressively improved on to effectively and efficiently deploy the CAV as an Industrial Park development. CAV is rapidly moving from conceptual development into a full-scale infrastructure development project that envisage to • • •

•

•

Concentrate aerospace component manufacturers and suppliers in one location; Reduces costs and exploits the latest advances in the aerospace manufacturing chain; Provide office space to be made available for service providers related to the aerospace industry in the Central Office Hub. Offices include a service concept for users and shared facilities and services; Provide modular buildings that are designed to maximise flexibility and synergies. Modular buildings can be adapted to customer needs.

All buildings are designed to meet international aerospace standards. Mini factories for smaller operations will be made available; Craft a value proposition model for suppliers.

The Value Proposition was reviewed and consist of three distinct elements namely 1) Incentives

• •

•

•

• •

and Rebates, 2) Cost of operations and 3) One-Stop-Shop Services; Design facilities that are in accordance to customer specifications and supports environmentally friendly building designs; Ensure that Turnkey buildings are delivered according to client requirements and where necessary to ensure that expansion possibilities are incorporated as part of the building design; Offer tenants the option of either leasing land in the case where they are interested to fund their own top structure on a Build-OperateTransfer (BOT) or Developer Lease option or to lease premises in the case of Build-to-Suit (BTS) or Build-to-Lease (BTL) options; Offer basic shared operational services as part of the development such as ICT, Security and Landscaping to name a few. New services will be introduced based on tenant needs; Design the “no build zone” to be environmentally friendly with indigenous flora; and Employ a highly experienced development team consisting of technical experts such as quantity surveyors, architects and engineers drive the development of the project.

4. CAV OVERVIEW OF THE YEAR UNDER REVIEW 4.1. CAV Institutional Form and Structure During the financial year under review CAV’s institutional form and structure remained the same: •

•

The process of appointing additional Board members was initiated through advertising in the Print Media.

The nature and the extent of the CAV’s organisational structure remained the same; and

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

49

4.2. Project delivery During the financial year under review physical project delivery performance was as follows: •

•

External Bulk Roads (Streets) & Storm water: − The start of construction work relies on CoT approving the drawings for van Ryneveld & Van der Spuy Road intersection upgrades. − In addition to upgrades to for van Ryneveld & Van der Spuy Road intersection, CAV intends to upgrade the following road intersections in 2021/22FY; van Reyneveld Avenue & Jim Verster Avenue (Intersection Upgrades) and van Reyneveld & Theron Street (Signal Timing). The upgrades to Boeing Street & Solomon Mahlangu Drive may be implemented in 2022/23FY. − Jodan Konstruksie (Pty) Ltd, the appointed contractor may only occupy site upon approval of the drawings and Wayleaves

by CoT for upgrading van Ryneveld & Van der Spuy Road intersection.

•

Minimum Internal Bulk Earth Works and Infrastructure Services (minimum BEWI): − The minimum BEWI project as implemented

by Jodan Rekopane JV (“JRJV”) reached practical completion. The next phase of the BEWI will entail the construction of the Aerosud gatehouse. At the end of Q4, JRJV was still pricing the BoQ for Aerosud gatehouse upgrades. The commencement of construction for the Aerosud gatehouse may be in Q1:2021/22FY.

External Bulk Water & Sanitation (Sewer) Services: By the end of the financial year, the sewer services, environmental management consultants had implemented the following: −

−

−

−

The Water Use Licence Application (WULA) process done through the Department of Water & Sanitation (DWS) was ongoing at the end of the financial year.

The Environmental Authorisation (EA) process done through the Gauteng Department of Agriculture & Rural Development (GDARD) was ongoing at the end of the financial year. GDARD approved the EA for water and at the end of 2020/21FY, the Technical Report for sewer services was yet to be approved.

The WULA requirement was unforeseen and emanated from CoT Bridge Management Department’s instruction of not installing the pipe through affixing along the culvert (bridge) which was as per drawings approved by the CoT Water & Sanitation Department. It was initially projected that the EA & WULA approval processes that takes up to 12 months may be concluded

by October 2020. The WULA process may now be completed by Q3 of 2021/22FY. Jodan Konstruksie (Pty) Ltd, the appointed contractor may only resume work on site upon completion of WULA and EA as well as CoT approving the Wayleaves that include WULA/EA.

5. OVERVIEW OF PAST DEVELOPMENT ACTIONS 5.1. Infrastructure, Services’ and Facility Development Meetings were held with the CoT’s town planning department during October 2020 to solicit support for the extension of time on the township establishment approach, and resulted in CAV getting extension till November 2021 (this is an additional year) 50

The initial Section 7(6) lapsed in April 2020 and CoT is yet to respond to the request for extension made before the deadline as well as on follow-up correspondence.

CoT Roads & Storm-water Department has delayed the preparation of the addendum to the sewer &

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

stormwater bulk services agreement since July 2020.

The addendum relates to upgrades to the 7 road intersections being in a phased approach, whereby Van Ryneveld & Van der Spuy Road intersection will be upgraded within the next financial year. Most of these delays can be subscribed due to the Covid 19 pandemic as officials were unavailable.

The following items as requested by CAV from CoT are still pending: • •

Extension of the Section 7 (6) approval that allows CAV to temporarily occupy the ATCC Building; Approval of the drawings for Van Ryneveld & Van der Spuy Road intersection upgrades.

CAV’s Management has and will continue to interact with Government Departments that are stakeholders to the park development. These Departments are Department of Public Works & Infrastructure (DPWI), Department of Employment & Labour (DOEL), Department of Water & Sanitation (DWS) and the Gauteng Department of Agriculture & Rural development (GDARD). The CAV liaison with City of Tshwane (CoT) is an ongoing process as they approve: (1) drawings for the current and future buildings, (2) issue wayleave approvals for all bulk external utility services, (3) issue Section 82 Certificate for all utility services being connected to the internal services and finally issue 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 (CGS), South African National Roads Agency (SANRAL) and Rand Water (RW).

During the 2021/22 financial year, the following approvals were obtained towards the landside development: • • • • • •

The drawings approvals for construction of Gatehouse 1 (Aerosud gatehouse) from CoT, The drawings approvals for construction of Park Perimeter Fence from CoT; The final occupation certificate has been obtained for both Gatehouse 1 and Perimeter Fence development from the CoT; The Basic Assessment approvals for external sanitation services from GDARD; The Water Use License (WUA) approvals for external sanitation services from DWS; The environmental assessment approvals for external water services from GDARD;

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

• • •

The Water Use License (WUA) approvals for external water services from DWS; The wayleave approval for water and sanitation services from CoT; and The wayleave approval for water and sanitation services from Rand Water.

During the current financial year, the strategic focus will be to obtain the required power of attorney from the DPWI towards completing the township establishment process, and subsequently complete all external utility services 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.

The focus is on finalising the external water and sanitation services implementation processes and seeking necessary approvals to implement the external streets and stormwater services, which would then pave the way for the finalisation of Section 82 Certificate. The Contractor for the construction of external water and sanitation services was appointed in October 2018, and price negotiations are underway to complete the water and sanitation services. The construction of these services was delayed by the COVID-19 outbreak and delays in the Roads and Stormwater Department of the City of Tshwane approving the pipe crossing of the R21.

The following processes are underway or are being initiated in finalising necessary approvals for external street and stormwater services: • • •

•

The environmental consultants have been appointed to conduct the studies for General Authorisation/Water Use License from DWS; The environmental consultants have been appointed to conduct the studies for Basic Assessment approval from GDARD; A new Traffic Impact Assessment is being initiated and will be used as an addendum to the already submitted comprehensive TIA to CoT for the street and stormwater drawings approvals; A revised bulk services report to be submitted to the CoT in finalising the updated Bulk Services Agreement (BSA) for external street and stormwater services. The revised BSA would determine the number of intersections to be upgraded because of CAV development. This 51

is required as a result of recent developments such as the Castle Gate Shopping Centre in the area.

5.2. Interaction with Interested Parties Since its inception, the CAV has succeeded in attracting the interest of a number of strong industry players to consider the CAV as an investment location to relocate or expand their footprints in Gauteng and to be part of the Industrial Park Development. 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 (LOI’s) were signed with industry partners interested to explore the CAV as a potential investment destination.

During the coming year the engagements towards incorporation of the CAV into the GGDA will continue.

This process is critical to support the CAV to secure Capital Funding to service the growing needs of interested tenant.

5.3. Strategic Partnership and interested tenants The tenant appetite for setting up space at CAV must be resuscitated once the power of attorney has been obtained from the DPWI. During the year, CAV will continue engaging with various strategic stakeholders in determining the legal status of the entity. CAV will also pursue other avenues for example the tripartite agreement between National Government, Provincial Government, and Local Government towards forming a new company status for CAV.

6. THE CAV AS A VIABLE BUSINESS 6.1.Creating a Commercially Viable Entity The objectives are to successfully build and operate an Industrial Park and to secure aerospace, defence and advanced manufacturing tenants in order to become self-sustainable and profitable. The capital funding for the provision of internal bulk earthworks infrastructure and external utility services development, as well as operational funding for the management of the CAV is being provided for by the dtic.

To achieve its complete vision and to further develop tenant and building-owner facilities, as well as general and specialised support services funding will be sourced through a combination of private and public funding.

The social impact of investment in infrastructure development and the upgrading of facilities once companies move to the CAV will be significant.

Importantly, there will be an increase in the pool of skilled people in the community and larger income per capita, with spin-off benefits for the national, provincial and local economy. The CAV’s Broad-Based Black Economic Empowerment (B-BBEE) agenda complements its social responsibility initiatives by fostering an environment, including incubation facilities and services, within which businesses from previously disadvantaged communities can develop and prosper.

6.2. Creating a Responsible South African Company By attracting fixed domestic and international investment, the development of the CAV will lead to the contribution of job creation and sustainability in the aerospace and defence industry. This will achieve significant macro-economic benefits nationally, provincially for Gauteng and locally for the City of Tshwane.

52

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

7. FUTURE OUTLOOK The CAV, as a typical cluster development, needs to attract aerospace and advanced manufacturing suppliers to reach a “critical mass”. The CAV would need to ensure further investment in production buildings over and above the dtic budget. It would need to finalise the utility and support services that will be required for the development of tenant facilities within the CAV. Cluster programmes that were identified for the CAV includes; 1) Central Shared Logistics Centre; 2) Incubation Centre and Programme; 3) Skills Development and Training Centre and 4) a Shared SMME Multi-Tenant Facility.

The intention is to solidify the CAV as an Advanced Manufacturing Cluster and Industrial Park Development as the entity conclude on all of its township establishment processes including the finalisation of bulk earth works, infrastructure and utility services that are required to start full scale development. The future outlook is that the CAV will be ready to address the needs of its tenants in order to create an environment that is considered an ideal place in which to do business and to work. A challenge would be to transition the CAV from a virtual organisation to a more conventional operational structure with an implementation mind-set that will require additional capital funding to address the needs of its potential tenants.

8. IMPLEMENTATION PLAN The past financial year saw a renewed increase in interest from role players from both the Aerospace and Defence industry in the CAV project. The CAV will continue to create awareness of the project in the market. An increase in awareness will undoubtedly lead to an increase in potential tenants interested to locate within the CAV. The biggest constraint for the CAV is access to Capital Funding. It is the intention that the CAV request Capital Funding to service the current tenant requirements for which Letters-of-Intent (LOI) were received. These projects can only materialise if capital funding is made available to so that LOI’s can be migrated to full-blown pre-lease and lease agreements.

− − •

Assessment of the impact of Covid-19 on the CAV in respect of: − Financial impact. − Operational impact.

•

Operations Functional Area (Implementation): − Extend the Section 7 (6) for temporary occupation of ATCC Building.

•

Complete all the external works to service the Landside Development site − General Authorisation and Water Use License Application for external works. − Complete the actual physical implementation of providing an external water & sewer pipes to cater for the ATCC Building. − Signing of the addendum & approval of the drawings for roads upgrades. − Complete the actual physical implementation of upgrading the access roads with the CAV’s Park as required by CoT.

•

Construct of the Aerosud Gatehouses: − Gatehouse 1 construction as per the agreement with Aerosud.

The following Focus Areas were identified for the next reporting period: •

Confirm incorporation with the Gauteng Growth Development Agency (GGDA). Run in parallel: − Establish appetite for incorporation process to Continue. − Way forward between the respective BoDs. − Initiation of resolution from GGDA board and process by the executive authority the dtic.

•

Finalise the Township establishment process and Review the Head-Lease Agreement with Department of Public Works and Infrastructure (DPWI):

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Review the Head-Lease Agreement with DPWI. Extend/Renew PoA to continue with the CAV Township Proclamation process.

53

•

Park Perimeter Fencing: − Installation Park perimeter fence of 856m length.

•

Financial modelling of business case: − Start of programme cash flow projection for services − Proof of concept of the shared services including determination of levy fees.

•

54

Financial projections − Update infrastructure investment projections. − Update pipeline of tenants with a 5-year outlook.

•

Financial model scenarios − Rent through Build to Lease Model (BTL Model). − Build Operate Transfer Model (BOT Model). − Funding/finance.

•

CAV and Aerosud contractual matters: − Review and Conclude SLA for the use of utilities between CAV and Aerosud to be concluded.

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

PART F FINANCIAL INFORMATION

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

DIRECTORS’ RESPONSIBILITIES AND APPROVAL The directors are required in terms of the Companies Act of South Africa to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the company as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards.

The annual financial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgement and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the company and place considerable importance on maintaining a strong control environment.

To enable the directors to meet these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or loss in a costeffective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate delegation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and all employees are required to maintain

the highest ethical standards in ensuring the company’s business is conducted in a manner that in all reasonable circumstances is above reproach.

The directors are of the opinion, based on the information and explanation given by management that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements.

However, any system of internal financial control can provide only reasonable and not absolute assurance against material misstatement or loss.

The directors have reviewed the company’s cash flow forecast and, in the light of this review and the current financial position, they are satisfied that the company has access to adequate resources to continue in operational existence for the foreseeable future.

The external auditors are responsible for independently reviewing and reporting on the company’s annual financial statements. The annual financial statements are examined by the Company’s external auditors and their report is presented on pages 57 to 59.

The annual financial statements set out on pages 61 to 85, which have been prepared on the going concern basis, is approved by the board of directors on 29 July 2022 and was signed on their behalf by:

__________________________ ____________________________ Mr. Sandile Ndlovu Mr.Tevern Jaftha Chairperson of the Board Director

56

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CENTURION AEROSPACE VILLAGE NPC Report on the Financial Statements We have audited the financial statements of Centurion Aerospace Village NPC set out on pages 61 to 84, which comprise the statement of financial position as at 31 March 2022, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the financial statements present fairly, in all material respects, the financial position of Centurion Aerospace Village NPC at 31 March 2022, and its financial performance and cash flows for the year then ended in accordance with the International Financial Reporting Standards and the requirements of the Companies Act 71 of 2008.

Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards). We believe that

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of the Directors for the Financial Statements The directors are responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards and the requirements of the Companies Act 71 of 2008, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one

57

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

•

• •

•

resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern.

If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Report on the audit of the Annual Performance Report In accordance with the Public Audit Act of South Africa of 2004 (PAA) and the general notice issued in terms thereof, we have a responsibility to report on the usefulness and reliability of the reported performance information against predetermined objectives for the selected programme presented in the annual performance report. We performed procedures to identify material findings but not to gather evidence to express assurance.

Our procedures address the usefulness and reliability of the reported performance information which must be based on the approved performance planning documents

58

of the entity. We have not evaluated the completeness and appropriateness of the performance indicators/ measures included in the planning documents. Our procedures do not examine whether the actions taken by the entity enables service delivery. Our procedures also do not extend to any disclosures or assertions relating to planned performance strategies and information in respect of future periods that maybe included as part of the reported performance information. Accordingly, our findings do not extend to these matters.

We evaluated the usefulness and reliability of the reported performance information in accordance with the criteria developed from the performance management and reporting framework, as defined in the general notice, for the following selected programme presented in the annual performance report of the entity for the year ended 31 March 2022: Programme

Pages in annual performance report Programme 4 – Industrial Park 29 to 31 Development and Operations Management No material findings in respect of the usefulness and reliability of the selected programme were identified.

Other Matter We draw attention to the matter below. Our conclusion is not modified in respect of this matter.

Adjustment of material misstatement We identified material misstatement in the annual performance report submitted for auditing. This material misstatement was on the reported performance information of Industrial Park Development and Operations Management. As management subsequently corrected the misstatement, we did not raise any material findings on the usefulness and reliability of the reported performance information.

Report on Other Legal and Regulatory Requirements We performed procedures to obtain audit evidence

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

that the entity has complied with legislation regarding financial matters, financial management and other related matters but not to gather evidence to express assurance thereon. We did not identify any instances of material non-compliance with specific matters in key legislation.

Other Information The directors are responsible for the other information.

The other information comprises the Directors’ Report as required by the Companies Act 71 of 2008 which we obtained prior to the date of this report, the detailed income statement and the Directors’ Responsibilities and Approval. The other information does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

As part of our audit of the financial statements for the year ended 31 March 2022, we have read the Directors’ Report for the purpose of identifying whether there are

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

material inconsistencies between that report and the audited financial statements. The Directors’ Report is the responsibility of the company. Based on reading that report we have not identified material inconsistencies between it and the audited financial statement We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

__________________________________ A2A Kopano Incorporated IRBA. NO. 901944-0007 Registered Auditors Director: TA Maenzanise Pretoria 29 July 2022

59

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

DIRECTORS REPORT The directors submit their report for the year ended 31 March 2022 1. Review of activities

South Africa and there are no instances of contravention noted in terms of the requirements as set forth by the Companies Act of South Africa or the requirements of the Reserve Bank of South Africa.

Main business and operations

7. Directors

The company is engaged in developing and constructing a high-tech advanced manufacturing aero-mechanical and defence cluster to tier-1 suppliers and sub-tier suppliers in the aerospace and defence industry, and all related activities.

The directors of the company during the year and to the date of this report are as follows: Name S Ndlovu B Sam T Jaftha C Ramphele

Nationality South African South African South African South African

2. Going concern

N Madavha

South African

The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

A Chetty

South African

S Moses

South African

The operating results and state of affairs of the company are fully set out in the attached annual financial statements and do not in our opinion require any further comments.

3. Events after the reporting period The directors are not aware of any matter or circumstances arising since the end of the financial year that has a material impact on the annual financial statements.

4. Non-current assets No major change has taken place in the nature or use of the non-current assets of the company during the year.

5. Secretary

Changes

Appointed on 01 May 2021 Appointed on 01 May 2021 Term expired on 31 December 2021 Term expired on 31 December 2021

8. Auditors A2A Kopano Incorporated was appointed as the External Auditor to conduct the audit for 2021/2022 financial year in accordance with Section 90 of the Companies Act of South Africa.

9. Company Secretary Compliance Statement In accordance with Section 88(2)(e) of the Companies Act, No.71 of 2008, it is hereby certified that the Company has lodged with the Companies and Intellectual Property Commission all such returns as are required of the Company in terms of the Act and that such returns are true, correct and up to date.

Mr Jerry Mokadikwa is the Company’s Secretariat and Legal Counsel.

6. Liquidity and solvency The directors have performed the required liquidity and solvency tests required by the Companies Act of 60

______________________ J Mokadikwa Company Secretary 29 July 2022

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

STATEMENT OF FINANCIAL POSITION Note(s)

2022 R

2021 R

Assets Non Current Assets Property, plant and equipment Intangible assets Long-term deposits

3 4 5

113 027 811 2 404 943 115 432 754

109 292 738 2 179 943 111 472 680

6 7

931 238 70 967 002

648 979 67 207 616

10

1 616 254 73 514 494 188 947 248

837 361 68 693 955 180 166 636

401 359

401 359

8

173 109 125

160 985 389

9 11 8

1 468 793 331 971 13 636 000 15 436 764 188 545 889 188 947 248

994 674 528 216 17 257 000 18 779 889 179 765 278 180 166 636

Current Assets Trade and other receivables Cash and cash equivalents Operating lease asset Total Assets Equity and Liabilities Equity Accummulated surplus Liabilities Non-Current Liabilities Deferred income Current Liabilities Trade and other payables Provisions Deferred income Total Liabilities Total Equity and Liabilities

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

61

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

STATEMENT OF COMPREHENSIVE INCOME Note(s)

Revenue Other income Operating expenses Operating deficit Investment income Surplus for the year Other comprehensive income Total comprehensive income

62

12 13

2022 R

2021 R

1 621 137 12 975 101 (14 596 238) -

1 679 605 10 895 218 (12 574 823) -

-

-

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

STATEMENT OF CHANGES IN EQUITY

Balance at 01 April 2020 Changes in equity Total comprehensive income for the year Balance at 01 April 2021 Changes in equity Total comprehensive income for the year Balance at 31 March 2022

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Accumulated Surplus R 401 359

Total equity

401 359

-

-

401 359

401 359

-

-

401 359

401 359

63

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

STATEMENT OF CASH FLOWS Note(s)

2022 R

Cash received from customers Cash paid to suppliers and employees

2021 R

22 037 823 (12 686 887)

18 940 974 (10 461 412)

9 350 936

8 479 562

9 350 936

8 479 562

(5 366 549) (225 000) -

(2 793 376) (81 000) -

Net cash utilised in investing activities

(5 591 549)

(2 874 376)

Total cash movement of the year Cash at the beginning of the year

3 759 386 67 207 616

5 605 185 61 602 431

Total cash at the end of the year

70 967 002

67 207 616

Cash generated from operations

14

Net cash from operating activities Cash flow in investing activities Purchase of property plant and equipment Purchase of intangible assets Purchase of long-term deposits Proceeds on disposal of property plant and equipment

64

3 4

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

ACCOUNTING POLICIES 1. PRESENTATION OF ANNUAL FINANCIAL STATEMENTS The annual financial statements have been prepared in accordance with International Financial Reporting Standards and the Companies Act, 71 of 2008, of South Africa. The annual financial statements have been prepared on the historical cost basis, except for the statement of cash flows which is prepared on a cash basis, and other financial assets which is measured according to its fair value and incorporate the principal accounting policies set out below. The amounts are presented in South African Rands.

1.1. SIGNIFICANT JUDGEMENT AND SOURCES OF UNCERTAINTY In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements.

Trade receivables The company assesses its trade receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit, the company makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

Fair value estimation The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the company for similar financial instruments.

and individual assets have been determined based on the higher of value-in-use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions. It is reasonably possible that the assumption may change which may then impact our estimations and may then require a material adjustment to the carrying value of tangible assets. Expected future cash flows used to determine the value in use of tangible assets are inherently uncertain and could materially change over time.

The company reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets.

Useful lives and residual values The residual values and useful lives of property, plant and equipment are based on management estimates.

1.2. PROPERTY, PLANT AND EQUIPMENT The cost of an item of property, plant and equipment is recognised as an asset when: • it is probable that future economic benefits associated with the item will flow to the entity; and • the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

Property, plant and equipment is carried at historical cost less accumulated depreciation and any impairment losses.

Property, plant and equipment are depreciated on the straight-line basis over their expected useful lives to their estimated residual value.

Impairment testing

Land is not depreciated as it is deemed to have an indefinite life.

The recoverable amounts of cash-generating units

The carrying values of property, plant and equipment

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

65

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

ACCOUNTING POLICIES are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the asset or cash-generating units are written down to their recoverable amount. Impairment losses and reversal of impairment losses are recognised in the statement of comprehensive income.

Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken into account in determining operating surplus.

The useful lives of items of property, plant and equipment have been assessed as follows: Item

Useful Life

Buildings Training equipment Furniture and fixtures Plant and machinery Motor vehicle Computer equipment Assets under construction

20 years 2-6 years 6 years 5 years 5 years 2-3 years n/a

Intangible assets are initially recognised at cost.

Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.

The amortisation period and the amortisation method for intangible assets are reviewed every period-end.

Amortisation is provided to write down the intangible assets, on a straight-line basis, to their residual values as follows: Item Computer software

Useful Life 2 years

1.4. FINANCIAL INSTRUMENTS Classification The company classifies financial assets and financial liabilities into the following categories: • Loans and receivables • Financial liabilities measured at amortised cost • Financial assets measured at fair value through surplus and deficit.

Initial recognition and measurement

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset.

An intangible asset is recognised when: • It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and • the cost of the asset can be measured reliably.

An intangible asset is an identifiable non-monetary asset without physical substance.

66

Financial instruments are recognised initially when the company becomes a party to the contractual provisions of the instruments.

The company classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

For financial instruments which are not at fair value through surplus or deficit, transaction costs are included in the initial measurement of the instrument.

Transaction costs on financial instruments at fair value through surplus or deficit are recognised in surplus or deficit.

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

ACCOUNTING POLICIES Financial Assets Financial assets are initially measured at fair value plus direct transaction costs.

Financial assets at fair value through surplus or deficit are subsequently measured at fair value with gains for losses being recognised in surplus or deficit.

Other financial assets are subsequently measured at amortised cost, using the effective interest method.

Financial Liabilities Financial liabilities are initially measured at fair value plus direct transaction costs.

Financial liabilities that are designated on initial recognition as financial liabilities at fair value through surplus or deficit are subsequently measure at fair value, with changes in fair value being recognised in surplus or deficit.

Other financial liabilities are subsequently measured at amortised cost, using the effective interest method.

Trade and other receivables Trade and other receivables are initially measured at fair value and are subsequently measured at amortised cost.

Trade and other payables Trade payables are initially measured at fair value and are subsequently measured at the amortised cost of the legal or constructive obligations.

Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short term highly liquid investments that that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially recorded at fair value and subsequently at amortised cost.

1.5. LEASES Finance leases are leases whereby substantially all the

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

risks and rewards of ownership are transferred to the lessee. Assets acquired in terms of finance leases are capitalised and depreciated over the shorter of the useful life of the asset and the lease term, with a corresponding liability raised on the Statement of Financial Position. The asset and liability are recognised at the commencement date at the lower of the fair value of the leased asset and the present value of minimum lease payments, calculated using the interest rate implicit in the lease at the inception of the lease. Any initial direct costs incurred are added to the amount recognised as an asset. Related finance costs are charged to profit or loss over the period of the lease using the effective interest method.

Leases, where the lessor retains substantially all the risks and rewards of ownership of the asset, are classified as operating leases. Operating lease expense and income with fixed escalation clauses (net of any incentives received from the lessor or incentives given to the lessee) are recognised in profit or loss on a straight-line basis over the lease term. The resulting difference arising from the straight-line basis and contractual cash flows is recognised as an operating lease obligation or asset.

Contingent rental escalations, such as those relating to turnover, are expensed in which the escalations are determined.

1.6. PROVISION AND CONTINGENCIES Provisions are recognised when: • the company has a present obligation as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 17.

Provisions are not recognised for any future operating losses.

1.7. GOVERNMENT GRANTS Government grants are recognised when there is reasonable assurance that:

67

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

ACCOUNTING POLICIES • the company will comply with the conditions attached to them; and • the grants will be received.

Government grants are recognised as income over the periods necessary to match them with the related costs that they are intended to compensate.

Government grants received for the acquisition of assets are capitalised as deferred income and recognised in the statement of comprehensive income over the useful life of the relevant asset.

1.8. REVENUE Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership are transferred to the buyer.

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the end of the reporting period.

The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: • the amount of revenue can be measured reliably; • it is probable that the economic benefits associated with the transaction will flow to the company; • the stage of completion of the transaction at the end of the reporting period can be measured reliably; and • the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax.

Interest is recognised, in surplus or deficit, using the 68

time apportionment method, unless it is required to be capitalised in terms of a grant funding agreement.

1.9. EMPLOYEE BENEFITS The cost of short-term employee benefits, (those payable within 12-months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and nonmonetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs.

Performance bonus The performance bonus is based on performance ratings and other factors including the performance of the entity, and its consequent ability to make bonus payments without infringing the requirements of prudent good governance.

The expected cost of bonus payment is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

The costs of providing employee benefits are recognised in surplus or deficit.

1.10. STATEMENT OF CASH FLOWS The statement of cash flows is prepared using the direct method.

1.11. FRUITLESS AND WASTEFUL EXPENDITURE Fruitless and wasteful expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the Statement of Financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of Financial Performance.

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2. NEW STANDARDS AND INTERPRETATIONS 2.1. STANDARDS AND INTERPRETATIONS EFFECTIVE AND ADOPTED IN THE CURRENT YEAR In the current year, the company has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations: Standard

Details of amendment

IFRS 9 Financial Instruments

• Annual Improvements to IFRS Standards 2018–2020: The amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in assessing whether to derecognise a financial liability.

• COVID-19-Related Rent Concessions: Amendment 1 April 2021 providing lessees with an exemption from assessing whether a COVID- 19-related rent concession (a rent concession that reduces lease payments due on or before 30 June 2022) is a lease modification 1 January 2022 • Property, Plant and Equipment: Proceeds before Intended Use: The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.

• Onerous Contracts—Cost of Fulfilling a Contract: The 1 January 2022 amendments specify which costs should be included in an entity’s assessment whether a contract will be loss-making.

IFRS 16 Leases

IAS 16 Property, Plant and Equipment

IAS 37 Provisions, Contingent Liabilities and Contingent Assets

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Annual periods beginning on or after 1 January 2022

69

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2.2. STANDARDS AND INTERPRETATIONS NOT YET EFFECTIVE The company has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the company’s accounting periods beginning on or after 01 April 2021 or later periods: Standard

IAS 1 Presentation of Financial Statements

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

70

Details of amendment

Annual periods beginning on or after • Classification of Liabilities as Current or Non-current: Narrow- 1 January 2023 scope amendments to IAS 1 to clarify how to classify debt and other liabilities as current or non-current.

• Disclosure of Accounting Policies: The amendments 1 January 2023 require companies to disclose their material accounting policy information rather than their significant accounting policies, with additional guidance added to the Standard to explain how an entity can identify material accounting policy information with examples of when accounting policy information is likely to be material.

• Definition of Accounting Estimates:The amendments clarify 1 January 2023 how companies should distinguish changes in accounting policies from changes in accounting estimates, by replacing the definition of a change in accounting estimates with a new definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. The requirements for recognising the effect ofchange in accounting prospectively remain unchanged

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

3. PROPERTY, PLANT AND EQUIPMENT

Assets under construction Buildings Training equipment Furniture and fixtures Computer equipment Motor vehicle Plant and machinery Total

2022 Cost Accumulated depreciation 90 040 306 -

Carrying value 90 040 306

2021 Cost Accumulated depreciation 90 259 666 -

Carrying value 90 259 666

32 476 938 2 659 812

(10 152 475) (2 659 812)

22 324 463 -

27 385 119 2 659 812

(8 774 813) (2 659 812)

18 610 306 -

815 983

(370 640)

445 344

406 853

(327 418)

79 435

697 422

(497 380)

200 042

697 422

(381 470)

315 952

30 200 417 105

(28 412) (401 236)

1 787 15 870

30 200 417 105

(26 625) (393 301)

3 575 23 804

127 137 766

(14 109 955)

113 027 811

121 856 176

(12 563 439)

109 292 738

Reconciliation of Property, Plant and Equipment – 2022

Assets under construction Buildings Furniture and fixtures Computer equipment Motor vehicle Plant and machinery

Opening Balance 90 259 666

Additions

Reclassification Impairments Depreciation -

(134 400)

(84 960)

-

90 040 306

18 610 306 79 435

4 957 419 409 130

134 400 -

-

(1 377 661) (43 222)

22 324 463 445 344

315 952

-

-

-

(115 910)

200 042

3 575 23 804

-

-

-

(1 788) (7 935)

1 787 15 870

109 292 738

5 366 549

-

(84 960)

(1 546 516)

113 027 811

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Total

71

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

Reconciliation of Property, Plant and Equipment- 2021

Assets under construction Buildings Furniture and fixtures Computer equipment Motor vehicle Plant and machinery

Opening Balance 87 918 262 19 901 149 66 049 31 026 5 363 31 738 107 953 587

Additions

Disposals

2 341 404 79 021 29 947 343 005 2 793 376

Depreciation -

Total

- 90 259 666 (1 369 864) 18 610 306 (16 560) 79 435 (58 080) 315 952 (1 788) 3 575 (7 934) 23 804 (1 454 225) 109 292 738

Details of property Buildings and assets under construction are for the development of an aerospace and defence Supplier Park, on Portions 11, 19, 34, 97 and 28R of the Farm Waterkloof 378 JR, Pierre van Ryneveld ext 33.

The property is built on land which is registered in the name of the Department of Public Works.

4. INTANGIBLE ASSETS

Computer software Total

2022 Cost Accumulated Amortisation -

Carrying value -

2021 Cost Accumulated Amortisation 56 915 (56 915) 56 915 (56 915)

Carrying value -

Reconciliation of intangible assets – 2022 Opening Balance Computer software

Additions -

Disposals -

Amortisation -

Total

-

-

Reconciliation of intangible assets – 2021

Computer software

72

Opening Balance 2 853 2 853

Additions

Disposals -

Amortisation -

(2 853) (2 853)

Total -

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

81 000 735 000 1 588 943 2 404 943

81 000 510 000 1 588 943 2 179 943

5. LONG-TERM DEPOSITS Aerosud Holdings Pty Ltd City of Tshwane deposits Lombard insurance

Four bulk service agreements were signed with City of Tshwane for the below mentioned services for the proposed Pierre van Ryneveld X33 Township: a) Electrical Services; b) Water Services; c) Sewer/ sanitation Services; and d) Streets/roads and Stormwater Services.

The agreements stipulate the pre-proclamation requirements under which the above services were to be supplied to the proposed township, including the following: • Bulk contributions towards the cost of External Services; and • Provision of Performance or Maintenance guarantees.

In line with the above requirements, performance and maintenance guarantees were sourced from Lombard Insurance and submitted to the City of Tshwane Metropolitan Municipality.

The long-term deposit was paid to the City of Tshwane for wayleave security deposit in line with the statutory requirements stipulated in Clause 9,2 of the Provincial Gazettee dated 19 February 2019. The provision of Wayleave refundable security deposit payments and submission of performance and maintenance guarantees to City of Tshwane were a mandatory requirement in obtaining a Section 101 certificate The issuing of the Section 101 certificate allows the developer to undertake site construction works, including Bulk Earthworks and Infrastructure (BEWI), utility services and specific facilities (such as tenant buildings). CAV has received the Section 101 certificate from the Municipality and are in the process of submitting the same to the Deeds Office.

The submission of Section 101 certificate would pave the way for a Section 103 certificate for township proclamation being issued by the Deeds Office.

Once the Section 103 certificate is issued, the guarantee and the Way leave deposit can be claimed within 12-months of retention period.

A deposit was made to Aerosud Holdings Pty Ltd for the temporary utility services as the mentioned services are temporarily connected to Aerosud utility services. The amount would be claimed back once the Section 82 certificate, and occupation certificate for ATCC building are obtained from the City of Tshwane.

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

73

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

6. TRADE AND OTHER RECEIVABLES Trade debtors Provision for doubtful debts Sundry debtors Deposits Value added tax

669 642 261 596 931 238

108 685 (76 310) -

616 604 648 979

Credit quality of trade and other receivables The maximum exposure to credit risk at the reporting date is the fair value of each class of debtors mentioned above.

Exposure to credit risk Trade receivables inherently expose the company to credit risk, being the risk that the company will incur financial loss if customers fail to make payments as they fall due. There have been no significant changes in the credit risk management policies and processes since the prior reporting period. Trade receivables consist mainly of rental income from tenants and utility expense recovery in line with the memorandum of agreement signed with the current tenants.

A loss allowance is recognised for trade receivables, in accordance with IFRS 9: Financial Instruments, and is monitored at the end of each reporting period. In addition to the loss allowance, trade receivables are written off when there is no reasonable expectation of recovery, for example, when a debtor has been placed under liquidation.

Trade receivables which have been written off are not subject to enforcement activities.

The company applies the simplified approach for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected credit loss provision for all trade receivables. The company’s historical credit loss experience does not show significantly different loss patterns for different customer segments.

Trade and other receivables past due but no loss allowances recognised Trade and other receivables which are less than 3-months past due are considered for loss allowances or ECL’s. As on 31 March 2022, a previously impaired amount of R86,993 was taken out of the accounts receivable as the amount was not recoverable.

Less than 30 days Between 31 and 60 days and above

74

-

192,445 477,197

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

Fair value trade and other receivables The fair values of trade and other receivables approximate its carrying value due to its short-term nature 7. CASH AND CASH EQUIVALENTS Bank balances Short-term deposits

1 562 223 69 404 779 70 967 002

161 381 67 046 235 67 207 616

Credit quality of cash at bank and short-term deposits, excluding cash in hand The credit quality of cash at bank and short-term deposits, excluding cash on hand that are neither past due nor impaired can be assessed by reference to historical information about counterpart default rates. None of the financial institutions with which bank balances are held defaulted in prior periods and as a result a credit rating of high are ascribed to the financial institutions. The company’s maximum exposure to credit risk as a result of the bank balances held is limited to the carrying value of these balances as detailed above. However, to mitigate the risk of loss, the company only transacts with highly reputable financial institutions.

8. DEFERRED INCOME Current liabilities - Opening balance - Receipts for operational expenditure - Transferred to grant income - Transferred to non-current deferred income Grants received not utilised

17 257 000 17 922 000 (10 649 755) (10 893 245) 13 636 000

25 721 473 15 531 000 (9 423 583) (14 571 890) 17 257 000

Non current liabilities - Opening balance - Receipts for capital expenditure - Transferred to grant income - Investment income capitalised - Transferred from current liabilities for operational expenditure Grants related to assets and operational expenditure

160 985 389 (1 631 476) 2 861 968 10 893 245 173 109 125

144 886 037 (1 457 078) 2 984 541 14 571 890 160 985 389

For more information on deferred income and grant income, refer note 20.

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

75

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

9. TRADE AND OTHER PAYABLES Trade payables Accruals

984 088 484 706 1 468 793

481 249 513 425 994 674

Fair value of trade and other payables The fair value of trade and other payables approximates the carrying value as the trade and other payables are short term in nature and do not fluctuate based on external factors.

10. OPERATING LEASE ASSET The company leases out land and building space to tenants. General leasing arrangements: (i) The leasing contracts include renewal options as well as escalation clauses. (ii) No contingent rent was recognised as part of revenue in the current financial year Current Assets Minimum lease payments due: - Within one year - In second to fifth year inclusive - Later than five years

1 616 254

837 361

1 421 2728 745 503 4 225 012 14 391 786

1 336 214 8 222 113 6 255 507 15 813 834

11. PROVISION Reconciliation of provisions – 2022 Opening Balance Provision for leave

Additions

528 216 528 216

Utilised during the year -

(148 088) (148 088)

Reversed during the year (48 157) (48 157)

Total

Reversed during the year

Total

331 971 331 971

Reconciliation of provisions – 2021 Opening Balance Provision for leave

76

356 224 356 224

Additions

173 099 173 099

Utilised during the year (1 108) (1 108)

-

528 216 528 216

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

The provision relates to the entity’s best estimate for employees’ accumulated leave at year-end. The provision is based on the assumption that employees’ leave pay will have to be settled upon resignation.

12. OTHER INCOME Grants utilised Other income Utility Recovery

12 281 231 693 870 12 975 101

10 880 662 14 557 10 895 218

1 546 516 84 960 5 732 159

1 454 225 2 853 6 478 021

-

-

1 631 476 -

1 457 078 -

(282 259) 474 119 (778 893) (196 244) 8 502 737 9 350 936

(431 367) 484 340 (837 361) 171 992 7 634 879 8 479 562

371 000 371 000

350 000 350 000

13. OPERATING DEFICIT Operating deficit for the year is stated after accounting for the following: Depreciation Impairment Amortisation Employee costs 14. CASH GENERATED FROM OPERATIONS Surplus for the year Adjustments for: Depreciation & amortisation Gain on sale of assets Changes in working capital: Trade and other receivables Trade and other payables Operating lease asset Provisions Deferred income

15. AUDITOR REMUNERATION Audit fees

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

77

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

16. TAXATION Major components of the tax expenses No provision has been made for taxation as the company is exempt from income tax under section 10 (i) (f) of the Income Tax Act. 17. CONTINGENT LIABILITY In terms of a premature termination of the agreement relating to the delivering of bulk earthworks and infrastructure development, the company has a possible obligation to pay the counterparty for damages arising from such a termination of the agreement.

The possible obligation will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events which is not wholly within the control of the company. The uncertain future events relate to the limitation to project funding restrictions presently in place and if a contract instruction can be given, with the view to re-establishing site and commencing with the work The possible liability would be calculated based on loss of income, loss of profits, direct cost incurred related to resources, plant and general expenses. There is no possibility of any reimbursement once the company has settled the obligation. For more information, refer note 18.

18. CAPITAL COMMITMENT A contract for the CAV landside Bulk Earth Works and Infrastructure (BEWI) Phase 1a was awarded to Jodan Rekopane JV in 2010/11 financial year for an original sum of R60,574,278 (Excl VAT). An amount of R10,453,398 (Excl VAT) was then disbursed in line with the contract. However, the contract was put on hold in 2011. An amount of R1, 950,459 was subsequently impaired.

The contract was resuscitated in 2018/19 financial year as construction work for minimum BEWI portion to the value of R22, 340 091 (Excl VAT), including inflationary allowance of R1, 282, 403 (Excl VAT) from the original contracted sum of R21, 057, 688 (Excl VAT) was allowed. A variation order of R2, 213,443.09 was also approved to complete the required minimum BEWI work. The minimum work included internal electrical, roads and stormwater as well as water and sanitation work.

The internal utility services will be connected to the external utility services once the external services are installed and the township for the PVR Ext 33 township is established. The construction of minimum internal work and the external work consist of a portion of the compliance for issuing a Section 82 Certificate for the CAV Landside development and an occupation certificate for the ATC Building by the City of Tshwane.

A construction for Perimeter fencing and a Gatehouse was commenced and concluded in the 2021/22 financial year as part of the contractual commitment. The construction cost for both the perimeter fencing and gatehouse was R7,049,439.76 (Excl VAT). The gatehouse was constructed in line with the Servitude and Maintenance agreement, signed between Aerosud Holdings and the CAV. 78

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

The balance of the work to the amount of ca. R20,731,350 (Excl VAT) plus any inflationary and construction industry increase is regarded as a contractual capital commitment 19. SURPLUS (DEFICIT) FOR THE YEAR The income generated from operations is utilised for operating expenses and related costs. The shortfall of the operating activities is covered by the grant income from the dtic. The remainder of the unutilised grant is then transferred to deferred income liability towards developmental commitments.

20. GOVERNMENT GRANTS Deferred income relates to the grants received from the dtic to cover the shortfall of operational expenditure not covered by income generated, as well as furtherance of the capital project in order to achieve the objective for which the CAV was incorporated. The non-current portion relates to the capital project, whilst the current portion relates to the funds kept as day-to-day reserves to cover the necessary operational expenditure if needed.

21. RELATED PARTIES Relationships Related party (Member) Department of Trade, Industry and Competition (the dtic) Related party (property Owner) Department of Public Works and Infrastructure (DPWI) Related party transactions The following shows the related party transactions: Grant received from related party The Department of Trade, Industry and Competition

17 922 000

15 531 000

Interest capitalised from related party The Department of Trade, Industry and Competition

2 861 968

2 984 541

22. GATEHOUSE EXPENSES A gatehouse was constructed in line with the “Servitude and Maintenance Agreement” that was signed between Aerosud Holdings and the CAV in 2018. As per the agreement, a new gatehouse was to be constructed for Aerosud in exchange for demolishing the already existing gatehouse. This arrangement was made specifically to enable the CAV to utilise the right of way servitude as an entrance to the CAV landside development. A traffic circle was built to divide the road entrance into two sections. One section leads to the Aerosud and the other to the CAV. The total cost for constructing the gatehouse including the technical team fees was R3,286,536.80 (Excl VAT). The total expense incurred prior to the 2021/22 financial year was R391,952.80 (Excl VAT).

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

79

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

23. CHANGE IN ESTIMATES In terms of the requirements of IAS 16, the depreciation methods, estimated remaining useful lives and residual values are reviewed at least annually. The assessment of useful life required judgement based on previous experience with similar assets or classes of assets. Management used its judgement on the depreciation methods and useful lives.

The following factors were considered in this regard: • Expected physical wear and tear • Obsolescence • Legal or other limits on the use of the assets Management estimated the useful lives of computer equipment to be between 2 - 3 years due to the high-end specification and durability of the computer equipment.

24. DIRECTORS’ EMOLUMENTS Remuneration paid to executive directors Remuneration paid to non-executive directors

2022 Remuneration paid to executive directors

Name Shaun Moses

Binu Sam

Designation Acting Chief Executive Officer Chief Financial Officer

1 462 582 1 462 582 Basic Pay

1 598 606 1 598 606

Travel Acting Cellphone Allowance Allowance Allowance 40 000 -

1 269 762

138 420

1 269 762

138 420

Total 40 000

14 400 1 422 582

40 000

14 400 1 422 582

2021

Name

Designation

Basic Pay

Remuneration paid to executive directors

Shaun Moses

Acting Chief Executive Officer Chief Financial Officer

1 214 045

184 561

- 1 398 606

1 214 045

184 561

200 000 1 598 606

80

Binu Sam

Travel Acting Total Allowance Allowance 200 000 200 000

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

25. COVID-19 IMPACT ON GOING CONCERN WITHOUT MATERIAL UNCERTAINTIES COVID-19 is not expected to have a significant impact on the entity. Management has determined that there is no material uncertainty that casts doubt on the entity’s ability to continue as a going concern. It expects that COVID-19 might have some marginal impact, though not significant, for example, in relation to expected future performance, or the effects on some tenants relocating or starting a new business in CAV. 26. RISK MANAGEMENT Financial risk management The company’s approach to risk management is based on risk governance structures, risk management policies, risk identification, measurement, reporting, monitoring, and continuous assessment.

The company is exposed to various financial risks due to the nature and diversity of its activities and the use of various financial instruments. These risks include: • Interest rate risk • Liquidity risk • Credit risk Information about the company’s exposure to each of the above risks, its objectives, policies and processes for measuring and managing these risks are included in this note. Further quantitative disclosures are included throughout the annual financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of the company’s risk management framework.

Interest rate risk Interest rate risk arises due to adverse movements in domestic and foreign interest rates.

The Company invested its funds in an interest-bearing account. The company does not depend on the interest for its liquidity. Its income and operating cash flows are substantially independent of changes in market interest rates.

Cash flow interest rate risk

Cash and cash equivalents

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

Carrying amount 70 967 002

Less than 1 Between 1 year and 5 years 70 967 002 -

Over 5 years -

81

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

At 31 March 2022, if interest rates on Rand-denominated borrowings had been 1% higher/lower with all other variables held constant, surplus for the year would have been R709,670 (2021: R672,076) lower/higher, mainly as a result of higher/lower interest income on floating rate borrowings.

Liquidity risk Liquidity risk is the risk that the company is unable to meet its payment obligations when they fall due and to replace funds when they are withdrawn, the failure of which may be the failure to meet obligations as they fall due.

Funding risk arises when the necessary liquidity to fund liquid asset positions, such as building infrastructure facilities and buildings for the park, cannot be obtained at the expected terms and when required.

The objective of the Company’s liquidity and funding management is to ensure that all foreseeable operational, capital expansion and loan commitment expenditure can be met under both normal and stressed conditions. The company has adopted an overall statement of financial position approach, which consolidates all sources and uses of liquidity, while aiming to maintain a balance between liquidity, profitability and interest rate considerations.

The company’s risk to liquidity is a result of the funds available to cover future commitments. The company manages liquidity risk through an on-going review of future commitments and credit facilities. Cash flow forecasts are prepared, and adequate utilised borrowing facilities are monitored.

Exposure to liquidity risk The following are the contractual maturities of financial liabilities, including interest payments and excluding the impact of netting agreements: Contractual undiscounted cash flows At 31 March 2022 Trade and other payables Total Contractual undiscounted cash flows At 31 March 2021 Trade and other payables Total

82

Carrying amount 1 468 793 1 468 793

Total cash flows 1 468 793 1 468 793

0-1 year

1-5 years

5 years +

1 468 793 1 468 793

-

-

Carrying amount 994 674 994 674

Total cash flows 994 674 994 674

0-1 year

1-5 years

5 years +

994 674 994 674

-

-

-

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

26. RISK ASSESSMENT (CONTINUED) Credit risk Credit risk is the risk of financial loss to the company should any of the customers or counterparties (including government) to a financial instrument fail to meet their contractual obligations. This risk arises principally from the entity’s receivables from customers (loans receivable, trade and sundry receivables) The company only deposits its cash surpluses with major banks with high credit standing and limits exposure to any one counter party.

The Board of Directors has an established policy for the management of credit risk arising on receivables from customers. Under this policy the creditworthiness of potential and existing customers is assessed prior to contracting with new or existing customers.

On-going credit evaluation of the company is performed. The granting of credit is approved by the directors. At year end, the company did not consider there to be any significant concentration of credit risk which has not been adequately provided for.

Credit exposure and concentration of credit risk The carrying amount of financial assets represents the maximum credit exposure at the reporting date.

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

83

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2022 R

2021 R

Financial assets by category The accounting policies for financial instruments have been applied to the line items below: Loans and receivables

Total

At 31 March 2022 Cash and cash equivalents Collateral for long-term insurance deposit Trade and other receivables

70 967 002 1 588 943 560 957 73 116 902 Loans and receivables

At 31 March 2021 Cash and cash equivalents Collateral for long-term insurance deposit Trade and other receivables

67 207 616 1 588 943 21 692 68 818 250

70 967 002 1 588 943 560 957 73 116 902 Total

67 207 616 1 588 943 21 692 68 818 250

Financial liabilities by category The accounting policies for financial instruments have been applied to the line items below: Financial liabilities at amortised cost At 31 March 2022 Trade and other payables

1 468 793 1 468 793

Financial liabilities at amortised cost At 31 March 2021 Trade and other payables

84

994 674 994 674

Total

1 468 793 1 468 793

Total

994 674 994 674

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

CENTURION AEROSPACE VILLAGE NPC Registration Number: 2000/006996/08

ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2022

DETAILED INCOME STATEMENT Note(s)

Revenue Other income Utility Recovery Other income Government grants

20

2022 R

2021 R

1 621 137

1 679 605

693 870 12 281 231 14 596 238

14 557 10 880 662 12 574 823

150 202 371 000 4 880 32 362 35 869 1 004 713 1 778 1 631 476 5 732 159 21 704 2 894 584 326 497 595 659 123 126 140 792 1 049 901 102 780 281 411 95 344 -

215 230 350 000 5 057 47 851 213 993 1 530 320 711 1 457 078 6 478 021 9 072 431 105 50 086 91 408 353 577 1 012 352 103 887 225 014 60

14 596 238 -

12 574 823 -

Operating expenses Advertising and marketing Auditor remuneration Bank charges Cleaning and consumables Computer expenses Consultation fees Delivery charge Depreciation and Impairment Employee costs Entertainment Gatehouse Expense Insurance Municipal expenses Printing and stationery Repairs and maintenance Security Subscriptions Telephone and fax Training Travel and accommodation Surplus (deficit) for the year

15

22

19

The supplementary information presented does not form part of the financial statements and is unaudited.

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

85

NOTES

86

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

NOTES

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

87

NOTES

88

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

NOTES

CENTURION AEROSPACE VILLAGE NPC | ANNUAL REPORT 2021/22

89

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) 12 662 5379 info@cav.org.za www.cav.org.za