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Centurion Aerospace Village (CAV)

Centurion Aerospace Village (CAV). CAV Presentation: Portfolio Committee on Trade and Industry CAV CEO 03 November 2015. Inter-governmental Opportunities : An “Initiative” of the Department of Trade and Industry ( the dti ) A GPG Industrial development opportunity

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Centurion Aerospace Village (CAV)

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  1. Centurion Aerospace Village (CAV) CAV Presentation: Portfolio Committee on Trade and Industry CAV CEO 03 November 2015

  2. Inter-governmental Opportunities: An “Initiative” of the Department of Trade and Industry (the dti) A GPG Industrial development opportunity “Special Project Status” with CoT CAV is being purpose built as a hi-tech advanced manufacturing and defense cluster CAV is an implementation strategy for the phased approach establishment of an Aeronautical, Space and Defense Industry support mechanism to create related clusters Aim to position South Africa as a platform for global exports through attracting foreign and local investments in Aerospace & Defense Industries Land made available by the Department of Public Works (DPW) through the dtifor 99 years effective as of 2009 Adjacent to Waterkloof Air Force Base in Centurion Current Development Phases- Landside Development For tenants who do not require runway access-13.6 Ha Proposed Future Development Phases- Airside Development Tenants who require runway access- 36 Ha Lay claim to other property For future tenant and user requirements Green Design Optimised shared services’ environment and unique value proposition in a world-class establishment What is the CAV?(Centurion Aerospace Village)

  3. A Forensic Audit was conducted of the Centurion Aerospace Village (the CAV): Questions were put to the Minister of the dti by the DA in Parliament 5 point repositioning of CAV in respect of the turnaround plan and hence regularisationof the business activities. These include inter alia: Strategic alignment with Aerospace Sector Development Plan Robust Policy framework in line with the PFMA, Companies Act, King III and other statutory prescripts Meeting ALL legal, zoning and permit processes for current (and future) operations Achieving the requisite institutional arrangements, board composition and investment for medium and long term sustainability and growth Strong focus on Human Capital development at CAV Key elements of the turnaround business plan:  Objectives have been established to mitigate ALL audit findings. Products and services, with emphasis on their distinguishing features and the market needs they will meet Estimate of market potential and assessment of the competition  Board and Management Team’s experience and talent: Executive changes to augment the structure and “anchor” CAV  Acquisition of products and services : Shared services will be performed.  Projected financial results compared with pre-turnaround financials  Capitalisation of CAV by the dti (slide 18)  Investor framework is being developed including the dti, SEDA, leveraging off-set agreements, IDC The Turnaround Plan

  4. Desired End State • The Desired end-state of the CAV is two-fold: • To stimulate economic development of the aerospace and defence sectors of the economy by the formation of an industrial park cluster that business will prefer to locate in, in order to gain a competitive and cost effective advantage • To develop a sustainable sub-tier supplier base and contribute to the growth of the Aerospace and Defence Industry by: • Creating economies of scale & agglomeration • Creating logistics efficiency through co-location • Identifying and relocating key Industry leaders as anchor tenants • Contributing improved export performance by Aerospace & Defence Industries • Promoting shared services efficiency • Providing opportunities for Developing and mentoring of SMEs and B-BBEEs • Providing facilities and services to complement hi levels of Technical Competence • Stimulating technical competence and R & D • Providing opportunity for New Entrants to the Industry

  5. Strategic Objectives

  6. Governance Structure Minister of Trade and Industry Executive Authority Accounting Authority CAV Board of Directors Governance Sub-Committees Audit & Risk Committee Human Resources & Remuneration Committee Nomination & Governance Committee

  7. Key Challenges and Mitigation

  8. Financial Stability Considerations

  9. Past, Present and Future CAV:The Future is Bright CAV: The Past Eighteen Months CAV: The Current programme • What happened?: • PFMA Listing Process • Business Case and Bill was developed • Landside BEWI contractor appointed • ITC2 building Completed • Record of Decision obtained • Township Establishment • MOI prepared • Governmental Interaction (IGR) • Air Force interaction • Establish CAV Business and Organisation Structure • What is happening?: • CEO appointment complete • Finalise Business Case • Conclude PFMA Listing • Maintain BEWI contract • Conclude Township Establishment Process • Target interested sub-tier supplier tenants • Re-establish the CAV Board • Governmental MOU (IGR) • Plan revenue streams & Funding opportunities • Strong focus on Human Capital Development • Meeting all legal, zoning process for current options • What ought to happen?: • Obtain Funding • Implement Business Case • Explore options for institutionalisation • Government IGR • Rejuvenate the BEWI contract • Establish the Township • Conclude the Landside Phase 1a BEWI works • Obtain occupancy certificate for ITC2 • Build and maintain relationship with stakeholders • Explore and obtain PPP • Roll-out CAV Structure • Manage revenue streams CAV is embarking on a Journey from an uncertain past into a sparkling future

  10. CAV Achievements • Footprint layout: • For various interested parties • Denel Aviation • Basic general layout: • Land and Airside • As per area plan submitted for township establishment purposes, including: • FAR requirements • Bulk Earthworks • Infrastructure • Utility Service requirements • EIA • TIA • Geo-Technical processes • Unqualified, clean audit since 2006/07 • Detailed engineering design: • For various interested parties: • As prep for intended signing of pre-lease agreements. • SMME support building: ITC2 • Non-destructive testing and standards: • African NDT • Electronic harnessing: • Amphenol Contactserve • Tooling: • Quad • Architectural views: • Per interested party • In anticipation of future needs

  11. Sector Development Plan (SDP) Technology Streams The existing and increasing levels of technical complexity associated with each product line and/or technology stream have resulted in the formation of a tiered supply chain in aerospaceThe CAV and the identified / potential tenants cover a wide variety of Aerospace and Defense Industry technology work streams AS WAS DEFINED in the Industry Sector Development Plan (the SDP)

  12. Aerospace Industry Supply Chain Overview Sub-contract work to lower tiers Tier 1 Supplier Tier 2 Supplier OEM Tier 3 Supplier Airlines Value adding products supplied to higher tier Core Competencies Inside South Africa Manufacturing Activities Outside South Africa Order placed by an Airline to an OEM Airlines Completed aircraft Supplied to Customer

  13. Deployment of Aero-mechanical Activities at CAV OEM Denel Tier 1 Aerosud Tier 1 Tier 2 Tier 2 Tier 2 Tier 3 Tier 3 Tier 3 Tier 3 Tier 4 down Aerospace Customers • SAAB • Airbus • Boeing • BAE Systems • SA Defence • Augusta Westland • Eurocopter • Spirit Aerospace • Airlines • Others Aerospace Activities in SA • CAV Shared Services • ICT • Security • Logistics • Warehousing • Packaging • Transportation • Customs • Facilities Management • Conference • Cleaning • Maintenance • Waste Management • Landscaping • Cafeteria • Others • MRO • Aircraft Refurbishments • Aircraft Upgrades • Maintenance, Repair & Overhaul • High-level Sub-Assembly • Final Assembly • Tooling, Jigs & Ground Support • Precision & Multi-axis Machining • Non-Destructive Testing • Vacuform • Composites • Plastics • Aircraft, components & parts painting • Electrical & Looming • Small Parts supply • Paint Supply • Bolts, screws, washers • Engineering Services

  14. Capital Funding Requirements • The capital funding requirements for CAV is stated below: • MTEF Periods (2015/16 to 2017/18)(2018/19 to 2020/21) and two additional years

  15. CAV’s Development Areas Landside X-tension CAV Landside CAV Airside Future Expansion? CAV C-Side

  16. The First CAV Building: ITC2

  17. Potential Tenants • Airside Interest: • The SARA Project • MRO Opportunities • Aerosudextension • National Airways Corporation (NAC): • Would re-locate building structures (from Lanseria and Grand Central Airports) • The current tenant pipeline satisfies the requirement of filling the critical mass • The requisite timing for the delivery of turnkey operations are satisfied within the investment requirements • The first stage of development includes the following: • African NDT • Mini-factories’ Interest by smaller potential tenants • Training and Incubation Facility • AMD • Permanent Exhibition Centre • CSIR / Aerosud Manufacturing • Aerosud Aviation • Aero Services • Electrothread • Business & Conference Centre

  18. Direct & Indirect Jobs: Socio-Economic Impact Assessment* CAV and Tenant CAPEX and OPEX Direct jobs Estimated total direct and indirect jobs • Impact on direct job creation at CAV and its tenants is illustrated to include: • Total CAV and tenant direct jobs in year 3 (2018/19) is expected to reach 2817 jobs, excluding the expected 335 construction jobs: • Tenant and CAV direct jobs are expected to reach 2764 jobs by 2018/19 • Tenant and CAV Service Provider jobs are expected to reach a level of 53 by 2018/19 • Impact on indirect job creation is illustrated with the application of a factor 7 as a multiplier: • The 2817 direct CAV and Tenant jobs, as well as the 335 construction jobs would generate some 22 000 indirect jobs in the broader economy by 2018/19 NOTE: * Based on Economic Impact Assessment of 2011

  19. Legal Processes and Appointments • Appointments: • Technical Team Appointments: • Principal agent, engineers, quantity surveyor, architects • Specialist Team Appointments: • Town planning, EIA, TIA, geo-technical survey, land survey • Procurement Process concluded for the following: • Bulk Earthworks and Infrastructure (BEWI) • ITC2 building • Legal processes: • Head Lease Agreement between the dtiand DPW • Powers of Attorney were issued by DPW • Power of substitution was exercised for CEO to sign agreements with CoT • Head Lease Agreement is being reviewed • Occupancy certification for ITC2 Building: • Legal Opinion obtained • CAV to approach CoT Building Inspectorate for Occupancy Certification • Pending bulk service agreements and contributions paid to CoT • Engagements with CoT • Township establishment process underway • Compliance with CIDB Status: • Legal opinion is being obtained • CIDB grading for the appointed BEWI contractor is being investigated • CIDB interaction is to follow legal opinion • Status of contract with BEWI contractor is to be confirmed • Regularising lease agreement for first CAV tenant building

  20. Questions and Answers

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