SL9/IS1/ ARMSCOR BUILDING

ARMSCOR RESULTS FOR FINANCIAL YEAR 2003/04

THE ROLE OF ARMSCOR ARMSCORARMSCOR MINISTER OF PUBLIC ENTERPRISES MINISTER OF PUBLIC ENTERPRISES DENEL OTHER LOCAL SUPPLIERS OTHER LOCAL SUPPLIERS FOREIGN SUPPLIERS FOREIGN SUPPLIERS MINISTER OF DEFENCE MINISTER OF DEFENCE SANDF OTHER LOCAL CLIENTS OTHER LOCAL CLIENTS FOREIGN CLIENTS FOREIGN CLIENTS USERS SUPPLIERS

THE FUNCTIONS OF ARMSCOR 1.To acquire and to procure defence matériel for the Department of Defence; 2.To provide a quality assurance capability in support of the acquisition process; 3.To dispose of excess, redundant, forfeited or surplus matériel of the South African National Defence Force;

THE FUNCTIONS OF ARMCOR 4. To support and maintain strategic and essential defence industrial capabilities, resources and technologies as determined by the Department of Defence; 5. To render acquisition and procurement support to other organs of State or other sovereign states with the approval of the Minister.

WHY DOES ARMSCOR EXISTS REASONS WHY WE NEED ARMSCOR:  Defence acquisition requires the application of engineering and science.  Public service remuneration system cannot support the technical skills required by Armscor  Public service management system will render Armscor ineffective (e.g. Dockyard).  Independent decision making body always produces best objective results (civilian oversight).

WHY DOES ARMSCOR EXISTS ARMSCOR’S RELATION WITH DENEL  Up to 1992 Denel was the manufacturing capability of Armscor.  Currently, Denel is one of the supplier to Armscor and the DoD.  Armscor treats Denel like any other local supplier to the SANDF ( must be cost and product competitive)..

CHALLENGES FACING ARMSCOR INADEQUATE FUNDING Transfer payment only funds about 61% of the operational budget of Armscor and thus creates the budget problems; Problems due to Inadequate funding;  Employees salaries lag market  Increased resignations  Erosion of technical capabilities  Inability to transform workforce  Increased workload  Inability to recapitalize organisation Additional income  R30 million added to transfer payment.

CHALLENGES FACING ARMSCOR LONG-TERM SOLUTIONS  Significantly increase the transfer payment to cover entire Armscor budget  Allow erosion of skills to the point where organisation is unable to function.  Supplement transfer payment with additional income from commercial activities. ADOPTED SOLUTION Supplement transfer payment with additional income from commercial activities.

ARMSCOR FUTURE STRATEGIES FINANCIAL OBJETIVES: Sweating Armscor’s assets Technology commercialization Management of Simon’s Town Naval Dockyard Management of other DoD outsourced functions (stock sales, etc.). Acquisition Service for SADC and AU. Black Economic Empowerment spending. STAKEHOLDERS OBJECTIVE Stakeholder management strategy Corporate Social Investment Improve internal and external communication

ARMSCOR FUTURE STRATEGIES INTERNAL IMPROVEMENT OBJECTIVES  Benchmarking of Armscor Acquisition process.  IT infrastructure renewal.  Improvement of business risk, personnel risk and property security.  Finalise the Armscor Act. HUMAN RESOURCE OBJECTIVES  Affirmative Action implementation.  Pay for performance & market related remuneration.  Workforce renewal plan.  Training and development.  Employee wellness programme

STRATEGIC DEFENCE PARKAGES STRATEGIC DEFENCE PACKAGES 1.Patrol Corvettes (type Meko A-200): o4 purchased o9 months delay due to faulty cabling oAll 4 ships (SAS Amatola, SAS Isandlwana, SAS Spioenkop & SAS Mendi) delivered to SA contractor oCurrently fitted with combat Suite oCommissioning into SA Navy starts May/June Class 209 Mod 1400 Submarines  3 purchased  One ship partially complete & ready or sea trials  1 st ship was delivered to the SA Navy in Germany around July 2005  Crew currently being trained in Germany  Other two ships currently being built & will be completed in July 2006 and July 2007 respectively.

ARMSCOR FUTURE STRATEGIES 3. MARITIME PATROL HELICOPTERS (Super Lynx)  4 helicopters purchased (contract sigend 14 Aug 2003). Delivery of the helicopters is scheduled for June/July LIGHT UTILITY HELICOPTERS (Agusta A109) 30 helicopters purchased 7 to be manufactured by Agusta in Italy. 23 are to be manufactured by Denel in SA 4 of the 7 are complete & undergoing tests Agusta transferred technology & manufacturing know-how to Denel Denel manufactured 3 of the helicopters. One of the 3 Denel helicopters started flying on 7 September 2004.

ARMSCOR FUTURE STRATEGIES 5. LEAD-IN FIGHTER TRAINER (HAWK)  24 purchased  Denel manufacturing parts as part of DIP  One aircraft in SA for test at TFDC  9 aircrafts are being assembled at Denel & one completed  Problems still encountered with qualification of the Rolls Royce Mk 951 ‘Adour’ engine. 6. ADVANCED FIGHTER AIRCRAFT (Gripen)  19 single and 9 dual sitters purchased  Denel manufacturing parts as part of DIP  Manufacturing of first aircraft in Sweden has commenced.  1 ST aircraft will be delivered in SA by mid  The last aircraft will be delivered in early 2012.

CONTAINERISED MEDICAL UNIT TEC has supplied various medical facilities to the South African National Defence Force. Various modules were supplied making up complete self-contained hospital facilities. These facilities include: Sterilization X-ray Surgical Theatre Pathological Laboratory Wards(with 4 beds) Orthopaedic Units Ablution Units Physiotherapy Units Dentistry Units Incubator Units Intensive Care Units 27 units were supplied to Bosnia comprising 2 full operating theatres. One fully fledged theatre was also supplied to India.

ARMSCOR PRESENTATION THE END THANK YOU