The Armaments Corporation of South Africa (Armscor) and the Castle Control Board (CCB) on May 6 briefed the Portfolio Committee on Defence and Military Veterans on its strategic plans and budgets for the 2020/21 financial year.

The parties outlined their expenditure and performance plans for the remainder of the year and beyond.

Armscor is the premier defence technology and acquisition service provider for the South African National Defence Force.

Armscor has been participating actively in terms of fighting the Covid-19 pandemic since the virus hit South Africa’s shores and during the lockdown, said Armscor chairperson Malusi Motimele.

Armscor has helped to manufacture personal protective equipment and sanitisers.

He asked the committee to support the entity’s turnaround strategy, which includes sweating its assets and implementing different sector charters.

CEO Solomzi Mbada presented Armscor’s corporate plan for 2020, which was aligned to the revised Medium Term Strategic Framework to 2024.

Mbada said the entity aimed to improve its revenue generation, cost management, efficient delivery and stakeholder management.

Specifically, he explained that the increased revenue generation focus was necessary owing to the insufficient fiscal budget allocation that the entity receives.  

Armscor plans to generate additional income from finding new markets, commercialising intellectual property, sweating assets and diversifying the client base – such as stakeholders in the security cluster.

Armscor’s revised vision is to be the strategic partner of choice for defence and security solutions, while its mission is to meet the defence material, technology requirements and management of strategic capabilities of the Department of Defence, organs of State and other entities.

As an example of increased revenue generation possibilities, the entity wants to expand the scope of its Hazmat manufacturing facility, which produces respiratory filtering masks for protection against most respiratory health hazards.

Hazmat has developed a new high-efficiency particle filter cartridge for half-face masks, which will be launched to the market as soon as the Covid-19 outbreak conditions improve.

Mbada said the entity would achieve a break-even budget for 2020 and that revenue generated by the research and development facilities continued to be under pressure owing to lower operating activities of major customers.

Armscor expected a R40-million Covid-19-related impact on the business.

“The declining budgets and transfer payments to Armscor from government remained a huge risk towards the future sustainability of the entity.

“However Armscor continued to work towards being a sustainable organisation that generates additional revenue through its partnerships, while containing costs and delivering ground-breaking technologies,” Mbada concluded.

CASTLE TOURISM RELIEF

CCB, which is responsible for the overall management, maintenance and promotion of the Castle of Good Hope as a heritage site and tourist attraction, also presented its five-year strategic plan to 2025 and its 2020 performance plan and budget.

CCB CE Calvyn Gilfellan said all of the castle’s revenue streams closed as soon as the South African lockdown started; however, it had sufficient resources to pay full salaries for March.

CCB could only pay 70% of operational staffs’ salaries in April, while management’s salaries were not paid.

Gilfellan advised that it involved the Unemployment Insurance Fund to help out its workforce.

When the castle closed, it lost six major events, amounting to more than R500 000 in potential revenue. "Because we are a tourism-focused entity, we will only be able to operate fully at Level 2 of lockdown restrictions."

CCB made a submission to the Department of Defence for a R1.6-million relief support package, which has been approved, but it still requires approval from National Treasury.

Meanwhile, CCB’s five-year strategic plan focuses on clean governance and good administration, while using an integrated conservation management plan as the basis for all heritage interventions.

CCB also advised how it would sustain the castle from a revenue and management point of view, while adhering to international benchmarks for heritage management – such as that of the United Nations Educational, Scientific and Cultural Organization – and addressing safety and security issues around the castle.

"We were budgeting for R8.9-million of expenses for 2020/21, comprising R3.6-million for human resources, statutory costs of R840 000, operational costs of R3.5-million and R932 000 for programmes.

"However, this has since been revised to a total budget of R5.2-million, should the castle be able to resume operations in August. However, this amount might need to be reworked further if the lockdown measures extend longer.”

The R1.6-million relief request was to keep up care-and-maintenance activities and some salaries to staff until the castle is able to open. However, should the lockdown restrictions persist and the castle is only able to open in December, it will need R3-million to maintain the operation and staff, since own-generated revenue is largely dependent on events and museum visits.

The staff of the castle consist of three cleaners, two tourist guides, one tourism booking officer, one cashier, one cashier’s assistant, one museum keeper, one finance officer and events manager, one events assistant, one heritage coordinator, one heritage assistant, one curio shopkeeper, a CFO, a CEO and a chairperson.