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Tuesday, 29 October 2013] 4843The following main challenges are faced by the Corporation:• Insufficient and sustainable funding• Resourcing of the organisation• Operational inefficiencies and effectiveness• Local industry support• Capacity rejuvenation at the Dockyard• Current capacity at the Dockyard insufficient.Financial OverviewArmscor’s operating expenses are largely funded by a transfer paymentfrom the Department. In 2012/13 it was R1.318 billion and for 2013/14 itamounts to R1.96 bn. This amounts to a nominal change of 48.73 per centand a real change of 40.85 per cent. In monetary terms it amounts toR642 million in nominal terms and R538 m in real terms respectively.Armscor’s net asset value increased by 187% to R1 7292m due torevaluation of land and buildings. The profits increased from R70.2 in 2012to R 84.6m in 2013. The total revenue increased by 1% to R308.2 millionwhile the personnel costs remained the main contributor at 74.4% of totaloperating cost.ConcernsThe following selected concerns regarding Armscor are noted:• The delay with the appointment of a new Chief Executive Officer as theformer CEO’s contract was terminated with effect from 7 January 2010.Mr JS Mkwanazi, General Manager Acquisition, has been appointed asacting CEO and has been acting up to the time this report was drafted.• The need for a review of the relationship between the DOD andArmscor has been an issue over time especially as it impacts on theefficiency and economy of the entity.• The active participation of black female-owned enterprises in Armscorprogrammes is a challenge that needs to be addressed in the BroadbasedBlack Economic Empowerment (BBBEE) context.• The Simon’s Town Dockyard is experiencing challenges resulting frominsufficient capacity and capability to execute its mandate.• How and to what extent will the current Defence Review impact onArmscor Corporate Plan? Attention will have to be paid to theimplications of Defence Industry chapter dealing with the DefenceIndustry and Policy.• The Defence Industrial Participation objective has not been achievedand no new DIP agreements were entered into during the period underreview as the DIP policy was revised in 2012.Recommendations• The permanent appointment of a CEO should be concluded as soon aspossible.• Training, especially of historically disadvantaged personnel, should beprioritised to fill scarce skill vacancies and BBBEE targets should beaggressively pursued.ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS NO 147─2013