Pretoria - Public Enterprises Minister Lynne Brown has expressed satisfaction at the performance of arms company, Denel, which reported revenue of R4.58 billion in its 2013/14 financial results.
The arms company has seen group revenue grow by 17% to R4.58 billion - most of which can be attributed to a 28% increase in exports. These exports account for 50% of total revenue, including participation in Middle East, Asian and South American countries for the development and production of missiles and turrets for infantry combat vehicles, among others.
Briefing media at the release of the results and the conclusion of an Annual General Meeting, on Friday, Minister Brown said the company -- which has seen good results in the last four years -- had turned a corner.
“The company has shown great resilience and is a good example of what I call getting the basics right. The company is on a road of financial sustainability and an example of good corporate governance,” said the Minister.
The group’s net profit has improved by R123 million to R194 million and its order book for projects to be executed in the next 10 years has grown to R32 billion. Denel chief executive officer Riaz Solajee said this was an exceptional achievement, saying that the company is committed to increasing investments in future capabilities and technologies.
The company has diversified into the space domain, with the company this year having set up the Spaceteq business unit in the Western Cape.
Previously Denel had needed bailouts from government. While progress has been made, more work still needs to be done at Denel, said the Minister. “The balance sheet is still supported by the R1.85 billion government guarantee and the company needs to wean itself off government support,” said the Minister.
Outgoing chairman of the board, Zoli Kunene, said government’s money was being put to good use.
“The government’s money is being put to work and productively so. Are we in a position to pay it back now? If pushed we can. What is happening is that the business is growing in leaps and bounds and that will require a bigger working capital,” he said.
Solajee further added in the short to medium term Denel will further diversify into the civil security arena and the command and control environment.
Speaking also on prospects for growth, Solajee added that the company is in the process of acquiring the BAE Systems Land Systems South Africa (LSSSA) after the UK- based global defence group recently announced that it is selling its SA armoured and mine-protected vehicle and related system.
“We are in discussion at the moment and there is going to be an agreement,” he said.
The company, said Solajee, supports the view that state owned companies must contribute to South Africa’s broader socio-economic transformation efforts and address issues like poverty, inequality and unemployment.
Meanwhile, discussions are underway with the Departments of Public Enterprises and Trade and Industry to secure National Industrial Participation work packages for the local aerospace industry when South African Airways and SA Express proceed with the procurement of new aircraft fleets.
The minister also spoke of the importance of transformation at Denel. “The company needs to transform its workforce to avoid the impending skills gap brought about by retirements,” she said.
The Minister also appointed Martie Janse van Rensburg as the acting chairperson of the board.
Following the briefing, the minster embarked on viewing exhibitions such as the Rooivalk on the Denel premises. – SAnews.gov.za
