Milkor, Cape Town


https://www.youtube.com/watch?v=SbA2JXr7bk4

Denel finally posts profit as turnaround kicks into high gear

Denel has, for the first time in years, posted a profit, with earnings of R390 million before interest and tax for the year ending March 2023, it told Parliament’s Standing Committee on Public Accounts (SCOPA) on Wednesday 14 June.

Denel reported a loss of R1.5 billion in 2020; a loss of R859 million in 2021; and a loss of R747 million in 2022. Denel last made a profit, of R395 million, in the 2015/16 financial year, before the effects of state capture and subsequent mismanagement took their toll.

In briefing SCOPA on key developments at the company, including the status of its turnaround plan, the status of its annual reports, and irregular, fruitless and wasteful expenditure, Denel also revealed that it plans to finalise the appointment of its Group Chief Executive Officer (GCEO) and Group Chief Financial Officer (CFO) by October this year.

Board Chair Gloria Serobe told SCOPA that until recently it was difficult to attract top management talent to the embattled state-owned company but now it aims to fill critical vacancies by 31 August and have built leadership and capacity by year-end (headcount dropped from 2 587 in 2021 to 1 670 in 2023).

Denel is optimistic about its turnaround and future prospects, and in a statement following the SCOPA briefing said, “The restructuring of Denel will be completed within the next six months which will reposition the state-owned defence and technology company to efficiently execute existing orders and grow its business through the existing opportunity pipeline.”

Since the 2020 financial year, Denel has remained insolvent and with poor liquidity, in spite of receiving R416 million, R3.03 billion and R205 million in FY2021, FY2022 and FY2023 respectively. R992 million was last year unlocked from the Denel Medical Benefit Trust (DMBT) and in March this year Denel received R1.8 billion in bailout funding from National Treasury, and is using this to resume production (another R1.5 billion is being withheld while Denel proceeds with the sale of remaining non-core assets as part of its turnaround plan, including property, Denel Gear Ratio, and its Hensoldt stake).

The DMBT and recapitalisation allowed Denel to successfully defend liquidation applications by suppliers, including Saab Grintek, and asset attachments by unions and employees. The extra funds are now mainly being used as working capital to restart operations and “normalise labour relations”. This recapitalisation has “allowed significant progress to be made on implementation of the sustainability phase of the turnaround plan. The balance of the funds will largely be spent to clear legacy obligations and support the growth phase of the plan,” Denel told SCOPA.

Legacy obligations amount to R521 million and cover the Airbus A400M contract, the failed delivery of vehicles to Chad, T5-52 howitzers, and a Democratic Republic of Congo contract, amongst others.

Denel also owes R600 million to Armscor, R75 million to the South African Revenue Service (down from R908 million), and creditors R753 million (down from R963 million). Exiting loss-making contracts will cost R118 million.

New capability areas

Denel interim chief executive Michael Kgobe said Denel is migrating to a new operating model and this will see Denel comprising four “capability areas” – guided weapons, integrated systems solutions (ISS), landward systems and air.

Existing Denel operating divisions will be arranged to fit in with this structure and be accompanied by a reduction in the company’s property footprint as well as what the statement says is a “rationalisation of facilities”.

Denel’s Lyttelton, Centurion, campus will be the primary site of the landward business and will see Denel Vehicle Systems (DVS) in Benoni relocated to the Denel Land Systems campus. “The once off cost to relocate and restore the DVS capability at the Lyttleton facility is estimated to be around R46 million with an annualised benefit of R68 million and a return from the sale of the property expected to be approximately R80 million,” Denel told SCOPA.

Unmanned aerial vehicles (UAVs) will be consolidated into the air capability area based at Denel’s Kempton Park campus as there is overlap with Denel Aeronautics, at Kempton Park, and Denel Dynamics, in Irene. The once-off cost to relocate and restore the UAV capability at the Kempton Park facility is estimated to be around R3 million with a return from the property expected at R40 million. An overall reduction of the Irene footprint is expected to save/earn up to R60 million a year going forward.

Denel Integrated Systems Solutions (ISS) will become a separate division to grow Denel capabilities in advanced technologies diversifying into cyber and civil security solutions.

Shared services will see rationalisation of resources and costs in support functions including human resources, business development, supply chain management as well as information and communication technology (ICT).

Denel said it is confident that it can secure new orders by March 2024 and that the company will be fully back on a growth trajectory by the middle of next year.

“Whilst revenues remain at conservative levels, the improved financial position following the recapitalisation of the business by the Shareholder to deal with the repayment of government guaranteed debt as well as other legacy obligations and working capital to restart operations positions the business to enter a growth phase through the unlocking of the opportunity pipeline and improved efficiencies and productivity. Further unlocking of cash into the business will be realised through the sale of non-core assets,” Denel said.

Irregular expenditure

Denel’s irregular expenditure stands at R3.2 billion, including legacy amounts and covers entities liquidated or being liquidated (LMT: R700 million, and Aerostructures: R250 million).

Serobe told SCOPA there has been “quite a lot of work done” to reduce irregular expenditure while dealing with legacy amounts; annual incurred irregular expenditure decreased by 98% since April 2018.

Irregular expenditure for the 2023 financial year stood at R20.193 million. The main contributors to this were deviations from competitive bidding processes (R9.6 million) and tax clearance certificates not being obtained (R10.17 million).

Annual reports

Regarding its outstanding annual reports, Denel told SCOPA that the timeous submission of annual financial statements for FY2021 and FY2022 “was not achieved due to the high turnover of personnel in Denel as a result of non-payment of salaries. Furthermore, AGSA [Auditor General of South Africa] was unable to commence with the audit until some payment was made as it was owed fees from the previous years.”

Denel added that the 2021/21, 2021/22 and 2022/23 reports have been submitted to the AGSA for audit and after paying the AGSA in March, auditing has commenced. This process will be completed at the end of June and Denel will then advise when all three annual reports will be tabled.

Denel has been chastised for failing to submit its annual reports, as well as failing to appear before SCOPA on 6 June. Serobe apologised for missing the last meeting, saying Denel was informed of its need to be at SCOPA late, and its executives were travelling. The fact that the meeting was a physical one in Cape Town made it even more difficult to attend. Serobe said Denel has in the past never missed a meeting but SCOPA chair Mkhuleko Hlengwa was not happy with this response and thought adequate notice was given for Denel appear through a letter to the Department of Public Enterprises. He threatened to contact board members directly in future if necessary to ensure SCOPA attendance.

https://www.defenceweb.co.za/featured/denel-finally-posts-profit-as-turnaround-kicks-into-high-gear/

Denel working on R18 billion order book as turnaround strategy is implemented

With its factories resuming production after a hiatus of several years, Denel is working on its R18 billion [$980 million] order book and targeting R30 billion [$1.6 billion] in new business.

Last month the Department of Public Enterprises said that Denel has a ‘robust’ order book, which stands at R18.37 billion for 2023/24, while planned total sales are projected to be R2.08 billion, compared with R1.08 billion in the 2022/23 financial year.

Denel Chief Restructuring Officer Riaz Saloojee told defenceWeb that orders at the moment are not a problem, and that Denel has more than enough business and enough outstanding work to keep the company busy for the next two years. However, it will need to secure orders after that.

He said that Denel’s artillery and missile systems are still world leaders and Saloojee is confident Denel can get Badger infantry fighting vehicle (IFV) production back on track for the South African Army. Similarly, the company hopes to resume Project Kamas, for the supply of A-Darter air-to-air missiles to the South African Air Force. “We will have to work with industry here,” Saloojee said, as Denel will try and use private companies to assist with manufacture as many skilled personnel have left Denel Dynamics. This Saloojee believes, is “a new philosophy of doing business.”

Denel Integrated Systems Solutions (DISS) has made good progress on the Ground Based Air Defence System (GBADS) for the South African Army, and is waiting for the next phase of this. The entity is picking up its old strategy of taking system design skills and focussing on other areas, such as border security and infrastructure protection. It is talking to Transnet and Prasa, especially regarding the securing of coal terminals.

Denel in August last year finally settled outstanding salaries, using R992 million from the Denel Medical Benefit Trust to do so. In March this year, it received R1.8 billion in bailout funding from National Treasury, and is using this to resume production (another R1.5 billion is being withheld while Denel proceeds with the sale of remaining non-core assets as part of its turnaround plan, including property, Denel Gear Ratio, and its Hensoldt stake). Saloojee said that as production restarts, Denel hopes to become self-reliant and not dependent on further bailouts. He said the key fundamentals are in place, and Denel just needs to maintain its skills base.

Saloojee told defenceWeb that Denel had stopped the bleeding and is now aiming to grow the business. “Denel has absolutely turned a corner. We still have significant challenges especially regarding skills.”

The Department of Public Enterprises and National Treasury are supporting the company, which also has the full backing of the South African National Defence Force (SANDF), he said. The company still needs to restore trust with its suppliers, however. Denel is reliant on local suppliers and wants to tell them that it is able to work with them again.

“We should take a South Africa Incorporated approach,” Saloojee said, adding that he also wants to see support from entities like Armscor and the Council for Scientific and Industrial Research (CSIR).

Various delegations in recent weeks and months have been visiting Denel to see progress on its turnaround. In March, the Parliamentary Portfolio Committee on Defence conducted an oversight visit at Denel Aeronautics and in early April, the Military Command Council paid a visit to Denel to strengthen ties between Armscor, Denel, and the SANDF.

May was particularly busy, starting with a military attache delegation touring the company’s facilities on the fourth in what Denel said was its first annual attache day. On 12 May, Public Enterprise Deputy Minister Obed Bapela conducted an oversight visit at Denel Land Systems and Pretoria Metal Pressings to see turnaround activity first hand – that same day, Denel hosted 400 members of the SANDF, including senior members of the Military Command Council. Other delegations came from Kenya and Ghana, and were followed by members of the Nigerian Armed Forces Command and Staff College who visited Denel Land Systems. On 23 May Denel and Hensoldt South Africa welcomed the SA Naval Staff College Junior Staff and Warfare Course 92 (JSWC) at the Denel Irene Campus.

Denel officials said that many delegations have approached Denel without invitation from the company, indicating strong interest in developments at the State-Owned Entity. Denel also plans to host product demonstrations for potential clients and as it makes itself more visible, has been taking part in defence exhibitions around the world. It was at the September 2022 edition of Africa Aerospace and Defence, and IDEX in the UAE in February.

More recently a Denel delegation, along with Defence Minister Thandi Modise was in Brazil for LAAD in April. Company officials were due to attend the LIMA exhibition in Malaysia in May. If the company does not have a stand at exhibitions, it will at least send representatives, particularly in African markets. Saloojee said the significant opportunities in Africa were important for the development of the continent and its peace and stability.
https://www.defenceweb.co.za/industry/industry-industry/denel-working-on-r18-billion-order-book-as-turnaround-strategy-is-implemented/

President Ramaphosa arriving in Warsaw, Poland, ahead of trip to Kyiv.

Faithful007:


Always insecure, confrontational and overly competitive. You correct them and they turn it into a personal attack.

Good observation.

Lurker4Long:
President Ramaphosa arriving in Warsaw, Poland, ahead of trip to Kyiv.

A meaningless trip.

We Africans need to start treating ourselves with respect.

Shaytun:


A meaningless trip.

We Africans need to start treating ourselves with respect.

I agree. Zelensky told Ramaphosa in a phone call what his conditions are, and so did Putin. Not acceptable to either side, and therefore no prospect of any agreement. After those phone calls, the whole thing should have been canned.
In fact, the Egyptian, Congolese and Ugandan presidents pulled out, only sending representatives.

Lurker4Long:


I agree. Zelensky told Ramaphosa in a phone call what his conditions are, and so did Putin. Not acceptable to either side, and therefore no prospect of any agreement. After those phone calls, the whole thing should have been canned.
In fact, the Egyptian, Congolese and Ugandan presidents pulled out, only sending representatives.

Exactly, they should lead a high level delegation to Sudan, I also didn’t see their voice when that bigoted Tunisian leader was clowning earlier this year.

And what are they doing including macky sall in the delegation.

Look at what a Ukrainian official is saying about the trip.

Shaytun:


Look at what a Ukrainian official is saying about the trip.

We have different understandings of the term "official". That's not to say I disagree with the Ukrainian political analyst.
For the official Ukrainian view, see here:
https://www.thebrenthurstfoundation.org/news/ukraine-foreign-minister-dmytro-kuleba-speaks-out-on-african-peace-initiative-and-negotiating-from-strongest-position-possible/


https://www.youtube.com/watch?v=KzhXEWy7vkg

Lurker4Long:

We have different understandings of the term "official". That's not to say I disagree with the Ukrainian political analyst.
For the official Ukrainian view, see here:
https://www.thebrenthurstfoundation.org/news/ukraine-foreign-minister-dmytro-kuleba-speaks-out-on-african-peace-initiative-and-negotiating-from-strongest-position-possible/


https://www.youtube.com/watch?v=KzhXEWy7vkg

Every drawing man will grab even tin air 😅

By the way, what in the name of gentle Jesus is this

US Morocco joint Airforce exercise

Lurker4Long:


I agree. Zelensky told Ramaphosa in a phone call what his conditions are, and so did Putin. Not acceptable to either side, and therefore no prospect of any agreement. After those phone calls, the whole thing should have been canned.
In fact, the Egyptian, Congolese and Ugandan presidents pulled out, only sending representatives.

I don't think peace was the intention here. They all knew the talks would lead to nothing. I believe Ramaphosa organized the trip because he wanted to make his and by extension Africas position on the war in Ukraine, clear.

Since many have accused SA of siding with Russia.

Faithful007:
US Morocco joint Airforce exercise

name of the aircraft in the last frame

Dstealth:
name of the aircraft in the last frame

USAF B1- Lancer. A heavy bomber in service with the air force.

Russia seems to be using it's experience in Syria towards Ukraine.
https://www.youtube.com/watch?v=Y5rC9eDUVM8

Faithful007:
USAF B1- Lancer. A heavy bomber in service with the air force.

thank you

Bacteria8:
By the way, what in the name of gentle Jesus is this

I'm guessing the plane is going to be refurbished for use by UkraiNATO troops . What a generous donation by the South African government.

USA SOF in Ukraine attacking Russian troops.


https://www.youtube.com/watch?v=_AFI85Q5XsU

Exnavyboy62:


I'm guessing the plane is going to be refurbished for use by UkraiNATO troops . What a generous donation by the South African government.

What happened was that, they stopped them from exiting armed. Mostly likely a case of miscommunication or the lack of it even.

Similar stuff happened to British SAS troops at the beginning of the war in Sudan. The Sudanese army were so pissed that the UK government had to pay "bribes" to pacify them. It was part of the reason, the US ruled out any military evacuation in Sudan.

Tinfoil:
USA SOF in Ukraine attacking Russian troops.


https://www.youtube.com/watch?v=_AFI85Q5XsU

And what the hell is "USA SOF"?

Faithful007:
And what the hell is "USA SOF"?

US Special Operations Forces. The Rambo guys

Lurker4Long:

Tinfoil:


US Special Operations Forces. The Rambo guys

Okay cool.

Trench clearing as it should be.

Warning: The following content contains scenes that some viewers may find disturbing. Viewer discretion is advised.

https://twitter.com/mrsorokaa/status/1670729546985877512

The Zambia Air Force generously made its facilities and aircraft available for the second edition of Kumbululuka Kwa Bafana – the Children’s Flight – in Lusaka last weekend, when more than 400 underprivileged children were given the chance to fly for the first time.

I never thought Nigerian President could damned the military industrial complex to name Mallam Nuhu Ribadu as the new NSA.

Wow...such a brave President

Renewed hope indeed.

Bacteria8:
I never thought Nigerian President could damned the military industrial complex to name Mallam Nuhu Ribadu as the new NSA.

Wow...such a brave President

Renewed hope indeed.

I'm impressed. Ribadu is someone I esteem highly

Wagner is open for recruitment

https:///intelslava/49010

.