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Another year of good results for Denel and India lifts ban on group

29th August 2014

By: Keith Campbell

Creamer Media Senior Deputy Editor

  

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South African State-owned defence indus-trial group Denel has announced its fourth consecutive year of profits. The group’s results for the financial year 2013/14 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net profit increased by 63% and exports rose by 28%. Exports now account for 50% of the group’s total revenues. And Fitch Ratings has upgraded Denel’s credit rating to AAA.

These results were welcomed by Public Enterprises Minister Lynne Brown. “It’s come a long way,” she highlighted in her address at the results presentation. ”The company has showed great resilience. This is a good example of what I call getting the basics right.”

She noted that this success had been achieved in a global defence market that was dominated by just 15 countries.

“We are not celebrating yet as a lot of work still needs to be done,” she cautioned. “I have reminded the board that the business is still a work in progress. The balance sheet is still supported by the R1.85-billion government guarantee and thus the company needs to wean itself off government support.”

Brown also stressed the need for transfor-mation, describing it as a “survival imperative” for the group. “The company needs to transform its workforce to avoid the impending skills gap brought about by retirements.” She concluded her address by saying: “We are seeing the fruits of the long-term turnaround strategy. These results show that we are on the path of sustainability.”

Responding to questions from the media regarding the government guarantee to the group, Brown affirmed: “We hope to see [Denel] in future becoming more sustainable and paying their own way . . . [But] I’m happy for Denel to retain its guarantee, for now.”

At the same event, outgoing Denel board chairperson Zoli Kunene described the results as “pleasing”. He noted that “this is the fourth year running Denel has presented positive results”. The company was showing a “strengthening balance sheet” and the the results confirmed the correctness of the group’s strategy.

“The board is satisfied that Denel is on a sustained long-term growth trajectory,” he said. He added that the board continuously evaluated the group’s business model to align it with government’s development policy. “I am leaving the company in a great operational and financial condition.”

Meanwhile, India has lifted its blacklisting of South African State-owned defence industrial group Denel, US website Defensenews.com reported, citing a source in the Indian Ministry of Defence (MoD). The MoD reportedly com-municated the ending of the ban on Denel in a letter dispatched on August 12.

The group had been blacklisted by the previous Indian government following allegations that it had paid kickbacks in 2002 to win a contract for 1 000 NTW-20 antimaterial rifles (plus 398 000 rounds of ammunition) for the Indian Army. The ban was imposed in 2005, by which time 400 of the rifles had been delivered. At the same time, India’s Central Bureau of Investigation (CBI) launched a probe into the deal. The CBI terminated the investigation late last year, after eight years of work failed to find evidence to support the allegations.

An antimaterial rifle is a large-calibre rifle (in the case of the NTW-20, the calibre is 20 mm) intended to target vehicles, semihard and high-value equipment at long range. Popularly referred to as a kind of sniper rifle, these weapons do not, in fact, necessarily, fall within this category. The NTW-20 is fitted with a recoil management system, allowing it to be fired by slightly built soldiers. It comes in two versions: the NTW-20x110 and the NTW-20x82.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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