The executive and the board of State-owned defence industrial group Denel have assured that the company is adopting proper and sound business practices. They did so in a press release on Wednesday. “Denel is emerging from a challenging period in its history but is quite confident that it is well on its way to recovery,” stated the release.

Among factors identified as essential to the future success of the group (some of which have already been implemented, others of which were in process) are the assurance of ethical leadership and a robust governance culture across its entire value chain; the upgrading of its ICT infrastructure and the reinforcement of controls to provide credible and accurate financial statements; the assurance of sufficient working capital to support future growth, which includes the re-engineering of cash flow and the management of working capital; and dealing with internal control deficiencies. The group has also implemented a broad fraud and corruption prevention strategy, that meets international standards and includes lifestyle audits for senior management and executives.

“In recent years the Auditor General has expressed significant disclaimers about the company’s internal controls,” acknowledged Denel. “Much of this can be attributed to a deficient internal control environment and a number of factors including the exodus of skilled employees and inefficient business processes, coupled with [the] lack of [an] integrated [Enterprise Resource Planning] system.”

Further, the group has to win a “healthy” order book, by winning orders from local and international customers; it has to prioritise supporting the SANDF; and it has started becoming actively involved in the management of its associate companies, to get value from Denel’s shareholdings in them. Also, strong programme execution interventions are being executed, to ensure operational excellence, and the group is intervening in all the legacy programmes, to revive them and ensure they are delivered to the requirements of the clients.

“All senior management positions have now been filled,” reported the group. “We were able to attract some of the top minds in specialised fields such as leadership, auditing, financial management and business development to lead the company through the final stages of restructuring, and beyond.”

Denel concluded by highlighting the group’s key role in preserving the country’s sovereign defence capabilities. These include control over advanced technologies, systems and platforms.