Denel says it is ready to move into the next phase of its strategic drive to strengthen its business and create a long-term, sustainable future based on improved business efficiencies and growth.
\nThis after the decision announced by Finance Minister, Enoch Godongwana, in his Medium Term Budget Policy Statement (MTBPS) to re-capitalise the State-owned aerospace and defence company with R3.4 billion.
\nDenel has described the move as a critical step in rebuilding the State-owned entity, which is led by the Chief Restructuring Officer, Riaz Saloojee, who plays a critical role in ensuring the successful turnaround of Denel.
\nAccording to the Group CEO of Denel, Mike Kgobe, the State\u2019s decision to recapitalise the entity is a vote of confidence to stabilise the company as it emerged from a sharp downturn, caused by mismanagement, State Capture and governance failures.
\n\u201cThis will enable us to proceed with the streamlining of the business and establish a base from which we can significantly grow our order book and access new revenue streams,\u201d he said.
\nNational Treasury, the Department of Public Enterprises and the Denel Board of Directors will monitor the R3.4 billion injection, which is attached to strict conditions.
\n\u201cGovernment, as the sole shareholder, clearly recognises the strategic importance of Denel as a commercially-driven aerospace and defence company and the immense value we can add to the economy in terms of innovation, creation of intellectual property and export revenue generation to contribute to the balance of payments,\u201d said Kgobe.
\nThe immediate actions by management with oversight of the Board, according to the entity, is to exit non-core assets and realise cash inflows towards the R1.8 billion that will contribute towards its turnaround plan.
\nIn addition, the company is proceeding with actions to align the costs of running the business with the current revenue base while retaining core capabilities for growth.
\n\u201cThe focus is now shifting to a critical stage in which we need to sustain the new business model which is emerging,\u201d said Kgobe.
\nIn this phase, Denel will also reduce the current operating divisions from six to four to continue to deliver world-class products across the spectrum of aerospace, defence and related technologies.
\nThis includes traditional domains of the battle space of land, sea and air, to new domains of cyber and civil security.
\nKgobe acknowledged that the previous business structure of Denel was unsustainable, which required a fundamental restructuring and a reduction of the cost base to affordable levels.
\n\u201cThe company will now begin to reduce its geographic footprint, rationalise its facilities and implement a shared services model in areas such as supply chain management, human capital and development, information and communication technology as well as finance and public affairs.\u201d
\nKgobe mentioned that the recapitalisation by the shareholder would help to accelerate processes and enable Denel to achieve stability and sustainability.
\n\u201cI am confident that a sustainable business model will enable us to focus on growth,\u201d said Kgobe.
\n\u201cThere is still significant global interest in our battle-proven products in the fields of artillery systems, infantry weapons, small to medium ammunition and infantry systems as well as aeronautical solutions of manned and unmanned aircraft and landward combat vehicles with armoured protection.\u201d
\nHe said the entity\u2019s reputation for excellence and quality has not been dented.
\n\u201cThere is still an appetite for partnerships with local and global companies in the aerospace, defence and technology sectors.\u201d
\nIn the coming months, Denel said it will embark on new revenue streams and explore further market opportunities for its strong range of existing products and advanced technology sectors of systems integration, command and control and cybersecurity.
\nDenel said this move will also help retain and attract some of the best brains that are emerging in the country.<\/p>\n
Source: South African Government News Agency<\/p>\n","protected":false},"excerpt":{"rendered":"
Denel says it is ready to move into the next phase of its strategic drive to strengthen its business and create a long-term, sustainable future…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[73],"tags":[],"yoast_head":"\n