Upload
morwenna-awena
View
45
Download
0
Tags:
Embed Size (px)
DESCRIPTION
DENEL GROUP. PRESENTATION TO PUBLIC ENTERPRISES PORTFOLIO COMMITTEE Messrs. Zoli Kunene and Riaz Saloojee, Mmes. Natasha Davies and Marina Uys 5 November 2013. CONTENTS. OVERVIEW OF DENEL FINANCIAL PERFORMANCE HUMAN RESOURCES AND TRANSFORMATION CONCLUSION. OVERVIEW OF DENEL. - PowerPoint PPT Presentation
Citation preview
DENEL GROUP
1
DENEL GROUP
PRESENTATION TO PUBLIC ENTERPRISES PORTFOLIO COMMITTEE
Messrs. Zoli Kunene and Riaz Saloojee, Mmes. Natasha Davies and Marina Uys
5 November 2013
DENEL GROUP
2
CONTENTS
OVERVIEW OF DENEL
FINANCIAL PERFORMANCE
HUMAN RESOURCES AND TRANSFORMATION
CONCLUSION
DENEL GROUP
4
DENEL STRATEGY FIRMLY IN PLACE
Our strategy focusses on significantly growing revenue, optimising costs and efficiencies, strengthening the balance sheet, transformation and modernising technology:
2018
2012
2006
Good
Great
Ailing • Working towards a revised Denel business culture optimal
for the next phase of growth• Improving operational performance and program
execution• Improving intensity to conclude orders in the pipeline, but
also when to cut our losses and move on.• Interventions to enable management to accelerate
Employment Equity (EE) in the engineering, scientist and technician categories in the group
• Creating an environment where Denel can participate in, and support other SOE and national technological programs.
• Increasing the focus on research, development and innovation to ensure our future products will have the required technological edge or unique selling point in the market.
Corporate Plan
Vision
Denel in 2013
A “Good”
Company
STRONG & COLLECTIVE LEADERSHIPDenel in 2018
A “Great”
Company
• Strategic Stakeholder Partnership DOD/Armscor & DPE/Denel anchors the sovereign/strategic capabilities, ensures joint long-term planning, enables multi-year orders, enables single source main contracting & facilitates MOD-MOD marketing support
• Industry Leadership: Denel acts as the mature national defence main contractor towards other RSA defence industries (both established & emerging)
• Transformation: Denel champions EE & SD internal & wider defence industry
• New Group Business Culture : New commitment to broad Group Vision & Goals not only narrow divisional perspectives. Mobility of people, sharing resources & ideas, working towards a common vision. Change management incl. targeted leadership interventions
• BD & Sales drive: Develop this function (shared roles between corporate and divisions to achieve the potential we know is possible
• Operations: Denel deliver on new programs. Grow capacity through interventions
• Cash and profitability: Continued increase in GP% and reduction in Opex %
• Respected SA company: Value adding partner to fellow SOEs & SOCs, skills development
The Denel of 2013 - Remaining Challenges:
•Quicker conversion of opportunities from the strong opportunity pipeline into long-term orders
•Cost base has improved but much more needed
•Aerostructures requires > R150m pa to break even
•Sub-optimal R&D investment in context of our high-technology industry priorities. Specific areas e.g. ammunition and artillery under threat.
•Asymmetrical warfare technology base weak though improving in certain areas example the LMT acquisition, new missile technologies.
•Though overall ACI representivity now 50%, EE in senior management & engineering still unacceptable
The Denel of 2013 – Promising Progress:
•Solid opportunity pipeline
•All business areas (except aerostructures) profitable
•Improved programme execution performance
•Improved customer confidence, and a commitment to a strategic partnership between DOD/Armscor and DPE/Denel
•Solid conventional technology base (though in a maturing industry sector)
•BBBEE Level 3
•Strengthened human capital base, with improved age & EE profile, and improved attraction and retention trends
The Denel of 2018 will be renowned for:
•New future orientated, group focussed business culture well established
•Revenue has grown to more than R7bn
•EBIT on group level more than 7% after major investments in R&D and Transformation
•Sufficiently funded balance sheet
•Long-term orders book more than 5x turnover, including new orders from SOEs
•Modernised product offerings in most capability areas provides competitive edge
•Challenged product areas incl. artillery, UAVS, ammunition & a/c MRO re-positioned
•Marked improvement in EE levels for Engineers & Senior Managers, and improvement in average age of workforce
EXTERNAL
INTERNAL
DENEL GROUP
9
KEY DEVELOPMENTS AND ACHIEVEMENTS
• Restructured the business, integrating eleven businesses into six, streamlining and sharing support services across the group, leading to cost optimisation and savings
• Achieved optimal mix between local and foreign sales - exports account for close to 50%. Overall revenue improving year-on-year
• Reduced net borrowing position and re-finance risk by restructuring the R1.85bn short-term debt to short-term commercial paper and medium-term bonds
• Concluded key transactions: o Joint venture with a UAE government-owned Tawazun Holdings in the
missiles domaino Acquired LMT, a strategic supplier of military vehicles to enhance our
landward vehicle capabilityo Signed an agreement to be the preferred provider of MRO services with
Russian Helicopters and Irkut Corporation, as well as Ukraine-based Antonov
• Operated under improving stakeholder relationship and support towards Denel
• Recognised for excellence in corporate reporting in June 2012 and received award for the best governed state-owned enterprise in October 2012
DENEL GROUP
10
KEY DEVELOPMENTS AND ACHIEVEMENTS (cont.)
• Denel continued to execute its major projects: o A-Darter 5th generation air-to-air missile qualification in process in close
collaboration with Brazil, a strategic IBSA and BRICS partner nationo Delivered the final Rooivalk helicopter, the first combat support helicopter to
be designed, built, qualified and certified on the African continento Continued to deliver on Hoefyster development contract. Production
contract awarded in September 2013, R8.4bn o Achieved scheduled milestones on the export turret contract to a customer
in Southeast Asia• Completed various demining and clearing of ERW in South Sudan,
Democratic Republic of the Congo, Senegal, Libya, Angola and Mozambique• Appointment of business unit deputy CEOs in July 2012 - two of these
deputies have subsequently assumed business unit chief executive roles• Achieved 79% ACI ratio on all new appointments against a target of 70%• Continued to contribute to National interests through skills development,
SED initiatives and R&D• Deployment of UAVS and sniffer dogs at Kruger National Park to assist with
the fight against rhino poaching, a project aimed at preserving our rich heritage
DENEL GROUP
11
DENEL ON THE WORLD STAGE
Denel’s position as a premier leader in the industry was confirmed at the premier industry event, Africa Aerospace and Defence (AAD) exhibition held at Waterkloof Air Force base during September 2012 where Denel signed a number of contracts and memoranda of understanding (MoUs) that will positively impact the business going forward
DENEL GROUP
12
TOWARDS THE ACHIEVEMENT OF THE STRATEGY - Some of the key interventions towards the achievement of the strategy
DENEL GROUP
15
Revenue R3 918m improves 10% •Local revenue R2 135m remains fairly stagnant •Export revenue R1 783m improves by 34% Net profit R71m improves R30m•Significant R&D spend of R528m (internally funded R142m)•Skills development spend of R46m•Share of profit from associates R72m improves 118%•Operating profit R117m improves 17%•Net loss posted by DAe R51m improves 35% Debt and equity improve•Equity position R1 472m improves by R777m•Borrowings marginally reduce by R51m
Strategic interventions•Focus on improving sales•Cost containment and programme efficiency drive•Improved stakeholder relationship and shareholder support•Focused leadership
KEY FINANCIAL HIGHLIGHTS
-
1 000
2 000
3 000
4 000
2009 2010 2011 2012 2013
Rm
Revenue per region
Africa, excl North Middle East Europe Asia Pacific Other South Africa
-
1 000
2 000
3 000
2009 2010 2011 2012 2013Rm
Debt and Equity
Equity Debt
DENEL GROUP
16
R71m
R178m
Audited profit for the year
Excluding interest
DENEL ACHIEVES A PROFIT OF R71m FOR 2013, BUT CONTINUES TO BE SIGNIFICANTLY IMPACTED BY INTEREST ON DEBT
2006
(R1 363m)
DENEL GROUP
18
EFFECTIVE SYSTEM OF INTERNAL CONTROL
• Clean internal and external audit• Strong governance structures and cultures o Rated as a leading and well governed SOC by the Centre for Corporate
Governance in Africa at the University of Stellenbosch among 21 Schedule 2 companies, in a report published on 11 October 2012
o Recognised for excellence in corporate reporting, achieving top position in annual report, disclosures for ethical leadership, corporate citizenship and board directors remuneration. Review conducted by Nkonki Inc. and results released on 15 June 2012
• Risk governance processes are in placeo Fraud prevention and anti-corruption including fraud hotlineo Ethics policyo Compliance processeso Complied with local and international codes, laws and regulations
• Complies with King III Code of Corporate Governanceo Stakeholder managemento IT governanceo Sustainability reporting
• Sound functioning of Board and Board Sub-committees• No concerns regarding the internal control environment
DENEL GROUP
19
Mar-13 Mar-12Actual Actual
Rm RmRevenue 3 918 3 568 Cost of sales (3 092) (2 706) Gross profit 826 862 Gross profit as % of sales 21% 24%Other income 231 196 Other operating expenses ( 940) ( 958) Operating costs as % of sales (24%) (27%)Operating profit/(loss) 117 100 Share of profit of associates 72 33 Profit/(loss) before interest and tax (EBIT) 189 133 Finance costs ( 143) ( 145) Finance income 36 61 Income tax expense ( 11) ( 8) Net profit/(loss) 71 41
GROUP INCOME STATEMENT 31 MARCH 2013
DENEL GROUP
20
Mar-13 Mar-12 Rm Rm
Non-current assets 2 177 2 131 Current assets 4 497 3 420
Inventories 713 624 Trade and other receivables 2 263 1 471 Loans and receivables 182 193 Other financial assets 42 38 Cash and short-term deposits 1 297 1 094
Assets held for sale 104 91 Total assets 6 778 5 642
EQUITY AND LIABILITIESTotal equity 1 472 695 Non-current liabilities 2 841 1 288
Loans and borrowings 1 406 101 Advance payments received 1 169 920 Provisions 265 260 Deferred tax liabilities 1 7
Current liabilities 2 465 3 659 Trade and other payables 946 826 Other financial liabilities 78 48 Loans and borrowings 507 1 865 Advance payments received 410 447 Provisions 523 470
Total equity and liabilities 6 778 5 642
YEAR-END
BALANCE SHEET AS AT 31 MARCH 2013
DENEL GROUP
21
Group2013 2012Rm Rm
OPERATING ACTIVITIES
Net cash flows from/(used in) operating activities (151) 360
INVESTING ACTIVITIES
Net cash flows used in investing activities (167) (150)
Net cash flows before financing activities (318) 210
FINANCING ACTIVITIES
Net cash flows from/(used in) financing activities 521 (70)
Net increase in cash and cash equivalents 203 140
Cash and cash equivalents:
At the beginning of the year 1 094 954
At the end of the year 1 297 1 094
CASH FLOW STATEMENT AT 31 MARCH 2013
DENEL GROUP
23
Denel Growth Strategy
Talent Acquisition &
Attraction
Learning & Develop-
ment
Performance & Rewards
Employee Relations & Retention
HUMAN RESOURCE STRATEGIC PLAN
HUMAN RESOURCE AND TRANSFORMATION STRATEGY
DENEL GROUP
24
TALENT ACQUISITION AND ATTRACTION
• Denel is repositioning itself as an Employer of Choice in the market through innovative branding and recruitment strategies
• Denel targets specific sources to attract its pool of talent and create its skills pipeline
• Employment Equity remains a key strategic objective which has improved significantly
DENEL GROUP
25
Denel has spent R46m on skills development
Denel has spent about R10m on youth development initiatives
LEARNING AND DEVELOPMENT
DENEL GROUP
26
YOUTH DEVELOPMENT PROGRAMMES
Schools outreach programme
•The Schools Outreach Programme (SOP) is a programme where learners from Grade 11 to Grade 12 are offered extra classes on Saturdays and holidays by qualified teachers from the local community
•The programme has been running in Gauteng and the North-West Province and has been expanded to include Limpopo; Mpumalanga and Free State
Bursaries
•Denel has offered over 80 bursaries to students towards qualifications in the following engineering fields: Electronic, Mechanical, Industrial, Software/ Computer and Mechatronic
Vacation Work and Internship
•Engineering students are required to undergo practical training during the year. This is a compulsory requirement from the University in order to graduate
•Denel divisions offer students vacation work over the December and January period for 6 weeks where each student is assigned to meaningful project related work
DENEL GROUP
28
EMPLOYEE SKILLS DEVELOPMENT INITIATIVES
Leadership and Management Development Programme
Workplace Skills Plans
Engineering Academy Of
Learning
Employee Study
Assistance
Group Succession
Plan
SKILLS DEVELOPMEN
T
DENEL GROUP
29
DENEL CONTRIBUTING TO THE DEVELOPMENTAL STATE
Denel hosted the DPE Free State Youth Camp at its Kempton Park hostel. A hundred of the best performing learners in Grade 10 and 11 in Free State schools were invited to the youth camp during which they were exposed to the various careers at state-owned enterprises
DENEL GROUP
30
DENEL CONTRIBUTING TO THE DEVELOPMENTAL STATE (cont.)
Denel helped out at the Via Nova School by painting a dormitory, providing food hampers and donating sports kits in commemoration of Youth month. Via Nova School is a school that admits pupils with special educational needs from throughout Gauteng and other provinces in certain cases
Denel was involved in a project to introduce the ‘Mini-Chess Programme’ to Philena Primary School in Olievenhoutbosch. This programme uses chess to teach learners about maths and science
DENEL GROUP
31
DENEL CONTRIBUTING TO THE DEVELOPMENTAL STATE (cont.)
Denel implemented a number of CSI interventions within the Ingquza Hill municipality in the Eastern Cape during October 2013 including:
• Installation of the Telematics Learner Support System
• Hosting a career expo in collaboration with other SOCs and the Department of Higher Education and Training
• Provided over 400 maths dictionaries to the 4 local high schools and library
• Creating a source of clean drinking water for local communities by funding four boreholes
• Denel will be donating computers to the best performing primary schools in Maths and Science
DENEL GROUP
33
FOCUS AREAS GOING FORWARD
• Strengthening balance sheet through improved profitability and better working capital management
• Denel continue its journey to self sustainability and profitability by converting significant opportunity pipeline to contracts
• Progress in strengthening relationship with Armscor and DoD - joint DoD/Denel/DPE/Armscor team established and Memorandum of Co-orporation in the process of being developed
• Improved level of investment in new technology and overall R&D
• Investing in the development of own staff and contribution to skills development in South Africa
• Continue high performance culture
oAchieved 94% of technical milestones on DoD orders
o International accreditations maintained
o Effective system of internal control and governance demonstrated by clean audits