Denel is emerging from a challenging period in its history but is quite confident that it is well on its way to recovery.

The restructuring process continues and will enable Denel to optimise operations, bolster delivery capacity and rebuild trust among industry partners, suppliers and end-users within the defence sector, says Group CEO Tsepo Monaheng. In this we are receiving significant support from our new Shareholder Representative and the Department of Defence, which enables Denel to integrate more fully into the broader defence community and benefit from stronger backing to better support the SANDF and grow our footprint internationally.

The 2025 Annual Report reflects the progress we are making on our journey to full recovery. We are establishing the foundation for sustainable growth and operational excellence. We are ensuring that all business areas are sustainable on their own for the group to be successful. We are stabilising our core business strengths and repositioning Denel as a trusted provider of vital defence capabilities, says Monaheng.

Together with the Board of Directors we identified several strategic success factors which are vital to secure the company’s future sustainability.

• We must build a healthy order book by securing contracts from both local and international clients.
• We must prioritise the support to the SANDF.
• We must ensure that adequate working capital is available to support future growth, including the re-engineering of cash flow and the management of working capital.
• We have established pillars that strengthen ethical leadership and embed a robust governance culture which will permeate through our entire value chain.
• We are upgrading Denel’s ICT infrastructure and strengthening controls to deliver accurate and credible financial statements.
• We are addressing internal control deficiencies to regain stakeholder confidence and support.
• We are taking an active role in the management of associate companies to derive value out of Denel’s Investments in these companies.
• We are implementing robust programme execution interventions to ensure that Denel continues on its journey of operational excellence.
• We are intervening in all legacy programmes, reactivating them to ensure that they are delivered to the satisfaction of the customers.

In recent years the Auditor General has expressed significant disclaimers about the company’s internal controls. 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 lack of integrated ERP system.

The Board and management introduced a robust remedial plan, which includes the re-establishment of strong internal control governance structures that drive implementation of the plan. “We are confident it will lead to a culture shift that embeds good corporate governance and good internal control systems,” says Monaheng.

Denel also introduced a wide-ranging fraud and corruption prevention strategy which meets international standards, including lifestyle audits for staff senior management and executives.

All senior management positions have now been filled. 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.

Monaheng says these strategic initiatives have fortified Denel’s position, ensuring its relevance and sustainability in a competitive and rapidly changing global defence and technology environment.

Denel’s vital role in the safeguarding of South Africa’s sovereign defence capabilities cannot be overstated. It remains a cornerstone of national security, providing the country with control over advanced technologies, systems and platforms necessary for operational readiness and strategic independence.

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