Pretoria: Denel’s commitment to good corporate governance, strong leadership as well as transparency in financial reporting is increasingly being recognised by independent analysts, says Denel’s Group CEO Riaz Saloojee.
A study conducted by the Centre for Corporate Governance at the University of Stellenbosch has named Denel as the best-performing state-owned company (SOC) in terms of corporate governance. This was announced last Thursday at an awards event hosted by the centre.
The researchers looked at 96 indicators across all SOCs, including the composition and functioning of boards and their ability to give strategic direction; accountability, particularly financial and audits; the relationship of enterprises with stakeholders, social and environmental factors, and the quality of reporting.
Saloojee said the study recognised the manner in which Denel reported on the company’s financial performance.
Denel has made significant financial improvements in recent years, including a return to profitability over the past two years after more than a decade of posting losses.
A recent decision to restructure the company and to cluster its entities according to similarities of business and geographic location are set to lead to increased efficiencies and even more effective corporate governance.
An integrated Denel will strengthen the company’s ability to retain its position as South Africa’s premier manufacturer of strategic defence and aerospace products and solutions, and a growing player in African and global defence markets, said Saloojee.
“We continue embarking on a comprehensive turnaround strategy that is starting to deliver results. The company is on the road to sustainability based on improved operational performance, containments of costs and an aggressive move into new markets for Denel’s quality products and services, especially in Africa and the Middle East.”
Denel’s Group Chief Financial Officer, Fikile Mhlontlo, said the improved performance of Denel over the past two years could be attributed to a growth in the order pipeline for new business combined with rigorous financial controls, improved efficiencies and cost containment measures across the operations.
Denel has continued to receive clean audit reports, recognising the quality of its financial management and controls.
The study also recognises how Denel relates with its stakeholders and ability to balance business needs with the implementation of government priorities.
It also highlights the quality of the relationship between Denel and its shareholder, the South African government, through the Department of Public Enterprises. Also of importance is the role played by the Denel board in providing strategic leadership to the company.
“We are extremely pleased with the award and believe that it is well deserved,” Saloojee said.
This recognition follows a previous award in June where Denel was recognised for excellence in corporate reporting.
The company achieved top position in annual report disclosures for 2011, for ethical leadership and corporate citizenship as well as in boards, directors and remuneration including independence.