DENEL SOC LIMITED - Notice of availibility of annual financial statements

Notice of availibility of annual financial statements

DENEL SOC LIMITED
Registration number: 1992/001337/30
JSE Alpha Code: BIDEN
(“Denel”)

NOTICE OF AVAILIBILITY OF ANNUAL FINANCIAL STATEMENTS

Denel hereby notifies its debt investors that it has publicly released its audited annual financial
statements (“AFS”) for the year ended 31 March 2019. It should be noted that the audit report
contains a disclaimer of opinion, an emphasis of matter and a material uncertainty as follows:

1.    Disclaimer of opinion

      The disclaimer of opinion contained in the audit report relates to the auditors of Denel being
      unable to express an opinion on the AFS of Denel and its subsidiaries for the year ended 31
      March 2019 due to insufficient appropriate audit evidence to provide a basis for an audit
      opinion. The basis of the disclaimer of opinion is fully set out in the independent auditor’s report
      as contained in the AFS.

2.    Emphasis of matter

      The emphasis matter relates to various restatements that occurred in the 2017 and 2018
      financial years as a result of an error. It should be noted that the audit opinion was not modified
      as a result of this.

3.    Material uncertainty

      A material uncertainty exists that may cast significant doubt regarding the going concern status
      of Denel as the Company incurred a net loss of R1.7 billion for the year ended 31 March 2019,
      projected losses in 2019 to 2020 and received a R1.8 billion recapitalisation from its
      shareholders. However, the auditors are satisfied that given the mitigating steps taken, Denel
      will continue as a going concern for the foreseeable future. It should be noted that the audit
      opinion was not modified as a result of this.

In addition, various restatements occurred to correct prior period errors relating to:

1.   Revenue recognition;
2.   Provision for remediation;
3.   Revaluation reserve;
4.   the Denel Medical Benefit Trust; and
5.   Operating leases.

Full details of the restatements are set out in note 40 of the AFS.

With the recent appointment of the Group Chief Financial Officer, the audit committee and the board
are reviewing the Denel improvement plan which will be finalised and shared with the market at the
end of October 2019.
The AFS are available on the Denel website at http://www.denel.co.za/financials and for inspection at
the Denel head office at Nellmapius Drive, Irene, Centurion, Pretoria, 0046 from 4 October 2019.

4 October 2019

Debt Sponsor: Nedbank Corporate and Investment Banking

Date: 04/10/2019 09:30:00
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