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Further update regarding disclaimer of audit opinion - BIDEN
DENEL SOC LIMITED
Registration number: 1992/001337/30
JSE Alpha Code: BIDEN
(“Denel” or the “Company”)
FURTHER UPDATE REGARDING DISCLAIMER OF AUDIT OPINION
Noteholders are referred to the announcements released on SENS, with the latest announcement
released on 28 March 2019, giving status updates on progress made in relation to the disclaimer of
opinion contained in the audit report for the year ended 31 March 2018 (the “Disclaimer”).
In this regard, the quantification of the prior period impact is still in progress with the following results:
Revenue recognition
Upon review of the revenue contracts for the 2017/18 financial year, there were misstatements in the
revenue recognised during and before this period. In certain instances, for some major contracts, the
incorrect standard for recognising revenue was applied and in other instances, whilst the correct
standard was applied, the principles for the recognition and measurement of revenue were not
applied correctly.
Furthermore, the treatment of prepayments received from customers and in particular the translation
exchange rates utilised on foreign contracts were not treated correctly. This has led to the
restatement of revenue, cost of sales, operating expenditure, trade debtors, amounts due from
customers and prepayments received from customers for the 2017/18 financial year. Given the length
of some of Denel’s contracts, the resultant restatements have taken longer to complete as initially
anticipated.
Final packs in respect of the aforementioned restatements have been prepared by Denel, together
with Deloitte and will be submitted to Denel’s auditors for audit in June 2019.
Property, plant and equipment
Denel has assessed the residual values and useful life of assets and, as a result, some of the assets
were valued at zero in the 2017/18 financial year. Furthermore, management notes that the
assessment of useful life and residual life is based on estimates and judgements based on latest
available and reliable information and as such Denel will re-assess the useful life and residual values
of its assets and record the impact thereof in the 2018/19 financial year according to IAS 8.
31 May 2019
Debt Sponsor : Nedbank Corporate and Investment Banking
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