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Quarterly update regarding disclaimer of audit opinion
DENEL SOC LIMITED
Registration number: 1992/001337/30
JSE Alpha Code: BIDEN
(“Denel” or the “Group” or the “Company”)
QUARTERLY UPDATE REGARDING DISCLAIMER OF AUDIT OPINION
Noteholders are referred to previous announcements released on SENS, with the latest quarterly
update released on 26 February 2021 (“the previous update”), providing updates on progress made
in relation to the issues that resulted in the disclaimer opinion as contained in the audit report for the
financial year ended 31 March 2020 (“2020 AFS”) (the “Disclaimer”).
The Company sets out below the latest progress on matters raised by the AGSA in the Disclaimer.
1. Audit Fix Plan
1.1 Denel has developed an Audit Fix Plan with its main focus on addressing matters dealing
with revenue recognition, inventory and trade and other receivables which were some of
the major areas that contributed to the Disclaimer Audit Opinion. Inclusive of the Audit
Fix Plan, management has focused on ensuring that all relevant documentation/audit
evidence is readily available to avoid inefficiencies leading to limitation of scope. This
included responding to the auditor’s queries within the required time.
1.2 Given the challenges that arose with the consolidation process in FY2019/20, Denel has
contracted a service provider who has developed a reporting consolidation tool to ensure
that all the consolidation findings raised by auditors have been addressed.
1.3 Engagements are ongoing with the external auditors with regards to differing technical
opinions on revenue contracts, the remedial actions management considers appropriate
given the current operational climate and the multi-year audit fix plan to resolve the audit
opinion.
2. Internal control and internal control deficiencies
2.1 Management has considered the findings by the external auditors dealing with the
internal environment and internal control deficiencies and these have been incorporated
in formulating the audit fix plan.
3. Going concern
Denel is in continuous engagements with the Shareholders in respect to matters pertaining to
Denel’s going concern. Denel is confident that it continues to have support from the Shareholder
in resolving the current liquidity challenges faced by Denel.
4. Ongoing
Denel will continue to resolve the matters raised in the Disclaimer and provide quarterly updates
in this regard.
31 May 2021
Debt Sponsor: Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Date: 31-05-2021 03:15:00
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