Daily News Articles for the Defence Sector, 2008

September 28, 2007
By Roy Cokayne

Pretoria - Denel, the defence parastatal, has sold 237ha of land next to OR Tambo International airport in Kempton Park to Airports Company South Africa (Acsa) for R606 million.

The sale of the land forms part of Denel's financial turnaround strategy to refocus on its core business and optimise its assets.

Acsa needs the land for the long-term expansion of its airport-related infrastructure and property development.

Shaun Liebenberg, Denel's group chief executive, said yesterday that the sale of the property was based on a "sale and lease back".

As such, Denel would have sufficient time to relocate or reconfigure its operations on the premises. The property is currently used by Denel Aviation.

Liebenberg said restructuring Denel's balance sheet had been a high focus area for the group over the past 18 months and the group was pleased to announce the sale of the land to Acsa.

"We are on the right track to strengthen the financial position of the group," he said.

"Other indicators of the progress we have made are evident in the unbundling of the organisation and the establishment of the stand-alone and independent operating businesses."

Denel embarked on a major restructuring strategy in 2005, which entailed unbundling the group into independent manufacturing entities.

Part of the strategy also involved exiting all non-core businesses and properties.

Businesses Denel sold last year include:

• The Irenco division, which contained electronics and plastics businesses;
• Dendustri, which made and maintained anodes for the aluminium industry;
• Consumer electronics firm Voltco;
• A 23 percent interest in information technology firm arivia.kom; and
• Properties within Bonaero Park, Denel's commercial property company.

Denel has generated a total of R1 billion in cash in the past 24 months from the sale of such non-core assets.

In July Denel reported a continuation of the group's financial turnaround in the year to March 2007 by reporting a net loss of only R549.1 million, compared with a loss of R1.36 billion last year and a loss of R1.67 billion in 2005.

The improvement came on the back of a rise in turnover from R2.77 billion in the previous year to R3.27 billion, because of a number of new successful contracts.