| Fri 30 Aug 2019, 15:40 | | DENEL SOC LIMITED - Further update regarding disclaimer of audit opinion - BIDEN |
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DENG83 DENG89 DENG85 DENG84 DENG86 DENG87 DENG88 DENG90 DENG91 201908300057A
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 25 June 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").
1. In this regard, the quantification of the prior period errors for the following items have been
completed and resolved to the satisfaction of its external auditors, the Auditor General of South
Africa ("AGSA") :
1.2 Revaluation Reserve: No adjustment was made as the relevant documentation was
submitted to the AGSA for audit and the treatment of the fair value adjustment of investment
policy was aligned to IAS 40.
1.3 Post-Retirement Benefit Fund Trust: Denel was assessed to have control over the Trust and
therefore needed to consolidate the Trust. Furthermore, due to the over funding of the Trust,
Denel enjoys a benefit which has been quantified and disclosed as an asset as per IAS 19.
1.4 Site Restoration Provision: Denel reviewed the calculation and treatment of the site
restoration provision. Property, plant and equipment have been amended to reflect the correct
application IFRS 16.
1.5 Operating Leases: Denel has now provided sufficient evidence to the AGSA, who has
indicated that this matter has been resolved and closed.
1.6 Review of internal processes to ensure compliance to the PFMA regarding the
identification and disclosure of Irregular Expenditure: The internal process review has been
completed with an update to the policy dealing with the prevention, identification and
disclosure of irregular, fruitless and wasteful expenditure and implementation thereof.
2. The following items have been assessed and adjusted by Denel, however the errors have not
been fully resolved:
2.1 Investment in Subsidiaries and Investments: The treatment of the acquisition of
Turbomeca Africa (Proprietary) Limited has not been fully resolved and this remains to be an
item to be resolved.
2.2 Revenue: 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. This has been rectified with Denel
applying the correct standard based on IAS 11 and IAS 18. However, there are still some
contracts which require the correct application of standards and this process is still ongoing.
Denel will continue to resolve the outstanding matters and plan to complete them during the
2019/20 financial year.
30 August 2019
Debt Sponsor : Nedbank Corporate and Investment Banking
Date: 30/08/2019 03:40:00
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