Rooivalk NewCo (2) 1 yr Budget & 5 yr Forecast. Turnover de-risked, efficiencies identified, costs reduced. 21 Feb 06

Transcription

1 Rooivalk NewCo (1) The main contractor for the SAAF Rooivalk Attack Helicopter conducting program and contract management along with system level engineering 34

2 Rooivalk NewCo (2) The main contractor for the SAAF Rooivalk Attack Helicopter conducting program and contract management along with system level engineering Item Notes/Status Plan % Status % Target 1 yr Budget & 5 yr Forecast Turnover de-risked, efficiencies identified, costs reduced 21 Feb 06 Ring Fence Business Operations Ring fence for separate reporting 1 Apr 06 Transfer to NewCo Due diligence process, Legal steps to transfer operations to NewCo (pending Turkey bid) 0 % Nov 06 Equity Partner Secure equity partner 0% Apr Complete Pending/In Process Risk Item

3 Strategic Roadmap: Denel Aviation, TMA, DPS, Astro Park Equity Partner Equity Partner TMF TMF Equity Partner Equity Partner Aerostructure Technology of SA (Pty) Ltd TMA (Pty) Ltd Denel Aviation (ISS) (Pty) Ltd Structural Structural Design, Design, Manufacturing, Manufacturing, Support Support Assemblies Assemblies Sheetmetal Sheetmetal (focused) (focused) Composites Composites D2 D2 Mechanical Mechanical Workshop Workshop Engines, Engines, TMF TMF Strategic Strategic Contribution Contribution Denel Aviation D2 Fixed Fixed and and Rotary Rotary Wing Wing MRO MRO D2 D2 Mechanical Mechanical Workshop Workshop Engineering Engineering & Flight Flight Test Test AMG AMG Manage Sale/Lease of property 36 Provide interim services Package & dispose/exit Manage disposal & closure Astro Astro Park Park Land/Facilities Land/Facilities DPS DPS Remainder Remainder AviationRump AviationRump DPS Astro Park

4 Denel Aviation (ISS) NewCo (1) A service provider leveraging its strategic SAAF business to support the local & selected international rotary & fixed wing aircraft markets in the provision of MRO services 37 Rotary and Fixed Wing Aircraft Maintenance

5 Denel Aviation (ISS) NewCo (2) A service provider leveraging its strategic SAAF business to support the local & selected international rotary & fixed wing aircraft markets in the provision of MRO services 38 Aircraft Component Maintenance and Engineering Support (and Manpower Support)

6 Denel Aviation (ISS) NewCo (3) A service provider leveraging its strategic SAAF business to support the local & selected international rotary & fixed wing aircraft markets in the provision of MRO services Item Notes/Status Plan % Status % Target 1 yr Budget & 5 yr Forecast Turnover de-risked, efficiencies identified, costs reduced 21 Feb 06 Ring Fence Business Operations Ring fence for separate reporting 30 May 06 Reduce Overheads Plan complete, labour notified, engaging unions 90 % 31 May 06 Transfer to NewCo Due diligence process, Legal steps to transfer operations to NewCo 50 % 1 Oct 06 Equity Partner Secure equity partner 20% Jan Complete Pending/In Process Risk Item

7 Aerostructure Technology of SA NewCo (1) An aerostructures facility, in cooperation with suppliers of aircraft such as Airbus and Boeing, which designs, manufactures, and assembles composites and metallic aircraft subsystem structures M A J O R C U S T O M E R S HAWK AIRBUS - A400M 40 GRIPEN AGUSTA

8 Aerostructure Technology of SA NewCo (2) An aerostructures facility, in cooperation with suppliers of aircraft such as Airbus and Boeing, which designs, manufactures, and assembles composites and metallic aircraft subsystem structures SHEETMETAL, COMPOSITE & MACHINED PARTS GRIPEN REAR FUSELAGE GRIPEN MAIN LANDING GEAR UNIT HAWK - FLAP 41

9 Aerostructure Technology of SA NewCo (3) An aerostructures facility, in cooperation with suppliers of aircraft such as Airbus and Boeing, which designs, manufactures, and assembles composites and metallic aircraft subsystem structures A400M Wing to fuselage fairing AIRBUS A400 M WING TO FUSELAGE FAIRING A400M- Top shell 42 LARGE SIZE COMPLEX STRUCTURES

10 Aerostructure Technology of SA NewCo (4) An aerostructures facility, in cooperation with suppliers of aircraft such as Airbus and Boeing, which designs, manufactures, and assembles composites and metallic aircraft subsystem structures Item Notes/Status Plan % Status % Target 1 yr Budget & 5 yr Forecast Turnover de-risked, efficiencies identified, costs reduced 21 Feb 06 Ring Fence Business Operations Ring fence for separate reporting 1 Apr 06 Reduce Overheads Plan complete, labour notified, engaging unions 90 % 31 May 06 Transfer to NewCo Due diligence process, Legal steps to transfer operations to NewCo 80 % 1 Aug 06 Equity Partner Secure equity partner 90% 1 Sept Complete Pending/In Process Risk Item

11 Strategic Roadmap: Optronics Equity Partner Equity Partner Optronics (Pty) Ltd Sensors Sensors Helmet Tracking Helmet Tracking Lasers Lasers Periscopes Periscopes Targeting Systems Targeting Systems 44 Surveillance Sights Surveillance Sights Military Sights Military Sights

12 Optronics NewCo (1) A global supplier, leveraging its expertise in Optronics products (Sensors, Helmet Tracking, Lasers, Periscopes, Targeting & Surveillance Systems & Sighting Systems) LEO II-A1 LEO II-A3 Argos 410-A4/Z GPA 410 LEO II-A5 (UItraForce II) Argos 410-A5 (Star Q) BRITE Star 45 Goshawk 350 Argos 410-M Argos 550

13 Optronics NewCo (2) A global supplier, leveraging its expertise in Optronics products (Sensors, Helmet Tracking, Lasers, Periscopes, Targeting & Surveillance Systems & Sighting Systems) Scout LH40 LRF LP16 EYESAFE LRF Noctua Eagle Eye LM30 / LM40 LRF Archer 46LH40C Periscope Systems Kenis Thermal Imager 3 to 5 µm

14 Optronics NewCo (3) A global supplier, leveraging its expertise in Optronics products (Sensors, Helmet Tracking, Lasers, Periscopes, Targeting & Surveillance Systems & Sighting Systems) Item Notes/Status Plan % Status % Target 1 yr Budget & 5 yr Forecast Turnover de-risked, efficiencies identified, costs reduced 21 Feb 06 Ring Fence Business Operations Ring fence for separate reporting 30 May 06 Reduce Overheads Process to be initiated 80% 10 % 30 Sept 06 Transfer to NewCo Due diligence process, Legal steps to transfer operations to NewCo 20 % 1 Sept 06 Equity Partner Secure equity partner 40% Oct Complete Pending/In Process Risk Item

15 Strategic Roadmap: Munitions Naschem La Forge Somerset West Wellington Philippi PMP Brass Plant Philippi Philippi Recommended Recommended Closure Closure 48 Equity Partner? Equity Partner? Munitions (Pty) Ltd Energetic Energetic Raw Raw Materials Materials Detonics Detonics Ordnance Ordnance Plant Plant & Equipment Equipment Shell Shell Manufacture Manufacture Pyrotechnics Pyrotechnics Small & Medium Calibre Small & Medium Calibre Product Product Partnerships Partnerships & Teaming Teaming BOWAS BOWAS New New Lachaussee Lachaussee Nitrochemie Nitrochemie GD GD OTS OTS Munitions Plants: Somerset West Somerset West Krantzkop Krantzkop Pretoria Pretoria West West (incl. (incl. Brass Brass plant) plant) Boskop Boskopplant plant (incl. (incl. La La Forge) Forge)

16 Munitions NewCo (1) An integrated supplier of selected munitions (artillery ammunition, mortars, bombs, large & medium calibre ammunition pyrotechnics; missile motors & warheads) to local & international customers ROCKET & MISSILES SUBSYSTEMS ARTILLERY PROPULSION PROPELLANTS FOR SMALL CALIBRE & POWER CARTRIDGES 49 ENERGETIC RAW MATERIALS FOR MILITARY & CIVILIAN APPLICATION POWER CARTRIDGES

17 Munitions NewCo (2) An integrated supplier of selected munitions (artillery ammunition, mortars, bombs, large & medium calibre ammunition pyrotechnics; missile motors & warheads) to local & international customers ARTILLERY AMMUNITION ARMOUR AMMUNITION AIRCRAFT BOMBS 50 RIOT CONTROL PRODUCTS

18 Munitions NewCo (3) Denel Munitions Strategy Initial strategy required consolidation of operations to one or two sites Consolidation and relocation study completed Relocation to single site is costly (up to R2 Billion) Manufacturing processes are interdependent all or nothing and have downstream implications for Munitions and Denel Dynamics (motors, warheads) Overheads are high due to replicated management Operational efficiencies can be improved with updated plant and improved processes Munitions should be a sustainable business at minimum turnover of R1.15 Billion p/a and with cost cutting Strategy therefore to continue operations at four explosive sites with consolidated management Implement tight controls with annual review of sustainability of Munitions business 51

19 Munitions NewCo (4) An integrated supplier of selected munitions (artillery ammunition, mortars, bombs, large & medium calibre ammunition pyrotechnics; missile motors & warheads) to local & international customers Item Notes/Status Plan % Status % Target 1 yr Budget & 5 yr Forecast 2006/07 Budget remains as per Plan. Update next 4 yrs 50 % 31 May 06 Ring Fence Business Operations Ring fence for separate reporting 1 Apr 06 Reduce Overheads Operations and management plan for NewCo 50% 5% 31 Aug 06 Transfer to NewCo Due diligence process, Legal steps to transfer operations to NewCo 0% 0% 1 Apr 07 Equity Partner Secure equity partner 0% 0% 1 Apr Complete Pending/In Process Risk Item

20 Strategic Roadmap Denel Land Systems DLS-Lyttelton Vektor Equity Partner Equity Partner Denel Land Systems (Pty) Ltd Infantry Turrets Infantry Turrets Artillery Development Artillery Development Maintenance Maintenance 53 Small Arms Small Arms

21 Denel Land Systems (DLS) NewCo (1) Denel Land Systems is a consolidated, project based design & development house for Combat Turrets, Artillery Development, Maintenance and Upgrades and Small Arms MCV Infantry Fighting System 54 Acrobat 81mm Mortar Fighting System

22 Denel Land Systems (DLS) NewCo (2) Denel Land Systems is a consolidated, project based design & development house for Combat Turrets, Artillery Development, Maintenance and Upgrades and Small Arms 155mm 45 Calibre G6 SP Howitzer System 155mm 45 Calibre G5 Towed Howitzer System 155mm 52 Calibre G6T6 SP Howitzer System 155mm 52 Calibre G Towed Howitzer System 155mm 52 Calibre G Towed Howitzer System 105mm 52 Calibre LEO Light Towed Howitzer System

23 Denel Land Systems (DLS) NewCo (3) Denel Land Systems is a consolidated, project based design & development house for Combat Turrets, Artillery Development, Maintenance and Upgrades and Small Arms Item Notes/Status Plan % Status % Target 1 yr Budget & 5 yr Forecast Turnover de-risked, efficiencies identified, costs reduced. Hoefyster contract NB! 21 Feb 06 Ring Fence Business Operations Ring fence for separate reporting 1 Apr 06 Reduce Overheads Completed Dec 05 Transfer to NewCo Due diligence process, Legal steps to transfer operations to NewCo 50 % 1 Sept 06 Equity Partner Secure equity partner 20 % Jan Complete Pending/In Process Risk Item

24 Strategic Roadmap Mechem Equity Partner Equity Partner Mechem (Pty) Ltd Demining Demining Mine Awareness Training Mine Awareness Training Victim Assistance Victim Assistance Stockpile Destruction Stockpile Destruction Battle Area Clearance Battle Area Clearance 57

25 Mechem NewCo (1) Mechem is a global leader in cost effective mine action, including demining, mine awareness training, victim assistance, stockpile destruction, clearance of battle areas & unexploded ordnance 58

26 Mechem NewCo (2) Mechem is a global leader in cost effective mine action, including demining, mine awareness training, victim assistance, stockpile destruction, clearance of battle areas & unexploded ordnance Item Notes/Status Plan % Status % Target 1 yr Budget & 5 yr Forecast Minimal changes. 21 Feb 06 Ring Fence Business Operations Ring fence for separate reporting 1 Apr 06 Transfer to NewCo Due diligence process, Legal steps to transfer operations to NewCo 40 % 1 Aug 06 Equity Partner Secure equity partner 5 % Jan Complete Pending/In Process Risk Item

27 Denel Holdings (Pty) Ltd Aerostructures (Pty) Ltd Denel Aviation (ISS) (Pty) Ltd Dynamics (Pty) Ltd TMA (Pty) Ltd An aerostructures facility, in cooperation with suppliers of aircraft such as Airbus and Boeing, which designs, manufactures, and assembles composites and metallic aircraft subsystem structures A service provider leveraging its strategic SAAF business to support the local & selected international rotary & fixed wing aircraft markets in the provision of MRO services A niche global competitor and local technology provider in the areas of tactical missiles, guided weapons and UAV systems TMA s focus is to be the centre of excellence for manufacturing and product support of selected; gears and shafts; gearbox casings; and engines and gearbox assemblies Mechem (Pty) Ltd Optronics (Pty) Ltd Denel Land Systems (Pty) Ltd Mechem is a global leader in cost effective mine action, including demining, mine awareness training, victim assistance, stockpile destruction, clearance of battle areas & unexploded ordnance A global supplier, leveraging its expertise in Optronics products (Sensors, Helmet Tracking, Lasers, Periscopes, Targeting & Surveillance Systems & Sighting Systems) Denel Land Systems is a consolidated, project based design & development house for Combat Turrets, Artillery Development, Maintenance and Upgrades and Small Arms Munitions (Pty) Ltd Denel Munitions is an integrated supplier of selected munitions (artillery ammunition, mortars, bombs, large & medium calibre ammunition pyrotechnics; missile motors & 60 warheads) to local & international customers Rooivalk (Pty) Ltd The main contractor for the SAAF Rooivalk Attack Helicopter conducting program and contract management along with system level engineering Command & Control (Pty) Ltd A local main contractor for integrated level 5 air defence systems, and a specialized local and international supplier of C3 products with GBADS as flagship program

28 Agenda 61 Key Events Overview of the Global Defence Industry & Denel Strategy Imperatives Recapitalisation Strategy Implementation Process & Status Transformation Head Office Developments & Changes Non-Core Disposal

29 Transformation & People Objective: Organisational Effectiveness Transform our people into a motivated, innovative and empowered workforce with a commercial and performance-based mindset within a truly representative and diverse environment Diversity Race Gender Age Disability Skills Retention & Development Technical career paths Leadership development Succession planning Motivated personnel Culture Performance culture Commercial mindset Diversity tolerance 62 Process Situation analysis (internal situation vs external benchmarks and criteria) Identify transformation goals & objectives Formulate & implement action plan to address shortcomings within an aggressive timeframe

30 Agenda 63 Key Events Overview of the Global Defence Industry & Denel Strategy Imperatives Recapitalisation Strategy Implementation Process & Status Transformation Head Office Developments & Changes Non-Core Disposal

31 Head Office Developments & Changes Convert and align accounting standards with International Financial Reporting Standards (IFRS) Contracted Internal Audit function and Risk Management to PwC to ensure alignment with best practice Pension fund currently healthy, showing good returns, tax efficient and forces employees to save for retirement. Denel to retain current fund arrangements. Umed closed medical scheme with ageing members. Investigating a transition to an open scheme involving amalgamation with another scheme over medium term. 64

32 Agenda 65 Key Events Overview of the Global Defence Industry & Denel Strategy Imperatives Recapitalisation Strategy Implementation Process & Status Transformation Head Office Developments & Changes Non-Core Disposal

33 Status on Non Core Asset Disposal Entity Shareholding Expected date of completion Current status Ariviakom (Pty) Ltd 22.98% Completed 27 Feb 2006 Completed SPP (Pty) Ltd 100% End June 2006 Recommendation to Board on 3 May 2006 Irenco (Observer) Business unit End May 2006 Contract signed on 27 February 2006 Voltco Business unit Completed Contract signed. Payment received 18 April 2006 Bonaero Park (Pty) Ltd 100% 30 June 2006 Contract signed on 31 March Competition Comm application filed 18 April 2006 Dendustri Division End Feb 2006 Payment for business received 28 Feb Transfer of related properties in process Cosource (Pty) Ltd 51,7% End June 2006 Revised transaction presented to Board/Minister. Board risk review on exit from Cosource 3 May 06. PFMA approval outstanding Irenco Plastics (Pty) Ltd 100% Nov 2005 Completed Only retention money received on 4 April TOTAL

34 Thank you