South Africa’s parliament said on Thursday it was concerned about the governance and financial challenges at state arms manufacturer Denel.

In a statement, the portfolio committee on public enterprises said it had heard from Denel officials during a briefing that the struggling firm suffered an unaudited loss of R1.8-billion for the 2019/20 financial year, due to a significant decline in revenue and poor programme management.

The Denel personnel said the arms maker’s equity was significantly below previous levels, at R4-billion, despite an injection of R1.8-billion disbursed in 2019/20.

The company received R305-million of the R576-million allocated to Denel in the 2020/21 financial year medium term expenditure framework.

Members of the parliamentary committee said Denel had taken no action after they previously raised issues of concern and asked questions in a bid to help the company plan more effectively for the future.

“The committee believes that the government and state-owned companies should begin trading amongst themselves in business, skills and capacity,” the committee said.

“In addition, Denel should look beyond the department of defence and Armscor to market its products.”

Armscor is the acquisition agency for South Africa’s defence department.

During the briefing, Denel told legislators that the non-payment of salaries had contributed to the loss of key technical staff in some divisions.