Johannesburg - Denel's financial results, which would be announced in August, were unlikely to impress anyone but would highlight the progress the state-owned arms manufacturer had made in its turnaround strategy, Shaun Liebenberg, the chief executive, said yesterday.

"We have done a lot of cleaning up and we would reflect in the results what the turnaround strategy has achieved," Liebenberg said in an interview with Business Report.

Liebenberg yesterday unveiled a final assembly plant for Denel and BAE Systems, the UK-based defence and aerospace systems company. The plant will assemble 23 Hawk jets the South African government bought from the aerospace company.

The jets are part of the government's $2.2 billion (R15 billion at current exchange rates) order of 52 jets from BAE made in 2000. The 24 Hawks and 28 Gripen fighters are due for delivery in 2010.

Cyril Moss, a programme manager at Denel Aviation, said BAE had committed itself to providing Denel with contracts worth about R500 million on top of other lucrative contracts it had already given to Denel as part of the government's industrial participation programme.

BAE had given Denel contracts that would last until 2008 to manufacture aircraft components such as Hawk tail flaps, airbrakes and aircraft technology for the aerospace company's customers, Moss said.

Denel had supplied 24 sets of components for 66 Hawks sold to India and had an order to manufacture 20 sets for Hawks to be sold to the UK government, Moss said.

Alec Erwin, the minister of public enterprises, said: "The Hawk and Gripen procurement is yielding vital benefits to our own industry and economy. Denel, for one, has benefited from the programme, acquiring skills, knowledge and experience working in partnership with BAE and Saab."

Jonathan Walton, BAE South Africa's vice-president, said that as part of the deal Denel would do a third of the work needed to produce the final product through manufacturing components, doing the final assembly and testing the Hawks.

Denel would only manufacture components for the Gripens because the final assembly would be in Sweden.

BAE would complement its industrial participation by investing in non-defence industries, he said.

It had invested in 40 projects in industries such as precious metals beneficiation, agroprocessing and medical technology.

He would not say how much the investments were worth, but the South African government requires investments worth about 30 percent of the purchase by a parastatal in a foreign-owned company. The company would meet targets set by the government by 2011, Walton said.

With acknowledgements to Mzwandile Faniso and the Business Report.