3.1 Performance of the entity The Chief Executive Officer informed the Committee that the entity had achieved eight of the twelve performance targets as agreed to in the shareholder compact. The entity failed to improve in the following areas: profitability management, reduction of debt and gearing, optimisation of operating expenditure and productivity improvement. He informed the Committee that Denel had a debt of R1.85 billion which posed a threat to the entity. The global economic conditions and the decline in export orders had a negative effect on Denel Saab-Aerostructures (DSA). The entity would be placing more focus on the areas that did not perform well. Furthermore, it would require constant funding from customers in order to strengthen the balance sheet.