Monday, May 21, 2018
Subscription Centre
Receive our free e-newsletter.
Click here for more information

Denel confident it will continue to pay salaries but faces cash challenges

Zwelakhe Ntshepe.Denel will be able to pay its 4 000 employees’ salaries in February and March, and has never been unable to, but is experiencing liquidity challenges, CEO Zwelakhe Ntshepe has said.

“I am happy to say we paid all salaries, we do not owe anyone any salaries from this point. We will continue paying salaries. We did not have a problem paying salaries in January, we will not have a problem paying in February or in March,” he said on Tuesday at a briefing to Parliament’s Public Enterprises Committee.

“Secondly, we have never not paid salaries at Denel,” he said. Denel had issues paying employees their 13th cheques in December, and the unions escalated the matter, causing it to end up in the press, Ntshepe said.

However, Ntshepe acknowledged that the issue of liquidity at Denel “is a serious matter,” which “didn’t start now”. He told the committee that Denel’s expenditure of more than R600 million a month goes towards paying banks for loans, as well as suppliers and salaries and that Denel needs to prioritise how we these expenses are paid.

Denel’s Chief Financial Officer Odwa Mhlwana told the committee that between 2001 and 2012, Denel collected in excess of R46 billion, but the net cash in the bank was R4 billion. “Throughout the period the business made no cash,” he said. Even though turnover has gone from R6.5 billion five years ago to R8 billion, Denel is still experiencing cash constraints.

“As far as salaries and creditors are concerned, we had some relief in December in taking care of the issues but that does not give a lasting solution to the problem and we are working on it,” he said.

Mhlawana said Denel was initially hoping to receive a R1 billion guarantee but, as this is unlikely it is looking at selling assets such as property and investments to generate cash.

After a dispute over its audit outcome last year, Ntshepe said Denel’s annual financial statements will be tabled in Parliament next week. In October, Parliament’s Public Enterprises Committee was presented with a letter from Auditor-General Kimi Makwetu in which he expressed concerns regarding the financial audit the firm, Sizwe Ntsalabu Gobodo (SNG), did of Denel. The Auditor-General found SNG failed to properly account for irregular expenditure in its report of Denel’s financials.

Aside from paying employees, Denel has struggled to pay its suppliers. For instance, at the beginning of November 2017 it had 1 557 unpaid invoices totalling R688 million.

While dismissing plans to sell off a stake in the troubled defence conglomerate, Public Enterprises Minister Lynne Brown has not ruled this out. Late last year she said, "the government has no plans, at this stage, to dispose of any equity stake in Denel. However, in reviewing and optimising Denel’s capital structure, such a decision cannot be ruled out.”
....

Company News


  • BRONCO II launched for USA
    by Paramount Group, 10 May 2018

    The BRONCO II's internal Interchangeable Multi-Mission System Bay allows a single airframe to be rapidly reconfigured to perform multiple roles.

  • AHRLAC/Mwari enters production and preparing first deliveries
    by Paramount Group, 8 May 2018

    The Ahrlac and its armed variant, the Mwari, are being developed and produced at Wonderboom Airport by Ahrlac Holdings, co-owned by Paramount Group.

  • defenceWeb launches new drone portal
    by defenceWeb, 7 May 2018

    The unmanned aerial vehicle portal will focus exclusively on military and commercial unmanned aviation, regulations and technology.