Denel Dynamics has not collected enough cash to make February salary payments to all staff as the division continues to struggle with wage obligations.
Denel Dynamics CEO Sello Ntsihlele made this known in an infogram to staff dated 25 February. He stated that, “a significant number of our clients have not paid their accounts as expected. The result of this is that, at this stage, we are only able to make payments for employees in funded ring-fenced programmes.”
He told employees that, “We are expecting some of the collections to materialize by next week and be able make some payment towards salaries for people outside of ring-fenced programmes. These include payment of salaries for employees working on critical projects as well as employees working in critical indirect functions such as finance, HR, operations, IT etc.”
He thanked staff for their perseverance and continued commitment to the business and said management will continue to monitor all incoming cash flows daily and will provide updates on further developments.
Denel Dynamics in December announced its plan to prioritise salaries for ring-fenced projects. From 1 December 2021, staff working on ring-fenced programmes are getting 100% of their salaries while critical functions such as finance, HR, ICT etc. will be paid from an overheads contribution. The percentage to be paid will be dependent on cash availability.
At the end of December 2021, the Denel Group owed R789 million to employees and R900 million to suppliers.