Denel Dynamics has not been able to generate enough cash to pay all staff their February wages, but will be able to pay employees working on ring-fenced projects.
In an infogram to staff dated 3 March, Denel Dynamics CEO Sello Ntsihlele noted that “the company’s liquidity and general financial situation remains difficult. This means we are still not in a position to meet our obligations to our employees.
“We are, however, pleased to report that we have made some progress with our collections, and as in in the previous months, we do not have sufficient collections and the percentages will be paid as follows,” Ntihlele explained:
a. Employees working on ring-fenced (and funded) programmes will receive 100% payment of net salaries.
b. Employees working on critical projects will receive 75% payment of net salaries.
c. Employees working on critical indirect functions such as Finance, HR, Operations, IT, etc. will receive 60% salary payment.
d. Employees working in critical support services will receive 50%.
e. The remainder of employees will receive 20%.
The Denel Dynamics CEO thanked employees for their patience “and continued commitment to the business. Management will continue to monitor all incoming cash flows 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. Legal action over the last month has seen Denel ordered to pay staff nearly R100 million in outstanding wages.