The bonds of embattled state-owned arms manufacturer Denel have been suspended from the JSE due to its failure to release an annual report that is now three months overdue.
JSE rules require state-owned enterprises to release annual financial statements within seven months of financial year-end, a deadline of the end of October for Denel, but its board decided in that month that it would make its 2021 results available when it releases its 2022 report.
Denel, one of the many state-owned enterprises (SOEs) that have been embroiled in allegations of state capture, has been running at a loss for years, most recently reporting a loss of R1.96bn in the year to end-March 2020, when it generated only R2.7bn in revenue.
The JSE said on Wednesday that Denel’s debt securities had been suspended with immediate effect.
Denel registered a R3bn domestic medium-term note programme with the JSE in its 2015 year, which was increased to R4bn in its 2019 year. At the end of its 2020 financial year it had raised R3.2bn.
The company has been struggling to pay salaries, telling parliament in August that it owed its staff R636m and suppliers R900m.
The suspension comes a day after the second part of the Zondo commission’s report, which has put the spotlight on both Denel and Transnet.
The report concluded that the reputational damage to Denel as a result of state capture has been “enormous”.
The report has recommended further investigation as necessary into Denel’s new board in 2015, which had moved rapidly to suspend the group CEO, group CFO and company secretary.
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