Eskom in its recent finance costs presentation, reported an improvement in its operational
performance, as well as its governance and control systems, at its
annual results on Monday morning.
However
, an independent audit opinion has cast “significant doubt” on the group’s ability to continue as a going concern.
Chairman Jabu Mabuza said the year had been tumultuous but noted the results were for the year ended March 31 and so reflected just 69 days of the new board’s tenure.
He said the board was disappointed it could not avoid a qualified audit.
CEO Phakamani Hadebe flagged a fundamental rethink of Eskom's future.
Earnings before interest, tax, depreciation and amortisation (ebitda) increased from R38bn to R45bn while revenue was flat at R177bn, with electricity sales up 0.9%.
A net loss of R2.3bn compared poorly with last year’s profit of R0.9bn.
The net finance cost grew by 61% to R23bn. This was linked to fewer costs being capitalised and a growth in borrowings.
On the R19.6bn irregular expenditure — increased from R3bn in the previous financial year — Eskom said 60% of incidents related to administrative noncompliance, and noted irregular spending was not necessarily fruitless and wasteful expenditure.
Mabuza said the significant rise in irregular expenditure was “a result of us shaking this cupboard so hard that all the skeletons are coming out”. Much of it arose from previous years.
He described Eskom as being at a “tipping point”.
Acting chief financial officer Calib Cassim said the irregular expenditure “did trigger some loan covenants but we have engaged with the necessary lenders and obtained waivers”, Reuters reported.
Eskom’s primary energy costs were largely contained at R85bn within the 2017-18 financial year.
Last week, however, Eskom confirmed it would embark on a costly exercise to truck up to 1-million tonnes of coal from its Medupi stockpile to power stations in Mpumalanga.
A bid to clean up and stabilise Eskom appeared to be steadily winning back investors. The utility said it had raised R57bn since January this year, and has raised 22% of its R72bn funding requirement for the 2018-19 financial year.
However, “Eskom continues to face significant financial and liquidity challenges in the short to medium term as a result of a high debt burden, low sales growth and increase finance costs”, the utility said in the presentation.
Hadebe said Eskom was moving in the right direction, but would have to put in more effort. Sustainability was a key issue the new board and executive committee had to tackle.
“Ultimately we have to decide about the future of Eskom,” Hadebe said.
“We need to agree with shareholder on key business policies and review business model and see if it remains relevant … we need new growth markets and products if we are to drive revenue.”
BDLive SA
However
, an independent audit opinion has cast “significant doubt” on the group’s ability to continue as a going concern.
Chairman Jabu Mabuza said the year had been tumultuous but noted the results were for the year ended March 31 and so reflected just 69 days of the new board’s tenure.
He said the board was disappointed it could not avoid a qualified audit.
CEO Phakamani Hadebe flagged a fundamental rethink of Eskom's future.
Earnings before interest, tax, depreciation and amortisation (ebitda) increased from R38bn to R45bn while revenue was flat at R177bn, with electricity sales up 0.9%.
A net loss of R2.3bn compared poorly with last year’s profit of R0.9bn.
The net finance cost grew by 61% to R23bn. This was linked to fewer costs being capitalised and a growth in borrowings.
On the R19.6bn irregular expenditure — increased from R3bn in the previous financial year — Eskom said 60% of incidents related to administrative noncompliance, and noted irregular spending was not necessarily fruitless and wasteful expenditure.
Mabuza said the significant rise in irregular expenditure was “a result of us shaking this cupboard so hard that all the skeletons are coming out”. Much of it arose from previous years.
He described Eskom as being at a “tipping point”.
Acting chief financial officer Calib Cassim said the irregular expenditure “did trigger some loan covenants but we have engaged with the necessary lenders and obtained waivers”, Reuters reported.
Eskom’s primary energy costs were largely contained at R85bn within the 2017-18 financial year.
Last week, however, Eskom confirmed it would embark on a costly exercise to truck up to 1-million tonnes of coal from its Medupi stockpile to power stations in Mpumalanga.
A bid to clean up and stabilise Eskom appeared to be steadily winning back investors. The utility said it had raised R57bn since January this year, and has raised 22% of its R72bn funding requirement for the 2018-19 financial year.
However, “Eskom continues to face significant financial and liquidity challenges in the short to medium term as a result of a high debt burden, low sales growth and increase finance costs”, the utility said in the presentation.
Hadebe said Eskom was moving in the right direction, but would have to put in more effort. Sustainability was a key issue the new board and executive committee had to tackle.
“Ultimately we have to decide about the future of Eskom,” Hadebe said.
“We need to agree with shareholder on key business policies and review business model and see if it remains relevant … we need new growth markets and products if we are to drive revenue.”
BDLive SA
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