Africa’s largest power utility announced its interim financial results today reporting that Eskom’s interim profits were down 34% to R6 billion.
Currently under investigation for corruption, corporate governance concerns and under new management via its recently appointed board members, the utility’s financial results are worrying.
Interim financial results in short
- Interim profits down 34% to R6 billion.
- Secured 54% of funding for 2017/18 financial year.
- R9 billion of liquid assets versus R30 billion a year earlier.
- Net cash from operations sits at R22 billion comapred to R32 billion a year earlier.
- Eskom says 5.23% tariff increase for 2019 FY will have negative impact on group liquidity.
- Further capital expansion activities will not be engaged after Kusile Power Station completion.
- The current economic climate and sovereign credit rating was taken into account in assessing ability to raise funds.
Citing declining sales and higher finance costs, the interim chief financial officer, Calib Cassim, reported the results for the six months to end-September, which shows Eskom’s interim revenue declined 2% to R95.5bn, while its after-tax profit plunged 34% to R6.3bn from R9.5bn in the matching period.
Read the full report here
Who said what?
Eskom’s interim Group Chief Executive, Phakamani Hadebe, said poor leadership was the primary reason behind Eskom’s corporate governance lapses and weak financial position.
Eskom’s board chairman, Jabu Mabuza, places corporate governance and financial sustainability among the key issues that the company will be focusing on going forward.
Eskom reported current assets of R71.4bn, which failed to cover its current liabilities of R74.2bn, prompting auditors SizweNtsalubaGobodo to include an emphasis of matter warning creditors that Eskom’s current liabilities outstripped its current assets by R2.8bn.
Besides the emphasis of matter, SizweNtsalubaGobodo alerted creditors that it had reported a list of irregularities to the Independent Regularity Board for Auditors.
Notably this included former chief financial officer Anoj Singh approving a three-month guarantee on behalf of Eskom for the Gupta family’s colliery Tegeta and former CEO Brian Molefe’s retirement agreement.
Other irregularities flagged by SizweNtsalubaGobodo included Eskom’s contracts with McKinsey and Trillian, which are being investigated by the parliamentary inquiry into the utility’s governance.
Cassim advised that the company remains hopeful of turning its liquidity position around but “is not yet out of the woods from a financial perspective”.
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