Financial improvement at Eskom‚ but under dark grey clouds
Eskom presented an improvement in its operational performance‚ as well as its governance and control systems‚ at its annual results presentation 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.
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 that 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”.
He described Eskom as being at a “tipping point”.
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.
Going forward‚ 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.