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SLO
SLO
SLO - SELCo - Reviewed Interim Financial Results For The Six Months Ended
31 December 2007
Southern Electricity Company Limited
Registration Number 1997/006894/06)JSE Share Code: SLO & ISIN:
ZAE000041919("SELCo" or "the Group")
REVIEWED INTERIM FINANCIAL RESULTS OF SOUTHERN ELECTRICITY COMPANY LIMITED
FOR THE SIX MONTHS ENDED 31 DECEMBER 2007
CONSOLIDATED BALANCE SHEET
Reviewed Reviewed Audited
6 months 6 months 12 months
ended 31 ended 31 ended 30
December December June
2007 2006 2007
R`000 R`000 R`000
ASSETS
Non-current assets 19 943 22 794 24 626
Investment property 12 500 11 750 12 500
Property, plant and 7 443 6 779 7 730
equipment
Investment - 4 265 4 396
Current assets 11 847 12 742 11 059
Inventories 581 539 581
Other loans receivable 5 019 7 709 5 650
Trade and other receivables 4 512 3 223 2 747
Cash and cash equivalents 1 735 1 271 2 081
31 790 35 536 35 685
Total assets
EQUITY AND LIABILITIES
Equity 19 057 23 614 23 247
Share capital 10 163 10 163 10 163
Non-distributable reserve 16 16 16
Available-for-sale - 1 029 1 142
investment reserve
Retained income 8 878 12 406 11 926
Liabilities
Non-current liabilities 8 055 7 156 8 273
Borrowings 3 503 3 192 3 559
Operating lease liability 574 - 574
Deferred tax 3 978 3 964 4 140
Current liabilities 4 678 4 766 4 165
Other loans payable - - 409
Borrowings 240 32 203
Taxation payable 1 721 1 867 961
Trade and other payables 2 717 2 867 2 592
Total equity and 31 790 35 685
liabilities 35 536
CONSOLIDATED INCOME
STATEMENT
Reviewed Reviewed Audited
6 months 6 months 12 months
ended 31 ended 31 ended 30
December December June
2007 2006 2007
R`000 R`000 R`000
Revenue 16 021 14 029 28 402
Cost of sales (7 800) (8 573) (14 538)
Gross profit 8 221 5 456 13 864
Operating costs (7 681) (5 413) 14 086
Operating (loss) profit 540 43 (222)
Investment revenue 453 471 1 067
Fair value adjustment - - 750
Impairment of investment (3 093) - -
Finance costs (227) (164) (383)
(Loss) profit before (2 327) 350 1 212
taxation
Taxation (721) (184) (388)
(Loss) profit after taxation (3 048) 166 824
(Loss) earnings per ordinary (5.55) 0.30 1.50
share (cents)
Diluted (loss) earnings per (5.55) 0.30 1.50
ordinary share (cents)
Headline (loss) earnings per (5.55) 0.30 0.79
ordinary share (cents)
Diluted headline (loss) (5.55) 0.30 0.79
earnings per ordinary share
(cents)
Earnings per ordinary share 0.08 0.30 0.79
excluding impairment of ENMo
investment (cents)
Diluted earnings per 0.08 0.30 0.79
ordinary share excluding
impairment of ENMo
investment (cents)
Weighted average number of 54 945 373 54 945 373 54 945 373
shares
CONSOLIDATED CASH FLOW STATEMENT
Reviewed Reviewed Audited
6 months 6 months 12 months
ended 31 ended 31 ended 30
December December June
2007 2006 2007
R`000 R`000 R`000
CASH FLOWS FROM OPERATING (336) (191) (569)
ACTIVITIES
Cash receipts from customers 14 255 13 237 27 602
Cash paid to suppliers and (14 647) (12 895) (26 835)
employees
Cash generated by operating (392) 342 767
activities
Interest income 407 471 1 067
Finance costs (227) (164) (384)
Taxation paid (124) (840) (2 019)
CASH FLOWS FROM INVESTING 10 (292) (1 588)
ACTIVITIES
Property, plant and equipment (213) (292) (1 996)
acquired
Repayment of loans from group 223 - 408
companies
CASH FLOWS FROM FINANCING (19) 520 3 003
ACTIVITIES
Repayment of borrowings (19) 520 353
Other loans - repayments - - 2 650
Total cash movement for the (345) 37 846
period
Cash and cash equivalents at the 2 080 1 234 1 234
beginning of the period
Total cash at the end of the 1 735 1 271 2 080
period
CONSOLIDATED CHANGES IN EQUITY
STATEMENT
Reviewed Reviewed Audited
6 months 6 months 12 months
ended 31 ended 31 ended 30
December December June
2007 2006 2007
R`000 R`000 R`000
Balance at beginning of period 23 247 23 448 22 311
(Loss) net profit for the period (3 048) 166 824
Unrealised gain on revaluation
of available-for-resale - - 131
investment
Deferred taxation on revaluation - - (19)
of investment
Reversal of available-for-sale (1 142) - -
investment reserve
Balance at end of period 19 057 23 614 23 247
COMMENTARY
Review for the reporting period
The gross profit margin has improved to 51% for the 6 months ended 31
December 2007 (2006: 39%). Profit before taxation and impairment of the
investment in ENMo, has improved from R350 000 to R776 000. The loss after
taxation for the period under review amounted to R3 048 000 (2006: profit
R166 000). Details of the loss per ordinary share and headline loss per
ordinary share are reflected in the Consolidated Income Statement.
In a trading statement published on 19 January 2008, SELCo advised
shareholders that the board had taken a decision to impair the company`s
investment in ENMo (a company incorporated in Mozambique for the execution
of an electricity generation, distribution and sale concession) as a result
of the unilateral revocation of the concession by the Government of
Mozambique. Excluding the effect of the above mentioned impairment, the
group achieved earnings of 0.08 cents per share compared to 0.30 cents per
share during the corresponding reporting period in 2006. Furthermore,
settlement negotiations with the Government of Mozambique are ongoing and an
amicable settlement is expected. The high rate of tax is attributable to
prior years under provision for taxation.
SELCo is actively seeking to substantially increase its business outside of
the Namibian marketplace to mitigate the potential risks associated with a
single country revenue source. Shareholders are referred to an announcement
on 11 February 2008 advising shareholders that the company had entered into
an agreement to acquire the entire issued share capital of Rural Maintenance
(Pty) Ltd and Netelek UK Limited in addition to 49% of the share capital of
Netelek Holdings (Pty) Ltd.
Outlook
SELCo`s business in Namibia demonstrates a profitable and sustainable
business model in the electricity distribution industry. In addition to the
proposed acquisition referred to above, management continues to explore
opportunities to apply the business model in other aspects of the
electricity industry in Southern Africa.
Directorate
Mr Hugo van Zyl was appointed as a non-executive director of SELCo with
effect from 17 January 2008. Mr van Zyl is a Chartered Accountant and also
holds a M.Com(Tax). He has many years of experience in financial services
and tax consulting. The board is confident that he will make a valuable
contribution to the business.
Mr Frederick Sekandi resigned as a director of the company with effect from
17 January 2008. The board wishes to thank Mr Sekandi for his contribution.
Segmental Analysis
The group operates as a vertically integrated electricity distributor and as
a result has only one reporting business segment as defined by IAS 14. The
rental income derived from the investment property is insignificant by
comparison and is therefore included in the primary business segment.
Accounting Policies
The interim results have been prepared in accordance with International
Financial Reporting Standards (IFRS), the interpretations adopted by the
International Accounting Standards Board and the requirements of the South
African Companies Act. There has been no change to the company`s accounting
policies for the period.
Mazars Moores Rowland, the group`s independent auditor, has reviewed the
interim financial statements contained in this interim report and has
expressed an unmodified conclusion on the interim financial statements.
Their review report is available for inspection at the Company`s registered
office.
Dividend
No dividend has been declared for the six month period ended 31 December
2007.
Reminder of cautionary announcement
Shareholders are reminded of the cautionary announcement dated 11 February
2008 and advised that a further announcement detailing the financial effects
of the acquisition of the entire issued share capital of Rural Maintenance
(Pty) Limited and Netelek UK Limited, as well as a 49% interest in Netelek
Holdings (Pty) Limited will be published in due course. Shareholders are
reminded to continue exercising caution when trading in SELCo shares until a
further announcement has been made.
By order of the Board
6 March 2008
DIRECTORS:
B Hlongwa* (Chairman), C F Bosch (CEO), I Bosch, M Senekal, A van Zyl, H van
Zyl*
* Non Executive
COMPANY SECRETARY AND REGISTERED OFFICE:
Elsa Steyn, 99 Fascia Street, Silvertondale, 0184 (PO Box 73130, Lynnwood
Ridge, 0040)
TRANSFER SECRETARIES:
Link Market Services South Africa (Pty) Limited, 5th Floor, 11 Diagonal
Street, Johannesburg, 2001, (PO Box 4844, Johannesburg, 2000)
SPONSOR:
Bridge Capital Advisors (Pty) Limited, 27 Fricker Road, Illovo Boulevard,
Illovo, 2196, (PO Box 651010, Benmore, 2010)
Date: 06/03/2008 17:40:17 Produced by the JSE SENS Department.
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