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SLO
SLO
SLO - SELCo - Audited Consolidated Results For The Year Ended 30 June 2008
Southern Electricity Company Limited
(Registration Number 1997/006894/06)JSE Share Code: SLO & ISIN:
ZAE000041919("SELCo" or "the Group")
AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2008
BALANCE SHEETS AT 30 JUNE 2008
Group
2008 2007
R R
ASSETS
Non-current assets 30 628 108 24 626 258
Investment property 13 000 000 12 500 000
Property, plant and 8 383 544 7 729 977
equipment
Intangible assets 9 244 564 -
Investment - 4 396 281
Investment in - -
subsidiaries
Current assets 5 177 709 11 058 441
Inventories 586 882 581 415
Loans to subsidiaries - -
Other loans receivable 25 287 5 650 134
Trade and other 3 757 494 2 746 360
receivables
Cash and cash 808 046 2 080 532
equivalents
35 805 817 35 684 699
Total assets
EQUITY AND LIABILITIES
Equity 21 185 624 22 852 348
Share capital 10 162 796 10 162 796
Non-distributable 16 115 16 115
reserve
Available-for-sale - 1 141 665
investment reserve
Retained income (Losses) 11 006 713 11 531 737
Minority interest - 35
Liabilities
Non-current liabilities 7 379 504 8 273 792
Other financial 3 379 310 3 559 439
liabilities
Operating lease - 574 327
liability
Deferred tax 4 000 194 4 140 026
Current liabilities 7 240 689 4 558 559
Loans from direct
subsidiaries - -
Other loans payable 3 389 587 408 360
Other financial 253 141 203 305
liabilities
Taxation payable 922 141 1 356 039
Bank overdraft - 482
Trade and other payables 2 550 730 2 506 964
Provisions 125 090 83 409
Total liabilities 14 620 193 12 832 351
Total equity and 35 805 817 35 684 699
liabilities
INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2008
Group
2008 2007
R R
Revenue 33 260 701 29 469 079
Turnover 32 536 530 28 401 778
Cost of sales (16 056 634) (14 538 077)
Gross profit 16 479 896 13 863 701
Other income 829 185 -
Operating expenses (14 040 385) (13 396 692)
Marketing and selling
expenses (234 250) (638 353)
Distribution costs - (50 630)
Earnings/(loss) before 3 034 446 (221 974)
interest and tax
Investment revenue 724 171 1 067 301
Impairment of investment (3 092 709) -
due to national- isation
Fair value adjustment 500 000 750 000
Finance costs (512 583) (383 512)
Profit/(loss) before 653 325 1 211 815
taxation
Taxation (1 178 349) (387 945)
(Loss)/profit for the (525 024) 823 870
year
Diluted and (loss) / (0.96) cents 1.50 cents
earnings per share
Diluted and headline 3.79 cents 0.79 cents
earnings per share
Earnings and headline earnings per share
Group
2008 2007
Cents Cents
Diluted and (0.95) 1.50
(loss)/earnings per
share
Diluted and headline 3.79 0.79
earnings per share
Basic attributable earnings per share are calculated by dividing the net profit
attributable to shareholders by the weighted average number of ordinary shares
in issue during the year.
The calculation of diluted and earnings per ordinary share is based on a
(loss)/profit for the Group of (R 525 024) (2007: R 823 870) on weighted average
ordinary shares of 54 945 373 (2007: 54 945 373) for the year.
The calculation of diluted and headline earnings per ordinary share is based on
a profit for the Group of R 2 081 394 (2007: (R 433 741) on the weighted average
ordinary shares of 54 945 373 (2007: 54 945 373) for the year.
There is no dilutive effect on earnings per share.
Diluted and headline (loss)/earnings, profit has been computed as follows:
Net (loss)/profit after (525 024) 823 870
taxation
Revaluation gain on (500 000) (750 000)
investment property
Impairment of investment 3 092 709 -
due to nationalization
Loss on disposal of 13 709 359 871
fixed assets
2 081 394 433 741
STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2008
Share Share Available-
capital premium for-sale
investment
reserve
GROUP R R R
Opening balance as 2 747 269 7 415 527 1 029 354
previously reported
Adjustments
Prior period adjustments
- STC liability raised
Balance as at 01 July 2 747 269 7 415 527 1 029 354
2006
Changes
Unrealised gain on 131 358
revaluation of available-
for-sale investment
Deferred taxation on (19 047)
revaluation of
investment
Net income recognised - - 112 311
directly in equity
Profit for the year
Total recognised income - - 112 311
for the year
Total changes - - 112 311
Balance at 01 July 2007 2 747 269 7 415 527 1 141 665
Changes
Minority shareholding
sold
Impairment of available- (1 141 665)
for-sale investment due
to nationalisation
Net income recognised - - (1 141 665)
directly in equity
Loss for the year
Total recognised income - - (1 141 665)
for the year
Total changes - - (1 141 665)
Balance as at 30 June 2 747 269 7 415 527 -
2008
STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2008 cont.
Non- Retained Minority Total
distributable income interest equity
reserve
GROUP R R R R
Opening balance as 16 115 11 102 867 35 22 311 167
previously reported
Adjustments
Prior period (395 000) (395 000)
adjustments - STC
liability raised
Balance as at 01 July 16 115 10 707 867 35 21 916 167
2006
Changes
Unrealised gain on 131 358
revaluation of
available-for-sale
investment
Deferred taxation on (19 047)
revaluation of
investment
Net income recognised - - - 112 311
directly in equity
Profit for the year 823 870 - 823 870
Total recognised - 823 870 - 936 181
income for the year
Total changes - 823 870 936 181
Balance at 01 July 16 115 11 531 737 35 22 852 348
2007
Changes
Minority shareholding (35) (35)
sold
Impairment of (1 141 665)
available-for-sale
investment due to
nationalisation
Net income recognised - (1 141 665)
directly in equity
Loss for the year (525 024) - (525 024)
Total recognised - (525 024) - (1 666 689)
income for the year
Total changes - (525 024) - (1 666 689)
Balance as at 30 June 16 115 11 006 713 - 21 185 624
2008
CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008
2008 2007
R R
Cash flows from
operating activities
Cash receipts from 34 193 546 27 601 712
customers
Cash paid to (31 605 983) (26 835 072)
suppliers and
employees
Cash generated from 2 587 563 766 640
operations
Interest income 724 171 1 067 301
Finance costs (512 583) (383 512)
Tax paid (1 590 172) (2 019 267)
Net cash from 1 208 979 (568 838)
operating activities
Cash flows from
investing activities
Purchase of property, (1 747 165) (1 996 044)
plant and equipment
Sale of property, 35 000 -
plant and equipment
Purchase of (9 244 564) -
intangible asset
Purchase of (35) -
investment in
subsidiary
Sale of Investment in 100 -
subsidiary
Sale of financial 30 220 -
assets
Repayment (advances) (1 502) 408 360
of loans from group
companies
Net cash from (10 927 946) (1 587 684)
investing activities
Cash flows from
financing activities
Advance (re- payment) 8 853 885 353 142
of other financial
liabilities
Advance (re- (406 922) 2 649 585
payments) of other
loans
Net cash from 8 446 963 3 002 727
financing activities
Total cash movement (1 272 486) 846 205
for the year
Cash at the beginning 2 080 050 1 233 845
of the year
Total cash at the end 808 046 2 080 050
of the year
Overview
Although July 2007 through June 2008 has been a challenging year for SELCo due
to the Mozambican Government`s interference with the Mozambican investment, the
board is pleased to announce a solid set of financial results with the Namibian
operations performing in line with expectations.
The Group is set for above inflation turnover growth in the new financial year,
with bad debts and stock losses set to reach an all time low due to the active
management of such key performance indicators.
Turnover growth was just higher than inflation at 14.56%, with the gross profit
improving 18.87% for the year. Operating profit for the year has grown to
R3,034,446 from a loss of R221,974 for the prior year. The Group has reported a
loss after tax of R525,024 for the year when compared to the previous year`s
profit of R823,870, mainly due to the impairment of the Mozambican investment,
amounting to R3,092,709.
The Directors are implementing processes to improve the efficiencies of the
Namibian operations, which should drastically improve the profitability of the
Group in 2009.
Review of the Business
We are pleased to note that headline earnings per share are up by 380% (from
0.79 cents in 2007 to 3.79 cents in 2008), earnings per share is however down to
a loss of 0.96 cents, from a profit per share of 1.5 cents. This is mainly due
to the fact that the investment in the royalty stream of Energia de Mocambique
Limitada was impaired in the current year due to the nationalisation of the
concession.
SELCo Namibia, the nucleus of SELCo Ltd, has highlighted its proficiency in the
operation of electrical networks, providing electricity to 4,000 electricity
users on a daily basis. It is this core operational expertise which has led the
Directors to focus on the growth of SELCo Namibia within the Namibian
environment in the new financial year through the potential conclusion of
contracts or partnership agreements in Southern Namibia which will expand
SELCo`s services in the region.
With this strategy in mind, SELCo Namibia has purchased Business Modelling
intellectual property from its ultimate parent, Rural Maintenance (Pty) Ltd
("Rural`s"), that will enable it to actively expand its sphere of business
independently from its ultimate holding company. Furthermore, with SELCo`s
historical successes and knowledge of the local Namibian landscape, the
Directors have deemed it proper to endeavour for a listing on the Namibian Stock
Exchange - thus consolidating the shareholder base and the principal place of
business, making it attractive for the target local authorities to lend their
support for a consolidation of the distribution industry in the South of
Namibia.
In the next financial year we anticipate a growth in NPAT as a result of the
curbing of non-technical losses through active, real time energy monitoring and
reconciliation between kilowatts procured and kilowatts sold. SELCo has in
addition also nearly replaced all of its ?2,500 prepayment meters due to
inaccuracy in historical metering. These replacements have already resulted in
substantial increases in prepayment revenues.
Key focus for 2009:
Debtor control.
KWh losses and subsequent recoveries.
Consolidation of business in Southern Namibia through strategic co operation
agreements.
Listing SELCo on the NSX, ensuring that SELCo shareholders are representative of
the demographics of the Country.
Alternative renewable sources of electricity supply.
Outlook
We at SELCo are extremely positive about the future business potential of the
Group. As a small private utility company, management and staff have been
exposed to and successfully resolved events and situations which are normally
reserved for parastatals and multinationals. SELCo, with its unique human
capital and industry experience is therefore well poised to capitalise on the
electricity situation in Southern Africa. In addition, the efforts of our
competent staff and dedicated management team should result in consistent
returns for the coming period. SELCo will focus on expanding its business in
the Namibian market place before seriously considering expansion into other
Southern African markets.
Directorate
FK Sekandi resigned as a director and H van Zyl was appointed as a non-executive
director on 17 January 2008. PM Bester was appointed as a director on 15 August
2008. The board wishes to thank Mr Sekandi for his valuable contribution.
Accounting Policies
The annual financial statements have been prepared in accordance with the
Listings Requirements of the JSE Limited, International Financial Reporting
Standards, IAS 34: Interim Reporting and the Companies Act of South Africa. The
annual financial statements have been prepared on the historical cost basis,
except for the measurement of investment properties and certain financial
instruments, and incorporate the principal accounting policies set out below.
These accounting policies are consistent with those applied in the previous
period.
The consolidated financial statements have been audited by the Group`s
independent auditors, Mazars Moores Rowland and their unqualified report on the
June 2008 Annual Financial Statements is available for inspection at the
company`s registered office.
Segment reporting
The primary reporting format of the Group is by business segment. As the Group
operates as a vertically integrated electricity distributor, there is only one
business segment as defined by IAS 14. (The rental income derived from the
investment property is insignificant by comparison and therefore is included in
the primary business segment).
Contingencies
The Group`s bankers have issued a guarantee in favour of NamPower amounting to
Z$66 000.
There is no obligation, current or pending, which is considered likely to have
an adverse effect on the Group.
Subsequent events
No material events have occurred in the period between 30 June 2008 and the date
of this report.
Dividends
No dividends were declared or paid to shareholders during the year under review.
By order of the board
1 October 2008
DIRECTORS:
B Hlongwa* (Chairman), C F Bosch (CEO), P M Bester, 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: 01/10/2008 16:38:32 Produced by the JSE SENS Department.
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