| Wed 30 Sep 2009, 8:33 | | SLO - Southern Electricity Company - Abridged audited consolidated results for |
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SLO
SLO
SLO - Southern Electricity Company - Abridged audited consolidated results for
the year ended 30 June 2009
Southern Electricity Company Limited
(Registration Number 1997/006894/06)
JSE Share Code: SLO ISIN: ZAE000041919
("SELCo" or "the Group")
ABRIDGED AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2009
BALANCE SHEETS
30 Jun 2009 30 Jun 2008
R R
ASSETS
Noncurrent assets 29 766 237 30 628 108
Investment property 13 000 000 13 000 000
Property, plant and 8 653 660 8 383 544
equipment
Intangible assets 8 112 577 9 244 564
Current assets 8 571 405 5 177 709
Inventories 1 458 568 586 882
Other loans receivable 28 865 25 287
Current tax receivable 362 445 -
Trade and other 4 021 316 3 757 494
receivables
Cash and cash 2 700 211 808 046
equivalents
Total assets 38 337 642 35 805 817
EQUITY AND LIABILITIES
Equity 22 290 631 21 185 624
Share capital 10 162 796 10 162 796
Non-distributable 16 115 16 115
reserve
Retained income 12 111 720 11 006 713
(losses)
Liabilities
Non-current 7 233 014 7 379 504
liabilities
Other financial 3 095 104 3 379 310
liabilities
Deferred tax 4 137 910 4 000 194
Current liabilities 8 813 997 7 240 689
Other loans payable 5 047 643 3 389 587
Other financial 285 696 253 141
liabilities
Taxation payable - 922 141
Trade and other 3 321 396 2 550 730
payables
Provisions 159 262 125 090
Total liabilities 16 047 011 14 620 193
Total equity and 38 337 642 35 805 817
liabilities
INCOME STATEMENTS
30 Jun 2009 30 Jun 2008
R R
Revenue 40 359 090 33 260 701
Turnover 40 206 924 32 536 530
Cost of sales (23 185 207) (19 140 970)
Gross profit 17 021 717 13 395 560
Other income 63 351 829 185
Operating expenses (15 395 426) (10 956 049)
Marketing and selling - (234 250)
expenses
Earnings/(loss) before 1 689 942 3 034 446
interest and tax
Investment revenue 156 415 724 171
Impairment of investment - (3 092 709)
due to nationalisation
Fair value adjustment - 500 000
Finance costs (920 768) (512 583)
Profit/(loss) before 925 589 653 325
taxation
Taxation 179 418 (1 178 349)
Profit/(loss) for the 1 105 007 (525 024)
year
Earnings and diluted 2.01 (0.96)
earnings/ (loss) per
share (cents)
Earnings and headline earnings per share
30 Jun 2009 30 Jun 2008
Cents Cents
Diluted and (loss) / 2.01 (0.96)
earnings per share
Diluted and headline 2.01 3.79
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 earnings and diluted earnings per ordinary share are based on
a profit/ (loss) for the Group of R1,105,007 (2008: (R525,024)) on weighted
average ordinary shares of 54,945,373 (2008: 54,945,373) for the year.
The calculation of headline earnings and diluted headline earnings per ordinary
share are based on a profit for the Group of R1,105,007 (2008: R2,081,394) on
weighted average ordinary shares of 54,945,373 (2008: 54,945,373) for the year.
There is no dilutive effect on earnings per share.
Headline earnings and diluted headline earnings have been computed as follows:
30 Jun 2009 30 Jun 2008
Cents Cents
Net profit/(loss) after 1 105 007 (525 024)
taxation
Revaluation gain on - (500 000)
investment property
Impairment of investment - 3 092 709
due to nationalization
Loss on disposal of 13 709
fixed assets
1 105 007 2 081 394
STATEMENTS OF CHANGES IN EQUITY
Share Share premium Available-for-
capital sale
investment
reserve
R R R
Balance as at 01 July 2 747 269 7 415 527 1 141 665
2007
Changes
Minority shareholding
sold
Impairment of investment (1 141 665)
due to nationalisation
Net loss 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 at 01 July 2008 2 747 269 7 415 527 -
Changes
Profit for the year
Total recognised income - - -
for the year
Total changes - - -
Balance as at 30 June 2 747 269 7 415 527 -
2009
STATEMENTS OF CHANGES IN EQUITY (cont)
Non- Retained Minority Total
distri- income interest equity
butable
reserve
R R R R
Balance as at 01 July 16 115 11 531 737 35 22 852 348
2007
Changes
Minority shareholding (35) (35)
sold
Impairment of investment (1 141 665)
due to nationalisation
Net loss recognised - - - (1 141 665)
directly in equity
Loss for the year (525 024) - (525 024)
Total recognised income - (525 024) - (1 666 689)
for the year
Total changes - (525 024) (1 666 689)
Balance at 01 July 2008 16 115 11 006 713 - 21 185 624
Changes
Profit for the year 1 105 007 - 1 105 007
Total recognised income - 1 105 007 - 1 105 007
for the year
Total changes - 1 105 007 - 1 105 007
Balance as at 30 June 16 115 12 111 720 - 22 290 631
2009
CASH FLOW STATEMENTS
30 Jun 2009 30 Jun 20088
R R
Cash flows from
operating activities
Cash receipts from 42 006 924 34 193 546
customers
Cash paid to suppliers (38 301 439) (31 605 983)
and employees
Cash generated from 3 705 485 2 587 563
operations
Interest income 156 415 724 171
Finance costs (920 768) (512 583)
Tax paid (967 452) (1 590 172)
Net cash from operating 1 973 680 1 208 979
activities
Cash flows from
investing activities
Purchase of property, (1 484 342) (1 747 165)
plant and equipment
Proceeds on sale of - 35 000
property, plant and
equipment
Purchase of intangible - (9 244 564)
asset
Purchase of investment - (35)
in subsidiary
Proceeds on sale of - 100
Investment in subsidiary
Proceeds on sale of - 30 220
financial assets
Repayment (advances) of - (1 502)
loans from group
companies
Net cash from investing (1 484 342) (10 927 946)
activities
Cash flows from
financing activities
Advance (repayment) of (248 073) 8 853 885
other financial
liabilities
Advance (repayments) of 1 650 900 (406 922)
other loans
Net cash from financing 1 402 827 8 446 963
activities
Total cash movement for 1 892 165 (1 272 004)
the year
Cash at the beginning of 808 046 2 080 050
the year
Total cash at the end of 2 700 211 808 046
the year
Overview
Following on the previous financial year which was challenging for SELCo due to
the Mozambican Government`s interference with the Group`s Mozambican investment,
the board is pleased for the year ended June 2009 to announce its financial
results with the Namibian operations performing in line with expectations.
As envisaged in last year`s annual report, bad debts and stock losses have
reached an all time low at a decrease of 52.93% and 15.51% respectively,
directly ascribable to the active management of these aspects as key performance
indicators.
Turnover growth was higher than inflation at 23.57%, with the gross profit
improving 27.07% for the year. Earnings before interest and tax for the year
has declined to R1,689,942 from R3,034,446 for the prior year. The Group has
reported a profit after tax of R1,105,007 for the year when compared to the
previous year`s loss of R525,024.
The metering capital program, essential due to the amended NamPower tariff
structure, is of prime importance. It is not expected at this stage that the
gross profit will be materially affected by such amendments to the bulk cost of
electricity.
Review of the Business
We are pleased to note that earnings per share is up from a loss of 0.96 cents
in 2008 to a profit of 2.01 cents in 2009. Headline earnings per share is,
however, down to 2.01 cents, from 3.79 cents in 2008.
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.
SELCo has had numerous discussions with political leaders in Southern Namibia
with a view to forming the Regional Electricity Distributor (RED) in Southern
Namibia. The talks have progressed positively and SELCo expects to make an
announcement pertaining broad public participation in Namibia within the coming
months.
SELCo`s consistent public relations efforts, backed up by quality service
delivery, has started to yield results with Abraham Kukuri in the driving seat.
Abraham has been involved with the Group since 2001, and took over as Managing
Director of SELCo Namibia in 2008. This has resulted in SELCo Namibia being
managed and operated in totality by Namibians.
SELCo`s prepayment metering upgrade has yielded results with the average
prepayment revenues having increased by 53.18% to an average of R535,942.51 per
month, justifying the related expenditure incurred.
Outlook
Key focus for 2010:
Debtor control
Since May 2009 the SELCo Revenue Team, consisting of three motivated women, has
managed to decrease the monthly arrears from 28% to 21%. Through persistence and
adherence to processes and procedures, the bad debt figure has also decreased,
resulting in fewer accounts at risk. We have maintained a banking figure of R4
million per month for the last three months. Our aim is to maintain these
results. The staff keep in close contact with the customers in their portfolios
through continued diligence and empathy, thus ensuring timeous payments of
monthly accounts.
KWh losses and subsequent recoveries
With a tremendous effort from the SELCo Billing Team, an intensive field audit
was launched in Keetmanshoop. Particular attention was paid to allocating the
correct meters to appropriate transformers in order to reconcile the kWh`s
consumed in the said transformer areas. As the kWh losses are of great concern,
we aim to implement the same field audits in Aranos and Karasburg.
Consolidation of business in Southern Namibia through strategic co-operation
agreements
The Government of Namibia is pursuing an initiative to restructure the
Electricity Supply Industry (ESI). This is with the aim of achieving the policy
goals and objectives as set out in the Government White Paper on Energy compiled
in 1998. The main objective of the White Paper is to merge electricity networks
of all the local authorities (in Southern Namibia in this case) into a single
financially viable Distribution company, owned by the local authorities. SELCo
is currently the only company with the necessary know-how and experience in the
south of the country with the potential to be restructured in such a way to
address to the needs of the Government. SELCo has therefore commenced with
initial negotiations with interested parties, The Nama Traditional Authority, to
buy a stake in the company. The Nama Traditional Authority will now further
engage key stake holders in Government as this transaction is seen as part of
the initiative to get the Southerners in the mainstream of the economy. The
revised distribution licenses of the local authorities invite public/private
sector partnerships, which further strengthens the possibility of a positive
outcome of this initiative between SELCo and The Nama Traditional Authority,
which is representative of people situated in the Hardap- and Karas Regions with
the population being a good mix of people of almost all ethnic groupings.
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 and the formation of the Southern RED, before seriously
considering expansion into other Southern African markets.
Directorate
PM Bester was appointed as a director on 15 August 2008. M Senekal passed away
on 26 September 2009.
Accounting policies
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards and the South African Companies Act,
1973, as amended. The principal accounting policies used in the preparation of
the abridged consolidated financial results for year ended June 2009 have been
applied consistently over the current year and prior financial periods.
The consolidated financial statements have been audited by the Group`s
independent auditors, Mazars Moores Rowland and their unqualified report on the
June 2009 Annual Financial Statements is available for inspection at the
company`s registered office.
Segment reporting
The Group engages in only one business activity, providing only one product or
service as a vertically integrated electricity distributor. The rental income
and management fees received within the Group are insignificant and the Group
therefore only reports as one operating segment. The Group`s business is
limited to Southern Namibia.
The numbers reported to the chief operating decision maker are made in
accordance with IFRS and can therefore be read directly from the annual
financial statements.
Contingencies
The Group`s bankers have issued a guarantee in favour of NamPower amounting to
N$66,000.
There is no obligation, current or pending, which is considered likely to have
an adverse effect on the Group.
Subsequent events
Carel Wessels ceased consulting for the Group with effect 30 September 2009 and
as such his membership of the audit committee terminates. Whereas the audit
committee terms of reference adopted on 14 August 2008 only stipulates a minimum
membership requirement of two non-executive directors, he will not be replaced
in the foreseeable future.
Montaque Senekal passed away unexpectedly on 26 September 2009 due to natural
causes. There are no immediate plans to replace him as a director and his
responsibilities will be allocated to the remaining executive directors.
Dividends
No dividends were declared or paid to shareholders during the year under review.
Notice of annual general meeting
Notice is hereby given that the annual general meeting of members of the Group
will be held at 99 Fascia Street, Silvertondale, Pretoria at 09h00 on Wednesday,
25 November 2009.
By order of the board
29 September 2009
DIRECTORS:
B Hlongwa* (Chairman), C F Bosch (CEO), P M Bester, I Bosch, 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: 30/09/2009 08:33:11 Produced by the JSE SENS Department.
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