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SLO
SLO
SLO - SELCo - Audited consolidated results for the year ended 30 June 2011
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 2011
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011
GROUP COMPANY
2011 2010 2011 2010
R R R R
ASSETS
Non-current assets 25 449 035 27 960 746 1 444 526 1 444 526
Investment property 13 000 000 13 000 000 - -
Property, plant and 6 600 433 7 980 157 - -
equipment
Intangible assets 5 848 602 6 980 589 - -
Investment in - - 1 444 526 1 444 526
subsidiaries
Current assets 15 598 556 12 869 739 2 067 035 1 879 219
Inventories 2 681 857 1 721 338 - -
Loans to group 2 703 - 1 318 324 791 021
companies
Current tax 1 870 612 1 426 246 51 351 48 985
receivable
Trade and other 8 225 129 6 387 643 275 856 114 490
receivables
Cash and cash 2 818 255 3 334 512 421 504 924 723
equivalents
Total assets 41 047 591 40 830 485 3 511 561 3 323 745
EQUITY AND
LIABILITIES
Equity 24 335 949 24 385 758 542 017 1 740 232
Share capital 10 162 796 10 162 796 10 162 796 10 162 796
Reserves 16 115 16 115 16 115 16 115
Accumulated loss 14 157 038 14 206 847 (9 636 894) (8 438 679)
Liabilities
Non-current 8 939 921 8 525 326 - -
liabilities
Other financial 2 655 086 2 798 392 - -
liabilities
Finance lease 354 139 531 059 - -
obligation
Deferred tax 5 930 696 5 195 875 - -
Current liabilities 7 771 721 7 919 401 2 969 544 1 583 513
Other financial 3 176 808 2 748 852 2 965 761 1 461 496
liabilities
Finance lease 176 921 293 239 - -
obligation
Trade and other 4 319 011 4 775 305 3 783 122 017
payables
Provisions 98 981 102 005 - -
Total liabilities 16 711 642 16 444 727 2 969 544 1 583 513
Total equity and 41 047 591 40 830 485 3 511 561 3 323 745
liabilities
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JULY 2011
GROUP COMPANY
2011 2010 2011 2010
R R R R
Revenue 54 109 722 49 957 746 1 800 000 1 800 000
Cost of sales (31 434 525) (28 998 844) - -
Gross profit 22 675 197 20 958 902 1 800 000 1 800 000
Other income 9 027 61 941 - -
Operating (21 747 771) (17 394 806) (3 056 083) (1 700 510)
expenses
Operating profit 936 453 3 626 037 (1 256 083) 99 490
(loss)
Investment 32 325 11 204 55 502 34 168
revenue
Finance costs (286 135) (484 144) - -
Profit (loss) 682 643 3 153 097 (1 200 581) 133 658
before taxation
Taxation (732 452) (1 057 970) 2 366 -
(Loss) profit for (49 809) 2 095 127 (1 198 215) 133 658
the year
Other - - - -
comprehensive
income
Total (49 809) 2 095 127 (1 198 215) 133 658
comprehensive
(loss) income
Total (49 809) 2 095 127 (1 198 215) 133 658
comprehensive
(loss) income
attributable to:
Owners of the
parent
Earnings per
share
Per share
information
Basic (loss) (0.09) 3.81 - -
earnings per
share (c)
Diluted (loss) (0.09) 3.81 - -
earnings per
share (c)
Headline (loss) (0.09) 3.83 - -
earnings per
share
Diluted headline (0.09) 3.83 - -
(loss) earnings
per share
RECONCILIATION OF HEADLINE EARNINGS
Audited Audited
year to 30 year to 30
June 2011 June 2010
R R
Profit for the year attributable to ordinary (49 809) 2 095 127
shareholders
Headline earnings adjustment net of taxation - 9 315
- Profit on disposal of property, plant and
equipment
Headline earnings (49 809) 2 104 442
Ordinary number of shares in issue 54 948 173 54 948 173
Weighted average number of shares 54 948 173 54 948 173
Diluted number of shares 54 948 173 54 948 173
Earnings per share (cents) (0.09) 3.81
Diluted earnings per share (cents) (0.09) 3.81
Headline earnings per share (cents) (0.09) 3.83
Diluted headline earnings per share (cents) (0.09) 3.83
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011
Share Share Total share
capital premium capital
GROUP R R
Balance as at 01 July 2009 2 747 408 7 415 388 10 162 796
Changes in equity
Total comprehensive income for - - -
the year
Total changes - - -
Opening balance as previously 2 747 408 7 415 388 10 162 796
reported
Adjustments
Prior period errors - - -
Balance as at 01 July 2010 as 2 747 408 7 415 388 10 162 796
restated
Changes in equity
Total comprehensive income for - - -
the year
Total changes - - -
Balance as at 30 June 2011 2 747 408 7 415 388 10 162 796
COMPANY
Balance as at 01 July 2009 2 747 408 7 415 388 10 162 796
Changes in equity
Total comprehensive income for - - -
the year
Total changes - - -
Balance at 01 July 2010 2 747 408 7 415 388 10 162 796
Changes in equity
Total comprehensive income for - - -
the year
Total changes - - -
Balance as at 30 June 2011 2 747 408 7 415 388 10 162 796
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011 (CONT)
Non- Accumulated Total
distributable loss equity
reserve
GROUP R R R
Balance as at 01 July 2009 16 115 12 111 720 22 290 631
Changes in equity
Total comprehensive income for - 2 095 127 2 095 127
the year
Total changes - 2 095 127 2 095 127
Opening balance as previously 16 115 15 106 155 25 285 066
reported
Adjustments
Prior period errors - (899 308) (899 308)
Balance as at 01 July 2010 as 16 115 14 206 847 24 385 758
restated
Changes in equity - (49 809) (49 809)
Total comprehensive income for
the year
Total changes - (49 809) (49 809)
Balance as at 30 June 2011 16 115 14 157 038 24 335 949
COMPANY
Balance as at 01 July 2009 16 115 (8 572 337) 1 606 574
Changes in equity
Total comprehensive income for - 133 658 133 658
the year
Total changes - 133 658 133 658
Balance at 01 July 2010 16 115 (8 438 679) 1 740 232
Changes in equity
Total comprehensive income for - (1 198 215) (1 198 215)
the year
Total changes - (1 198 215) (1 198 215)
Balance as at 30 June 2011 16 115 (9 636 894) 542 017
CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
GROUP COMPANY
2011 2010 2011
R R R R
Cash flows from
operating
activities
Cash generated from (190 843) 4 834 262 (1 535 683) 82 887
(used in)
operations
Interest income 32 325 11 204 55 502 34 168
Finance costs (286 135) (484 144) - -
Tax paid (442 000) (1 063 801) - -
Net cash from (504 967) 3 297 521 (1 480 181) 117 055
operating
activities
Cash flows from
investing
activities
Purchase of - (779 049) - -
property, plant and
equipment
Sale of property, - 143 867 - -
plant and equipment
Sale of financial - 28 865 - -
assets
Net cash from - (606 317) - -
investing
activities
Cash flows from
financing
activities
Proceeds from other 784 812 - 2 004 427 475 186
financial
liabilities
Repayment of other (500 162) (2 499 398) (500 162) -
financial
liabilities
Nett movement on (293 238) 475 577 - -
finance leases
Loans advanced to (2 703) - (527 303) -
group companies
Repayment of loans - (33 080) - (529 288)
from group
companies
Net cash from (11 291) (2 056 901) 976 962 (54 102)
financing
activities
Total cash movement (516 258) 634 303 (503 219) 62 953
for the year
Cash at the 3 334 512 2 700 211 924 723 861 772
beginning of the
year
Total cash at the 2 818 254 3 334 514 421 504 924 725
end of the year
Overview
This past financial year has been an exciting but strenuous year for all at
SELCo.
Subsequent to the restructuring of operations and the costs incurred in an
attempted merger at the beginning of the financial year, SELCo`s efforts have
paid off in that it has identified a number of core interventions for action:-
* strong local empowerment grouping in Namibia;
* public relations programme with Municipalities and Government structures in
Namibia;
* reduction of energy losses; and
* the commencement of dividend payments.
Empowerment Grouping
In addition to the fact that the entire SELCo Namibia operations are being
conducted with NO South African expatriates being present in Namibia, the local
SELCo Namibian leadership under the guidance of Abraham Kukuri has concluded two
strategic agreements (awaiting shareholder ratification), embedding SELCo into
Southern Namibia and setting the scene for organic growth.
1. SELCo Nambia is to allocate 20% of SELCo Namibia`s funds available for
distribution as declared dividends for distribution to its employees on a
formula based incentive scheme where liquidity and solvency are not
compromised and participating employees have been with the Company for at
least 2 years. This will retain skills without diluting ownership.
2. SELCo Namibia has reached agreement with the Nama Traditional Authority,
comprising 11 chiefs located from Noordoewer in the South to Kunene in the
North and the Erongo in the West, whereby the Nama Traditional authority
obtains 5% of the shares in SELCo Namibia against no payment with the
option of procuring a further 20% of the shareholding at market related
price less 25%.
3. SELCo Namibia will change its dividend policy in future.
Public Relations Programme
Numerous regular meetings and information sessions have been held with the
municipalities in the South of Namibia, together with relevant Government
departments to raise awareness of SELCo within the formal Government sector.
This programme will continue throughout the next financial year.
Reduction of Energy Losses
In the last 12 months, SELCo has managed to further reduce kWh losses from 7.96%
(June 2010) to 6.93% for June 2011, thus improving revenue streams and also
assisting in limiting tariff increases - resulting in electricity being more
affordable to the stretched electricity users in Namibia. Historically, losses
have reduced on a consistent basis from 14.02% (June 2008), to 11.75% (June
2009) to the current 6.93%. These losses represent both technical and non-
technical losses.
Dividend Payments
As the underlying principles of SELCo`s business are strong, it is the intention
of the directors to commence with dividend payments from the next financial
year, provided always that solvency and liquidity are not being compromised.
Review of the Business
Although there was a small operating loss for the year, this was due to the
costs incurred with the attempted merger and not due to unprofitability of
SELCo`s core operations, which remain strong. Profitability has also been
somewhat reduced due to the disparity in tariffs between the buying and selling
of electricity.
Trade and other receivables has grown from R6 387 643 (June 2010) to R8 225 128
for the year ending June 2011. Debtor days for the period have also increased
from 46 days to 55 days. However, the directors are comfortable with the
standing of the debtors book as numerous Government payments reliant on new
budget allocations were received only days after the year end period.
In addition to the ongoing kWh loss management program, SELCo is rolling out
remote metering to its entire customer base to enable time of use metering and
billing. The deployment of this technology will reduce SELCo`s potential
liabilities in the current disparity of the electricity buying tariffs methods
and the electricity selling tariffs methods. In addition, users of electricity
would have a choice of using electricity consumption to manage tariffs to their
own needs and tariff associated with that use. The capex rollout is expected
to take place at a rate of approximately R2 200 per meter. This is also
expected to improve the profitability of the group.
Please note that no statements regarding the future prospects of the company
have been reviewed or reported on by the company`s auditors.
Outlook
SELCo`s core business has been well proven and healthy. The deployment of the
new time of use metering will further reduce SELCo`s potential exposure in
tariff disparities as well as further reducing kWh losses.
With SELCo`s empowerment partners in place, the long overdue expansion programme
in the South of Namibia is of primary importance in the new financial year.
Appreciation
Our sincere appreciation is extended to our fellow board members, management and
staff for their efforts and their continued commitment to the company.
Accounting Policies
Presentation of annual financial statements
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards and the Companies Act, 71 of 2008.
The annual financial statements have been prepared on the historical cost basis,
except for the measurement of investment properties and certain financial
instruments at fair value, and incorporate the principal accounting policies set
out below. They are presented in South African Rands.
These accounting policies are consistent with the previous period.
The consolidated financial statements have been audited by the Group`s
independent auditors, Middel and Partners and their unqualified report on the
June 2011 Annual Financial Statements is available for inspection at the
company`s registered office.
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 shareholders will be
held at 11:00 on Tuesday 15 November 2011 at the company`s registered office
located at 99 Fascia Street, Silvertondale, Pretoria to transact the business as
stated in the notice of Annual General Meeting contained in the Annual Report
which will be posted to shareholders today, 30 September 2011.
By order of the board
30 September 2011
DIRECTORS:
B Hlongwa* (Chairman), P M Bester (CEO), I Bosch, E E Cloete*, W B Mahlangu*, H
van Zyl*
* Non Executive
COMPANY SECRETARY AND REGISTERED OFFICE:
RMMS Consulting, 99 Fascia Street, Silvertondale, 0184 (PO Box 73130, Lynnwood
Ridge, 0040)
TRANSFER SECRETARIES:
Link Market Services South Africa (Pty) Limited, 13th Floor Rennie House, 19
Ameshoff Street, Braamfontein, 2001 (PO Box 4844, Johannesburg, 2000)
SPONSOR:
Grindrod Bank Limited, Building three, First Floor, Commerce Square, 39 Rivonia
Road, Sandton, 2146 (PO Box 78011, Sandton, 2146)
Date: 30/09/2011 09:00:02 Produced by the JSE SENS Department.
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