Wrap Text
Eskom’s operational performance remained strong despite tough trading conditions - BIESKM
ESKOM HOLDINGS SOC LTD
JSE CODE: BIESKM
DATE: 31 JANUARY 2018
MEDIA STATEMENT
Eskom’s operational performance remained strong despite tough trading conditions
Tuesday, 30 January 2018: Whilst Eskom’s operational performance remained strong for
the six months ending on 30 September 2017, the company is facing significant financial
challenges going forward.
The company achieved generation plant availability of 83.2% against a target of 80%
which matches our 80% energy availability 10% planned maintenance and 10%
unplanned maintenance by 2020 Generation Sustainability Strategy.
The new build programme is on track with Medupi Unit 4 having achieved commercial
operation on 28 November 2017 and Kusile Unit 1 having achieved commercial operation
on 30 August 2017 adding a combined 1 594 MW to the national grid. In addition, 350km
of transmission and distribution lines were constructed and 1 000MVA transformers
commissioned.
Eskom has also concluded its interim results having connected 100 380 new households
to the electricity grid.
Eskom’s Interim Group Chief Executive Phakamani Hadebe during his presentation earlier
today said that the financial challenges experienced during the first six months of the
financial year are primarily due to flat revenue attributable to the 2.2% price increase for
2017/18 and sales volumes declining by 1.9%, exacerbated by escalating municipal arrear
debt. “There was also the 2016/17 audit qualification on irregular expenditure which has
led to access to funding being restricted,” he said.
Hadebe said Eskom has had a series of meetings with the bankers, lenders and investors
over the course of last week, and that he was optimistic that Eskom would be able to raise
the required funding for its capital investment programme.
“We are in discussions with the domestic financial institutions and the prognosis is
positive. We are confident that we will be able to close the current R20 billion funding gap
before the end of March 2018,” he said.
Due to tough trading conditions that were exacerbated by the qualified audit opinion and
lapses in corporate governance, Eskom’s funding plans were limited during the period
under review, resulting in a constrained liquidity position.
Eskom’s Acting Chief Financial Officer, Calib Cassim said EBITDA (earnings before
interest, tax, depreciation and amortization) decreased to R30 billion compared to R32
billion in the same period last year. Cash from operations also reduced to R22 billion from
R32 billion. The liquidity position also slipped from R30 billion to R9 billion.
Revenue decreased by 2% to R96 billion, which is attributable to declining sales volumes
and a 2.2% tariff increase for the 2017/18 financial year.
Cassim said good progress has been made and he is confident that the qualified audit
opinion that was raised by Eskom’s external auditors in the 2016/17 financial year would
be closed out by year-end.
Eskom Chairperson Jabu Mabuza said that the new board, which has already met two
times last week, has to take decisive action and find credible solutions to the complex
challenges that impede Eskom’s sustainability.
“As the Board, we strongly believe that what underpins the stabilisation of Eskom is
fulfilling our duty to improve trust and restore investor confidence in order to access
q4financial markets and to re-establish the credibility of this strategic organisation, which
will be celebrating its 95th anniversary in March.The issuing of the interim results today is
one of the many more necessary steps in the journey of its renewal,” said Mabuza.
Commenting on rating agency Moody’s decision to downgrade Eskom last week, Mabuza
said: “The decision by Moody’s to downgrade the company’s rating on Friday is
understandable but stands as a beacon of motivation to double our efforts in our united
purpose to ensure financial sustainability. We are mindful that this will not be easy, but as
a collective we have the skills, the strength and the courage to turn things around.”
He added that: “Our mandate is non-negotiable: we need to root out financial
mismanagement, malfeasance and maladministration as a critical foundation to restoring
transparent and effective governance. We also need to entrench financial and business
discipline in order to rebuild confidence in this great institution.”
Eskom’s efforts to improve trust and restore investors’ confidence received a boost when
five senior officials who were implicated in corporate governance lapses and impropriety
left the employ of Eskom last week, including former chief financial officer Anoj Singh who
resigned.
The investigations on other senior managers and executives who are implicated in various
allegations of impropriety are ongoing, and disciplinary action will be taken against those
whom evidence of misconduct exists.
“I believe that through a display of inspirational and ethical leadership, and through a
collaborative and diligent approach between the Board, the Executive Committee and the
47 000 Eskom employees who are proud, and committed to living in, and serving, South
Africa, Eskom remains motivated to move towards a successful future - to deliver on our
mandate and to remain South Africa's trusted and credible electricity supplier,” he said.
“With the right people and support structures in place, of priority is entrenching financial
and business discipline as a foundation to restoring the credibility and integrity of the utility
with financial markets. These are some of the key principles that are critical to stabilise,
reform and ultimately set Eskom up for sustained success.”
ENDS
Issued by: Eskom Media Desk
Tel: +27 11 800 3304/3343/3378
Fax: 086 664 7699
Email: mediadesk@eskom.co.za
Date: 31/01/2018 10:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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