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Audited Results of Southern Electricity Company Limited for the year ended 30 June 2013
Southern Electricity Company Limited
(Registration Number 1997/006894/06)
JSE Share Code: SLO ISIN: ZAE000041919
(“SELCo” or “the Group”)
AUDITED RESULTS OF SOUTHERN ELECTRICITY COMPANY LIMITED FOR THE YEAR ENDED 30 JUNE
2013
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME OF SOUTHERN
ELECTRICITY COMPANY LIMITED FOR THE YEAR ENDED 30 JUNE 2013
Audited Audited
2013 2012*
(R'000) (R'000)
Revenue 77,171 61,779
Cost of sales (46,440) (37,465)
Gross profit 30,731 24,314
Other income 458 31
Operating expenses (27,656) (25,287)
Profit/ (loss) before interest and tax 3,533 (942)
Investment revenue 105 27
Fair value adjustments (6,250)
Finance costs (234) (848)
Profit/ (loss) before taxation 3,404 (8,013)
Taxation (782) 919
Profit/ (loss) for the period 2,622 (7,094)
Other comprehensive income - -
Total comprehensive profit/ (loss) for the period 2,622 (7,094)
Attributable to:
Owners of the parent 2,622 (7,094)
Earnings per share:
Earnings & Diluted loss per ordinary share (cents) 4.77 (12.91)
*Prior year error and reclassification corrected see Restated comparable figures note
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF SOUTHERN ELECTRICITY
COMPANY LIMITED AS AT 30 JUNE 2013
Audited Audited Audited
30 June 2013 30 June 2012* 01 July 2011
(R'000) (R'000) (R'000)
ASSETS
Non-current assets 16,069 17,786 26,155
Investment property 6,750 6,750 13,000
Property plant and equipment 4,616 5,718 6,600
Intangible assets 3,585 4,717 5,849
Deferred tax 1,118 601 706
Current assets 31,018 16,748 15,598
Inventories 3,009 3,665 2,682
Current tax receivable 495 300 1,870
Other financial assets - 9 3
Trade and other receivables 12,004 9,794 8,225
Cash and cash equivalents 15,510 2,980 2,818
Total assets 47,087 34,534 41,753
EQUITY AND LIABILITIES
Equity 19,864 17,242 24,336
Stated capital 10,163 10,163 10,163
Non-distributable reserve 16 16 16
Retained income 9,685 7,063 14,157
Liabilities
Non-current liabilities 4,933 8,319 9,645
Other financial liabilities - 2,469 2,655
Finance lease obligation 342 560 354
Deferred tax 4,591 5,290 6,636
Current liabilities 22,290 8,973 7,772
Other financial liabilities 12,274 3,117 3,177
Current tax payable 2,006 7 -
Finance lease obligation 363 295 177
Trade and other payables 7,425 5,149 4,319
Provisions 222 405 99
Total Liabilities 27,223 17,292 17,417
Total equity and liabilities 47,087 34,534 41,753
*Prior year error and reclassification corrected see Restated comparable figures note
CONDENSED STATEMENT OF CASH FLOWS OF SOUTHERN ELECTRICITY COMPANY LIMITED FOR
THE YEAR ENDED 30 JUNE 2013
Audited Audited
2013 2012*
(R'000) (R'000)
CASH FLOWS FROM OPERATING ACTIVITIES
Profit (loss) before taxation 3,404 (8,013)
Adjustments for:
Depreciation and amortisation 2,483 2,527
Loss on sale of assets - 96
Proceeds from loans from group companies 9 -
Interest received (3) (2)
Finance costs 234 849
Fair value adjustments - 6,250
Movements in provisions (183) 306
Other non-cash items 0 (2)
Changes in working capital:
Inventories 657 (983)
Trade and other receivables (2,210) (1,569)
Trade and other payables 2,276 830
Cash generated from (used in) operations 6,667 289
Interest income 3 2
Finance costs - (595)
Tax received/(paid) (196) 1,259
Net cash from operating activities 6,474 955
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (249) (909)
Sale of property, plant and equipment - 299
Proceeds from other financial assets - (6)
Loans advanced to group companies - -
Net cash from investing activities (249) (616)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from other financial liabilities 6,536 -
Repayments of other financial liabilities - (424)
Proceeds from finance leases - 249
Repayment of finance leases (231) 0
Net cash from financing activities 6,305 (175)
Total cash movement for the year 12,529 163
Cash at the beginning of the year 2,981 2,818
Total cash at the end of the year 15,510 2,981
*Prior year error and reclassification corrected see Restated comparable figures note
Notes
Basis of preparation
The abridged audited consolidated annual financial statements for the year ended 30 June 2013
have been prepared in accordance with the Framework concepts and measurement and recognition
requirements of IFRS and the Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by Financial Reporting Standards Council
containing the information required by IAS 34 Interim Financial Reporting, the JSE Limited Listing
Requirements and the Companies Act, 71 of 2008 as amended.
The accounting policies are in terms of International Financial Reporting Standards and, together
with the methods of computation are consistent with those of the Annual Financial Statements for
the year ended 30 June 2013 as issued on 4 October 2013.
These abridged consolidated group financial statements has been extracted from the audited annual
financial statements upon which Mazars Inc. have issued an unqualified report, but is not itself
audited.
The directors take full responsibility for the preparation of the abridged financial statements and
confirm that the financial information has been correctly extracted from the underlying annual
financial statements. The auditor’s report does not necessarily cover all of the information
contained in this financial report. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor’s work they should obtain a copy of that report together
with the accompanying annual financial report from the registered office of the company.
The financial statements were prepared internally by Shane Leas CA (SA), and will be published on
Friday 4th October 2013.
The preparation of condensed consolidated interim financial statements requires the use of
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the condensed consolidated interim financial
statements and the reported amounts of revenue and expenses during the reporting periods.
Although these estimates are based on management’s best knowledge of current events and actions
that the group may undertake in the future, actual results may differ from those estimates.
Review for the reporting period
SELCo is proud to announce that it has only requested a 3.25% tariff increase for the 2013/2014
financial period, in contrast to NamPowers’ 13% tariff increase. Although this will impact on the
bottom line, economic activity may be boosted in the long term on the back of more affordable
tariffs. The board trusts that Southern Namibia would welcome this slight increase in the light of the
economy as a whole. SELCo’s cost control measures, effectively increases SELCo’s ability to maintain
a stable cash flow and minimised bad debts.
• Revenue increased with 24.91% to R77.171m;
• Operational Expenditure increased by 9.37% from R25,286m (2012) to R27,656m, which was
incurred as a result of the fulfilment of the mandate, i.e. the upgrade of infrastructure to
maintain stable and sustainable quality of supply;
• The previous year’s loss was realised into profit of R2.621m in the current year, the main
attribute to this profit is the fair value adjustment that was not present in the current year,
compared to the prior year’s fair value adjustment of (R6.250m). Further the gross margin %
remained constant at 39% from prior year, with the operational expenses merely increasing
with 9.37% from prior year;
• Employee Costs decreased by 2.90% due to the resignation of a senior manager who was not
replaced;
• Due to strict credit control, bad debts decreased by 90.62% from R729,485 (2012) to
R68,456 (2013); and
• Royalties paid back to the local Council’s from tariffs amounted to R5.880m for current
period, R4.748m (2012).
Restated comparable figures
The prior year comparable figures were restated in the current year because of the following factors:
• Due to mathematical errors identified in the prior year Group and Company’s statement of
cash flows.
• Deferred tax asset not disclosed separately from the deferred tax liability.
• Loans to group companies disclosed as short-term when the terms and conditions of the
loans make them long-term in nature.
Outlook
SELCo’s business in Namibia demonstrates a profitable and sustainable business model in the
electricity distribution industry which customer base size and volumes have to be increased to
ensure growth. Management continues vigorously to explore other opportunities in its business
model by expanding its field of the electricity distribution business in Southern Namibia, as well as
considering suitable acquisitions.
Directorate
Mr Brian Hlongwa resigned from the Board with effect 19 February 2013. Mr Eckhard Cloete has
been appointed as Independent non-executive Diretor, Chairman with effect from 19 February 2013,
whilst Mrs Pinky Mopedi has been appointed as Independent Non-Executive Director and member
of the Audit Committee with effect from 8 March 2013
The Board wishes to thank Brian Hlongwa for his valuable contribution over many years.
Segmental Analysis
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 currently 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.
Subsequent Events
The directors are not aware of any matter or circumstance arising since the end of the financial year
that has a material impact on the financial statements.
No dividend has been declared for the year ended 30 June 2013
Earnings and headline earnings per share:
Audited Audited
12 months 12 months
30-Jun-13 30-Jun-12
Cents Cents
Earnings and diluted earnings per share 4.77 (12.91)
Headline and diluted headline earnings 4.77 (12.91)
per share
Basic attributable earnings per share are calculated by dividing the profit or loss attributable to the
ordinary equity holders of the parent by the weighted average number of ordinary shares in issue
during the period of 54,948,173 (2012: 54,948,173).
Diluted earnings per share are equal to basic earnings per share because there are no dilutive
potential shares in issue.
The calculation of earnings and diluted earnings per ordinary share is based on a profit for the group
of R2,621,000 [2012: (R7,094,000)] on weighted average ordinary shares of 54,948,173 (2011:
54,948,173) for the period. There are no reconciling items to headline earnings.
Notice of Annual General Meeting
Notice is hereby given to shareholders that the annual general meeting ("AGM") of Southern
Electricity Company Limited ("the company") for the year ended 30 June 2013 will be held at 99
Fascia Road, Silvertondale, Pretoria at 11h00 on 21 November 2013, for the following purposes: to
(i) deal with such business as may lawfully be dealt with at the meeting; and (ii) consider and, if
deemed fit, pass, with or without modification, the ordinary and special resolutions set out
hereunder in the manner required by the Companies Act 71 of 2008 (as amended) ("the Act"), as
read with the listings requirements of the JSE Limited ("JSE Listings Requirements") and other stock
exchanges on which the company's ordinary shares are listed.
RECORD DATES, PROXIES AND VOTING
In terms of section 59(1)(a) and (b) of the Act, the Board of the company has set the record date for
the purpose of determining which shareholders are entitled to:
• receive notice of the AGM (being the date on which a shareholder must be registered in the
company's securities register in order to receive notice of the AGM) as Friday, 27 September
2013;
• participate and last date to trade in order to be eligible to vote at AGM as Friday, 8 November
2013; and
• participate in and vote at the AGM (being the date on which a shareholder must be registered in
the company's securities register in order to participate in and vote at the AGM) as Friday, 15
November 2013.
Kindly note that in terms of section 63(1) of the Act, meeting participants (including proxies) will be
required to provide reasonably satisfactory identification before being entitled to participate in or
vote at the AGM. Forms of identification that will be accepted include original and valid identity
documents, driver's licences and passports.
The annual report will be posted on 4 October 2013.
By order of the board
04/10/2013
DIRECTORS: EE Cloete* (Chairman), PM Bester (CEO), I Bosch, S Goliath*#, WB Mahlangu *, P
Mopedi * *Non Executive #Namibian
COMPANY SECRETARY AND REGISTERED OFFICE: RMMS Consulting (Pty) Ltd, 99 Fascia Street,
Silvertondale, 0184
TRANSFER SECRETARIES: Link Market Services South Africa (Pty) Limited, PO Box 4844,
Johannesburg, 2000
SPONSOR: Grindrod Bank Limited, PO Box 78011, Sandton, 2146
AUDITORS: Mazars Inc.
Date: 04/10/2013 02:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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