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Audited Consolidated Results for the year ended 30 June 2012
Southern Electricity Company Limited
(Incorporated In the Republic of South Africa)
(Registration number 1997/006894/06)
Share code: SLO ISIN: ZAE000041919
(“SELCo” or “the group” or “the company”)
AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2012
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012
GROUP COMPANY
2012 2011 2012 2011
R R R R
ASSETS
Non-current assets 17 184 968 25 449 035 1 444 526 1 444 526
Investment property -Property, plant and equipment 6 750 000 13 000 000 - -
Intangible assets
Investment in subsidiaries 5 718 358 6 600 433 - -
4 716 610 5 848 602 - -
- - 1 444 526 1 444 526
Current assets 16 748 326 15 598 555 2 487 532 2 067 035
Inventories 3 664 914 2 681 857 - -
Loans to group companies 8 794 2 703 1 415 134 1 318 324
Current tax receivable 299 848 1 870 612 299 848 51 351
Trade and other receivables 9 793 863 8 225 128 738 271 275 856
Cash and cash equivalents 2 980 907 2 818 255 34 279 421 504
Total assets 33 933 294 41 047 590 3 932 058 3 511 561
EQUITY AND LIABILITIES
Equity 17 242 325 24 335 946 761 502 542 016
Share capital 10 162 796 10 162 796 10 162 10 162 796
796
Reserves 16 115 16 115 16 115 16 115
Retained earnings/ (accumulated loss) 7 063 414 14 156 035 (9 417 409) (9 636 895)
Liabilities
Non-current liabilities 7 717 753 8 939 923 - -
Other financial liabilities 2 469 426 2 655 086 - -
Finance lease obligation 559 549 354 139 - -
Deferred tax 4 688 778 5 930 698 - -
Current liabilities 8 973 216 7 771 721 3 170 556 2 969 545
Loans from group companies - - 210 052 -
Other financial liabilities 3 116 627 3 176 808 2 952 991 2 965 761
Current tax payable 7 426 - - -
Finance lease obligation 294 789 176 921 - -
Trade and other payables 5 149 118 4 319 011 7 513 3 784
Provisions 405 256 98 981 - -
Total liabilities 16 690 969 16 711 644 3 170 556 2 969 545
Total equity and liabilities 33 933 294 41 047 590 3 932 058 3 511 561
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012
GROUP COMPANY
2012 2011 2012 2011
R R R R
Revenue 61 778 880 54 109 722 1 800 000 1 800 000
Cost of sales (37 465 401) (31 434 525) - -
Gross profit 24 313 479 22 675 197 1 800 000 1 800 000
Other income 31 353 9 027 15 282 -
Operating expenses (25 286 394) (21 747 771) (1 680952) (3 056 083)
Operating (loss) profit (941 562) 936 453 134 330 (1 256 083)
Investment revenue 26 913 32 325 85 202 55 502
Fair value adjustments (6 250 000) - - -
Finance costs (848 084) (286 135) (46) -
(Loss) profit before taxation (8 012 733) 682 643 219 486 (1 200 581)
Taxation 919 112 (732 452) - 2 366
(Loss) profit for the year (7 093 621) (49 809) 219 486 (1 198 215)
Other comprehensive income - - - -
Total comprehensive (loss) income for the year (7 093 621) (49 809) 219 486 (1 198 215)
Earnings per share
Per share information
Basic loss per share (c) (12.91) (0.09) - -
Diluted loss per share (c) (12.91) (0.09) - -
Headline loss per share (c) (2.95) (0.09)
Diluted headline loss per share (c) (2.95) (0.09)
RECONCILIATION OF HEADLINE EARNINGS
Audited year Audited year to 30
to 30 June June 2011
2012
Loss for the year attributable to ordinary shareholders (7 093 621) (49 809)
Headline earnings adjustment net of taxation
- Profit on disposal of property, plant and 96 203 -
Equipment
- Investment property - Fair value adjustment 6 250 000 -
- Tax effect thereon (875 000) -
Headline loss (1 622 418) (49 809)
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) (12.91) (0.09)
Diluted earnings per share (cents) (12.91) (0.09)
Headline earnings per share (cents) (2.95) (0.09)
Diluted headline earnings per share (cents) (2.95) (0.09)
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012
Share Share Total Share
capital Premium Capital
R R R
GROUP
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 reported 2,747,408 7,415,388 10 162 796
Adjustments Prior period errors
- -
Balance as at 01 July 2010 as restated 2,747,408 7,415,388 10 162 796
Changes in equity
Total comprehensive income for the year - - -
Total changes - - -
Balance as at 01 July 2011 as restated 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 2012 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 - - -
Balance as at 01 July 2010 as restated 2,747,408 7,415,388 10 162 796
Changes in equity
Total comprehensive income for the year - - -
Total comprehensive income for the year - - -
Balance as at 01 July 2011 as restated 2,747,408 7,415,388 10 162 796
Changes in equity
Total comprehensive income for the year - - -
Total comprehensive income for the year - - -
Balance as at 30 June 2012 2,747,408 7,415,388 10 162 796
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012 (CONTINUE)
Non - Accumulated Total
distributable Loss Equity
Reserve
GROUP
Balance as at 01 July 2009 16 115 12 111 720 22 290
631
Changes in equity
Total comprehensive income for year - 2 095 127 2 095 127
Total Changes - 2 095 127 2 095 127
Opening balance as previously reported 16 115 15 106 155 25 285 066
Adjustments
Prior Period errors - (899 308) (899 308)
Balance as at 01 July 2010 as restated 16 115 14 157 038 24 385 758
Changes in equity (49 809) (49 809)
Total comprehensive income for year
Total changes - (49 809) (49 809)
Balance as at 01 July 2011 16 115 14 157 038 24 335 949
Changes in equity - (7 093 621) (7 093 621)
Total comprehensive income for year
Total changes - (7 093 621) (7 093 621)
Balance as at 30 June 2012 16 115 7 063 414 17 242 325
COMPANY
Balance as at 01 July 2009 16 115 (8 572337) 1 606 574
Changes in equity - 133 658 133 658
Total comprehensive income for the year
Total changes - 133 658 133 658
Balance at 01 July 2010 16 115 (8 438 679 1 740 232
Changes in equity - (1 198 215) (1 198 215)
Total comprehensive income for the year
Total changes - (1 198 215) (1 198 215)
Balance as at 1 July 2011 16 115 (9 636 894) 542 017
Changes in equity - 219 486 219 486
Total comprehensive income for the year
Total changes - 219 486 219 486
Balance as at 30 June 2012 16 115 (9 417 409) 761 502
CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
GROUP COMPANY
2012 2011 2012 2011
R R R R
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash generated from (used 263 424 190 843 (324 356) (1 535 683)
in) operations
Interest income 26 913 32 325 85 202 55 502
Finance costs (848 084) (286 135) (46) -
Tax received (paid) 1 258 605 (442 000) (248 497) -
Net cash from operating
activities 700 858 (504 967) (487 697) (1 480 181)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property, plant
and equipment (908 552)
- - - -
Sale of property, plant and 299 000 - - - -
equipment
CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012 (CONTINUE)
GROUP COMPANY
2012 2011 2012 2011
R R R R
Net cash from investing (609 552) - - -
activities
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from other
financial liabilities - 784 812 - 2 004 427
Repayment of other (245 841) (500 162) (12 770) (500 162)
financial liabilities
Nett movement on finance
leases 323 278 (293 238) - -
Loans advanced to group
companies (6 091) (2 703) (96 810) (527 303)
Proceeds from loans from - - 210 052 -
group companies
Net cash from financing
activities 71 346 (11 291) 100 472 976 962
Total cash movement for the
year 162 656 (516 258) (387 225) (503 219)
Cash at the beginning of
the year 2 818 255 3 334 512 421 504 924 723
Total cash at the end of
the year 2 980 907 34 279 421 504
Overview
At the end of our 2012 financial year, we wish to present a report on the performance of
SELCo as well as the progress that was made during the year. Even though the wave of the
global decline has continued, SELCo with its local partners in Namibia have intensified
efforts to expand its business operations in Southern and Central Namibia, retaining good
cash flow and minimal bad debts in the process.
* Revenue increased by 14.17% to R61.778m
* Expenditure increased by 16.27% to R25.28m, catering for the marketing and relations
drive embarked upon to actively increase SELCo’s footprint in Southern and Central
Namibia.
* Although SELCo registered a loss of R7.098m, this was due to i) a fair value
adjustment on an investment property of R6.25m, AND ii) the effect of SELCo’s tariffs
which were not increased for a period of 4 months whilst the bulk supply tariff had
been amended upwards. Royalties paid back to the local Council’s from tariffs
amounted to R4.748m.
It was unfortunate that a number of exceptional items for the period detracted from an
otherwise solid performance by SELCo. This sensitivity to exceptional items relates to
SELCo’s small customer base and not to the business model. SELCo’s Board is committed to the
expansion of SELCo’s business through organic growth and corporate activity where same is
sustainable and to the benefit of the Company.
In short, the Directors are acutely aware that SELCo has to grow materially in the next
financial year to justify the overheads and effectively deal with the exceptional items,
which unfortunately remain a fact of business.
Empowerment Grouping
As stated in the previous financial year, SELCo Namibia’s operations are being conducted with
No South African expatriates being present in Namibia, confirming the successful and
sustainable business model where customer loyalty can be secured through delivering
professional services in a respectful and personalised manner.
SELCo is gaining political stature in Namibia. To further strengthen its image, become a
strong local brand and actively market the business model, SELCo has concluded an agreement
with GDCE - a local Namibian based BEE Consultancy Company. Through the initiatives of the
latter, SELCo was invited to submit a bid for the electricity distribution services in the
Omaheke Region in the eastern part of the country. SELCo is one of two companies shortlisted.
The Agreement that was reached with the Nama Traditional Authority during the 2011 year, was
finalised, ratified and signed by the shareholders during the 2012 year. Public Relations
Program
Numerous meetings and information sessions have been held with the communities, Regional
Councils and municipalities in the Southern and Central part of Namibia, together with
relevant Government Departments to raise awareness of SELCo within the formal Government
sector. SELCo also sponsored various sport activities such as the Fish River Marathon at
which the staff manned one of the water points. This program will continue throughout the
next financial year. In addition, SELCo provides food to 1,000 children on a daily basis,
Monday through Friday via the public school structures in all three towns.
Effective Network Management
SELCo has continued through its effective management processes to minimise its overall
network losses to 9.36%. The net effect thereof is that SELCo’s new tariff increases for the
next financial year 2012/2013 are lower than that of the energy provider Nam-Power. SELCo is
therefore cushioning its customers against tariff increases.
In addition to the ongoing kWh loss management program, SELCo continues to roll out remote
metering systems to its entire customer base to enable time of use metering and billing. The
deployment of this technology has reduced SELCo’s potential liabilities from the current
disparity between the electricity buying tariffs methods and the electricity selling tariffs
methods. With Time of Use tariffs [TOU], electricity users have a choice and can therefore
actively manage electricity costs.
Review of the Business
? Profitability of SELCo Namibia has been negatively affected due to the late
promulgation of the 2011/2012 tariffs. The logistical challenges have been resolved
between the Municipalities and the Regulator, with the tariff increases for 2012/2013
being implemented timeously
? The fair value adjustment of an investment property downwards to reflect the economic
climate has had a negative impact on SELCo’s earnings.
? Historical Non trading, trade and other receivables, have been written off to ensure
the integrity of SELCo’s debtor book. At 30 June 2012 only R51, 506 (2011: R286, 522)
were more than 3 months in arrears.
? As per the 2011 report, SELCo is still in the process of actively rolling out remote
metering to its entire customer base as planned. The further reduction in losses is
testament to the success of the programme, currently standing at a spectacular 5.98%.
Outlook
SELCo’s core business is performing well. The efforts of our competent staff and dedicated
management team are now focused on growing the SELCo customer base which is essential to
deliver a return to shareholders.
Any reference to future financial performance included in this announcement has not been
reviewed or reported on by SELCO’s external auditors.
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
These results are presented in terms of IAS34 and the JSE Limited Listings Requirements. The
annual financial statements have been prepared in accordance with the International
Financial Reporting Standards, the AC500 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 report on the June 2012 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. 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.
Notice of Annual General Meeting.
Notice is hereby given that the Annual General Meeting of shareholders will be held at 11:00 on
Thursday 22 November 2012 at the company's registered office located at 99 Fascia Road,
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 shortly.
By order of the board
28 September 2012
DIRECTORS: B Hlongwa* (Chairman), P M Bester (CEO), I Bosch, E E Cloete*, W B Mahlangu*, S
Goliath* (* 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: 28/09/2012 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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