Wrap Text
Notice of availability of interim financial statements
Eskom Holdings SOC Limited
(Registration No. 2002/015527/06)
JSE alpha code: BIESKM
(“Eskom” or the “group”)
NOTICE OF AVAILABILITY OF INTERIM FINANCIAL STATEMENTS
Eskom hereby notifies its debt investors that it has publicly released its reviewed interim financial
statements for the six months ended 30 September 2019 (“Interim Financial Statements”).
The Interim Financial Statements, together with the review report, are available on the Eskom
website at https://www.eskom.co.za/IR2019/Interim/Pages/default.aspx and for inspection at
Eskom’s registered office at 1 Maxwell Drive, Megawatt Park, Sunninghill, Johannesburg, 2000.
The interim financial statements for the period ended 30 September 2018 omitted to account for
the impact of adopting IFRS15 on certain revenue contract in Eskom’s subsidiaries. This was
identified and corrected in the 2019 annual financial statements. Debt investors are referred to
note 17 in the Interim Financial Statements which sets out the impact of this error.
In addition, Eskom’s external auditors raised certain reportable irregularities in prior periods.
Progress was made in clearing these reportable irregularities, with some staying open until
finalisation of court cases or conclusion of investigations by external parties. Debt investors are
referred to note 18 in the Interim Financial Statements which sets out the status of the reportable
irregularities in prior periods.
The auditor’s review report further contains a material uncertainty that may cast significant doubt
on the group’s ability to continue as a going concern as a result of the group’s current liabilities
exceeding its current assets by R13 059 million. Full details are set out in note 2.1 of the Interim
Financial Statements for the six months ended 30 September 2019.
Eskom’s results indicate some positive financial performance for the first half of the year,
although financial and operational challenges remain
• Net profit after tax of R1.3 billion compared to R0.6 billion in the same period last year
• EBITDA increased to R30.6 billion in comparison to R28.3 billion for the same period last
year
• No loadshedding during winter 2019
• Increased international sales volumes
• New build projects continue to deliver with Medupi Units 2 and 3 (each 794 MW) achieving
commercial operation
• 45 km of high-voltage transmission lines commissioned
• Improvement in availability of new build units as a result of fixing defects
• Generation plant and environmental performance remain a challenge with availability
declining to 70% compared to 75% for the same period last year
• Municipal arrear debt (including interest) has increased by R5.2 billion since March 2019
to R25.1 billion
Eskom is encouraged by the achievement of an improved net profit and increased EBIDTA in this
period. However, despite delivering some positive financial performance for the six months ending
on 30 September 2019, financial and operational performance remains a challenge. In addition,
some financial ratios are expected to deteriorate further before improving.
The group has achieved an EBITDA of R30.6 billion compared to R28.3 billion over the same
period last year and a net profit of R1.3 billion compared to R0.6 billion in the same period last
year. Debt has increased to R454 billion. A total of 61% of funding for the 2020 financial year has
been secured by September 2019. Savings of R5.6 billion achieved could be negatively impacted
to year end by spend on diesel to stabilise the grid.
The group’s total revenue has increased by 10%, primarily as a result of NERSA’s overall tariff
determination of 13.87% for the year. Local sales volumes declined by 1.29% compared to
September 2018, mainly in industrial and distributor categories. International sales have shown an
increase in the past six months. The municipal arrear debt continued to increase to R25.1 billion,
an average growth of over R850 million per month.
Eskom’s Interim Executive Chairman and Acting Group Chief Executive, Jabu Mabuza during his
address today said that Eskom’s turnaround journey to achieve financial and operational
sustainability is aligned to the Department of Public Enterprises’ special paper (Roadmap for
Eskom in a Reformed Electricity Supply Industry). “Eskom’s turnaround journey that seeks to
stabilise, separate and grow the company in order to achieve long-term sustainability will take
some time to achieve its objectives.
“We are encouraged by positive steps taken in stabilising governance and rooting out financial
mismanagement, malfeasance and maladministration. This includes recovery of monies lost
during the period of state capture. Lifestyle audits of executive senior managers have been
completed. Eskom is working with all law enforcement agencies conducting major investigations
into matters of fraud and corruption that affect the organisation”, added Mabuza.
Group Chief Financial Officer, Calib Cassim gave a full report on the financials highlighting that
Eskom’s financial performance remains under pressure. Cassim indicated that cost savings alone
cannot resolve the current financial challenges. Migration towards a cost-reflective tariff remains
imperative. “We have lodged applications with the High Court to review the National Energy
Regulator of South Africa (NERSA’s) recent revenue determinations.
In terms of municipal debt, arrear balances including interest have increased by R5.2 billion since
March 2019 to a total of R25.1 billion with a payment level of 44% for the top 20 defaulting
municipalities. Payment levels at Soweto remain low at 16%.
Cassim indicated that although positive progress has been made with the implementation of the
Generation nine-point recovery programme, plant availability together with environmental
performance remain key challenges. “The recovery programme helped us to improve operational
performance and ensured no loadshedding during winter. Unfortunately, we had to implement
loadshedding for five days in October and November to stabilise the system. In addition, we have
seen some improvement in the availability of new build units as defects were fixed. Medupi Power
Station’s Unit 3 achieved commercial operation on 5 July 2019 adding 794 MW to the national
grid, and 45 km of high-voltage transmission lines were commissioned.”
“The average partial load losses continue to exceed the target of 3 500 MW, with unplanned
maintenance increasing to 19.58%. This affects the reliability of our system and requires usage of
diesel (OCGTs). Environmental performance and boiler tube leaks remain a challenge in some of
our power stations, necessitating the shutting down of these units. In the last six months, both
generation and transmission network performance has deteriorated, with generation plant
availability declining to 69.92% from 75.01% for the same period last year. Generation continues
to focus on operational and environmental recovery. Of concern is the high utilisation of the coal
fleet”, says Cassim.
“In order to reduce irregular expenditure, a dedicated function to focus on addressing PFMA
violations has been established. Reporting procedures have been amended to comply with recent
National Treasury instructions, and it is encouraging to see that the amount of new incidents of
irregular expenses has reduced to below R1 billion for the period” says Cassim.
Mabuza elaborated on the projections for year-end: “As we know that financial performance is
seasonal, projections are that we will declare a loss for the full year’s results, similar to that of last
year. Contributing factors include revenue variance between the winter and summer periods with
higher demand in the winter and higher winter prices, higher primary energy costs in summer due
to higher production from renewable IPPs in summer, and increased price of coal, employee
benefits from salary settlements and escalating municipal arrear debt. Our debt servicing
obligations largely fall within the second half of the year thus putting more pressure on liquidity.
We continue to work with our shareholder to stabilise Eskom’s finances. Projections indicate that
we are unable to service debt and fund a portion of capex through cash from operations. We
remain reliant on Government support of R49 billion for the 2020 financial year and R56 billion for
2021 to ensure Eskom’s status as a going concern.”
Welcoming the appointment of Mr André de Ruyter as the Group Chief Executive of Eskom,
Mabuza said, “On behalf of the Eskom Board, I wish to convey our congratulations to Mr André de
Ruyter on his appointment as the Group Chief Executive. I wish him well in his new role as I pass
the baton on to him. We are fortunate to have the expertise of an experienced leader such as
André to steer Eskom towards achieving our vision for the future. Leadership stability remains a
critical factor in Eskom’s turnaround.”
Johannesburg
29 November 2019
Debt Sponsor
Nedbank Corporate and Investment Banking
Date: 29-11-2019 08:32:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
