Embattled power utility Eskom has published its interim results for the six months ending 30 September 2023.
The group saw a jump in revenue to R144.84 billion over the period (from R135.4 billion the year prior). However, earnings before interest, taxation, depreciation and amortisation (Ebitda) was recorded lower at R37.96 billion (from R44.56 billion the year prior).
Because of higher depreciation and amortisation expenses, as well as greater finance costs, the group reported significantly lower profits for the period, at R3.84 billion, down from R10.6 billion the year before – a reduction of 64%.
In the segmental review, it’s clear that Eskom’s generation business is the major drag, with the segment extending losses from 2021 of R2.2 billion to a massive loss of R5.2 billion.
The transmission and distribution businesses continue to perform well, with profits of R7 billion each.
The group’s debt liabilities are sitting at R423.64 billion.
The Eskom board said that it has assessed and noted various pressures on the company and its ability to continue as a going concern for the foreseeable future.
Most notably, it is cognisant of the group’s projected net loss before tax for 2023, which is currently estimated at R32.4 billion.
In assessing Eskom as a going concern, the board said it:
- Reviewed the performance of the group for the period ended 30 September 2022, including the net profit after tax of R3.84 billion and the net current liabilities of R30.13 billion.
- Noted the deterioration in some of the group’s financial indicators compared to 31 March 2022.
- Noted the improvement in the cash and cash equivalents balance of R16.7 billion from R15.9 billion at 31 March 2022 which were applied towards settling Eskom’s debt obligations.
- Considered the impact of the cash flow forecast for the 18 months ending 31 March 2024 and the projected net loss before tax for 2023, estimated at R32.43 billion.
The board said that Eskom is in a debt-reliant liquidity situation that has resulted from low tariffs and stagnant and contracting sales volumes. It is also being battered by above-inflation cost increases, constrained generating plant performance and its capital programme to increase and replace generating and transmitting capacity.
However, the company has also received continue equity support from the national government, with R21.9 billion committed and received in January 2023.
“This support assisted Eskom in maintaining a positive liquidity position during the period,” the board said.
The group is also being assisted through the debt-takeover from National Treasury, which is currently going through the legislative process, it said.
This will provide support of R78 billion in 2024, R66 billion in 2025 and R40 billion in 2026.
The board said that Eskom needs to secure R60 billion in funding for 2023, but 77% of this had already been secured by the end of February. The balance will be raised through private placement, it said.
“The revenue determination decision by Nersa on 12 January 2023, as well as the debt relief measures announced in February 2023, will alleviate pressure on Eskom’s operating cash flow, thereby enabling expenditure on capital to restore the energy availability of the fleet of power stations and to strengthen and expand the transmission and distribution networks,” the board said.
The group said that it is dealing with many challenges that resulted from mismanagement and corruption that could have an influence on stakeholder sentiment.
“Progress has been made in cleaning-up irregularities, improving processes and strengthening controls, but it is taking time to identify all issues and take appropriate corrective action and implement consequence management,” it said.
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