Eskom results – R2.3 billion loss

Eskom has just released their annual results and – it is not good.

Okay the bottom line is that they have a R2.3 billion loss, and R19 billion in irregular spending. Kind of puts Gordhan’s reign of terror into perspective doesn’t it?

Particularly when you consider that Eskom cited leadership as part of the reason why its net cash from operations declined from R45.8bn to R37.6bn.

It also isn’t too happy about the R4.2bn owed to it by municipalities.

A total of 52 active payment agreements are in place with the defaulting municipalities, including 12 of the top 20 defaulters. However, only 28 of these are being fully honoured, with only four of the top 20 defaulters honouring their agreements fully.

That is not good. Those deals have to be honoured to really mean anything.

The earnings before interest, tax, depreciation and amortisation (EBITDA) improved compared to the previous year, but the group reported a net loss after tax and most of the financial ratios deteriorated.

The improvement in EBITDA is mainly as a result of a reduction in employee benefit cost due to, interalia, no provision made for performance bonuses in the current year as well as a reduction of 22.9% in other expenses, mostly relating to cost savings initiatives and a reduction in the power station decommissioning provision.

You know the recent strike action by Eskom’s workers? This is part of it, they’re feeling the squeeze as Eskom tries to get itself into the black. Don’t expect an easy resolution to staff disputes over the next few years.

Particulate emissions of 0.27kg/MWhSO reflect an improvement on the 2017 performance of 0.30kg/MWhSO because there was increased opportunity for outages and lower load factors which reduced the burden on the emission abatement equipment.

Well, that’s one way to look at it, hooray for power cuts, they’re saving the environment!

My take

Eskom is pretty central to our economy. Without power, what we can do is severely limited.

The fact that the report stresses, “The going-concern status of the group remains a challenge,” to me is scary, though I can’t imagine government allowing Eskom to fold. I suspect it would get massive bailouts rather than have that happen.

Hopefully the new board turns things around, which I hope they do, but eish, it is a mess.


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