South African electricity utility Eskom on Tuesday reported net profit after tax of R5,2-billion for the 15 months ended March 2005, compared with R3,4-billion for the 12 months ended December 2003. Eskom’s financial year-end has changed from December to March.
Revenue increased to R43-billion from R33-billion before and a dividend of R1,643-billion was declared from R569-million in 2003.
Eskom attributed the strong performance to increased demand for electricity and improved efficiencies. Costs were also well contained, it said.
During the period, Eskom continued its restructuring process to enable it to refocus on its core business of generating, transporting, trading and retailing electricity and ensuring that it has the required capability to build new capacity.
The balance sheet has strengthened further and at March 31 2005 the debt equity, including long term provisions, improved further to a new record low of 0,18 compared with 0,30 at December 31 2003.
“This is considered appropriate in light of the huge capital expansion programme that will be embarked on in the very near future,” Eskom added.
Cashflow from operating activities increased to R14,3-billion from R12,7-billion before, and a net increase in cash and cash equivalents of R11,2-billion was achieved, after a net decrease of R1,8-billion in 2003.
In terms of the operational sustainability index, which reflects overall technical performance, while balancing the low-cost production of electricity with sustainable long-term reliability, Eskom scored 90.4% in 2005 against a minimum threshold of 80%.
Commenting on the results, Eskom chief executive Thulani Gcabashe said: “Growth in demand for electricity reached all time high levels in the period under review. Our commitment to driving efficiencies and productivity contributed significantly to these results.
“Eskom has entered a new era of growth and to this end we have restructured the business to focus on our core activity which will equip us to meet the unprecedented growth in demand for electricity.”
Eskom will shortly be embarking on a build programme that will require around R93-billion of capital expenditure over the next five years.
Sales demand has been faster than expected and requires an acceleration of plans to increase generating capacity.
The programme also involves the recommissioning of three previously mothballed stations and will contribute 3Â 600 MW of capacity between 2005 and 2011, boosting baseline capacity.
“The expansion programme will provide significant opportunities in terms of career development for prospective and existing employees. The benefits of this programme for South Africa as a country will be immense,” he said.
Looking ahead, Eskom said the sharp increase in demand for electricity is unlikely to be of a similar magnitude going forward, as commodity prices are levelling off and there are no major new projects in the pipeline. However, the underlying growth in demand for electricity is approximately 2,3% and this is expected this to continue going forward.
Eskom’s major challenge over the next five years is to roll-out the R93-billion capital expenditure programme.
“The challenge for the year ahead will be to continue focusing on driving efficiencies and containing costs, while at the same time preparing for the capital expansion necessary to meet the growth in demand. We are committed to providing our customers with competitively priced electricity and aligning our strategy with the objectives of government in supporting the development of South Africa,” Gcabashe added.-I-Net Bridge