… PAYS E4.2M DIVIDEND TO GOVT

MBABANE - During the year under review, a dividend amounting to E4.2 million was declared and paid to the shareholder in respect of profits for the financial year ended March 31, 2023.

The company’s net asset (shareholder’s equity) value stood at E4 billion (2023: E3.9 billion); an overall increase of 3 per cent from the previous year.  The increase in shareholder’s equity is a result of the retained profits plus other comprehensive income recognised during the year.  The company closed the year with a positive cash balance of E267 million (2023: E210 million).  This E57 million net increase in cash was mainly due to the drawdown from the World Bank loan facility, matured financial investments and dividends received from Motraco during the year.Meanwhile, the current ratio and acid test ratio stood at 1.9 times and 1.7 times, respectively, at the end of the year. At the close of last year, these ratios were at 2.6 and 2.3, respectively.

Cost

The utility reported that cost of sales for the year amounted to E2.525 billion; a 16 per cent increase from the E2.178 billion incurred in the previous year. The high cost of imported electricity was the main contributor to the increased cost of sales.  Power purchases and wheeling charges accounted for 70 per cent of cost of sales. The aggregate increase in electricity purchases from all sources during the year was 20 per cent, while power generation, transmission and distribution costs increased by 7 per cent.

The company continued to mitigate the cost of sales expenditure through smart trading in the Southern Africa Power Pool’s (SAPP) DayAhead Market (DAM).  However, the power trading in DAM during the year was very subdued, due to severe supply constraints in the market, which emanated from severe drought conditions in some parts of the SADC region. Nonetheless, the good rains received during the year enabled the ramping up of internal generation, thereby offsetting the cost of expensive imported power, especially during the peak demand periods.  

Total operating expenditure shows a 3 per cent decrease to E364 million (2023: E374 million), mainly due to a reversal of provisions raised in earlier years. In addition, to tighter expenditure control, the decrease in administrative expenses was attributable to the change in the rating of electricity for VAT purposes introduced in the past year.  This change allows the EEC to reclaim a large portion of its input VAT which previously would be absorbed as a cost to the company.  

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