1 ESKOM ANNUAL RESULTS 2003 & CORPORATE OBJECTIVES 2004 - A PRESENTATION TO THE PORTFOLIO COMMITTEE...
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Transcript of 1 ESKOM ANNUAL RESULTS 2003 & CORPORATE OBJECTIVES 2004 - A PRESENTATION TO THE PORTFOLIO COMMITTEE...
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ESKOM ESKOM ANNUAL RESULTS 2003 ANNUAL RESULTS 2003
&&CORPORATE OBJECTIVES 2004 -CORPORATE OBJECTIVES 2004 -
A PRESENTATION TO THE PORTFOLIO A PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC COMMITTEE ON PUBLIC
ENTERPRISESENTERPRISESTHULANI S. GCABASHETHULANI S. GCABASHE
CHIEF EXECUTIVECHIEF EXECUTIVE27 OCTOBER 200427 OCTOBER 2004
2
ESKOM GROUP
Eskom Group
Eskom Holdings Limited
Subsidiaries Regulated Business
Eskom Enterprises (Pty) Ltd
Eskom Finance Company (Pty) Ltd
Escap Limited
Gallium Insurance Company Limited
Generation Division
Transmission Division
Distribution Division
Key Sales and CustomerService Division
Four corporate divisions
3
ESKOM GOVERNANCE• Continued emphasis on good
corporate governance and compliance with King II
• Promoting corporate values:
–Excellence
– Integrity
– Innovation
–Customer satisfaction
4
SOCIO-ECONOMIC
FINACIAL
PEOPLE,SAFETY, HEALTH & ENVIRONMENT
TECHNICAL• Electrification
• Black economic empowerment
• Plant availability
• Plant reliability
• System minutes
• People measures• HIV / Aids• Eskom fatalities• Specific water consumption• Relative particulate emissions
• Profit before tax
• Return on assets
• Debt:equity
SUSTAINABLE DEVELOPMENT
CUSTOMERCUSTOMERCUSTOMERCUSTOMER
• World industrial electricity prices
• Sales volumes
5
ESKOESKOMM
Holdings LtdHoldings Ltd
SOCIO -ECONOMIC
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IN 2003 ESKOM HAS DELIVERED• Electrified an additional 175
396 homes (2002: 205 371 homes)
• Eskom group procured goods and services to the value of R7.3bn from black economic empowered enterprises (2002:
R5.5bn)
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ELECTRIFICATION CUMULATIVE NUMBER OF HOMES ELECTRIFIED
0
300,000
600,000
900,000
1,200,000
1,500,000
1,800,000
2,100,000
2,400,000
2,700,000
3,000,000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
175 396
Electrified our 3 millionth customer in Feb 2004
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BLACK ECONOMIC EMPOWERMENT
R’m
•Spent R20.6bn since 1998
•Spent R714m with black women owned enterprises since 20020
1000
2000
3000
4000
5000
6000
7000
8000
1998 1999 2000 2001 2002 2003
Coal
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ESKOMESKOM Holdings LtdHoldings Ltd
PEOPLE, SAFETY, HEALTH & ENVIRONMENT
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PEOPLE MEASURES
Actual 2003 Actual 2002
• HR Sustainability Index 91.8% 89.8%
• Equity targets
– Racial equity 56.3% 54.6%
– Gender equity 27.8% 24.5%
– Disable persons 1.4% 0.16%
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EMPLOYMENT EQUITY (MANAGERIAL AND SUPERVISORY CATEGORIES)
56.3
0
10
20
30
40
50
60
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
%
8.8
27.8
0
5
10
15
20
25
30
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Racial equity Gender equity
10.4
12
EDUCATION AND TRAINING
• Invested R 505m in the development
and training of employees
• 1 850 bursars supported
– 87% black
– 50% women
– 455 black bursars and trainees completed
training
13
SAFETY
• Reduction in public electrical fatalities from 24 to 20
• Lowest number of work related fatalities in 30 years
• Disabling injury incident rate continues to improve from 0.45 to 0.37
14
MANAGING THE IMPACT OF HIV/AIDS
HIV/AIDS continues to be a focus area
The group contributed R 67m to date
to the development of a vaccine
Continued education and awareness
programmes with special focus on
voluntary confidential counselling and
testing
15
ENVIRONMENTAL PERFORMANCE
•Eskom’s commitment to be ISO 14001 compliant was achieved
•Contraventions reported in terms of the operational sustainability index reduced from 3 to 2
16
RELATIVE PARTICULATE EMISSIONS
•Achieved 5 year
target set in 1998
•Current emissions
0.28 kg/MWh sent
out
0.00
0.10
0.20
0.30
0.40
1998 1999 2000 2001 2002 2003
kg/MWh
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SPECIFIC WATER CONSUMPTION
• 70% wet cooled technology
• Consumed 271 940 Ml of raw water
• Specific water consumption of 1.29l/kWh
• Impacted by the change in the mix of stations 0.0
0.10.20.30.40.50.60.70.80.91.01.11.2
1.31.41.5
1998 1999 2000 2001 2002 2003
l/kWh SO
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ESKOMESKOM Holdings LtdHoldings Ltd
TECHNICAL PERFORMANCE
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SUSTAINABILITY INDEX The operational sustainability index is a composite measure used to ensure the long-term sustainability of technical performance.
Actual 2003
ThresholdActual 2002
Operational 89.6% 80.0% 88.2%
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TECHNICAL PERFORMANCE
85
87
89
91
93
Actual2002
Actual2003
Target2003
Unit Capability Factor (UCF)
0
1
2
3
4
5
6
Actual2002
Actual2003
Target2003
Unplanned Automatic Grid Separations (UAGS)
-- International median
Availa
bili
ty (
%)
Relia
bili
ty
(Nu
mb
er)
21
TECHNICAL PERFORMANCE
2
3
4
5
6
Actual2002
Actual2003
Target2003
Unplanned Capability Loss Factor (UCLF)
2
3
4
5
6
Actual2002
Actual2003
Target2003
System Minutes Lost (SML)Perc
en
tag
e
Min
ute
s (<
1S
ML)
22
KEY SUSTAINABILITY INITIATIVES
• Approved the Eskom sustainability strategy and performance index
• Continued participation in the United Nations Global compact
• Partnerships– Endangered Wildlife Trust– Endangered and Environmental Society of South
Africa (WESSA)
• Key research projects in support of sustainable development
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RESEARCH AND DEVELOPMENT
Invested R 558m in research projectsInvested R 558m in research projects
End use 6% Research management 4%
Future technology 5%
Environmental 9%
Transmission and distribution related 40%Generation related 15%
Business and market technology 9%
Integrated energy systems 12%
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ESKOMESKOM
FINANCIAL PERFORMANCE
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FINANCIAL• Group profit after tax at R3.5bn
(2002: R3.7bn)
• Group financial health continued to improve as measured by debt equity (Improved from 0.46 to 0.30)
• 4.8% electricity sales growth (2002: 3.5% )
• Total productivity was positive to the extent of R613m or 2.5% (2002:1.6%, R382m)
26
FINANCIAL
Impact of prudent accounting
• Impairment due the delay in issuing
the license for the Second National
Operator (R649m)
• Provision for investment in
Telecoms Lesotho (R154m)
27
FINANCIAL
• Group return on total assets
declined from 13.07% to 10.35%
• Eskom Holdings real rate of
return declined from 1.69% to
0.53%
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R’m
0
1000
2000
3000
4000
5000
6000
7000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
GROUP PROFIT BEFORE TAX
Impact of adjustments
29
GROUP INCOME STATEMENTR’m Actual 2003 Actual 2002
Revenue 32,848 29,684 Operating expenditure (25,227) (21,363) Net operating income 7,621 8,321 Net interest expenditure (1,304) (2,775) Profit before exceptional 6,317 5,546 Exceptional items (803) - Profit after interest b/ f fair value 5,514 5,546 Fair value loss - financial instruments (283) (118) Profit before tax 5,231 5,428 Income tax expense (1,859) (1,727) Profit after tax 3,372 3,701 Other 162 6 Net profit for the year after tax 3,534 3,707
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GROUP BALANCE SHEETR'm Actual 2003 Actual 2002
Non-Current Assets 74,694 77% 65,877 80%
Current Assets 21,780 23% 16,605 20%
Total Assets 96,474 82,482
Capital & Reserves 40,683 42% 37,717 46%
Non-Current Liabilities 35,900 37% 31,701 38%
Current Liabilities 19,891 21% 13,064 16%
Total Equity 96,474 82,482
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0
0.3
0.6
0.9
1.2
1.5
1.8
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Ratio
DEBT : EQUITY
0.3
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GROUP CASH FLOW STATEMENTR'm 2003 2002
Cash flows from operations 12,664 11,808
Cash generated by trading operations 13,845 12,911
Interest received 3,345 3,559
Interest paid (3,893) (4,610)
Dividend paid (549) -
Income tax paid (84) (52)
Cash utilised in investing activities (6,980) (5,750)
Cash effects of financing activities (7,459) (3,515) Net (decrease) / increase in cash and cash equivalents (1,775) 2,543
33
ESKOM ESKOM CORPORATE OBJECTIVESCORPORATE OBJECTIVES
2004 2004
34
FINANCIALOBJECTIVES INDICATORS MEASURES TARGET
2004
Improving the management of resourcesLong term financial viability.Business sustainability.Economical, efficient and effective usage of resources.Focus on customer satisfaction.Excellent technical performance.Continued focus on affirmative action and actively promoting women and disability equity.
Net income after interest and before fair value adjustment
Budget (R‘m)
4 212
Net income after taxation Budget (R‘m) 2 781
Debt: equity (including long-term provisions) Financial Plan 0.56
Historic cost return on total assets Financial Plan 8.61
Productivity improvement for the year Budget % 1
Human resources sustainability index Index 80
Customer satisfaction index Index 75
Operational sustainability index Index 80
Black management, professional and supervisory staff at 31 December
Target % 57,9
Women management, professional and supervisory staff at 31 December
Target % 29.1
Disabled employees Target % 1.9
Procurement expenditure and supply of services, both capital and operating:
-Black economic empowerment (50% discretionary expenditure)
Target (R‘m)
7 465
-Women empowerment (> 5% of BEE amount) Target (R‘m)
521
35
ENVIRONMENTAL
OBJECTIVES INDICATORS MEASURES TARGET 2004
Environmental(Demonstrating exemplary corporate commitment to a sustainable environment)
Contravention of environmental legislationSpecific water consumption.Relative particulate emissions.
Number
l/kWh sent out targetkg/MWh sent out target
0
1.28
0.27
36
SOCIALOBJECTIVES INDICATORS MEASURES TARGET
2004
(Demonstrating exemplary corporate citizenship and harmony with society)Support for socio-economic development.Support for NEPAD
Expenditure of Eskom Development Foundation (ESDEF)
Budget (R’m) 42
Expenditure on projects to encourage electricity development in Africa (Westcor)
Approved USD100 000
Eskom financial contribution to AIDS vaccine development research.
Budget R15 million
Eskom contribution to advanced AIDS training for medical practitioners.
Budget R2 million
Employees enrolled in E-vision management development program
Employees Targeted
2000
37
REVISED BUSINESS MODEL
OBJECTIVES INDICATORS MEASURES TARGET 2004
(Demonstrating progress towards achieving Eskom's intended business model)Diversification and growth of markets, products and services.Restructuring Eskom to support the strategic intent and align with Government policy.
Expenditure on diversification and market growth.Market related, risk adjusted return on new investment as approved per investmentImplementation of Government’s ESI/EDI restructuring policies and plans within Eskom’s control executedImplementation of internal restructuring milestones and plans towards Eskom’s strategic intent-Generation cluster subsidiaries-Generation BEE sale-SAPEX-EDI preparation-Repositioning of Eskom Enterprises
Budget (R’m)Investment return require-ment matrixGovernment policies & plansKey milestones & target dates
20Individual projects within agreed limitsAchievementAchievement of dates
38
CONCLUSIONSDuring the first decade of democracy, Eskom has:
Delivered on its developmental mandate Sustained financial performance Delivered world class technical performance Practiced sound corporate governance Become a global player of note
There are significant key challenges ahead. Eskom is ready for the
challenge and the next decade of delivery!
39
ESKOESKOMM
Holdings LtdHoldings Ltd
The EndThe End