prasa group financial performance for the year ended 31 march 2013
TRANSCRIPT
PRASAGROUP FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 MARCH 2013
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Key Highlights Conclusion of the procurement process in relation to the
Rolling Stock Fleet Renewal Program and announcement of the successful bidder (ALSTOM-led GIBELA consortium).
Commenced with the implementation of the 5-year Signalling Upgrade Program in Gauteng, KwaZulu-Natal and the Western Cape
A total of 579 coaches delivered as part of the Accelerated Rolling Stock Program.
As part of the Balance Sheet restructuring process, investment property was revalued according to IAS 40 (from R924m to R2.5bn.
Capital expenditure improved by 82% from R3.5bn last year to R6.3bn.
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Key Highlights
Established the SIP7 Project Office as part of the Government’s infrastructure program under the Strategic Integrated Projects.
Metrorail fare revenue increased by 22% from last year, generating R1.8bn for the year and was 2% below budget for the year
Unlocking the value of assets through Balance Sheet Restructuring initiatives (New Real Estate Strategy Approved).
Reduced operational losses through various cost containment/management interventions
Despite a demand for a double-digit wage increase, PRASA settled at 8%
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Key Highlights
Awarding of over 500 bursaries as part of skills development contribution and Learnerships
Increase in the value of assets (excluding investment property) grew by 25% from R19.4 billion to R24 billion
Improvement on the company’s solvency with debt or solvency ratio at 0.17 despite operational challenges and unfunded mandate within Rail.
Fare revenue excluding Government subsidy and other revenue growth by 16.3% (Metrorail fare revenue)
Total Revenue (excluding government subsidy) and grew by 16.3% to R549 million compared to the previous year.
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Key Highlights
Group posted a current year shortfall of R157m, which is a loss increase of R128m on the prior year loss of R29m, mainly due to increased operational costs.
Passenger number for MLPS declined further due to the rationalization of its services. MLPS posted R795m loss excluding subsidy.
CRES’ ability to lease property has been affected by the current economic environment, characterised by poor property rental demand and generally lower rentals has severely affected the income generation capacity of the property portfolio division, with income being 46% below budget.
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Key Highlights
Autopax failed to secure the required bus operating licences which would have allowed it to generate sufficient revenue.
Despite the increase in Capital subsidy this has not been accompanied by growth in Operational Subsidy thus placing strain on cash flows to manage the capital enhancements. Operational subsidy increased by 5.6%.
Rates & taxes including energy increased by 18% on the prior year.
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ANALYSIS OF TOTAL ASSETS
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FIXED ASSET BASE
Property, Plant and Equipment; Investment Properties & Intangible Assets
R'm FY 2013 FY 2012
Carrying value at beginning of year 20 485 17 804
Additions 6 329 3 476
Fair valuation 1 265 774
Depreciation/derecognitions/impairment ( 1 618) ( 1 569)
Carrying value at end of year 26 461 20 485
% Movement 29.2%
Assets grew by 29.2% further strengthening the Group Balance Sheet.
Spending on capital project for the year increased by 82% on last year.
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ANALYSIS OF TOTAL LIABILITIES
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ANALYSIS OF TOTAL LIABILITIES
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KEY FINANCIAL POSITION RATIOS
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ABRIDGED GROUP INCOME STATEMENT
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QUALITY OF EARNINGS
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GROUP SUBSIDY AND FARE REVENUE
R'm FY 2010 FY 2011%
Movement FY 2012%
Movement FY 2013%
Movement
Capital Subsidy 4 297 5 610 30.6% 6 135 9.4% 6 701 9.2%
Operational Subsidy 3 186 3 155 -1.0% 3 339 5.8% 3 527 5.6%
Fare Revenue 2 159 2 117 -1.9% 2 342 10.6% 2 756 17.7%
Increase in Capital Subsidy is in line with strategy on modernisation of public transport.
However, the operational subsidy is below the levels required to sustain the envisaged growth strategy.
Eventhough fare revenue increased by 18%in f2013 it is still not sufficient to sustain the current business operating activities as well as to manage additional capital enhancements of R6.3bn
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1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
FY 2010 FY 2011 FY 2012 FY 2013
R'm
Capital Subsidy
Operational Subsidy
Fare Revenue
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% COST DISTRIBUTION
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OPERATIONAL EFFICIENCY RATIOS
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FRUITLESS & WASTEFUL EXPENDITURE
Nature R'm
Interest and penalties on late payment of creditors 8 347
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IRREGULAR EXPENDITURE : FY 2013
Nature of Irregular Expenditure R'000
CCMA award to employees fired/suspended 948
Relocation costs contrary to policy requirements 56
Employee appointed with no qualifications 54
Employee suspended for longer periods 1 184
Procurement of services : Hired vehicles without following due process in the the Western Cape 3 884
Three quotes not obtained and no motivation for deviation 1 310
Functionality not applied from 7 December - PPPFA 169
Appointment of security in the Western Cape on an emergency and not approved for emergency security 9 630
Entity 17 234
Autopax : Non compliance with SCM policies - month to month contracts 15 114
Autopax : Elapsed contracts continued month to month 1 307
Group 33 655
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SUMMARY OF KEY CHALLENGESTRANSPORT AND RAIL POLICY
Policy certainty is vital
Rail as backbone of transport
Conflict between rail and transport policy
Devolution of rail functions
Long distance rail
Access to the rail network
High speed rail (Future)
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SUMMARY OF KEY CHALLENGESFUNDING FOR NEW ROLLING STOCK
Request for Review of Affordability Level (R40bn to R51bn)
Hedging – National Treasury
Turbulent Situation in Terms of Exchange Rate
(Rand – Dollar)
(Rand – Euro)
(Commodity Risks – Steel, Copper etc)
Mitigate Against the Risk
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SUMMARY OF KEY CHALLENGESFUNDING FOR RAIL
Lack of funding is destroying long-distance Rail (Metrorail)
Mainline Pax Services (MLPS – otherwise known as Shosholoza Meyl, is costing PRASA R870m a year
Reduced Funding for Metrorail is equally destructive, affecting key operations
Increase in energy costs as well as negative rates and taxes impact on cash position of PRASA, suppliers and small business
Conditions on Capex Retrogressive
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SUMMARY OF KEY CHALLENGESUNLOCKING THE VALUE OF PRASA ASSESTS
Section 54 (a) Application to the Shareholder
Support for PRASA Real Estate Strategy
Disposal of certain assets (eg Residential Property)
Private Sector Investment in New Developments
Conditions on Capex Retrogressive
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SUMMARY OF KEY CHALLENGESTHE ROLE OF PRASA IN THE SADC REGION
Opportunities for Integration in the SADC region
Legal Framework not prohibitive, however, no mandate
Opportunities to run train and bus between South Africa, Mozambique, Zimbabwe, Malawi, Lesotho and Zambia
Infrastructure Investment in SADC region
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THANK YOU