Thursday, 29 September 2022: Eskom hereby notifies its stakeholders that due to the delayed appointment of the external auditors as announced on 4 November 2021 and the extensive process of taking on a new audit, as well as the time it has taken to resolve several issues that were raised during the audit, Eskom Group’s audited Annual Financial Statements for the year ended 31 March 2022 (“2022 AFS”) are anticipated to be published by end November 2022.
Eskom’s management is working hard to finalise the audited Annual Financial Statements for the year ended 31 March 2022 and is committed to publish these by the end of November 2022.
Eskom is currently resolving, together with the auditors, anticipated restatements to its previously issued audited financial statements for the prior year ended 31 March 2021, which will have an impact on the Eskom Group’s statements of financial position and income statement. Some of the anticipated restatements are as follows:
- Reclassification of coal stocks from current assets to non-current assets – following a review of the quantity and usage of coal stocks at power stations, it was concluded that a portion of the coal stocks will not be utilised within the normal operating cycle, as certain of these coal stocks result from coal purchases under take-or-pay arrangements exceeding use over a number of years, or are in excess of those levels required to be held to comply with the grid code and for emergencies to ensure security of supply. As a result, certain coal stocks will be reclassified from current to non-current assets, with an increase in primary energy cost expensed, partially offset by an over-provision on a coal penalty;
- Reclassification of certain electricity debtors from current to non-current;
- A single discount rate was previously used to present value power station-related environmental restoration and mine-related closure cost provisions. An adjustment is proposed to effect discount rates matching the expected timing of the associated cash flows on a per site basis, thereby increasing net finance costs;
- Various adjustments to property, plant and equipment, which include assets for which incorrect useful lives have been used, extension of asset useful lives not accounted for, timing of the recognition of assets under construction to commercial operations and write-off of aged assets under constructions where there are no further expected future economic benefits;
- Revaluation of derivative instruments due to the application of incorrect assumptions into the valuation models;
- Insufficient consumable stock obsolescence provisions; and
- Re-presentation of segmental reporting as the segmental financial information presented did not align to financial information presented internally as required by IAS 8 Operating Segments.
Items 1 and 2 as reflected, have a material impact on the current ratio. Further details on the above restatements will be made available when the 2022 AFS are released. As the audit is still underway, other matters may be identified. The audit process has been impacted by broader control issues ranging from stock counts, procurement compliance and financial reporting matters referred above.
Eskom’s management is fully committed to resolving the above matters and finalising the audit process in respect of the 2022 Annual Financial Statements.