Antoinette Slabbert
3 minute read
20 Sep 2017
8:01 am

This SOC even pays a dividend!

Antoinette Slabbert

We addressed our concerns about SAA exposure – Acsa.

While other state-owned companies are fighting for government bailouts, Airports Company South Africa (Acsa) will be paying a R358 million dividend for the financial year ended March 31, 2017.

Ironically, it is about equal to the amount South African Airways (SAA) overspends on its income every month.

According to Acsa CEO Bongani Maseko, the group increased its profit by 10.8% to R2 billion, off R8.6 billion revenue. This represents an increase in profitability as revenue grew by only 3.4%.

Acsa further reduced its interest-bearing debt by 5% to R9.3 billion and met 76% of its performance targets. Maseko said Acsa’s debt, primarily in the form of bond issues, has been reduced significantly from R17 billion in 2012. As a result, the company’s gearing ratio has reduced from 59% in 2012 to 25% in the 2017 financial year.

Return on equity was 11.3% compared to 11.5% in the previous period. Capital expenditure reduced by 31.3% to R893 million.

The dividend is up 4.3%from the previous year. The South African government, which holds a 74% stake in Acsa, will receive R265 million of the total dividend, the Public Investment Corporation, which holds a 20% stake will get R72 million and the balance will be paid to minority shareholders.

OR Tambo International airport was Acsa’s biggest money spinner during the period, with revenue of R5.2 billion and profit before tax of R3.8 billion. These figures show little growth compared to the previous year.

Income from Cape Town International airport grew by 9% to R1.8 billion but profit before tax was flat at R1.1 billion.

Revenue from King Shaka International airport grew by more than 8% to R781 million and pre-tax profit showed huge growth from R79 million to R226 million.

Regional airports showed a loss in the previous financial year but recorded a pre-tax profit of R107 million during the reporting period.

Maseko said Acsa is proceeding with its strategy to diversify its sources of income. In the reporting period 63% of revenue was derived from aeronautical sources. These include landing fees, passenger service charges and aircraft parking fees. The group will continue to grow its non-aeronautical revenue, which includes rental fees for advertising and retail and other space, parking fees, and car rental concessions among others.

“The overall financial position of the company therefore remains healthy despite regulatory uncertainty and difficult economic conditions,” said Maseko.

“Operationally, we are adapting well to a new tariff regime from the regulator which required a 35.5% reduction for the 2018 financial year with increases in the following two years of 5.8% and 7.4%,” he said.

In its report about Acsa, Auditor-General Kimi Makwetu pointed out that at year-end 23% of Acsa’s trade receivables to the value of R231 million were overdue, but not impaired. These include outstanding amounts from a variety of clients, including airlines like SAA.

During the reporting period provisions increased by 110% to R112 million, which is out of proportion with the 7% growth in total trade receivables, Makwetu stated.

He thoroughly assessed Acsa’s assumptions and stated that he was satisfied that the provisions and valuations of trade receivables were appropriate.

In notes to its financial statements Acsa points out that it has large exposure to one client, presumably SAA.

From the note it seems that SAA owed Acsa R150 million at the end of the financial year and that this amount was not recovered within one month.

It is pubic knowledge that SAA is currently struggling to pay its creditors on time and when Moneyweb asked him about Acsa’s exposure, Maseko confirmed that the group was very concerned about the matter.

He said Acsa met with SAA and made an arrangement which it believes SAA will honour. He did not disclose the terms of the agreement.

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