NOTES TO THE FINANCIAL STATEMENTS - NOTE 52


 

52. Pro forma revaluation of property, plant and equipment (unaudited)

The group currently accounts for its property, plant and equipment using the cost model under IAS 16 Property, plant and equipment. The cost model requires that property, plant and equipment should be measured at cost (including borrowing cost capitalised in respect of qualifying assets), less accumulated depreciation and impairment. However, the cost model does not reflect the true economic value of the group’s property, plant and equipment and the basis on which our tariff is calculated by NERSA. Therefore, a summary has been provided below reflecting what the impact on the financial statements would be if the group’s property, plant and equipment was measured using the depreciated replacement cost (DRC) model. Borrowing costs were not included in the carrying amount of property, plant and equipment when determining the increase or decrease in the revaluation surplus and have therefore been expensed. The fair values determined using the DRC model were reviewed for possible impairment loss in order to determine whether or not the net future cash inflows related to the use of property, plant and equipment are less than the calculated fair value of property, plant and equipment. The fair values disclosed below are net of the adjustment made for the tariff shortfall in the first few years of R190 billion (2013: R238 billion). This shortfall is expected to be eliminated once the electricity tariff determined in terms of the regulatory methodology, which is based on the depreciated replacement values, is fully phased in by NERSA.

    2014       2013    
  Historical
cost
Rm
Adjustments
Rm
After
revaluation
Rm
  Historical
cost
Rm
Adjustments
Rm
After
revaluation
Rm
 
Summarised group statements of financial position at 31 March 2014                
Assets                
Property, plant and equipment 401 373 164 836 566 209   341 429 165 073 506 502  
Deferred tax assets 339 32 231 32 570   25 24 597 24 622  
Other assets 103 281 103 281   90 570 90 570  
  504 993 197 067 702 060   432 024 189 670 621 694  
Equity and liabilities                
Total equity 119 784 118 682 238 466   109 139 118 852 227 991  
Deferred tax liabilities 19 461 78 385 97 846   15 806 70 818 86 624  
Other liabilities 365 748 365 748   307 079 307 079  
  504 993 197 067 702 060   432 024 189 670 621 694  
Summarised group income statements for the year ended 31 March 2014                
Operating profit before depreciation and amortisation expense, net impairment loss and other operating expenses 46 563 46 563   37 992 37 992  
Depreciation and amortisation expense (11 937) (13 887) (25 824)   (9 960) (15 534) (25 494)  
Net impairment loss (1 557) 45 (1 512)   (1 039) (28) (1 067)  
Other operating expenses (19 177) (85) (19 262)   (23 039) (77) (23 116)  
Operating profit/(loss) before net finance (cost)/income 13 892 (13 927) (35)   3 954 (15 639) (11 685)  
Net finance (cost)/income (4 772) (13 290) (18 062)   3 003 (3 678) (675)  
Share of profit of equity accounted investees, net of tax 43 43   35 35  
Profit/(loss) before tax 9 163 (27 217) (18 054)   6 992 (19 317) (12 325)  
Income tax (2 137) 7 621 5 484   (1 856) 5 409 3 553  
Profit/(loss) for the year from continuing operations 7 026 (19 596) (12 570)   5 136 (13 908) (8 772)  
Profit for the year from discontinued operations 63 63   47 47  
Profit/(loss) for the year 7 089 (19 596) (12 507)   5 183 (13 908) (8 725)