Sanral e-toll revenue slumps 63% in year to March 2019

If you are paying e-tolls, you one of the few. Low payment rates by motorists resulted in revenue received by the SA National Roads Agency (Sanral) from e-tolls on the Gauteng Freeway Improvement Project (GFIP) slumping 63% to R687.7 million in the year to March from R1.87 billion in the previous year.

Sanral raised an impairment of R10.04 billion on its total e-toll trade and other receivables of R10.96 billion at end-March.

Auditor-General Kimi Makwetu confirmed this was the value of expected credit losses by Sanral’s e-toll trade and other receivables at the end of its financial year.

Trade receivables are amounts billed by a business to its customers when it delivers goods or services to them in the ordinary course of business.

Sanral says in its latest integrated report that although the debtor was not written off, the impairment was a reflection of the probability of collection based on historic trends and a new International Financial Reporting Standard (IFRS).

The agency reported a profit after finance costs of R2.42 billion for the year compared to the R418 million loss in the previous year.

Revenue for the year from non-toll operations declined by 23% to R6.97 billion, which Sanral attributes largely to the transfer of R5.75 billion to the toll portfolio.

Toll revenue from operations declined by 18% to R4.24 billion from R5.19 billion in the previous year.

To address the shortfall because of the low e-toll payment rate, Sanral received R439 million from government as a grant plus a R5.75 billion portion of the non-toll grant.

The non-toll portfolio reported a R96 million operating loss for the year compared to R1.1 billion profit in the previous year, with income (comprising largely the grant received from government) declining by 23.9% because of the R5.75 billion transfer to the toll portfolio.

The toll portfolio reported an operating profit after finance charges of R2.51 billion, with a 56.1% increase in income for toll operations largely because of the grant transferred from the non-toll portfolio.

Sanral’s cash and cash equivalents increased to R8.74 billion at end-March from R7.64 billion in the previous year.

Sanral says it has continued to meet its repayment obligations and is considering resuming borrowing using its non-guaranteed domestic medium-term note programme and is “at an advanced stage” in negotiations with several international financial institutions to secure loans.

“Any positive developments towards resolving the e-tolling issues and improving the collection rate are expected to increase the appetite for Sanral debt,” it says.

Development loan of R7bn

Sanral earlier this month reported that the New Development Bank had decided to extend a R7 billion loan to it for road infrastructure development projects.

President Cyril Ramaphosa earlier this year appointed Minister of Transport Fikile Mbalula to head a task team that had to report to him by the end of last month on the options on the table with regard to e-tolls.

Sanral says government has also issued guarantees totalling R37.91 billion, of which R29.5 billion had been used at end-March.

“The board of Sanral is fully aware of the liquidity risk it faces in the short term and is actively engaging with government to resolve the matter,” it says.

Makwetu says a material uncertainty exists that may cast significant doubt on Sanral’s ability to continue as a going concern.

He adds that Sanral’s funding strategy for the next 12 months relating to toll operations is dependent on positive developments to resolve the e-toll impasse and Sanral raising funding either from government grants or further borrowings.

Irregular expenditure by Sanral in the year to March increased by 25% to R419 million from R334 million.

However, Sanral says R117 million was for irregular contracts identified in prior years but the expenditure on the contracts remained irregular until it was condoned by the relevant authority.

The agency says two issues in the year under review were declared as irregular expenditure that amounted to R282 million of the total irregular expenditure.

It says one of these issues was the result of additional expenditure that could not be avoided on an existing road construction contract and was submitted to National Treasury for approval on time, but the approval was delayed.

Sanral says the other issue related to the acquisition of a building for administration purposes where the approval for the acquisition was given to a board subcommittee.

Sanral chair Themba Mhambi says the agency has received a record 15th consecutive unqualified audit report and is on track to achieve a clean audit opinion by 2020/21.

Wayne Duvenage, chief executive of the Organisation Undoing Tax Abuse (Outa), declined to comment on Sanral’s financial results until the organisation has analysed them.