SAA, SA Express and Denel miss reporting deadline, flouting finance act
Finance minister Nhlanhla Nene is expected to provide details of a funding package for SOEs in his medium-term budget policy statement
More than five months after the end of the financial year, the latest annual reports of struggling state-owned enterprises (SOEs) SA Airways, SA Express and Denel are yet to be finalised.
By law, the reports must be tabled in parliament by the end of September.
But in a letter to the speaker, public enterprises minister Pravin Gordhan, the custodian of the three SOEs, said the “audits on these entities are still being concluded, after which they must still be reviewed and finalised by the audit committee and boards of the respective state-owned companies”.
All three SOEs are already reliant on government support to continue operating and have appealed to the government for additional funds.
Finance minister Nhlanhla Nene is expected to provide details of a funding package for SOEs in his medium-term budget policy statement to be tabled in parliament on October 24.
SAA said it requires R21.7bn over the next three years to implement its turnaround strategy and set the airline on a sustainable footing. SA Express wants loans of R1.74bn converted into equity; and defence manufacturer Denel, which has government-guaranteed debt of R2.7bn, has asked for a further R1bn guarantee and a cash injection to recapitalise the business. It did not disclose the size of the requested cash assistance.
The reasons for the delay in finalising the three SOEs’ financial statements have not been disclosed, but reports are often delayed when the auditor-general has raised issues about the going concern status of the enterprises. This refers to the ability of the business to continue operating and meet its financial obligations for at least the next 12 months.
Gordhan said the statements, for the year to end-March, will be tabled as soon as the auditing processes have been resolved.
The Treasury has already revealed that SAA continued its track record of losses in the 2017/2018 financial year, notching up a net loss of R5.7bn, close to R3bn worse than expected.
DA deputy finance spokesperson Alf Lees said that this was at least the third year in which the tabling of the SAA financial statements had been delayed and was an indication of the parlous state of the airline.
The airline, where a new board was appointed in October 2017, only tabled its 2016/2017 financial statements in March this year, reflecting a loss of R5.56bn.
SA Express, where a new board was appointed in May, has struggled operationally, and has said it expects to report a substantial loss for 2017/2018.
SAA referred Business Day to the minister's letter to the Speaker. Denel and SA Express were not available for comment.
Correction: September 20 2018
A previous version of this article incorrectly stated that SAA did not respond to requests for comment. We regret the error.