State signals provider Sentech, which was facing a cash crisis towards the end of 2010, is fairing better financially, but is not yet out of the woods.
CEO Setumo Mohapi says it has recovered from a negative earnings position between 2003 and 2009, and expects to produce stable profits over the next three years. He presented the entity's corporate strategy to journalists this morning.
Sentech expects to be earnings before interest and tax positive over the next few years and has also recovered from a period of sustained negative retained earnings between 2003 and 2009, says Mohapi. He projects retained earnings of R586 million by the end of this financial year.
Mohapi says he is comfortable that the difficult period is behind Sentech, with most of the legacy issues having been resolved. However, he adds that Sentech is not out of the woods yet.
Towards the end of 2010, Sentech faced a litany of woes, including a cash crunch and a lack of leadership. Its annual report for 2009/10 showed it faced high costs, marginal growth and no vision.
However, the state-owned enterprise improved its cash position by October that year after cutting costs and focusing on collecting debt. Sentech had R230 million in cash at the end of September 2010.
For the 2014 financial year, the entity expects to end with R709.1 million in cash, which will grow to R977.4 million by 2016.
According to its corporate plan, Sentech projects revenue of R952.8 million for the 2014 financial year, which is a year-on-year gain of 5.4% for the forecast for the end of 2013. However, operating, administrative and sales costs are expected to rise 9.7% to R818.9 million.
The signals provider expects earnings before interest and tax of R133.9 million, a 15.3% reduction, while net profit is expected to be 18.3% lower at R105.9 million.
Sentech also plans to spend R878.4 million in the next three years, of which it will fund R414 million, with government supplying the balance. Included in the spending is an expansion project to grow its digital coverage and marginally expand some of its analogue network. It will also spend on maintaining its network and future implementation projects.
The entity has "sufficient financial resources" to fund its operations and has no plan to borrow. Its current borrowings, a loan of R24 million, was raised in previous years to fund infrastructure. It says it has honoured repayments and will continue to do so.
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