Energy Giant Efora Faces Revenue Plunge: Inside the Boardroom’s Bold Decisions and Transparent Financial Strategies

  • Financial Challenges: Efora Energy faced a significant 97% drop in revenue, reflecting tough conditions within the energy sector.
  • Strategic Decisions: The board opted not to declare dividends, emphasizing prudent financial management and responsibility to stakeholders.
  • Transparency Measures: Efora chose not to issue an Integrated Annual Report, focusing instead on a detailed Corporate Governance and Material Risks Report.
By Lethabo Ntsoane

Efora Energy Limited recently released its audited consolidated annual financial statements for the twelve months ending 28 February 2022. The report reveals a year of significant challenges and strategic decisions for the company. Let’s delve into the salient features, financial highlights, and key decisions that shaped Efora’s journey over the past year.

Financial Highlights

Revenue Takes a Dive

Efora Energy reported a substantial decrease in revenue, marking a 97% drop to R38.0 million compared to R1.2 billion in the previous year. This decline is a stark indicator of the challenges faced by the company within the energy sector.

Earnings and Losses

Despite the revenue setback, there are nuanced improvements in the company’s financial metrics. The headline loss per share decreased by 32.48 cents per share, resulting in a headline loss of 1.53 cents per share compared to 34.01 cents per share in the previous year. On the positive side, earnings per share showed a significant improvement, standing at 20.87 cents per share, a shift from the previous year’s loss of 46.52 cents per share.

Dividend Decision

In a move reflecting prudent financial management, the board of directors decided not to declare a dividend for the fiscal year ending 28 February 2022. This decision contrasts with the previous year when no dividends were also declared.

Short-Form Announcement and Full Financial Statements

Efora Energy emphasizes transparency by providing a short-form announcement of the financial results. However, readers are encouraged to explore the full consolidated annual financial statements, available on the company’s website, for a comprehensive understanding of the financial landscape.

Auditors’ Perspective

The financial statements underwent scrutiny by SizweNtsalubaGobodo Grant Thornton Inc. While an unqualified opinion was expressed on the separate annual financial statements, the consolidated annual financial statements received a disclaimer of opinion. This disclaimer stems from internal control deficiencies at Afric Oil Proprietary Limited, a former material subsidiary of Efora Energy.

Integrated Annual Report (IAR)

Unlike the previous year, Efora Energy decided not to issue an Integrated Annual Report for the year ending 28 February 2022. This strategic choice aligns with the company’s belief that another IAR would not provide stakeholders with materially different information than the last IAR issued in May 2023. Instead, the company has released a Corporate Governance and Material Risks Report, meeting the disclosure requirements of the JSE Listings Requirements.

Annual General Meeting (AGM)

The decision to forgo an Annual General Meeting at this stage stems from Efora’s last AGM held in June 2023. As per the South African Companies Act, a company is required to conduct an AGM annually, and Efora Energy commits to providing updates on the expected timing of the next AGM in due course.

Financial Statements Overview

For a deeper understanding of Efora Energy’s financial performance, let’s take a closer look at the consolidated and separate statements of comprehensive income, financial position, and changes in equity.

Consolidated and Separate Statements of Comprehensive Income

A summary of the comprehensive income for the year ended 28 February 2022 is presented below:

Group/Company2022 (R’000)2021 (R’000)
Revenue38,0001,200,000
Headline Loss per Share(1.53 cents)(34.01 cents)
Earnings per Share20.87 cents(46.52 cents)

Consolidated and Separate Statements of Financial Position

The financial position of the group and the company as of 28 February 2022 is summarized below:

Assets/LiabilitiesGroup (R’000)Company (R’000)
Non-current assets1,607
Current assets89,81689,816
Total assets91,42391,423
Shareholders’ equity68,69569,056
Non-controlling interest
Total equity68,69569,056
Non-current liabilities1,0611,379
Current liabilities21,66720,988
Total liabilities22,72822,367

Consolidated and Separate Statements of Changes in Equity

The changes in equity for the year ended 28 February 2022 are summarized below:

Group:

Equity ComponentsStated Capital (R’000)Total Reserves (R’000)Accumulated Loss (R’000)Total Equity Attributable to Equity Holders (R’000)Non-controlling Interest (R’000)Total Equity (R’000)
Balance at 1 March 20211,668,354137,509(1,868,790)(62,927)(64,114)(127,041)
Changes in equity(98,697)230,319131,62264,114195,736
Balance at 28 February 20221,668,35438,812(1,638,471)68,69568,695

Company:

Equity ComponentsStated Capital (R’000)Total Reserves (R’000)Accumulated Loss (R’000)Total Equity Attributable to Equity Holders (R’000)
Balance at 1 March 20211,668,35410,579(1,646,276)32,657
Changes in equity36,39936,399
Balance at 28 February 20221,668,35410,579(1,609,877)69,056

Consolidated and Separate Statements of Cash Flows

A summary of the cash flows for the year ended 28 February 2022 is presented below:

Cash Flow ComponentsGroup (R’000)Company (R’000)
Cash (used in)/from operations(25,582)13,530
Net cash (used in)/from operating activities(24,954)14,086
Net cash from investing activities58,97527,929
Net cash used in financing activities(4,561)(4,561)
Total movement in cash and cash equivalents for the year29,46037,454
Cash and cash equivalents at the end of the year37,78937,789

Conclusion

Efora Energy Limited’s financial report for the year ending 28 February 2022 reflects a challenging period, marked by a substantial decline in revenue. However, the company’s strategic decisions, including the choice not to declare a dividend and the publication of a detailed Corporate Governance and Material Risks Report, demonstrate a commitment to transparency and responsible financial management.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo