Sanral’s annual report for 2016, released last week, is replete with errors, misrepresentation and an astonishing disregard for sound accounting practice and the intelligence of Gauteng motorists, the vast majority of whom have shunned the failed e-toll scheme.
This is according to a press release by the Organisation Undoing Tax Abuse (OUTA), which it published on its website.
OUTA says the errors and misrepresentations in the Sanral financial statements are too numerous to list in the media release, but it details some of the “more egregious statements that require answering or explanation by Sanral and / or the Auditor General”.
It says the most alarming aspect of Sanral’s 2016 financial statements is the increase in trade receivables from R1,15 billion in 2014 to R4,96 billion in 2015 and R7,66 billion in 2016.
“Sanral clearly continues to count unpaid e-tolls as an asset on its balance sheet, when all indications point to virtually no hope of recovering this money. Had Sanral accounted prudently and honestly as regards these unrecoverable amounts, it would have been forced to report a far greater loss than the R954 million reported for the 2016 financial year. It is also noteworthy that impairment losses from toll and other receivables for 2016 were reflected as being R91,8 million, an implausibly low figure, suggesting Sanral refuses to acknowledge the large-scale failure of its ability to collect the bulk of e-tolls invoiced, even at the discounted tariffs as they have indicated their figures to reflect.
“As a user pays scheme, which now has only around one in five users paying for the use of Gauteng’s freeways and 2,9 million unique road users in default, there appears to be no acknowledgement in Sanral’s annual report that the scheme has largely failed in achieving its aim to repay the debt borrowed for the upgrade.
“This refusal to write off trade receivables in line with accepted accounting practice, has had the effect of padding its balance sheet and distorting its true financial position, at a time when bond investors are bailing out on Sanral bond auctions.
“Some of these outstanding e-toll bills are well over two years old, well past the age of write-off in terms of accepted accounting practice. Conventional accounting practice requires that unrecoverable receivables which are clearly unrecoverable must be expensed through the income statement.”
OUTA estimates that today, upwards of 80% of Gauteng motorists do not pay e-tolls.
“How then is it possible for Sanral to report a 47% increase in trade receivables to R7,6 billion for the 2016 financial year, without having to provide for or write the bulk of this value off as unlikely to collect?”
OUTA says it is clear that the unpopular e-toll scheme and the boycott thereof has hit Sanral’s bottom line harder than expected and their higher cost of borrowing has increased their finance costs to unbearable levels. “It is unfortunate that Sanral has not reported sufficiently on this serious plight, nor have they proposed possible solutions to this dire predicament, other than the issue of summonses as a possible but very short-sighted answer.”
Read the entire press release here.