{
  "id": 12345476,
  "title": "How once-off gains are masking financial strain at SOEs",
  "url": "https://urgent.news/2026/10/06/how-once-off-gains-are-masking-financial-strain-at-soes-12345476",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-06T08:50:29.000Z",
  "source": {
    "name": "The Citizen",
    "slug": "the-citizen",
    "url": "https://www.citizen.co.za/business/how-once-off-gains-are-masking-financial-strain-at-soes/"
  },
  "original_language": "en",
  "account": "Despite the misleading appearance of financial recovery in state-owned enterprises (SOEs), a closer examination reveals that many SOEs are merely masking their true financial strain through the use of once-off gains. At first glance, prominent SOEs such as Eskom, Transnet, Airports Company South Africa (Acsa), the Development Bank of Southern Africa (DBSA), and the Public Investment Corporation (PIC) reported substantial profits totalling nearly R45 billion during the year ending March 2026. However, this rosy picture is largely a result of non-operational factors that boosted profits, rather than genuine improvements in underlying operations.\n\nTransnet, for instance, reported an after-tax profit of R4.6 billion after selling a 49.99% stake in Durban Gateway Terminal for R10.5 billion. This accounting gain, while significant, is a one-time event and does not reflect Transnet's true operational performance. The company is still grappling with a substantial finance cost of R16.4 billion, which far outweighed its operating profit. Transnet's CEO, Michelle Phillips, acknowledged that the turnaround is not yet complete, and the company still has a long way to go to achieve sustainable financial health.\n\nIraj Abedian, a former Transnet board member, expressed concern over the reliance on such once-off gains, stating that it points to a deeper problem within SOEs. He pointed out that the real issue lies in a culture of mediocrity, where poor performance is tolerated and rewarded, and where there is a reluctance to benchmark performance against international standards. This culture perpetuates inefficiency, hampers service delivery, and erodes public trust.\n\nAbedian argued that SOEs should generate profits organically from their core operations, rather than relying on balance-sheet engineering. He traced the origins of this trend back to the early 2000s, when South African Airways (SAA) began using asset revaluation to demonstrate profitability. This practice has since become embedded in the SOE sector.\n\nAbedian emphasized that asset revaluation is a standard accounting practice, but it must be applied honestly, reflecting both increases and decreases in value. Simply increasing an asset's value without reflecting its actual decline would misrepresent the company's true financial position. He stressed that profitability alone is not sufficient; returns must exceed the cost of capital deployed. If profit as a ratio of the capital employed is lower than the borrowing cost of replacing that capital, the entity is effectively making losses.",
  "summary": "The collective profit of R45bn is a mirage for some",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}