CFO Masibulele Dem says there is scope for improvement in Hulisani results
Masibulele explains that, while they continue to reduce costs, there is room for higher reductions.
Hulisani has reported a recovery from a loss of R26.9 million in the previous financial year, to an inaugural net profit of R13.4 million for the year ended 28 February 2021.
According to CFO Masibulele Dem, the improved performance is largely attributable to a significant increase in fair value gains of R18.9 million, and an impairment loss reversal of R14.3 million.
The company reported that fair value gains are driven by increased energy production activities in the LPS investment as well as the favourable movement in the GRI financial asset. The reversal of impairment is attributable to the significant decrease in interest rates, resulting in the improvement of project cash flows in Kouga.
In addition, the group’s operating expenses for the period decreased in line with its strategy to contain costs. However, Masibulele says that while the costs have declined year-on-year, the decline is relatively marginal. “There is scope for a higher reduction in costs, to boost profitability.”
Despite an increase in profit and decreased costs, Hulisani reported a revenue decrease of 10 percent to R62.4 million. The group’s revenue consists of sales of electricity at its subsidiary, Rustmo Solar Farm, and the profit share earned from the convertible loan from Legend Power Solutions. “The revenue was impacted by production factors, mainly the production interruption related to the soiling and cleaning of the solar panels in the Rustmo Solar Farm,” Masibulele says.
Hulisani reported a positive cash flow from its investments in line with its business strategy, even in difficult trading circumstances. The company said that its assets continue to demonstrate strong performance and are cash generative.