Wrap Text
Condensed Consolidated Results for the six months ended 31 August 2018
HULISANI LIMITED
Registration number 2015/363903/06
(Incorporated in the Republic of South Africa)
Share code: HUL
ISIN: ZAE000212072
("the Group" or "the Company")
CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2018
INTRODUCTION
Hulisani is presenting the group results for the six months period ended in 31 August 2018.
Hulisani is listed on the JSE and trades as an investment holding company.
RESULTS
Revenue for the period under review is reported at R23.6m, an increase of R10.7m from the
prior half-year period. Revenue arose from the sale of electricity to Eskom, backed by the PPA
contract.
Operating expenses increased by 24% compared to the prior half-year unaudited results to
R34.4m. Contributing to the increase in operating expenses is the increase in staff compliment
since Hulisani ceased to operate as a Special Vehicle Purpose (SPAC), as well as the
incorporation of the full six months of the subsidiary investee operations relative to three months
in the prior period (the subsidiary was acquired in June 2017). Hulisani’s evolution from
operating as a SPAC necessitated additional resources and building of capacity during the
period under review. The additional resources and capacity are necessary for the proper and
sustainable operation of the company in the long term.
Finance income of R2.4m earned consists of R0.9m interest in cash balances and R1.5m
interest earned on financial investments. The group incurred interest expenses of R7.6m on long
term borrowings.
Hulisani’s share of loss from associates for the six months period under review is R7.4m. This
relates to Hulisani’s share of losses from GRI Wind Steel South Africa (“GRI”’), the only
operational manufacturer of Wind Towers in South Africa, in which the Company holds 25%.
GRI has made losses as a result of the two year delay in the recently signed 27 Power Purchase
Agreements (PPAs). The previous reporting period included losses for two months (the
acquisition was made in July 2017) whereas the current reporting period includes six months of
losses. In addition, Hulisani’s full shareholding of 25% is accounted for in the current period,
whereas only a 12,5% share of losses was accounted for in the previous comparative period.
This holding is made up of a 12.5% equity investment (accounted for as a loss in the previous
period) as well as a further 12.5% holding through a preference share, which was reclassified as
an investment in associates at year end. While accounting for a much larger holding has
resulted in a greater loss reported for the six months under review, GRI Wind Steel has secured
significant orders to manufacture wind towers with the potential for an increase in orders since
the recent signing of 27 PPAs by ESKOM. The income from the signed contracts will only reflect
in subsequent periods.
In the prior half year period Hulisani Limited issued a loan to the value of R100m to Legend
Power Solution Pty) Ltd (“LPS”) which was classified as a loan receivable. At the end of the prior
year period the loan was classified as a financial asset at fair value through profit and loss and
carried as such in the period under review.
The following table reflects the operating financial results for the six months ended 31 August
2018 compared to the corresponding previous financial period:
Unaudited Unaudited
period ended period ended 31 Variance Variance
Summary of Results 31 Aug 2018 Aug 2017
R’000 R’000 R’000 %
Revenue 23,593 12,863 10,730 83
Operating expenses (34,369) (27,670) (6,699) (24)
Finance income 2,430 11,618 (9,188) (79)
Finance cost (7,552) (3,983) (3,569) (90)
Profit/(loss) from associates (7,444) 857 (8,301) (>100)
Fair value adjustment 2,456 - 2,456 100
Loss before tax (19,997) (5,067) (14,930) (>100)
NAV per share (R) 7.13 9.77 (2.64) (27)
PROJECTIONS
The recent signing of 27 PPAs by ESKOM and the release of the IRP update, presents a
significant break from a long period of delays and uncertainty in the South African energy market
and provides momentum to the energy sector. Hulisani maintains a positive outlook on the
energy sector and our pipeline stands at R4bn, with an initial focus on R2bn in completed
projects. We continue to assess various forms of funding to enable the conclusion of the
pipeline.
GOING CONCERN
The unaudited condensed consolidated interim results for the period ended 31 August 2018,
have been prepared on a going concern basis.
DIRECTORS
No changes to the board of directors took effect during the period under review.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST
2018
Unaudited Restated
31 Aug Unaudited Audited
2018 31 Aug 2017 28 Feb 2018
Notes R’000 R’000 R’000
ASSETS
Non-current assets 510,471 596,065 519,658
Property, plant and equipment 5 129,519 137,027 133,914
Intangible assets 149,397 134,336 152,830
Investments in associates 2,3 131,445 219,190 148,810
Financial asset at amortised cost 6,050 - -
Financial asset at fair value through other
comprehensive income 16,461 - 8,961
Financial asset at fair value through profit
and loss 3,4 77,599 105,161 75,143
Deposits held against bank guarantee - 350 -
Current assets 48,379 80,779 64,657
Trade and other receivables 22,139 51,724 29,140
Cash and cash equivalents 26,240 29,055 35,517
TOTAL ASSETS 558,850 676,844 584,315
EQUITY AND LIABILITIES
Equity 389,453 503,759 412,524
Stated capital 500,000 500,000 500,000
Accumulated loss (144,379) (11,714) (122,874)
Non-distributable reserves 773 - 773
Non-controlling interest 33,059 15,473 34,625
Non-current liabilities 156,758 159,277 157,506
Long term borrowings 7 121,692 127,749 121,692
Deferred tax liability 35,066 31,528 35,814
Current liabilities 12,639 13,808 14,285
Trade and other payables 9,160 6,605 3,722
Current portion of borrowings 3,479 7,203 10,563
TOTAL EQUITY AND LIABILITIES 558,850 676,844 584,315
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX
MONTHS ENDED 31 AUGUST 2018
Unaudited Unaudited Audited
31 Aug 31 Aug 28 Feb
2018 2017 2018
Notes R’000 R’000 R’000
Revenue 8 23,593 12,863 37,378
Other income 136 1,248 977
Operating expenses (34,369) (27,670) (57,699)
Finance income 2,430 11,618 10,107
Finance costs (7,552) (3,983) (12,298)
Share of losses from associates 2 (7,444) 857 (6,492)
Impairment loss - - (60,299)
Loss before fair value adjustments (23,206) (5,067) (88,326)
Fair value gain/(loss) 4 2,456 - (25,055)
Net loss before tax (20,750) (5,067) (113,381)
Tax 753 - (2,463)
Net loss after tax (19,997) (5,067) (115,844)
Other comprehensive income
Items that may be reclassified to profit or loss:
Changes in the fair value of available-for-sale
financial assets - - 773
Total other comprehensive income - - 773
Total comprehensive loss for the year (19,997) (5,067) (115,071)
Loss for the period is attributable to:
Owners of Hulisani Limited (21,505) (5,704) (116,864)
Non-controlling interest 1,508 637 1,020
(19,997) (5,067) (115,844)
Total comprehensive income/(loss) for the half-
year is attributable to:
Owners of Hulisani Limited (21,505) (5,704) (116,091)
Non-controlling interest 1,508 637 1,020
(19,997) (5,067) (115,071)
Basic and diluted earnings per share (cents) 9 (43) (11) (234)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX
MONTHS ENDED 31 AUGUST 2018
31 August 2018
Non- Non-
Stated Accumulated distributable controlling
capital loss Reserves Total interests Total
Notes R’000 R’000 R’000 R’000 R’000 R’000
Balance at 01
March 2017 500,000 (6,010) - 493,990 - 493,990
Arising from
Acquisition of - - - - 38,632 38,632
subsidiary
Loss for the year - (116,864) - (116,864) 1,020 (115,844)
Other
comprehensive
income - - 773 773 - 773
Dividends paid (5,027) (5,027)
Balance at 28
February 2018 500,000 (122,874) 773 377,899 34,625 412,524
Profit/(Loss)for the
year - (21,505) - (21,505) 1,508 (19,997)
Disposal of
subsidiary 272 272
Dividends paid - - - - (3,346) (3,346)
Balance at 31
August 2018 500,000 (144,379) 773 356,394 33,059 389,453
28 February 2018
Non-
Non- controlling
Stated Accumulated distributable Total interests Total
capital loss Reserves
Notes R’000 R’000 R’000 R’000 R’000 R’000
Balance at 01 - - - - - -
March 2016
Loss for the year - (6,010) - (6,010) - (6,010)
Issue of shares 500,000 - - 500,000 - 500,000
Balance at 28
February 2017 500,000 (6,010) - 493,990 - 493,990
Arising from
Acquisition of - - - - 38,632 38,632
subsidiary
Profit/(Loss)for the - (116,864) - (116,864) 1,020 (115,844)
year
Other
comprehensive - - 773 773 - 773
income
Dividends paid - - - - (5,027) (5,027)
Balance at 28
February 2018 500,000 (122,874) 773 377,899 34,625 412,524
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS
ENDED 31 AUGUST 2018
Unaudited Unaudited Audited
31 Aug 2018 31 Aug 2017 28 Feb 2018
Notes R’000 R’000 R’000
Cash flows from operating activities
Cash generated from operations 1,293 (31,887) (30,533)
Net Cash inflow/(outflow) from
operating activities 1,293 (31,887) (30,533)
Cash flows from investing activities
Acquisition of subsidiary, net of cash
acquired - (100,464) (100,464)
Acquisition of investments in
associates - (223,950) (223,951)
Acquisition of financial assets 6 (7,500) (100,000) (108,188)
Acquisition of property, plant and
equipment 5 (167) (538) (628)
Dividends received 9,921 5,616 8,350
Interest received 2,176 6,686 8,000
Net cash inflow/(outflow)from investing
activities 4,430 (412,650) (416,881)
Cash flows from financing activities
Repayment of borrowings 7 (7,084) - (2,697)
Interest paid (4,570) (1) (7,896)
Dividends paid to non-controlling
interests in subsidiaries (3,346) (2,289) (5,027)
Net cash inflow/(outflow)from financing
activities (15,000) (2,290) (15,620)
Net increase/(decrease) in cash and
cash (9,277) (446,827) (463,034)
Opening cash and cash equivalents 35,517 498,551 498,551
Cash and cash equivalents 26,240 51,724 35,517
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed consolidated interim financial statements are prepared in accordance with
International Financial Reporting Standard, (IAS) 34 Interim Financial Reporting, the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by Financial Reporting Standards Council and the requirements of
the Companies Act of South Africa. The accounting policies applied in the preparation of these
interim financial statements are in terms of International Financial Reporting Standards and are
consistent with those applied in the previous annual financial statements.
The condensed consolidated interim financial results for the six months ended 31 August 2018
have not been audited or reviewed. The condensed consolidated interim financial results have
been prepared under the supervision of MP Dem (CA)SA, in his capacity as Chief Financial
Officer.
2. INVESTMENTS IN ASSOCIATES
Unaudited Unaudited Audited
31 Aug 31 Aug 28 Feb
2018 2017 2018
R'000 R'000 R'000
Summary - Balances
Kouga 114,639 136,879 122,312
GRI 16,806 82,312 26,498
Total investments in associates 131,445 219,191 148,810
Summary - Movements
Beginning of the period 148,810 - -
Additions - 223,950 223,951
Impairments - (60,299)
Share of profits/(loss) (7,444) 857 (6,492)
Dividends received (9,921) (5,616) (8,350)
End of the period 131,445 219,191 148,810
3. RECLASSIFICATION OF ASSETS
(a) Convertible loan to Legend Power Solution
Hulisani Limited has issued a convertible loan to the value of R100m to Legend Power Solutions
(Pty) Ltd (“LPS”), a company with an underlying investment in Avon and Dedisa Peaking Power.
The loan participates in 9% of distributable profits available to LPS shareholders and will convert
to a 9% equity stake in LPS on maturity. The convertible loan is carried at fair value with gains
and loss recognised through profit and loss. In the comparative period this investment was
presented as loan receivables on the group’s statement of financial position.
The group has updated comparative information and reclassified the convertible loan to financial
assets at fair value through profit and loss to reflect the measurement basis.
(b) Investment in GRI Wind Steel (Pty) Ltd associates
The Company acquired 50% of the share capital in Pele SPV13 (Pty) Ltd (“Pele SPV13”) for a
cash consideration of R41.25m and subscribed for preference shares of R41.25m to Pele
SPV198 (Pty) Ltd (“Pele SPV198”). The preference share subscription agreement includes a
requirement that Pele SPV198 pledges its shares held in Pele SPV13 to Hulisani until the
preference share funding is repaid. Therefore, until such time as the preference shares have
been repaid, risks and rewards associated to Pele SPV198 investment in Pele SPV13 remain
with Hulisani resulting in a 25% effective stake in GRI Wind Steel South Africa (Pty) Ltd (“GRI”)
which has been equity accounted.
In the comparative period the subscription to the preference shares in Pele SPV198 (Pty) Ltd
was classified as other financial instruments. The company has updated the comparative
information and reclassified the subscription to preference shares to Investments in associates
to reflect the substance of the transaction.
Financial
assets at fair
value through
Other financial profit and loss Investments in
Loans instruments associates
Receivables
R'000 R'000 R'000 R'000
Balance at 01 March 2017 - - - -
Addition 104,932 41,479 - -
Reclassification (104,932) (41,479) 105,161 1 41,250
Balance at 31 August 2017 - - 105,161 41,25
1 Included in the financial assets at fair value through profit and loss is the reclassification of interest rate SWAP valued at R229k, from other
financial instruments.
4. FINANCIAL ASSET AT FAIR VALUE THROUGH PROFIT AND LOSS
Unaudited Unaudited Audited
31 Aug 31 Aug 28 Feb
2018 2017 2018
R'000 R'000 R'000
Balance at the beginning of the period 75,143 -
Addition - 100,229 100,000
Fair value gain/(loss) 2,456 - (24,857) 1
Interest accrued - 4,932 -
Balance at the end of the period 77,599 105,161 75,143
1 The balance of the fair value loss as disclosed in the statement of comprehensive income
includes R198k which relates to fair value movements on the interest rate swap.
5. PROPERTY, PLANT AND EQUIPMENT
Fixtures Computer
Land & Office and Equipment Motor Plant &
Buildings Equipment Fittings & Software Vehicles Machinery Total
31 August 2018 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 01 March 2017 - 323 2,310 170 - - 2,803
Cost/additions - 49 471 108 - - 628
Acquisition of subsidiary 2,212 - 2 - 248 135,025 137,487
Accumulated
depreciation/depreciation - (60) (434) (98) (56) (6,356) (7,004)
Carrying amount at 28
February 2018 2,212 312 2,349 180 192 128,669 133,914
Half-year ended 31 August 2018
Opening carrying amount 2,212 312 2,349 180 192 128,669 133,914
Additions - - - 16 - 151 167
Depreciation - (31) (209) (49) (36) (4,237) (4,562)
Balance at 31 August 2018 2,212 281 2,140 147 156 124,583 129,519
Cost 2,212 372 2,783 294 248 135,176 141,085
Accumulated depreciation - (91) (643) (147) (92) (10,593) (11,566)
Carrying Amount at 31
August 2018 2,212 281 2,140 147 156 124,583 129,519
Computer
Fixtures Equipment
Land & Office and & Motor Plant &
Buildings Equipment Fittings Software Vehicles Machinery Total
28 February 2018 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 01 March 2016
Cost/additions - 323 2,310 170 - - 2,803
Accumulated
depreciation/depreciation - - (18) (29) - (47)
Carrying amount at 28 February
2017 - 323 2,292 141 - - 2,756
Year ended 28 February 2018
Opening carrying amount - 323 2,292 141 - - 2,756
Additions - 49 471 108 - - 628
Acquisition of subsidiary 2,212 - 2 - 248 135,025 137,487
Depreciation - (60) (416) (69) (56) (6,356) (6,957)
Balance at 28 February 2018 2,212 312 2,349 180 192 128,669 133,914
Cost 2,212 372 2,783 278 248 135,025 140,918
Accumulated depreciation - (60) (434) (98) (56) (6,356) (7,004)
Carrying Amount at 28 February
2018 2,212 312 2,349 180 192 128,669 133,914
Land & Fixtures Computer
Building Office and Equipment Motor Plant &
s Equipment Fittings & Software Vehicles Machinery Total
31 August 2017 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 01 March 2017
Cost - 323 2,310 170 - - 2,803
Accumulated depreciation - - (18) (29) - (47)
Carrying amount at 28
February 2017 - 323 2,291 141 - - 2,756
Half-year ended 31 August 2017
Opening carrying amount - 323 2,291 141 - - 2,756
Additions - 26 463 49 - - 538
Acquisition of subsidiary 2,212 - 2 - 248 133,600 136,062
Depreciation - (29) (207) (31) (17) (2,044) (2,329)
Balance at 31 August 2017 2,212 320 2,549 159 231 131,556 137,027
Cost 2,212 349 2,778 219 359 162,167 168,084
Accumulated depreciation - (29) (229) (60) (128) (30,611) (31,057)
Carrying Amount at 31 August
2017 2,212 320 2,549 159 231 131,556 137,027
6. FINANCIAL ASSETS AT FAIR VALUE
(i) Fair value hierarchy
The following table presents the group’s financial instruments measured and recognised at fair
value at 31 August 2018.
The group has classified its financial instruments into the three levels prescribed under the
accounting standards.
Level 1 Level 2 Level 3 Total
Financial assets R'000 R'000 R'000 R'000
31 August 2018
Financial assets at fair value through profit
and loss:
Convertible loan - - 77,599 77,599
Financial assets at fair value through other
comprehensive income:
Cumulative redeemable preference
shares - - 16,461 16,461
Total financial assets - - 94,060 94,060
Level 1 Level 2 Level 3 Total
Financial assets R'000 R'000 R'000 R'000
28 February 2018
Financial assets at fair value through profit
and loss:
Convertible loan - - 75,143 75,143
Financial assets at fair value through other
comprehensive income:
Cumulative redeemable preference
shares - - 8,961 8,961
Total financial assets - - 84,104 84,104
Level 1 Level 2 Level 3 Total
Financial assets R'000 R'000 R'000 R'000
31 August 2017
Financial assets at fair value through profit
and loss:
Convertible loan - - 100,000 100,000
Financial assets at fair value through profit
and loss:
Interest rate SWAP - 229 - 229
Total financial assets - 229 100,000 100,229
(ii) Fair value measurements using significant unobservable inputs (level 3)
Cumulative
Convertible preference
loan shares Total
31 August 2018 R'000 R'000 R'000
Balance at the beginning of the period 75,143 8,961 84,104
Acquisitions/additions - 7,500 7,500
Income recognised in other comprehensive income - - -
Gains recognised in profit or loss 2,456 - 2,456
Closing balance at the end of the period 77,599 16,461 94,060
Cumulative
preference
Convertible loan shares Total
28 February 2018 R'000 R'000 R'000
Balance at the beginning of the period - - -
Acquisitions/additions 100,000 8,188 108,188
Income recognised in other comprehensive income - 773 773
Gains recognised in profit or loss (24,857) - (24,857)
Closing balance at the end of the period 75,143 8,961 84,104
Interest rate Convertible
SWAP loan Total
31 August 2017 R'000 R'000 R'000
Balance at the beginning of the period - - -
Acquisitions/additions 229 100,000 100,229
Income recognised in other comprehensive income - - -
Gains recognised in profit or loss - - -
Closing balance at the end of the period 229 100,000 100,229
(iii) Fair value gains and losses
Unaudited Audited
31 Aug 2018 28 Feb
2018
R'000 R'000
Total loss for the period recognised in profit or loss under ‘Fair
value gain/(loss)’ 2,456 (24,857)
Total gains for the period recognised in other comprehensive
income under ‘Other comprehensive income’ - 773
2,456 (24,084)
There were no transfers between levels 1 and 2 for recurring fair value measurements during
the year.
The group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as
at the end of the reporting period.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded
derivatives, and trading and available-for-sale securities) is based on quoted market prices at
the end of the reporting period. The quoted market price used for financial assets held by the
group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for
example, over-the-counter derivatives) is determined using valuation techniques which
maximise the use of observable market data and rely as little as possible on entity-specific
estimates. If all significant inputs required to fair value an instrument are observable, the
instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the
instrument is included in level 3. This is the case for unlisted equity securities.
(iv) Valuation techniques used to determine fair values
The fair value of the convertible loan and preference shares is determined using discounted
cash flow method.
(v) Valuation inputs and relationships to fair value
31 August 2018
Relationship of
unobservable
inputs to fair
Fair Value Unobservable value
Description R’000 inputs Actual input
Convertible loan 77,599 1 Discount rates 13.20% The higher the
discount rate
the lower the
fair value
Base revenue R1.1 billion The higher the
from plant base revenue,
operation the higher the
fair value
Period of 30 years The shorter the
operation period, the
lower the fair
value
1 The positive fair value movement for interims is mainly attributable to a change in the cashflow
sweeping mechanism that was put in place by the lender, which became no longer applicable
during interim reporting, resulting in increased free cashflows.
28 February 2018
Relationship of
unobservable
inputs to fair
Fair Value Unobservable value
Description R’000 inputs Actual input
Convertible loan 75,143 Discount rates 13.20% The higher the
discount rate
the lower the
fair value
Base revenue R2.3 billion The higher the
from plant base revenue,
operation the higher the
fair value
Period of 30 years The shorter the
operation period, the
lower the fair
value
(vi) Valuation processes
The finance department of the group obtains input from independent valuation experts in
performing valuations of financial assets required for financial reporting purposes, including level
3 fair values. The valuations expert communicates directly with the chief financial officer (CFO).
Cumulative preference shares are valued by using the Discounted Cash Flow Method and the
convertible loan uses the Dividend Discount Model. The discount rates used for the valuations
are the prevailing market rates at the time of the valuations.
The group conducts valuations twice a year, at the interim financial reporting period and also at
the year-end reporting period.
7. BORROWINGS
Unaudited Unaudited Audited
31 Aug 31 Aug 28 Feb
2018 2017 2018
R'000 R'000 R'000
Balance at the beginning of the period 132,255 - -
Arising from acquisition of subsidiary - 134,952 134,952
Repayments (7,084) - (2,697)
Balance at the end of the period 125,171 134,952 132,255
Secured
Non-current
IDC loan 60,977 64,107 60,977
Nedbank loan 60,715 63,642 60,715
Total non-current interest-bearing debt 121,692 127,749 121,692
Secured
Current
IDC loan 1,757 3,586 5,301
Nedbank loan 1,722 3,617 5,262
Total current interest-bearing debt 3,479 7,203 10,563
Total interest-bearing debt 125,171 134,952 10,255
8. REVENUE
Hulisani Limited revenue arises from the sale of electricity by the subsidiary, RustMo1 Solar
Farm (Pty) Ltd.
9. EARNINGS PER SHARE
The calculation of earnings per share at 31 August 2018 was based on the loss attributable to
ordinary shareholders of Hulisani Limited, and a weighted average number of ordinary shares.
Reconciliation between earnings and headline earnings is as follows:
Notes Unaudited Unaudited Audited
period ended period ended period ended
31 Aug 2018 31 Aug 2017 28 Feb 2018
R’000 R’000 R’000
Loss for the year (21,505) (5,704) (116,864)
Adjustments:
Impairment loss - - 60,299
Loss on disposal of a subsidiary 688 - -
Headline earnings (20,817) (5,704) (56,565)
Number of shares in issue (’000) 50,000 50,000 50,000
Weighted numbers of shares (’000) 50,000 50,000 50,000
Basic and diluted earnings per share (cents) (43) (11) (234)
Basic and diluted headline earnings per share
(cents) (42) (11) (113)
10. SEGMENT REPORTING
The group’s executive committee, consisting of the chief executive officer, the chief financial
officer and the chief investment officer, examines the group’s performance both from the nature
of investment perspective and has identified the following reportable segments of its business:
a) RustMo1: This is a material subsidiary of Hulisani.
b) Kouga: This is an investment Hulisani has significant influence over.
c) GRI: This is an investment Hulisani has significant influence over.
d) LPS: Hulisani participates in 9% of the distributable profits of the investee.
e) Other: The segment represents activities within the holding company.
The executive committee uses dividends received/receivable to assess the performance of the
operating segments. Information about the segments' revenue and assets is received by the
executive committee on a monthly basis.
RustMo1 Kouga GRI LPS Other Total
31 August 2018 R’000 R’000 R’000 R’000 R’000 R’000
Non-current assets 276,369 114,639 16,806 77,599 25,058 510,417
Current assets 32,053 - - - 16,326 48,379
Total assets 308,422 114,639 16,806 77,599 41,384 554,850
Non-current liabilities 156,758 - - - - 156,758
Current liabilities 8,252 - - - 4,387 12,639
Total liabilities 165,010 - - - 4,387 169,397
RustMo1 Kouga GRI LPS Other Total
R’000 R’000 R’000 R’000 R’000 R’000
Revenue- external 23,593 - - - - 23,593
Net profit 7,049 2,248 (9,692) 3,694 (23,296) (19,997)
Dividend received 6,496 9,921 - - - 16,417
Non-cash items in
statement of - - - - (688) (688)
comprehensive income
Depreciation and (7,709) - - - (286) (7,995)
amortisation
Finance income 746 - - 1,238 446 2,430
Finance costs (7,549) - - - (3) (7,552)
RustMo1 Kouga GRI LPS Other Total
28 February 2018 R’000 R’000 R’000 R’000 R’000 R’000
Non-current assets 283,926 122,312 26,498 75,143 11,779 519,658
Current assets 33,928 - - 2,107 28,622 64,657
Total assets 317,854 122,312 26,498 77,250 40,401 584,315
Non-current liabilities 157,506 - - - - 157,506
Current liabilities 12,219 - - - 2,066 14,285
Total liabilities 169,725 - - - 2,066 171,791
RustMo1 Kouga GRI LPS Other Total
R’000 R’000 R’000 R’000 R’000 R’000
Revenue- 37,378 - - - - 37,378
external
Net profit 7,415 (10,788 (56,003) (22,750) (33,718) (115,844)
Dividend received 9,758 8,350 - - - 18,108
Non-cash items
in statement of - (14,314) (45,985) (24,857) - (85,156)
comprehensive
income
Depreciation and (11,563) - - - (543) (12,106)
amortisation
Finance income 1,085 - - 2,107 6,915 10,107
Finance costs (12,298) - - - - (12,298)
RustMo1 Kouga GRI LPS Other Total
31 August 2017 R’000 R’000 R’000 R’000 R’000 R’000
Non-current assets 268,566 136,879 41,062 104,932 44,626 596,065
Current assets 32,304 - - - 48,475 80,779
Total assets 300,870 136,879 41,062 104,932 93,101 676,844
Non-current liabilities 159,277 - - - - 159,277
Current liabilities 10,807 - - - 3,001 13,808
Total liabilities 170,084 - - - 3,001 173,085
RustMo1 Kouga GRI LPS Other Total
R’000 R’000 R’000 R’000 R’000 R’000
Revenue- external 12,863 - - - - 23,593
Net profit 1,968 1,045 (188) 4,932 (12,824) (5,067)
Dividend received 4,444 8,350 - - - 12,794
Non-cash items in
statement of - - - - (688) (688)
comprehensive income
Depreciation and (3,767) - - - (267) (4,034)
amortisation
Finance income 327 - - 4,932 6,359 11,618
Finance costs (3,981) - - - (2) (3,983)
11. CHANGES IN ACCOUNTING POLICIES
This note explains the impact of the adoption of the following new accounting standards on the
group’s financial statements, as issued by IASB, which were effective for the group from 01
March 2018:
• IFRS15 Revenue from Contracts with Customers (IFRS 15).
• IFRS 9 Financial Instruments (IFRS 9).
(i) Impact on the financial statements
The group did not need to restate prior year financial statements due to changes in accounting
policies due to adoption of IFRS 9 and IFRS 15.
(ii) Adoption of IFRS 15
The policy changes came into effect on 01 March 2018 for the group. IFRS 15 replaces IAS 18
Revenue, IAS 11 Construction Contracts and related interpretations. Under IFRS 15, revenue is
recognised at an amount that reflects the consideration to which an entity is expected to be
entitled for transferring goods or services to a customer. In accordance with the transition
provisions in IFRS 15, the group is required to adopt the new rules retrospectively and restate
comparatives for the prior financial year.
The group generates revenue from the sale of electricity to Eskom. The adoption of IFRS 15 did
not have a significant impact on revenue recognition on the sale of electricity.
(iii) Adoption of IFRS 9
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and
measurement of financial assets and financial liabilities, derecognition of financial instruments,
impairment of financial assets and hedge accounting. The adoption of IFRS 9 Financial
Instruments has the following impact on the group:
• Change in classification of the measurement categories for financial instruments.
• Change from the IAS39 incurred loss model to the expected credit loss (ECL) model when
determining impairment of financial assets.
(a) Classification and measurements
IFRS 9 introduced changes to the measurement categories for financial assets. The group
classifies financial assets in each of the IFRS 9 measurements categories based on the group’s
business model for managing financial assets and the cash flow characteristics of the financial
assets. The new financial assets categories are illustrated below:
IAS 39 Categories IFRS 9 Categories
Financial assets at fair value through profit and Financial assets at fair value through profit and
loss loss (FVTPL)
Loans and receivables Financial assets at amortised cost
Available for sale assets Financial assets at fair value through other
comprehensive income (FVOCI)
Held to maturity
The reclassification into new measurement categories of IFRS 9 did not have a significant
impact on the group. Hulisani has designated investments in preference shares at fair value
through other comprehensive income, and convertible loan to LPS at fair value through profit
and loss.
Financial liabilities under IFRS 9 continued to be measured at amortised cost except for those
designated at fair value through profit and loss, which are measured at fair value.
(b) Impairment of financial assets
The group was required to revise its impairment methodology under IFRS 9 for each of the
following classes of assets:
• Trade and other receivables
• Financial assets carried at amortised cost
• Contract asset relating to the Eskom contract
• Preference shares carried at FVOCI
While cash and cash equivalents are subject to the impairment requirement of IFRS 9, the
identified impairment loss was immaterial.
Under IFRS 9, credit losses (impairments) are recognised earlier than under IAS 39. Expected
credit loss allowances are measured on either one of the following basis:
• 12 – month ECLs; these are ECLs that result from possible default events within the 12
months after the reporting date; and
• Lifetime ECLs; these are ECLs that result from all possible default events over the expected
life of the financial instrument.
? Trade and other receivables and contract assets
The group applies the IFRS 9 simplified approach to measuring expected credit losses which
uses a lifetime expected loss allowance for all trade receivables and contract assets.
The group recognised the expected credit risk as immaterial to provide for restatement of
opening balances.
12. RELATED PARTIES
(a) Balances
31 Aug
2018
R’000
Other receivables (i) 5,201
Loan receivables (ii) 6,050
(i) Sponsor fees refundable to Hulisani by Nibira (Pty) Ltd. The payment was rendered invalid and
the amount remains owing to the group at the end of the financial period.
(ii) A subsidiary of Pele Green (Pty) Ltd, Pele SPV198 (Pty) Ltd entered into an agreement with
Hulisani Limited to jointly subscribe for ordinary shares in Pele SPV13 (Pty) Ltd. Hulisani
Limited subscribed for cumulative preference shares in Pele SPV198 (Pty) Ltd for the entity's
funding of the ordinary shares subscription in Pele SPV13 (Pty) Ltd. Loan receivables are due
from Pele Green Energy (Pty) Ltd, a parent company to Pele SPV198 (Pty) Ltd.
13. DIVIDENDS
There will be no dividends declared for the interim period.
UNAUDITED INTERIM CONDENSED RESULTS
This short-form announcement is the responsibility of the directors and is only a summary of the
information in the full announcement and does not contain full or complete details. The full
announcement was released on SENS on 31 October 2018 and can be found on the Company’s
website at www.hulisani.co.za and is available free of charge at the registered office of the
Company and the sponsor’s office, during normal office hours. Copies of the full announcement
may be requested by contacting info@hulisani.co.za or calling 0878062425. Any investment
decision should be based on the full announcement published on SENS and the Company’s
website.
On behalf of the Board
ME Raphulu
Chief Executive Officer
Registered Office:
4th Floor, North Tower,90 Rivonia Road, Sandton, Gauteng.
Auditors
PricewaterhouseCoopers Inc.
Johannesburg
31 October 2018
Sponsor
PSG Capital
Transfer secretaries:
Computershare Investor Services Proprietary Limited, 70 Marshall Street Johannesburg, 2001
Company secretary
The Paper-Clip Consultancy, 31 Pineview Estates, Pine Road, Kengies, Fourways, Gauteng,
2146
Directors:
ME Raphulu (Chief Executive Officer), MF Modau (Chief Investment Officer), MP Dem (Chief
Financial Officer), PC Mdoda* (Chairman), A Notshe^, MH Zilimbola^, NP Gosa*, DR
Hlatshwayo*, HH Schaaf*#, B Marx*.
* Independent Non-executive # German ^ Non-independent Non-executive.
Date: 31/10/2018 05:27:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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