Mahube Infrastructure’s Annual Results Show Decline Amidst Infrastructure Sector Challenges

Mahube Infrastructure Limited
  • Mahube Infrastructure reports decline in annual results for 2023, with decreased dividends, negative total revenue, and lower tangible net asset value.
  • Operating expenses increased, while the company’s investment portfolio includes wind farms and solar photovoltaic farms.
  • The decline in financial performance reflects the challenges faced by Mahube in the infrastructure sector.

Mahube Infrastructure Limited announced its audited annual results for the fiscal year ending on February 28, 2023. The company’s financial performance experienced a decline, with several key metrics showing significant decreases compared to the previous year.

The most notable changes in Mahube’s annual results include a 67.7% decrease in dividends received, a negative total revenue of R14.1 million, basic and headline losses of 53.7 cents per share, and a decline in tangible net asset value per share from R11.2 to R9.9. These figures indicate a challenging year for Mahube, reflecting the difficulties faced by the company in the infrastructure sector.

Mahube Infrastructure Limited specializes in offering investors exposure to infrastructure assets across Southern Africa. Its vision revolves around promoting fast, affordable, and sustainable delivery and maintenance of infrastructure on a large scale. The company aims to generate investment returns characterized by consistent cash flows from infrastructure assets, long-term ownership and operation of assets, and the potential for disruptive solutions to infrastructure-related market inefficiencies.

Currently, Mahube has invested in and holds equity interests in two wind farms and three solar photovoltaic farms, collectively capable of generating approximately 400 MW of power. These renewable energy assets secured licenses during Bid Window Rounds 1 and 2 of the Renewable Energy Independent Power Procurement Programme in South Africa. Each asset operates under a 20-year power purchase agreement, supplying electricity to Eskom.

The decrease in Mahube’s financial performance can be attributed to various factors. Primarily, the reduction in dividend income stems from lower dividend declarations by Mahube Capital Fund, a subsidiary company. This decrease is further intensified by the redemption of A class preference shares, which impacted the cash available for distribution to equity holders. Additionally, a decline in dividends received from Mahube Infrastructure Investments also contributed to the overall decrease in dividend income.

The negative change in fair value of financial assets, amounting to R33.1 million during the fiscal year, was driven by adverse changes in forecasted macroeconomic variables and the revision of long-term assumptions concerning electricity generation from one of the wind power plant investments. This revision aligns with the trend of below-expectation wind resources experienced across the wind Independent Power Producer (IPP) industry in South Africa.

Operating expenses for the period increased to R15.4 million compared to R12.9 million in the previous year’s comparative period. The rise in expenses can be attributed to the impact of price inflation, with an additional R1.65 million attributable to costs related to the attempted restructuring of the company’s business.

Despite the challenging financial results, Mahube Infrastructure remains committed to its vision of delivering infrastructure projects in an efficient and sustainable manner. The company aims to provide investment returns characterized by predictable and regular cash flows, long-term ownership and operation of assets, and innovative solutions to address market inefficiencies in the infrastructure sector.

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