…As quality investments remain scarce amid economic challenges
By Hilary Mare
STIMULUS Investment Limited will dedicate significant focus to working closely with the management teams of the investee companies to explore new and innovative ways of servicing their different market segments and maintaining market share, the company has said.
Announcing its annual financial statements for the year ended 28 February 2018 last week, the Namibian private equity fund highlighted that the existing portfolio is underpinned by quality investments.
“The challenging economic environment experienced during the past year provided an opportunity for most of our portfolio companies to focus on internal restructuring initiatives. There has been renewed focus on streamlining the business operations of the investee companies through optimising cost structures aimed at improving operational efficiencies.
“Over time, we believe that the investee companies will be well-positioned to take advantage of improvements in the current economic conditions and growth prospects in the different sectors. We continue to seek new investments which meet our investment mandate, as well as our risk and corporate governance criteria. We further see opportunities to increase our positions in some of our investee companies and to invest in opportunities that will create synergies within our existing portfolio. Whilst the Namibian economy remains under pressure, we expect trading conditions to improve somewhat over the next 12 months,” the firm said.
The Stimulus investment portfolio achieved an annual return of 3.44 perecent for the year under review.
The directors resolved that in addition to the interim dividend of N$ 25,811,862 paid in December 2017, an amount of N$ 25,021,229 (2017: N$ 32,229,947) be declared as a final dividend to the preference shareholders, which translates into a dividend of N$ 5.38 per preference share based on 4,650,786 preference shares in issue (2017: N$ 6.93 per preference share in issue).
The preference dividend amount represents the total realised cash returns of Stimulus, after adjusting for fair value gains, for the financial year ended 28 February 2018.
Josephat Mwatotele, Chief Executive Officer, Stimulus Investment Limited stated that they were satisfied with the results achieved over the past financial year.
“The negative macro-economic environment in Namibia resulted in 2017 being economically challenging for most Namibian businesses. GDP growth was negative, consumer confidence was low, and policy uncertainty negatively impacted companies’ strategic deployment of capital. Although liquidity has improved somewhat, the Namibian economy remains in a vulnerable position and the outlook in the short- to medium term remains challenging. “
He went on to say that given the difficult economic conditions, growth in the private sector had been constrained, and many of Stimulus investee Companies were not immune to the downturn.
“Underlying portfolio growth was flat. Significantly, the Stimulus team applied its efforts to provide strategic guidance and to ensure that each portfolio company is optimally positioned, both strategically and operationally, to handle this challenging environment in the best possible manner and makes them well placed to deliver accelerated results when the economy improves. Positive political developments in key neighbouring trading partners, especially Angola and South Africa, have relevance to some of the Stimulus investee companies and may result in new revenue opportunities.”
Share acquisitions and capital advancements in aggregate of N$33.3 million in Khomas Solar-Saver (Pty) Limited, Cymot Investments (Pty) Limited and Polyoak Packaging Namibia (Pty) Limited were made during the year under review.
“The investment in Joe’s Beerhouse Properties (Pty) Limited was disposed during the year. Finance costs stipulated in the Statement of Comprehensive Income comprise the realised and unrealised portfolio returns which, based on the current portfolio valuations, would be due to the holders of Stimulus’ listed preference shares,” added Mwatotele Stimulus has grown from being the first Namibian private equity fund to the largest due to a combination of patient capital and an experienced, long-standing management team. In 2017, Stimulus deployed additional capital of N$60 million within its portfolio as part of its approach to help investee companies grow their businesses, diversify, unlock value and support their long-term strategy.
Confidente. Lifting the Lid. Copyright © 2015