GREYSTONE PARTNERS RECORDS OVER E760 000 PROFIT DECREASE

MBABANE - For the fiscal year ended December 31, 2023, Greystone’s investment portfolio continues to grapple with tough economic and trading conditions endemic across numerous sectors within Sub-Saharan Africa.

Greystone Partners Limited is a listed investment company that focuses primarily on unlisted investment opportunities, like the private equity asset class. The company’s aim and objective are to achieve superior long-term capital appreciation through majority or minority equity stakes across a portfolio of investments.As Greystone’s diversely con structed portfolio is gradually stabilising from prior global disruptions, the persisting instability in the global supply chain, partially a residual outcome of the Russia-Ukraine conflict and neighbouring economies’ poor economic growth has hampered the realisation of the growth believed to be attainable by the portfolio.

This is detailed in the entity’s audited financial results for the year ended December 31, 2023. The group made a gross profit of E290 349 485 in the last financial year, compared to a gross profit of E291 111 965 for the 2022 financial year, depicting a decrease of E762 480 in gross profit. As a result of the above, the entity revealed that unfettered inflationary pressure and stagnating economic growth have placed undesired pressure on consumer purchasing power and consequently on the profitability of some of Greystone’s investments.

Consumption

“Some businesses within our purview have been required to absorb a portion of the inflationary pass-through to consumers thereby inducing a squeeze on profitability. Consumer behaviour has notably shifted towards non-discretionary purchases, with a more conservative approach to consumption habits that reflect the decrease in disposable income,” read the audited report results. The results stipulate that this has had a moderate financial impact on the entity’s growing, defensive (noncyclical) investments, but has significantly impacted our early-stage discretionary goods (cyclical) investments, namely General Africa Foods Eswatini (Pty) Limited’s (GAFE). The company revealed through the financial results that the manager was evaluating potential business improvement strategies that can be implemented to drive the performance of the business.

“Notwithstanding the structural impediments affecting the portfolio, most of Greystone’s investments have demonstrated resilience and performed well during the year under review.
Ngwane Mills (Pty) Limited (Ngwane Mills) and Alliance Foods (Pty) Limited (Alliance Foods) in particular have produced desirable growth,” stated the entity. Despite the tough trading environment persisting in the local economy, presenting some of the toughest business conditions in the company’s history, it remains determined in its commitment to withstand these trials and emerge stronger. They have navigated sluggish economic growth, supply chain disruptions, soaring electricity costs, foreign exchange fluctuations, geopolitical tensions, local political instability, unprecedented inflation, and consequent global interest rate increases according to the financial results. “These factors have unquestionably affected the profitability and valuations of our investee companies.

Outlook

‘‘However, we are extremely proud of the performance of several four assets. Ngwane Mills, Alliance Foods, ESRIC and Lojaf continue to perform despite the structural challenges faced. The Board, in collaboration with the Manager, maintains a positive outlook for the future.” To this end, Greystone’s portfolio is well-positioned for sustained growth. In addition to the anticipated macro-economic improvements, our assets are set to benefit from a rising middle class, increased urbanisation, the adoption of new technologies, and the formalisation of informal trade.They have already seen signs of healthier trading activity and reduced margin pressure within our investment portfolio, which should enhance cash flow generation.
“However, we recognise that this transient trend needs to continue for a substantial positive impact on our portfolio valuation,” read the results.

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