GREYSTONE PARTNERS INTERIM REVENUE DROPS 4.1%

MBABANE – For the six months ended June 30, 2024, Greystone Partners Group revenue slightly dropped by at least 4.1 per cent when compared to the same period last year.

During the six months ended June 30, 2024, the group recorded revenue amounting to E841 306 799, while in the same period last year it recorded E849 290 906. According to the company’s interim results, Greystone’s underlying investments have largely benefitted from a more stable and commercially desirable macro-economic environment. While the general population in territories Greystone operates undoubtedly remaining under pressure, with discretionary spending still lagging pre COVID-19 levels, green shoots are beginning to show.
Greystone Partners Limited’s primary goal as an investment firm is to cultivate and expand a portfolio of material equity stakes in privately held companies. Companies are carefully selected based on their proven growth track records or their potential for future growth.

Greystone continues to provide its shareholders with access to a diversified portfolio of private enterprises, that are actively managed by African Alliance Eswatini Capital Limited (the manager). The company believes that in order to be a conduit for wealth creation, it must make a direct and proactive contribution to Eswatini’s economic growth and development and priorities investments in the local economy.

Profitability

Lingering impacts of a tough three years do, however, remain with the company’s early-stage discretionary goods (cyclical) investments, namely, General Africa Foods Eswatini (Pty) Limited’s (“GAFE”), continuing to absorb inflationary pressure inducing a squeeze on profitability. The manager was however excited to introduce to the market a revitalised, repurposed and more importantly reinvigorated general merchandising brand in early September. Greystone is optimistic this offering will result in a much- improved financial performance, emanating from this entity.

Nobwithstanding lingering structural impediments affecting the portfolio, most of Greystone’s investments have demonstrated resilience and performed well during the six months ended June 30, 2024. Ngwane Mills (Pty) Limited and Alliance Foods (Pty) Limited continue to outperform. ESDI, a homegrown standalone butchery has, however, stood out. It follows that Greystone has entered into agreements to swap its shareholding in Alliance Foods for shares in Inala Capital (which will, ultimately, own 100 per cent of Alliance Foods) as part of a broader consolidation and continued growth strategy, as well as sell Ngwane Mills entirely.

This will ensure ongoing exposure to Alliance Foods during its next growth phase and drive a liquidity event for Greystone, through the sale of the Ngwane Mills shares for cash.
The manager will continue to focus on unlocking shareholder value, driving underlying portfolio company performance and looking for value accretive corporate actions at a Greystone investment holding company level.

By nature, private equity is a long-term investment, requiring long-term thinking and a patient strategy. Greystone, through the manager, remains confident of its ability to generate sustainable, market-leading returns for its investors.Furthermore, the company reported that at group level, the revenue cost of sale and operating expenses are largely attributable to GAFE and Lojaf as these entities are recognised on a consolidated basis. Operating expenses include advertising costs, rent, salaries and wages, royalty fees as well as other costs relating to the operational expenses of ESDI’s, Pick n Pay’s and West Pack’s operating under GAFE and Lojaf.

Greystone Group’s total investment income of E1.5 million is solely comprised of E1.5 million in interest received.It is worth noting that during the year ended December 31, 2023, Alliance Foods was reclassified as held for sale and as such revenue, cost of sales, operating costs and gross profits are no longer recognised on a consolidated basis for this investment
Profit attributable to discontinued operations (Alliance Foods) amounts to some E7.2 million for the period under review. The two largest expenses (at a company level) specifically related to administration and management fees of E3.6 million and auditors remuneration of E563 000. The management fee covers all accounting, rent, deal sourcing, holding company management and other operating activity costs of Greystone. This management fee is 1.5 per cent of the audited Net Asset Value of Greystone.

Supplemental

Greystone Company’s balance sheet remains conservatively leveraged with a total of E64.3 million of debt and accrued interest. This debt was raised as supplemental capital that was deployed in historic years, into portfolio investments made to date. Cash and Cash equivalents amounted to E29.6 million for the Group and E195 500 for the company. All investments, not consolidated, are disclosed as investments, reflected at fair value through profit and loss (FVTPL) of E158.1 million at Greystone Group level and E436.4 million at a company level property, plant and equipment, inventories, accounts receivable and accounts payable all largely relate to GAFE and Lojaf. Overall, the net asset value at group level is E656.8 million and at  company level is E473.9 million as of June 30, 2024.

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