Stimulus Investments Limited has recently published its audited financial results for the year ending 29 February 2024. These results shed light on the company’s operational successes and challenges over the past fiscal year. This article delves into the details of Stimulus’s financial performance, portfolio adjustments, and strategic decisions that have shaped its current standing.
Operational Performance
Operating Profit and Comprehensive Income
Stimulus Investments Limited reported an operating profit of N$76.8 million for the year ended 29 February 2024. This figure represents a slight decrease from the N$84.4 million reported in the previous year. The company’s loss before taxation was N$5,154, a significant drop from a profit of N$18,455 in 2023. Taxation for the period matched the loss, resulting in a net profit of zero for both 2023 and 2024. This outcome underscores the company’s commitment to reinvest earnings back into its operations and growth strategies.
Dividend Revenue and Finance Costs
Dividend revenue from investee companies saw a substantial increase of 71%, reaching N$29.7 million. This surge is primarily due to N$12 million in dividends from Desert Trade Investments (DTI) following the sale of shares in Namibia Media Holdings and Newsprint Namibia. Finance costs in the Statement of Comprehensive Income reflect net realized and unrealized portfolio returns due to preference shareholders. The preference shareholders are entitled to 100% of net returns as the minimum prescribed performance hurdle was not met.
Portfolio Adjustments
Disposal of Investments
During the review period, Stimulus disposed of its investments in Namibia Media Holdings and Newsprint Namibia. These entities were held under DTI, a wholly-owned subsidiary of Stimulus. The disposals were conducted at values consistent with independent valuations from the 2023 Annual Financial Statements. By the balance sheet date, DTI had received N$12 million of the sales consideration, which was paid as dividends to Stimulus. The remaining consideration is to be paid by the purchaser over the next three financial years.
Valuation Gains and Total Assets
The portfolio of investments in subsidiaries and associates was valued by an independent valuator, resulting in a fair value gain of N$60.5 million for 2024. This figure is lower than the N$80.8 million gain reported in 2023. The total assets under management amounted to N$726.4 million, up from N$651.1 million in the previous year. This increase reflects the company’s strategic investment and portfolio management efforts.
Financial Metrics and Shareholder Returns
Net Asset Value (NAV) and Dividends
The net asset value (NAV) attributable to each preference share, cum dividend, rose to N$156.19 from N$139.91 in 2023. Following the payment of dividends, this value will adjust to N$152.17 per preference share. The final preference dividend declared for 2024 is N$18.7 million, translating to N$4.02 per preference share, a significant increase from the N$0.76 per share in 2023. This dividend represents the total realized cash returns of Stimulus, adjusted for fair value gains.
Strategic Investments and Market Position
Current Investments and Market Outlook
Stimulus holds equity investments in several prominent Namibian companies, including Cymot Group, Khomas Solar Saver, Neo Paints Group, Plastic Packaging Group, Polyoak Namibia, and Walvis Bay Stevedoring. These investments position Stimulus to capitalize on the improving Namibian economic environment, particularly the potential upswing in the energy sector. Despite challenges in the construction sector impacting Neo Paints Group, other portfolio companies have shown encouraging earnings growth.
Conclusion
Stimulus Investments Limited has demonstrated robust performance amid challenging economic conditions. The strategic disposal of non-core assets and reinvestment in key portfolio companies have positioned the company for future growth. The substantial increase in dividend revenue and the declared final dividend reflect strong shareholder returns. As Namibia’s economy continues to recover, Stimulus’s well-diversified portfolio and strategic investments are likely to yield further growth and value for its shareholders.
Table: Key Financial Metrics
| Metric | 2024 (N$) | 2023 (N$) |
|---|---|---|
| Operating Profit | 76,792,013 | 84,376,863 |
| (Loss) / Profit Before Taxation | (5,154) | 18,455 |
| Taxation | 5,154 | (18,455) |
| Profit for the Period | 0 | 0 |
| Dividend Revenue | 29,700,000 | 17,400,000 |
| Fair Value Gain | 60,500,000 | 80,800,000 |
| Total Assets Under Management | 726,400,000 | 651,100,000 |
| NAV per Preference Share (Cum Dividend) | 156.19 | 139.91 |
| Final Dividend per Preference Share | 4.02 | 0.76 |