By: Business Partners Limited
Promising results in an underperforming economy
During the last financial year, Business Partners Limited (BUSINESS/PARTNERS) – a leading risk financier – approved R 1 027.5 million in business finance to 308 businesses in South Africa, representing a notable increase in the number of companies that it was able to reach this year, up from 295 businesses last year.
In addition, the company grew its financial assistance to female business owners by disbursing 39.8 percent of total disbursements to the group, up from 36.9 percent in the 2017/2018 financial year. The disbursements to black business owners also increased from 40.5 percent in the prior year to 41.2 percent in the year ended 31 March 2019.
This is according to Ben Bierman, Managing Director of BUSINESS/PARTNERS, commenting on some of the highlights of the company’s 2018/2019 financial results, which were released today. He adds that in spite of challenging economic conditions over the last 12 months, the Group has seen noteworthy improvements in key areas of its operation.
“BUSINESS/PARTNERS was able to offer our investors a return on equity of 6.4 percent and achieve a net profit of R212.8 million, which is satisfactory. More importantly, we have been able to add value to more businesses than in the preceding years, in the form of the number of transactions approved and disbursed.”
Bierman states that the latter was no easy feat. “South Africa’s economy is recovering slowly, having increased from 0.6 percent GDP growth in 2017 to 1.2 percent in 2018. Similarly, business confidence has been slow to rise again, which had an effect on businesses’ appetite for growth – a reality that was evident from our rate of lapsed investments, which was at 21.8 percent.
“This means that around a fifth of the businesses that were approved for finance, ended up not concluding the investment process, with the vast majority stating that they had decided to postpone their planned expansions,” he explains.
Still, Bierman notes that the rise in businesses that received our financing, is encouraging, adding that BUSINESS/PARTNERS aims to approve about R1.4 billion and disburse R1.15 billion in finance in the 2019/2020 financial year.
More positive news is that the company was able to decrease its net credit losses by 32.3 percent. “While there was an increase in the bad debt write-offs, this was offset greatly by our success in reducing our overall credit risk, as well as our improved ability to recover on some debts. It is worth adding that our technical assistance programme is also believed to have contributed to a much healthier portfolio of clients. In total, net credit losses decreased from R76.3 million to R51.6 million.”
Bierman says that the challenges in the macroeconomic environment were also evident in the subdued capital yields that BUSINESS/PARTNERS realised from its property asset class, which only grew by 1.6 percent in 2018/19.
Lastly, the preceding 12 months witnessed some interesting developments for BUSINESS/PARTNERS in the rest of Africa as well. “While there was low business activity in some of our operations in the rest of the continent, we delivered exceptional results in Rwanda, Uganda and Namibia. Our investment portfolios in these countries expanded and now amount to more than R500 million in total, indicative of the confidence we have in the future of these economies.”
In closing, Bierman says that BUSINESS/PARTNERS has already identified opportunities to better serve burgeoning businesses and help to contribute to greater economic growth in the year to come. “We are confident that the 2019/2020 financial year will bring even more quality returns for our shareholders, as well as the clients that we serve,” Bierman concludes.