Afinitas, the pan African investment holding company focused on developing a portfolio of African focused businesses , might be on its way to profitability after it narrowed its losses, the company said on Friday.
The venture capital firm listed on the Botswana Stock Exchange reported a 64 percent increase in revenue, raking in P12.2 million for the six months ended June 2019. However, the top-line was eroded by expenses which spiked by 11 percent to P14.7 million, leaving the company with a loss of P1.7 million.
Listed on the Botswana Stock Exchange in 2015 under the domestic venture capital counter, Afinitas has been reporting losses with the investment focused company pumping millions into new ventures. After raising money through listing, the company acquired a 50 percent shareholding in Africa Events Limited which entirely owns the rights to Africa Financial Services Investment Conference (AFSIC). In 2016 Afinitas followed with establishment of two new companies; Ethiopia Investments Limited and Adventis Limited, committing P50 million to the two ventures.
“The Directors are pleased to note the continued strong growth in group revenue. Your group is well placed to benefit from an expected increase in interest in Africa as an investment destination. The financial performance of the group reflects the fact that many of Afinitas’ portfolio companies are early stage and substantial embryonic costs are incurred in the early years, while recurrent revenue sources take time to develop. The Directors of Afinitas expect revenue growth to continue to be strong in future years while costs are forecast to grow at a lower rate than revenue growth. The result of this would be a continued move towards sustainable and growing profitability,” the company said.
The narrowed losses for the latest financial results comes after company directors told shareholders at an annual general meeting held last year that Afinitas has successfully developed the necessary
corporate structures, allowing the company to focus on revenue growth. In the past the company’s management defended the mounting losses as teething problems of a new start-up company, explaining that operating costs are going to exceed revenue generated due to investment in human resources and infrastructure at a time when revenue streams are not fully developed.
Leutlwetse Tumelo, Afinitas promoter and executive director, reiterated that the group is focused on revenue growth going forward, and that some of the investee companies were showing positive signs of growth. The company’s stock price has slightly declined from the listing price of P1, and now retails for P0.99. However, the management says the stock price will pick up overtime, spurred by growing revenues.
“The BSE is generally an illiquid market with very low share trading especially on companies listed on the venture capital board,” Tumelo said. “At the current stage of development, the company has not started generating revenues. Once revenues start to increase most investors would have greater interest in the stock.”
