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NPF saga degrades Engen Botswana cash reserves

Publishing Date : 10 April, 2018


Engen Botswana Limited, a subsidiary of Petroleum Investment Holdings Limited has announced a decline in the cash reserves of the group. The company which engages in selling, distributing fuels and lubricant alongside property letting has revealed that 2017 was not a good year as the company has been greatly affected by the inability to recover the amount being owed by the Government of Botswana through the National Petroleum Fund (NPF).

The NPF which is still on hold following the corruption revelations is said to have had major effect in the dealings of the company. Engen notes that the NPF started accumulating the funds from December 2016 to December 2017.The just released results indicate that the company remains hopeful that the Government will attend to the matter of the slate –under-recovery refund without further delay.

The results show that the commercial side of the business continued to deliver strong results in spite of the challenges faced by the mining, and agriculture sectors of the economy. Having registered an 8.9 percent growth for profit before tax and costs from 186 million to 202 million for the year ending December 2017, Engen has continued praising the commercial section of their business.

It is further noted that distributors and lubricants continued to play an influential role in the good financial performance of the said channel. Health, Safety and Environmental (HSE) Key Performance Indicators for the year under review are reported to have been met and in many cases exceeded. The results highlight that this continues to be a key focus area in the daily business and there is zero tolerance to acts or behaviour that compromise the company’s set HSE standards. The company highlights that efficiency continued to be enhanced in the distribution part of its business in order to ensure on time and in full deliveries and to manage the cost to serve.

In spite of the challenging economic conditions within Botswana resulting from subdued mining activity, the group in 2017 exceeded many of the operating parameters achieved in 2016. Fuel supply into Botswana was disrupted during the second half of 2017 due to the unplanned shutdown of some refineries in the Republic of South Africa (RSA). Crude oil prices gradually increased during the course of the year from around 55 USD / BBL at the beginning of the year to 75 USD/BBL at the end of 2017, which resulted in significant inventory revaluation gains.

The Group says that it managed to stream in “new to industry”, retail outlets towards the end of 2017 which they note did not contribute in any significant way to the increase in sales volumes due to the short period they were in operation. While competition in t he retail space across the industry intensified, the Group cites that it managed to grow its retail sales by 3 percent in the year under review mainly from its base network. Engen Botswana notes that it has continued to offer outstanding customer service at their retail outlets and the results are evident in their achievement of Net Promotor score of 84 percent the retail sales channel and 100 percent in the commercial sales channel.

A substantial amount of their capital expenditure resources is reported to have been utilized to grow the Group’s retail and convenience network, which in return managed to set them apart from competitors. Engen Botswana further states that throughout all this it has embarked on a program to refresh some of its retail outlets in order to enhance the motoring public’s perceptions of their brand.

Engen is optimistic that the high levels of operational efficiency, good corporate governance and responsible conduct business in line with values will stand in good stead to surmount the challenges that they may encounter in the future. They also note that this will help deliver strong results for shareholders and make a meaningful contribution to the economic prosperity of Botswana. The group cited that it remains optimistic about the operating environment and continue to espouse its long-term strategic intent to grow the Engen brand in the Botswana market and to be the leading brand of choice in this market.



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