New African Properties distributes more dividends despite profits decline
Business
New African Properties (NAP), a Botswana Stock Exchange (BSE) listed property group that owns amongst others one of Gaborone’s first urban shopping spaces River Walk mall, this week released their audited abridged financial results for the year ended 31st July 2019.
The company has distributed more to its unit holders despite an over 8 % decrease registered in profits for the year. The total distributions for the year amount to 25.80 thebe per linked unit adding to P155.9 million, mirroring a 5.2% increase when compared to 24.53 thebe, per linked unit from P148.3 million dispatched in the prior year.
Last year New African Properties reported that the impact of the prior period income included in the first half of the 2018 financial year increased the comparable distributable income by P1.5 million, adjusting for this the annual increase in distributions would have been 6.3%.
The final distribution of 13.24 thebe per linked unit, based on the forecast distributable income of P156.0 million, was declared on 25th July and paid on 30th August and amounted to a 7.8% increase on the prior year's 12.28 thebe.
On the rental fronts, the company’s Net rental income has increased by 5.2% for the year, which would have been 6.2% without the P1.5 million prior period incomes included in the comparative. Property costs excluding tenant installations and letting commissions, which are expensed as incurred, increased by 4.6%.Other contributors to distributable income include portfolio costs which remained flat and net investment income and tax which both increased marginally.
Zooming into profits for the year BSE listed property closed the financial year ended 31st July 2019 at P198.7 million, lower than the P217.3 million recorded at 2018 year end. This year’s profits exceeds the distributable income by P42.7 million lower that the P69.4 million recorded in 2018 as a result of after-tax revaluation and other accounting adjustments that are non-cash flow items and do not impact distributions but add to the underlying net asset value of NAP.
T.LJ Mynhardt Managing Director of New African Properties Limited says the actual value of investment property has increased by 3.0% this year but the relative increase in valuations in the current year is lower than last year which has resulted in a decrease in profit. The company ‘s property portfolio has not changed the year which comprises predominantly Botswana based retail properties, weighted towards Gaborone but with a wide geographical footprint, as well as some exposure to Namibian retail properties.
The Managing Director says the quality and diversity of the tenant base is a key consideration and contributor to the company’s performance. At year end 96.6% against 96.2%, 2018 figure of the gross lettable area was let in terms of 478 leases compared to 474 in 2018 with 58% of rentals flowing from listed and multinational companies.
Mynhardt added that two vacancies arose in the upper level at Riverwalk in the second half of the year resulting in adverse impact for the second half explaining that this will spill over to impact the new financial year. “This space has not yet been re-let but Management is in discussions with prospective tenants” he said.
In Selibe Phikwe where the company owns a number of commercial spaces, which accounts for 2.4% of total property value and 2.7% of rental income, the portfolio has marginally exceeded expectations with vacancies decreasing from 2 094 m2 to 1 785 m2 during the year, albeit at reduced rentals, accounting for 41% of total vacancies in the portfolio at year end.
The lease expiry profile of existing leases in this area is 26%, 49%, 23% respectively in each of the next 3 years and 2% in the 2024 financial year with the tenant composition being 52% listed and multi-nationals, 3% nationals, 13% government and the remaining 32% smaller tenants. “Substantially all of the leases expiring during the year were either renegotiated or re-let.” Added the company MD.
Mynhardt further explained that renegotiations in Selebi Phikwe, an industrial property in Francistown and for certain smaller tenants in Kagiso reduced the average increases achieved across the remainder of the portfolio which achieved escalations in line with the portfolio rental growth for the year. New African Properties reports that net unprovided tenant arrears amount to P0.8 million compared to P0.3 million) in 2018, with an impairment charge of P0.2 million against 2018’s figure of P0.4 million after applying the new requirements in terms of IFRS 9. The change from IAS 39 to IFRS 9 did not result in any restatement to opening retained income.
Business
CA SALES revenues rose to R9.5 billion
The Botswana and Johannesburg Stock Exchange listed distributor of fast-moving consumer goods
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Business
Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.