New acquisitions boost Chobe profits
Chobe Holdings Limited, Botswana’s domestic tourism and hospitality group posted positive results for their financial year ended February 2019 after making several new acquisitions as well as renovations in their existing camps and lodges during the prior year.
According to financial results released by the Botswana Stock Exchange listed group, during the period under review occupancy increased by 5 percent due to growth in available beds following renovations at Chobe Game Lodge and the addition of Dinaka to the Group’s portfolio.
During the financial year, the Group spent, from internally generated cash flows, P82.4 million on the purchase of game drive vehicles, boats, a Cessna caravan significantly improving existing buildings and equipment. Chobe further reports that the acquisition of Dinaka Safari Lodge and the three property owning companies 1st September 2017 by Ker and Downey Botswana, a wholly subsidiary of Chobe, forming the Dinaka Conservancy, gave rise to P26.6 million goodwill.
The lodge was subsequently rebranded and reopened as a Ker & Downey property n 1st March 2018. Furthermore Chobe says during the financial year under review the company commenced the induction and boarding of agents through Dinaka on educational tours to familiarize themselves with the concept of conservancy tourism, a pioneering and otherwise non-traditional Botswana.
According to Chobe Executive management height end conservancy tourism is relatively new to Botswana, with currently no existing entities to benchmark with. “We have therefore used currently available booking data and cash flows from existing camps as models, modifying them to estimate future cash flows from cash flows for Dinaka, to assess the goodwill for impairment in accordance with IFRS” explained J M Gibson, Chobe CEO and Deputy Chairman. The assessment according to Gibson indicated that there was need to write down the goodwill by P7.4 million.
On the revenue front, figures went up by13 percent after a boost from increased bed night’s old, marginal increase in achieved bed night rates in US Dollar terms and depreciation of the Pula against the US Dollar. When gauged against the financial year ended February 2018 Chobe also attributes increased occupancy figures to enhanced marketing efforts.
Group Profit after tax closed the year at 15 percent increase when gauged against the previous year end. Yearend operating cost figures grew by 14 percent, which considered satisfactory in light of increased volumes of business and current inflation levels.
During the year under review Chobe distributed P1.5 million to phantom share scheme, a window opened in February 2013 which allows employees participation in the dividend distribution of the Group. The scheme allows all qualifying staff to share equally in a bonus which is calculated to be equal to the value of dividends attaching to three million shares in the Company.
Post February 2019 Chobe through its wholly owned subsidiary Ker & Downey Botswana acquired the entire issued stated capital of Nelle Investments ,a property owning holding leases for two game farms in the Hainaveld area for a cash consideration of P15.4 million financed using the Group ‘s internal cash resources . Chobe says the two properties will be utilised to increase the extent of the land holdings currently held by Dinaka Conservancy.
Going forward Chobe says it continues to invest considerable resources to improve its marketing strategies, product offerings and cost controls. “The Group’s strong cash position provides us with the opportunities that may arise.” Said Gibson. Tourism in Botswana is earmarked to provide much needed economic diversification away from mining. This diversification drive, according to the World Tourism Organization needs however, to be cautiously applied to avoid “over tourism”, a relatively new buzzword for tourism congestion, management and carrying capacity. “Over tourism” identifies that the true challenge is not so much the number of visitors, but the capacity to manage them. All this whilst preserving the environment.
Chobe says the continued underperformance of Air Botswana hinders growth in the sector. “For the tourism industry to grow to its full potential there is need to have other airlines with relatively reliable performance to be introduced to the Botswana skies both domestically and internationally” said Chobe Boss in the financial statement.
Chobe Holdings Limited owns and operates, through its wholly owned subsidiaries, eleven eco-tourism lodges and camps on leased land in Northern Botswana and the Caprivi Strip in Namibia with a combined capacity of 314 beds under the brands Desert & Delta Safaris and Ker & Downey Botswana.
Safari Air, a wholly owned air charter operator, provides air transport services to the group's camps and lodges. Desert and Delta Safaris (SA) (Pty) Ltd, another wholly owned subsidiary operating in South Africa, provides reservation services to the group. The company got incorporated in Botswana in 1983 and listed on the Botswana Stock Exchange in September 29th 1999.
Business
LLR transforms from Company to Group reporting
Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.
The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.
At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.
The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.
“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.
The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.
In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.
“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.
Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.
Business
Botswana’s Electricity Generation Dips 26.4%
The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.
Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.
Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.
Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.
Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.
The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.
The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.
In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.
Business
MMG acquires Khoemacau in a transaction valued at P23Bn
MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.
On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.
Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.
In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).
On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.
MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.
On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.
The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.
On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.
The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.
Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.
Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.