Botswana’s flagship hotel Group Cresta Marakanelo Limited continues to register declining sets of results in cash flows and revenue base. Following subdued performance on overall in 2017 trading year, the Group started the year 2018 on another slow note, unaudited financial results for the first six month of the year mirrored contracted set of figures with total assets and equity gown down the cliff by 3 percent.
According to the financial results for the six month ended June 2018 Cresta ended the half year on cash resources of P45.3 million compared to P51.0 million gathered in the corresponding 2017 period. Due to this 3 percent contraction in total assets and equity the Botswana Stock Exchange (BSE) listed hospitality outfit declared a dividend payments amounting to P25.9 million at 14 thebe per share during the period from July 2017 to June 2018.
Cresta Marakanelo Limited which operates in excess of 10 hotel and lodges registered another depressed performance in Cash flows, during the period under review, operating activities collected P20.2 million, a significant decline when compared to P25.7 million realised at the end of first half year 2017. Cresta noted that still under this subdued cash flow output; a large portion of the figures further went towards tax payments.
“Net cash utilized in investing activities increased to P20.8 million, from P15.4 million in the prior year, as a result of the ongoing refurbishment underway at the flagship Cresta Mowana Resort & Spa,” reveals the statement from the BSEL listed group. Explaining the set of results Cresta says for under Botswana division, the new Maun hotel, which started operating in June 2017, accounted for a significant part of the revenue growth achieved by the Group in Botswana market when not counted in.
“Excluding the new operation, existing hotels’ revenue increased by 4 percent. The new operation’s average occupancies are still low and it has therefore been incurring losses. The overall impact of Maun hotel to the Group’s profit before tax for the half year was a loss of P3.9 million, compared to a prior year loss of P2 million inclusive of pre-opening expenses,” explains Cresta.
According to further commentary on the half year results Cresta reflects incurred stretched sets of costs from property rental expense, which is increasing ahead of inflation. On the Zambian operations a major cholera outbreak in Lusaka during the first five months of 2018 adversely affected the hotel operations. The Zambian Ministry of Health banned large gatherings of more than five people in order to stop the transmission of the disease.
However, the Moses Lekaukau led board reports that the performance started to improve during the latter part of the second quarter, with profits achieved higher than the prior year. “However this did not completely reverse the losses incurred during the first quarter, resulting in the hotel recording an operating loss for the half year of P122, 000 compared to a profit of P570, 000 in the prior year,” underscores the statement from Cresta.
On Prospects Cresta Marakanelo says despite an expected improvement in performance during the second half of 2018, the Group’s net profit for the year is anticipated to be below last year’s performance. “The new Maun hotel will continue to have a negative impact on Group’s results in the short term.” In a bid to keep up with the market and stay relevant as the country’s traditional major hotels services provider Cresta says it will implement various strategies to diversify their products in order to compete with new active and vibrant market entrants.
“A number of initiatives are underway to improve the performance of this hotel and also increase the contribution of the leisure market to the company’s customer base, which is heavily skewed towards business travelers,” reveals the statement from Cresta. Cresta has been adversely affected by sluggish economy since 2016 which resulted in reduced government spending, increased completion from new entrants as well other unfavorable trading circumstances, in 2017 Cresta registered profit decline of 29 percent compared to 2016 trading year.
“There will be a focus on improving margins, as well as product improvement across all hotels. The Cresta Mowana Resort & Spa refurbishment is currently underway,” laments statement from the Group. Cresta Marakanelo underscores that it continues to explore local and regional growth opportunities in order to diversify its portfolio and increase shareholder value.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.