Connect with us

Cresta profits decline by 30 percent

Traditional hospitality giant Cresta Marakanelo Group which operates hotels and lodges in Botswana & Zambia continues to be negatively affected by the increasing hospitality industry competition.

 As signaled by the Group at half year ended June 2017 results presentation, the chain hotel outfit collectively registered shrunk profits for the complete 2017 trading year ended December last year. According to the annual report released last week the Botswana Stock Exchange (BSE) listed hotels Group performance was subdued, with depressed overall financial performance compared to the prior year.

The prior year also recorded lapses in governance processes within the Group, which resulted in a restructuring of the leadership and a complete review of the internal control system, which was completed in 2017. Cresta Marakanelo Limited Chairman of Board of Directors Moatlhodi Lekaukau explains that the overall decline in profitability was by in large attributed to increased competition in the markets the Group operates in, coupled with significant reduction in Government spending.

Cresta has been predominantly a household name in the hospitality and related industries such as conferencing for several years; however of recent the Botswana market which is Cresta’s main operating space has been receiving new entrants who bring to the game exciting and diversified products, amongst other elite’s hospitality outfits internationally reputable market nectarines.

This has in turn taken the competition to Crestar’s door step. The Group also takes blows from reduced government spending from time to time. Government business especially civil servant’s official trips hospitality contributes significantly to Cresta’s bed occupancy. During the year under review the company recorded an overall profit before tax of P26.2 million mirroring a 29 percent decline from the result recorded for the previous year.

 The Group recorded a marginal 1 percent increase in revenue to P 337 million. Total overheads decreased marginally, despite the inclusion of the costs related to the new hotel in Maun for the second half of the year.  Lekaukau notes that the reduction was as a result of cost rationalization measures across the Group.

Despite shrunk profits as compared to the previous year, Cresta’s total assets for the year under review climbed by 2 percent, while equity increased by 4 percent compared to the same period last year.  According to Lekaukau the Group continued to be cash generative despite downward trajectory on profitability, a total 6% increase in net cash generated from operating activities compared to the year ended December 2016.

Net cash generated from operating activities was P65.3 million compared to P61.8 million in 2016.  “The Group has a robust and stable base, with cash resources of P65.3 million more that the P61.8 million in 2016, this is satisfactory going forward, the cash will be utilized to fund the payment of dividends to shareholders, refurbishments and expansion activities,”  explained Lekaukau.

The group’s operating profit decline of 26 percent comes about from P33 million raked in during the 2017 trading year compared to P44.9 million in 2016. Earnings per share also registered a decline of 29 percent from 20.32 thebe in 2016 to 14.47 thebe in 2017, while the total dividend of 14 thebe per share for the 2017 financial year represents an 8 percent growth on the prior year.

The dividend yield for 2017 of 13 percent compares favourably to the average dividend yield of approximately 5.5% for counters listed on the Botswana Stock Exchange. At year end, the Group had negligible debt amounting to P8.4 million, a significant reduction from the over 12 million debt registered at the end of 2016.

Cresta Marakanelo Managing Director Mokwena Morulane notes that his company‘s declined performance is attributable to sluggish economy and contracted expansion opportunities due competition brought about by new entrant in the market. He however submits that Cresta Marakanelo Group is able to generate cash flows from operations of approximately P65 million per year.

 “The Group is adequately positioned for ongoing operations and macro-economic shocks that may occur, we have debt carrying capacity and we are also able to take advantage of significant expansion opportunities,” he said. Amongst the two operation markets for Cresta, Botswana operations were significantly affected by the increased competition. According to the report Botswana’s overall occupancy declined from 63 percent in 2016 to 57 percent in 2017, also weighed down by the low occupancies of the new Cresta Maun Hotel, which opened in May 2017.

Three of the 11 Cresta hotels in Botswana incurred losses for the year as a result of flat revenue growth in a competitive environment. However on the Zambian Market the group performed satisfactorily with the division raking in operating profit of P987 million for the year, compared to a loss of P57 million in the previous year.  “This was achieved in spite of the subdued business environment in Lusaka during the first half of 2017” observes Morulane.

 The Cresta MD notes that cost optimization for the Zambian operations beard fruits as division’s revenue increased by 2 percent in Kwacha compared to the prior year, with the overall increase in profitability. To emerge from the declined profitability and remain the leading hotel Group predominantly in Botswana Cresta Marakanelo commenced the implementation of its new strategic plan aimed at repositioning the group and revamping its performance.

The strategic plan will run for the five year period from 2018 to 2022. The five main pillars of the Strategic Plan covers the broad areas of human resources and capacity building; growth; information communication and technology; marketing; and cost optimization. “We are working on initiatives to drive down costs without compromising the quality of product offering at the hotels, while also improving the value proposition,” explained the Group MD. 

The Group has embarked on significant refurbishment projects of properties in 2018 with over P40 million earmarked to be spent on three properties this year.  “This drive for product refreshing and improvement will continue into 2019, and we expect improved occupancies across all our properties,” observed Group Chairman. Lekaukau also notes that Cresta Marakanelo continues to explore regional growth opportunities in order to diversify its portfolio and further unlock shareholder value.

Managing Director Mokwena Morulane says the growth prospects of the Global Travel and Tourism industry as well as possible policy review by different stakeholders on the part of local industry sparks growth forecasts for the sector and ultimately profitability for the Cresta Grou.  “The renewal and turnaround at Cresta Hotels will be premised on a solid platform of enhanced customer experience and strong commercial delivery. We are therefore on track to transform the Group into a stronger commercial and financially sustainable company whose central focus is the guest,” he said.

Continue Reading


Botswana records first trade surplus since January

7th October 2021

Botswana has recorded its first trade surplus for 2021 since the only one for the year in January.

The country’s exports for the month of July surpassed the value of imports, Statistics Botswana’s July International Merchandise Trade data reveals.

Released last Friday, the monthly trade digest reports a positive jump in the trade balance graph against the backdrop of a series of trade deficits in the preceding months since January this year.

According to the country’s significant data body, imports for the month were valued at P7.232 billion, reflecting a decline of 6.6 percent from the revised June 2021 value of P7.739 billion.

Total exports during the same month amounted to P7.605 billion, showing an increase of 6.1 percent over the revised June 2021 value of P7.170 billion.

A trade surplus of P373.2 million was recorded in July 2021. This follows a revised trade deficit of P568.7 million for June 2021.

For the total exports value of P7.605 billion, the Diamonds group accounted for 91.2 percent (P6.936 billion), followed by Machinery & Electrical Equipment and Salt & Soda Ash with 2.2 percent (P169.7 million) and 1.3 percent (P100.9 million) respectively.

Asia was the leading destination for Botswana exports, receiving 65.2 percent (P4.96 billion) of total exports during July 2021.

These exports mostly went to the UAE and India, having received 26.3 percent (P1. 99 billion) and 18.7 percent (P1.422 billion) of total exports, respectively. The top most exported commodity to the regional block was Diamonds.

Exports destined to the European Union amounted to P1.64 billion, accounting for 21.6 percent of total exports.

Belgium received almost all exports destined to the regional union, acquiring 21.5 percent (P1.6337 billion) of total exports during the reporting period.

The Diamonds group was the leading commodity group exported to the EU. The SACU region received exports valued at P790.7 million, representing 10.4 percent of total exports.

Diamonds and Salt & Soda Ash commodity groups accounted for 37.8 percent (P298.6 million) and 6.2 percent (P48.7 million) of total exports to the customs union.

South Africa received 9.8 percent (P745.0 million) of total exports during the month under review. The Diamonds group contributed 39.9 percent (P297.4 million) to all goods destined for the country.


In terms of imports, the SACU region contributed 62.7 percent (P4.534 billion) to total imports during July.

The topmost imported commodity groups from the SACU region were Fuel; Food, Beverages & Tobacco, and Machinery & Electrical Equipment with contributions of 33.3 percent (P1.510 billion), 17.4 percent (P789.4 million) and 12.7 percent (P576.7 million) to total imports from the region, respectively.

South Africa contributed 60.1 percent (P4.3497 billion) to total imports during July 2021.

Fuel accounted for 32.1 percent (P1.394 billion) of imports from that country. Food, Beverages & Tobacco contributed 17.7 percent (P772.0 million) to imports from South Africa.

Namibia contributed 2.0 percent (P141.1 million) to the overall imports during the period under review. Fuel was the main commodity imported from that country at 82.1 percent (P115.8 million).

During the months, imports representing 63.5 percent (P4.5904 billion) were transported into the country by Road.

Transportation of imports by Rail and Air accounted for 22.7 percent (P1.645 billion) and 13.8 percent (P996.2 million), respectively.

During the month, goods exported by Air amounted to P6, 999.2 million, accounting for 92.0 percent of total exports, while those leaving the country by Road were valued at P594.2 million (7.8 percent).

Continue Reading


The 2021/2022 Stanford Seed Transformation Program Begins

7th October 2021

Founders from twenty companies have been accepted into the program from Botswana, Namibia, and South Africa

The 4th Cohort of the Stanford Seed Transformation Program – Southern Africa (STP), a collaboration between Stanford Graduate School of Business and De Beers Group commenced classes on 20 September 2021. According to Otsile Mabeo, Vice President Corporate Affairs, De Beers Global Sightholder Sales: “We are excited to confirm that 20 companies have been accepted into the 4th Seed Transformation Programme from Botswana, Namibia, and South Africa. The STP is an important part of the De Beers Group Building Forever sustainability strategy and demonstrates our commitment to the ‘Partnering for Thriving Communities’ pillar that aims at enhancing enterprise development in countries where we operate in the Southern African region”. Jeffrey Prickett, Global Director of Stanford Seed: “Business owners and their key management team members undertake a 12-month intensive leadership program that includes sessions on strategy and finance, business ethics, and design thinking, all taught by world-renowned Stanford faculty and local business practitioners. The program is exclusively for business owners and teams of for-profit companies or for-profit social enterprises with annual company revenues of US$300,000 – US$15million.” The programme will be delivered fully virtually to comply with COVID 19 protocols. Out of the 20 companies, 6 are from Botswana, 1 Namibia, and 13 South Africa. Since the partnership’s inception, De Beers Group and Stanford Seed have supported 74 companies, 89 founders/CEOs, and approximately 750 senior-level managers to undertake the program in Southern Africa.

Continue Reading


Minergy overcomes challenges – improves revenue and produces record breaking coal sales to date

7th October 2021

Minergy, the coal mining and trading company with the Masama coal mine, this week released results for the year ended 30 June 2021. The company achieved revenue of P193 million (2020: P81 million) with significant improvement in sales volumes surpassing 415 000 tonnes sold for the year.

The performance was divided into two distinct periods with very different operating environments. The first eight-month period (July 2020 – February 2021), was negatively impacted by delayed funding, COVID-19 impacts and excessive rain; and the last four-month period (March – June 2021), was a more stable production environment moving toward nameplate capacity.

According to Minergy CEO, Morné du Plessis, production and sales initially recovered in July and August 2020 with the easing of COVID-19 restrictions and recoveries were further bolstered by the successful launch of the rail siding. Delays experienced in concluding the funding contributed to contractors limiting operations to manage arrears.

“However, the heavy rains we experienced from December 2020 through February 2021 flooded the mine pit making access difficult and impacting both production and sales. Fortunately, the rain subsided in March 2021, and we entered a more stable environment, with a positive impact on operations. Good recoveries in production and sales were experienced during the last four-month period of the year, with the mine moving closer toward a breakeven position.”

“Despite these operational constraints, including the effects of COVID-19 on logistics and manning of shifts, we expect to reach consistent nameplate capacity in the 2022 financial year,” du Plessis added.


In addition to the revenue reported above, the company incurred costs of sales of P256 million (2020: P150 million) with operating costs of P23 million (2020: P31 million). This effectively resulted in an operating loss of P86 million (2020: P100 million). Finance costs of P51 million (2020: P17 million) were incurred, bringing the net loss before taxation to P136 million (2020: P117 million).

Du Plessis explains that the adverse conditions in the first eight-month period contributed to 86% of the gross loss, while the more stable four-month period alone contributed to 50% of total sales value, helping to decrease monthly gross losses, albeit below breakeven levels.

The company benefited from a strengthening in the South African Rand (“ZAR”) supporting higher back-on- mine sales prices.

“As announced, we’re pleased to have secured P125 million of additional convertible debt funding through the Minerals Development Company Botswana (Proprietary) Limited (“MDCB”). Minergy remains grateful for this support.”

He added that the first tranche of additional funding provided by the MDCB had been received in December 2020, which allowed Minergy to settle the majority of the contractor’s arrears and allowed their teams to be remobilised. The second and final tranche was paid post the financial year-end and will allow the business to reach nameplate capacity in the new financial year.”


Sales volumes increased by 110%, supported by increased sales in Botswana and internationally in South Africa and Namibia. Sales for June 2021 exceeded 56 000 tonnes, a record since the inception of the mine, with pricing increasing late in the financial year on the back of buoyant international prices and a strengthening ZAR.

Minergy also concluded a further 12-month off-take agreement to the existing off-take agreement, with a further agreement finalised post year end.

Overburden moved during the reporting period increased by 86% and extracted coal by 50%. Coal mined in June 2021 alone exceeded 100 000 tonnes. “This is a good performance considering the challenges faced such as sacrificing pre-stripping activities for a period to manage arrears, excessive rain and COVID-19,” du Plessis indicated.

“The wash plant was initially starved of coal due to the factors noted already. Despite this, overall plant throughput performance was 37% higher than 2020. Consistent output was supported by the completion of the Stage 2 rigid crushing section as well as the water saving dewatering screen with filter press contributing to a reduction in water usage of 60% per tonne of coal. A record throughput of more than 84 000 tonnes was achieved in March 2021 and this consistency has been maintained.”


According to du Plessis, the completion of Stage 4 of the Processing Plant, the rigid screening and stock handling section, remains a key optimisation step, which has associated benefits. “The completion was unfortunately delayed by a southern African wide shortage of structural steel but was commissioned post year-end.”

Minergy expects the positive momentum in international coal pricing for southern African coal to remain in place. Higher coal prices have resulted in coal being withdrawn from the inland market in favour of lucrative international markets. Du Plessis added that the regional market is currently under- supplied with sized coal, which supports higher pricing and new customer opportunities for Minergy.

“Our objective for the 2022 financial year is to achieve nameplate capacity by completing final ramp-up of operations. This will enable the company to generate sufficient cash flow to stabilise the business at breakeven or better. The bullish coal market is also providing support. COVID-19 will still be closely managed, and we look forward to the lifting of the State of Emergency, as announced, and trust that vaccination programmes will achieve herd immunity in Botswana during the next 12 months.”

Du Plessis expressed his excitement on prospects stating that, “The Eskom due diligence process is continuing, and we are hopeful of receiving feedback during the current financial year. In addition to this opportunity, Minergy is also investigating participation in the request by the Government of Botswana to provide a 300MW power station for which the company has been shortlisted.”

The approved process to issue shares for cash is showing positive leads and he concluded by saying that a listing in London is still being investigated.

Continue Reading
Do NOT follow this link or you will be banned from the site!