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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.

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Food prices continue to rise, but at a slower rate

28th November 2022

Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.

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Still doing business the old way?

18th November 2022

It’s time to get business done better with MTN Business Botswana’s ICT Solutions.

Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.

More and more, clients are looking for ways to keep their staff productive in a dynamically changing business environment. Whether your people are working from home, the office or abroad, there is a growing recognition that digitising your operations can offer unprecedented commercial value in flexibility, productivity and growth. This new, digital reality means that it is more important than ever to stay agile – if there is anything that can slow a business down, it is being burdened by othatld technology.

Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.

A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.

Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
MTN’s evolution

For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.

As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.

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BIE to vitalize the Dignity of Engineers

9th November 2022

Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in  which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.

The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.

Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.

“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.

He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.

Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.

“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.

He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.

He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc

“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran

Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.

“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.

Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that  the BIE provides a fertile environment where they can meet, share ideas and grow professionally.

“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.

He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.

“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams

He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .

Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution  said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.

“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.

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