LLR posts impressive financial results despite covid-19 impact
Friday, 23 October 2020. Gaborone. Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (ďLLRĒ or ďthe CompanyĒ) today hosted an investor and press briefing on their financial results for the year ended 30 June 2020.
The Company reported robust results, an increase in the fair value of its portfolio and balance sheet strength, notwithstanding tenants experiencing business interruptions as a result of national lockdown measures to mitigate the spread of COVID-19 (ďthe pandemicĒ).
Acting Chief Executive Officer, Ms Kamogelo Mowaneng commented:
ďOur results are underpinned by the high quality of our tenants and the diversity of our portfolio and we are very pleased to report profits of P79.9 million, an increase of 24% that were achieved under exceptionally difficult trading conditions. The jump in earnings should however be seen against a once-off book loss reported in the prior year when we exited our leisure portfolio.
ďManagementís continued focus on balance sheet strength and conservative gearing levels of 15% allowed us to make some value-accretive acquisitions towards the end of the reporting year that will unlock stakeholder value in the current financial year.
ďGoing forward, our focus will remain on prudent capital allocation for maximum shareholder returns. We remain vigilant to value-enhancing opportunities including capital recycling, refurbishments, and acquisitions, after having reconsidered our pipeline against current and expected market conditions.
ďAt the same time, we will continue to work with our tenants on an individual basis to ensure support their sustainability where possible, in dealing with the impact of the pandemic.Ē
LLRís real estate portfolio, which is diversified across industrial (comprising 67% of the portfolio), retail (21% of the portfolio), commercial offices (6% of the portfolio) and residential (5% of the portfolio) achieved growth of 32% during the year under review and is now fairly valued at P911 million.
Despite business interruptions as a result of a six-month long state of emergency and several lock-down periods declared by the Government of Botswana to limit the spread of COVID-19, the Company maintained an exceptionally low vacancy level of 1.8% across its industrial and commercial portfolios.
LLR engaged with tenants experiencing cashflow constraints as a result of business interruptions on a case-by-case basis and accorded rental deferrals for a period of three months from April 2020. Concessions are on a month-by-month basis and will be recovered in future.
The company has further grown its balance sheet by acquiring a portfolio of six prime industrial properties at a purchase consideration of P174.4million. The acquisition was wholly funded by cash reserves from the sale of the leisure portfolio which was conclude at the tail end of prior financial year.
Due to the conclusion of the transaction very late in the financial year, the benefits of the acquisition were not materially reflected in the current financials and are expected to flow through in the current year.
Net asset value increased by 3% to P771 million, which equates to a net asset value of 275 thebe per linked unit. Although the Companyís share price increased significantly from 185 thebe per linked unit at the beginning of the financial year, closing at 233 thebe per share on 30 June 2020, it still trades at a discount to fair value.
Despite the impact of COVID-19 on both international markets and the Botswana economy, LLR remains positive of a local macro-economic recovery, supported by Government assistance. Going forward, the Company will focus on growing its portfolio both in-country and regionally with a view of transforming spaces to the benefit of shareholders.
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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.
‚ÄúIn 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,‚ÄĚ 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.
‚ÄúCommunity 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,‚ÄĚ 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.
‚ÄúAs 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‚Äôs 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,‚ÄĚ said the Minister of Minerals and Energy.
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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Moody‚Äôs Reaffirms African Trade Insurance‚Äôs A3 Rating & Revises Outlook to Positive
Moody‚Äôs Investors Service (‚ÄúMoody‚Äôs‚ÄĚ) has affirmed the A3 insurance financial strength rating (IFSR) of the African Trade Insurance Agency (ATI) for the fifth consecutive year and changed the outlook from stable to positive.
Moody‚Äôs noted that the change in outlook to positive reflects the strong growth in ATI‚Äôs membership base – that has resulted in improved portfolio diversification, strengthened capital adequacy, and the good profitability despite the challenging operating environment. In addition, ATI benefits from its preferred creditor status (PCS) amongst sovereign member states which protects it from the risk of default by member sovereigns through securing recoveries against claims paid on guarantees.
The strong membership and equity growth are some of the key considerations for the consistent reinstatement of ATI‚Äôs A/Stable rating by Standard & Poor‚Äôs and Moody‚Äôs rating, over the years. Also supporting the rating affirmation are; consistent improvement in financial performance, commitment of its shareholders who continue to uphold the preferred creditor status, its high quality and conservative investment portfolio as well as strong relationships with a number of global reinsurers that provide significant risk-bearing capacity.
With the change in outlook to ‚Äúpositive‚ÄĚ, ATI is now better placed to provide enhanced support to its member countries, attract additional shareholding and grow its portfolio. The positive outlook is an indication that if ATI continues to demonstrate its strong underwriting performance and ability to recover claims under the preferred creditor arrangements, among other factors, an upward pressure towards an upgrade may be generated. The Moody’s press release can be accessed from¬†here
Commenting on the rating, Africa Trade Insurance Chief Executive Officer Manuel Moses said: ‚ÄúThis positive revision is in line with our 2023 – 2027 strategic objectives in which we set to improve our rating outlook to positive in the first year, and achieve an upgrade of at least ‚ÄúAA‚ÄĚ/Stable rating by both Moody‚Äôs and S&P within this Strategic Plan period. We aim to achieve this by doubling our exposures and increasing our capital to more than USD1 billion.‚ÄĚ
ATI‚Äôs mandate is to provide trade-credit and political risk insurance, as well as other risk mitigation products to its member countries and related¬†public and private sector actors. These insurance products not only directly encourage and facilitate foreign direct investment as well as local private sector investment in our member countries, but also contribute to intra- and extra-African trade.
About The African Trade Insurance Agency¬†
ATI was founded in 2001 by African States to cover trade and investment risks of companies doing business in Africa. ATI predominantly provides Political Risk, Credit Insurance and, Surety Insurance. Since inception, ATI has supported US$78 billion worth of investments and trade into Africa. For over a decade, ATI has maintained an ‚ÄėA/Stable‚Äô rating for Financial Strength and Counterparty Credit by Standard & Poor‚Äôs, and in 2019, ATI obtained an A3/Stable rating from Moody‚Äôs, which has now been revised to A3/Positive.