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Sefalana H2:2020 rocket high at P150 million

FMCG sector top player Sefalana Finance Director Mohamed Osman started a year with bringing a smile on investors or shareholder’s face when he announced that Group’s profit before tax for the six month period ended 31 October 2020 will be between 21 percent to 23 percent (approximately P25 million to P28 million) higher than that reported for the comparative period ended 31 October 2019 which amounted to P121.1 million.

In the FMCG entity’s 2020 Annual Report Group managing director Chandra Chauhan said they managed to be resilient despite the winds of Covi-19 which affected most business operations across the continent. Sefalana Group operates in South Africa, Botswana, Zambia, Lesotho, Namibia and recently Australia. Sefalana will be publishing its consolidated financial results of the Group for the six month period ended 31 October 2020 by the end of January 2021.  The share price of Sefalana is at 9.34 thebe before closed period.

“Notwithstanding the difficult times, we have managed to close the year with a sterling performance. Last year we reported our best ever results and this year we have done it again, and are pleased to generate almost exactly the same profit despite the adverse impact of Covid-19,” said Chauhan in the Group’s 2020 Annual Report.

According to Chauhan what could have impacted the group’s impressive financial trail of more than three years would be Covid-19. He said the Group had made considerable progress in the first half of 2020, but then were negatively impacted by the pandemic when their stores were restricted in terms of permitted customer numbers, and when liquor sales were prohibited during lockdown.

For the yet to released second half of 2020 results which are slated for end of this month, Sefalana Group might have not been surprised by almost P150 million to be published because most of Covid-19 regulations were relaxed at the Group’s markets. Restrictions and lockdowns were relaxed toward the middle of the second quarter of 2020.

However Chauhan has a gloomy picture of H2:2020, he said the second half of the year was then impacted by the onset of the Covid-19 Pandemic and many businesses suffered as a consequence.

He said the uncertainty this caused resulted in a more cautious customer, initially forward buying in anticipation of the lock-down, and then reduced buying until after the lockdown had ended.  Chauhan the product mix also moved towards essentials and away from luxury high margin products and net margin mix therefore reduced as a result.

Mostly, Sefalana forfeited profits, approximately P10 million, as a result of the ban on liquor sales during the State of Emergency and lockdown and foreign exchange losses on forward contracts due to the weakening of the South African Rand over a short period of time straddling the year end.

Heavy Covid-19 impacts with regards to Sefalana trading operations disruptions were offset by the Group being used by donors when buying food hampers. Chauhan said they were a “preferred supplier” due to the “competitive prices.”

“We deliberately reduced margins on these orders to maximize the food being made available to those in need. As a consequence, our turnover increased but at very slim margins. Our advance planning enabled us to stock up on key lines and this enabled us to be in a position of having adequate stock of these lines when our competitors had run out,” said Chauhan in the last Annual Report.

For the year ended for the year ended 30 April 2020 the  Group achieved a turnover of P5.8 billion and generated a profit before tax of P259 million, this was despite the coronavirus scourge on businesses.

Move out of SACU to Australia

In its quest to move out of SACU, in April 2020 the Group entered into an agreement to purchase 40 percent of the share capital of an Australian business that operates in the Fast Moving Consumer Goods division at a tune of P70 million (AUD 9.9 million). Seasons Group, the name of the Australian entity, consists of a chain of 7 supermarkets in the Brisbane area.

The effective date of investment was 8 May 2020. This investment will be treated as an investment in an associate, in which Sefalana exerts significant influence, and therefore will be equity accounted. Sefalana entered into this agreement in order to pursue its Group strategy to diversify its income stream and foreign exchange exposure,” said the Sefalana board.

Morevere the Australian investment is expected to yield an additional EBITA of around P15 million for Sefalana for the year ending 30 April 2021. Sefalana intends on expanding its manufacturing business to include wheat milling and to establish our fruit juice and bottled water plant in early 2021.

Business

China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Business

Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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