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Chobe cuts losses as tourism gradually recovers

Chobe Holdings Limited, Botswana’s high-end tourism services provider, has significantly reduced its losses during the six months ended 30 August 2021, registering a P22.39 million loss from P35.15 million loss in the comparative six months period ended 30 August 2020.

On Tuesday, the company reported in their unaudited abridged results that the half year under review saw a gradual, but at times, stuttering recovery of travel world-wide. Southern Africa was generally unable to take advantage of this as both Botswana and South Africa remained on Britains Red List for the larger part of the period under review.

Despite this, the Group achieved an overall occupancy rate of 17% compared with 8% in the comparable period last year, all of which was generated in the first few weeks of March 2020 before the pandemic broke giving rise to the consequent cessation of all travel. Achieved occupancies in the current period grew from an extremely low base at the start of the financial year, encouragingly, however, steadily improving month by month until the end of the period.

During the period Chobe directors continued to ensure the assets of the company remained not only protected but maintained to a standard that would enable them to be brought back into operation at immediate notice, the benefit of these precautions has allowed for the seamless re-activating of all camps, lodges with particular reference to the aviation division. Whilst no staff were retrenched or went unpaid during the pandemic, salaries and wages were reduced on a sliding scale with the highest paid most severely prejudiced and the lowest least so.

As business improved during the half most staff members have been brought back to work on full remuneration. A combination of careful cost controls, improved trading and an increase of almost P 14 million from the financial year-end in respect of Advance Travel Receipts, has allowed the group to repay almost the entire overdraft facility whilst still retraining net Cash and Cash Equivalents of almost P 11 million at the end of the half. This positive outcome has been achieved despite the suspension of the wage subsidy granted by government in the two previous halves.

To unlock operating capital Chobe sold one of its aviation divisions aircraft with a shortfield performance profile and no longer required for in excess of P10 million, after reporting date, subject to maintenance checks and other legal requirements all of which have been met.
The actual handover of the aircraft andpayment is now imminent. The aircraft was presented under assets classified as held for sale in the last financial statements.

Chobe directors noted that results thus reflect the steady improvementof trading conditions and are in line with expectations for occupancies at that level, this especially so given the mix of minimal rates applied to local and regional travellers and the enhanced rates achieved in respect of international travellers.

Looking ahead Chobe Directors observed that whilst the COVID-19 pandemic is not over, circumstances have finally brightened for the world-wide tourism industry thanks to the high vaccination levels among the travelling public and the implementation of effective preventative protocols; such that even if a more virulent strain emerges in future, high immunity levels and the availability of better and more informed healthcare procedure will almost certainly ameliorate the consequence.

This improving situation has already lifted a number of other constraints previously limiting the Groups ability to trade. Notably travel restrictions have been eased with airlines responding by increasing flight frequencies particularly from Chobe’s source markets in the Northern Hemisphere. The lifting of the state of emergency and the alcohol ban has done much to assure the travelling public as to their safety and rights of enjoyment.

The removal of all Southern African countries, including Botswana, from Britains Red List has considerably further eased travel to Botswana by British nationals whilst also improving perceptions worldwide. Chobe noted that it has, on an industry-wide basis, successfully engaged with and worked with local health authorities to prioritize the vaccination of tourism workers in terms of the availability of vaccines, logistics such that most were vaccinated at their place of employment and the considerable administrative effort associated with the project.

“Today we are pleased to report that almost all our staff have been double vaccinated and now have the official vaccination certificates issued by the Ministry of Health and Wellness,” the company said. Chobe recently completed negotiations to acquire Nxamaseri Island Lodge on the Okavango Pan Handle, according to directors this will greatly enhance the offerings of Chobes Desert & Delta Safaris brand.

“The above has largely restored the confidence of the travelling public to begin to travel again, unleashing a noticeably strong demand pent-up over the past eighteen months. Further the Groups policy of dont cancel but defer has kept in place a large proportion of the forward bookings that were held at the onset of the pandemic with reservations offices now able to fix travel dates in respect of those travellers.

Most encouragingly, however, is that the aforementioned increase in Advance Travel Receipts reflects a strong future interest by the travelling public, reflecting their confidence in Chobes travel offerings. Occupancies in the second half, though increasing, will remain relatively subdued especially, as would be expected, in respect of the company’s traditional low season months of January and February.

Forward bookings already on hand, however, indicate that, barring the unforeseen, trade levels will begin to uptick to their pre-COVID levels from the onset of the new financial year in March. “We remain confident that owing to our effective cost control measures during the pandemic, our unrelenting efforts to maintain all operational assets, the continued loyalty of our staff despite the past difficulties experienced by all, and our still largely debt free balance sheet, we will be able to quickly take advantage of the increased business levels enabling us to restore the group back to profitability” commented J M Gibson, Chobe Deputy Chairman & Chief Executive Officer

Gibson said notwithstanding the financial impact of COVID-19 pandemic on the group, the personal toll on all employees has been significant, “thankfully however as a group, we have remained fatality free during the half under review”. Recognising the importance of preserving the Groups cash resources, directors have elected to defer the declaration of dividends until such time as the Groups earnings potential and cash flows allow.

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Grit divests from Letlole La Rona

22nd March 2023

Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.

The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.

Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.

This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.

In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.

Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.

The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.

“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said

In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.

The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.

Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.

Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.

Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.

Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.

“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.

LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.

The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.

An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.

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Stargems Group establishes Training Center in BW

20th March 2023

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.

“In 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,” 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.

“Community 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,” 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.

“As 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’s 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,” said the Minister of Minerals and Energy.

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Food import bill slightly declines

20th March 2023

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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