We have extracted below the Chairman’s Statement from the 2019 abridged report of Chobe Holdings Limited (CHOBE.bw), listed on the Botswana Stock Exchange:
• 5% increase in occupancy levels.
• 13% increase in revenue.
• 23%increase in operating profits.
• Costs contained at inflationary levels.
• Goodwill of P7.4 million written down.
• 15%increase in profit after tax.
• Capital expenditure of P82.4 million financed from internally generated cashflows.
• Cash and cash equivalents of P66.1 million.
Basis of Preparation
The audited financial statements for the year ended 28th February 2019 have been prepared based on accounting policies which comply with International Financial Reporting Standards (“IFRS”). The accounting policies applied are consistent with those of the annual financial statements for the year ended 28th February 2018, as described in those annual financial statements.
The group financial statements from which this published summarised financial information is derived from, has been audited by Price water house Coopers, the Chobe Holdings Group’s external auditors. Their unqualified audit report is available for inspection at the Company’s registered office. This summarised financial information has not been reviewed by the auditors.
During the period under review occupancy increased by 5% when compared to the same period in the prior year due to enhanced marketing efforts and an increase in the number of available beds following completion of renovations at Chobe Game Lodge and the addition of Dinaka to the Group’s portfolio.
A 13% increase in revenue was recorded as a result of the aforementioned increase in bed nights sold, a marginal increase in achieved bed night rates in US Dollar terms and depreciation of the Pula against the US Dollar.
Other operating income comprises mainly foreign exchange gains.
An operating cost increase of 14% is considered satisfactory in light of increased volumes of business and current inflation levels.
The Group spent, from internally generated cash flows, P82.4 million on the purchase of game drive vehicles, boats, a Cessna Caravan and significantly improving existing buildings and equipment.
The acquisition of Dinaka Safari Lodge and the three property owning companies on 1st September 2017 by Ker and Downey Botswana (Pty) Ltd, a wholly owned subsidiary of Chobe, forming the Dinaka Conservancy, gave rise to P26.6 million of goodwill. The lodge was subsequently rebranded and reopened as a ‘new’ Ker & Downey property on 1st March 2018. The financial year under review was largely utilised to induct agents through Dinaka on educational tours to familiarise themselves with the concept of conservancy tourism, a pioneering and otherwise non-traditional Botswana offering.
As high-end conservancy tourism is relatively new to Botswana there are no existing entities to bench- mark with. Your directors have therefore used currently available booking data and cash flows from existing camps as models, modifying them to estimate future cash flows for Dinaka, to assess the goodwill for impairment in accordance with IFRS. This assessment indicated that there was need to write down the goodwill by P7.4 million. This write down is not a cash transaction and does not affect the Company’s dividend payment capacity. Your directors, whilst anticipating that Dinaka will take time to fully develop, remain confident with regard to its future potential.
Your directors approved a phantom share scheme during the year ended 28th February 2013 which allows the Group’s employees to participate in the dividend distributions of the Group. The scheme allows all qualifying staff to share equally in a bo- nus which is calculated to be equal to the value of dividends attaching to three million shares in the Company. A total of P1,500,000 was distributed amongst qualifying employees during the year end- ed 28th February 2019.
Events after the reporting date
The Company, through itswholly owned subsidiary Ker & Downey Botswana (Pty) Ltd, acquired the en- tire issued stated capital of Nelie Investments (Pty) , a property owning company holding leases for two game farms in the Hainaveld area for a cash consideration of P15.4 million financed using the Group’s internal cash resources. These two proper- tieswill be utilized to increase the extent ofthe land holdings currently held by our Dinaka Conservancy.
The lease for Xugana Island Lodge expired on 31st December 2018. We remain in occupation and the lodge fully operational pending renewal. Non-renewal of this lease would have a negative impact on the Group’s profitability. However, the Company’s directors are confident that the expired lease will be renewed under terms and conditions that are acceptable to the Group.
Tourism in Botswana is earmarked to provide much needed economic diversification away from mining. This diversification drive, according to the World Tourism Organisation needs however, to be cautiously applied to avoid “overtourism”, a relatively new buzzword for tourism congestion, management and carrying capacity. “Overtourism” identifies that the true challenge as not so much the number of visitors, but the capacity to manage them. All this whilst preserving the environment.
The national carrier, Air Botswana, continues to under perform. For the tourism industry to grow to its full potential there is need to have other airlines with relatively reliable performance to be introduced to the Botswana skies both domestically and inter- nationally.
The Group continues to invest considerable re- sources to improve its marketing strategies, product offerings and cost controls. New game drive vehicles were acquired to replace ageing ones and a Cessna Caravan added to the aircraft fleet.
The Group’s strong cash position provides us with the opportunity to take advantage of any expansion opportunities that may arise.
Notice is hereby given that the final dividend of 60 thebe per share has been declared for the year ended 28th February 2019. The dividend has been declared out of retained earnings. The dividend will be paid on or about 28th June 2019 to shareholders registered at the close of business on 18th June 2019. The ex-dividend date will be 14th June 2019.
The directors wish to bring to the notice of shareholders that there are certain amounts of unclaimed dividends in the Company’s records. In terms of clause 27.5 of the Company’s Constitution, dividends unclaimed for three years after due date for payment may become the property of the Company and used for the benefit of the Company. The shareholders concerned are therefore advised to claim their unclaimed dividends within the prescribed three-year period.
Shareholders can claim their unclaimed dividends by contacting the Company’s transfer secretaries:
DPS Consulting (Pty) Ltd
P O Box 294, Gaborone.
Tel. 3952011 / Email: [email protected]
By order of the Board of Directors.
J M Gibson, CEO & Deputy Chairman