Unaudited Group Results for the half year ended 30 June 2022
The challenges from the Covid-19 pandemic are significantly over mainly due to the vaccination programmes that took place worldwide together with other measures that were implemented to curb the virus.
All our facilities were able to trade at the normal hours and movement within the country took place without any restrictions. The increased business activity enabled the company to significantly improve its performance when compared to the same period in 2021.
Real GDP growth was 13.1% for the first quarter and this was a significant improvement when compared to minus 4.4% for the same period in 2021. This increase was driven mainly by the growth in the mining sector with diamonds in particular. All sectors, with the exception of agriculture, experienced growth during the period. There was a marked increase in tourist activity during the period owing to the relaxation of international travel restrictions. The Russia/Ukraine conflict has continued and will affect the global economic outlook.
Inflation for the first time in many years breached the 12% mark rising above the Bank of Botswana upper limit of the tar- get range. This was due to increases in VAT, and fuel prices. It is expected that inflation will continue to be high for the remainder of the year.
Crude oil prices steadily rose during the period under review resulting in significant inventory revaluation gains accruing during the period. Gains accruing during the period, however created a negative impact on working capital.
Net Profit Before Tax increased by 110% during the period under review compared to the previous year. This was mainly as a result of the improvement in business conditions as a result of easing of Covid-19 restrictions compared to the prior year and the significant increase in globalmcrude oil prices. The slate receivable from Government was P537 million as at 30 June 2022 compared to P151 million as at 30 June 2021. Earnings per share increased from 82.8 thebe per share during the same period in 2021 to 174.6 thebe per share for the period under review.
The performance of the retail sales channel of the business declined by 9% in comparison to the same period in 2021 due to a general reduction in disposable income caused by high inflation and some areas of the economy that have not yet recovered from Covid-19. There were no new retail outlets that were streamed in this period, however, we expect that there will be two new to industry service stations before the end of the year. This is in line with our strategic intent to leverage on a strong retail position. It is expected that the performance of this sales channel will improve for the remainder of the year.
The commercial sales channel grew by 56% compared to the previous year. This performance was mainly attributable to the acquisition of new supply contracts which offset some of the effects of Covid-19.
The lubricants sales channel continued to perform well albeit with challenges in the rising costs of base oils and additives. These increases in the cost of goods sold affected margins negatively. It is expected that this performance will be enhanced during the second half of the year.
The company achieved an outstanding level of Health, Safety, Environment and Quality performance with no injuries and no loss of primary containment or contaminations, which are critical KPIs, recorded in the period under review.
The Directors of the company acknowledge the contribution of the management, staff, valued customers, shareholders and all other stakeholders for the support toward the success of Engen Botswana Limited during the first half of 2022.
By Order of the Board
Dr S Ndzinge
B F Sameke
(Acting Managing Director)
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