Sefalana Holding Company Limited (SEFALA.bw) 2022 Abridged Report
Financial results of the Group – overview
Despite the challenges we have been facing in the current environment across all the Regions in which we operate, we are delighted to be able to once again, report to you our best results to date!
We have consistently been able to do this over the last 10 years (other than 2017) and are proud to be able to do so once again. This comes at a time when many organizations locally and across the world are reporting downward trends.
We generated a profit before tax (“PBT”) of P334 million. This is up 15% on the prior year and on the back of reporting our best PBT for the half year ended October 2021 of P153 million.
We have been able to do this through sheer determination and perseverance by our people, our human capital, who are our most important asset. Our teams have remained motivated and driven and have been resilient throughout the year. For this we are truly grateful. Our Group had put in place measures, as early as November 2019, in anticipation of the impact of the Pandemic and this has helped us navigate through these difficult 3 years. We identified ways in which we were able to mitigate the effects of the Pandemic, and ultimately provide our customers with what they require, in as many channels as possible. We endeavour to continually deliver and exceed the expectations of all our stakeholders. We are very pleased with our success in this regard.
We are pleased to report that we did not retrench any of our staff during the Pandemic and ensured all our staff throughout the Group were fully paid. We also applied pay increases wherever possible to assist our staff during these troubled times. Our head count across the Group has seen a 38% increase from 4,076 in April 2019 to 5,619 in April 2022. Just over 99% of our Botswana staff compliment are local citizens. Creating employment, developing, and supporting our people, and retaining talent are at the centre of our business model.
Our precise strategic focus has been on the core Fast Moving Consumer Goods (FMCG) businesses where we have placed considerable efforts to enhance margins and relative contribution to Group results. This has not been easy but has enabled us to remain ahead and deliver these
Our manufacturing operations which support the FMCG businesses are also key focus areas for us. These have performed well during the year despite certain challenges beyond our control. Our diversification strategy across both trade sectors and countries over recent years has helped maintain our Group performance and support sustained long term growth.
The effective tax rate for the year of 34% is significantly higher than that of the prior year of 25% due to the accelerated withholding tax paid on dividends declared by subsidiary companies to Sefalana Holding Company Limited, prior to the increase in Botswana withholding tax rates on 1 July 2021. This will result in an enhanced net cash dividend available for distribution to our Shareholders over time. The Group made an overall tax saving of just over P7 million from this accelerated declaration and this saving will be realized by our Shareholders in the coming years.
For the 52-week period ended 24 April 2022, the Group’s:
- Revenue was P7.5 billion – up 19% on prior year.
- Gross profit was P523 million – up 15% on prior year.
- Earnings before interest, tax and amortisation(“EBITA”) was P323 million, up 16% on prior year.
- Profit before tax was P334 million – up 15% on the prior year.
- Final dividend of 30 thebe per share to be paid to our Shareholders: and Special dividend of 10 thebe per share to be paid in December 2022
The Group’s business and geographical segments are reported separately. Inter-segment transactions are eliminated, and costs of shared services are accounted for in a separate (“Inter-segment or Unallocated”) segment. All transactions between segments are at arm’s length.
Review of operations
Botswana Business units – 58% of Group profits
Overall Botswana business units have generated P192 million of the PBT for the year, up 8% on the prior year. From the 3 African territories in which we are present, the Botswana operations have experienced the greatest impact of the Pandemic and related economic stress.
Trading – consumer goods
The Botswana FMCG businesses have been adversely affected for much of the last 2 years by the trading restrictions that have been in place. These restrictions have been gradually lifted in the current year and consequently there has been a solid recovery of performance by this segment. Consumers have begun to visit stores more often than during the initial phase of the Pandemic, and basket sizes have begun to increase, with a lower frequency of visits.
The consumer is still somewhat cautious and tends to focus more on value packs, necessities, and private label products, rather than luxuries. The desire for a one-stop shop is very much apparent and we have responded accordingly through offering a wider variety of goods and services both in-store and online.
At the beginning of the financial year, Sefalana operated 4 hyper stores (“Sefalana Hyper”), 25 cash and carry stores (“Sefalana Cash & Carry”) and 33 supermarket retail stores (“Sefalana Shopper”) across the country, giving the Group a total of 62 stores in Botswana. During the year, we expanded our national footprint through the opening of an additional Sefalana Shopper retail store in Ramotswa and at Molapo Crossing, Gaborone and a Sefalana Quick at our new Caltex site in Broadhurst Industrial. All these newstores are performing well and are proving popular with the customer base in the area. We also introduced retail liquor departments in 3 existing stores – Shopper Mahalapye, Shopper Ghanzi and Hyper Gaborone.
As part of our annual birthday promotion, our Cash & Carry business continued with its empowerment program and gave away 28 mobile kiosks to Batswana to start their own businesses. The number of budding and young entrepreneurs has been increasing and we look to support our community through this initiative. Total cost of these kiosks amounted to just under P2 million. To date we have given away 144 kiosks at a combined cost of P7.2 million over the last 4 years, changing the lives of the winners.
Our Retail birthday promotion focused on giving away P1.9 million in the form of cash. This generated a lot of excitement in the market meeting the needs of our retail customers who prefer cash rather than