As the half year saw a downturn in western and northern hemisphere economic health, American and European business declined in the tourism industry of Botswana, negatively impacting Chobe Holdings Group.
Notwithstanding dampened markets, Chobe Holdings was able to register an increase of revenue and furthermore an increase in profit, although margins were rather flat.
The group recently published its HY results for the period ending 31 August 2012. Revenue was up 15% to P81.7mn from P71.0mn.
This was due to a marginal increase in the number of ‘bed nights sold’, as well as a relatively weaker pula against the dollar which favored the group. Operating expenses increased in line with inflationary levels, up 7% to P51.0mn from P47.7mn. As a result, PBT stood at 13.8% higher at P20.9mn than last year’s corresponding value (FY11: P18.4mn).
Furthermore, PAT was relatively flat, increasing 1.4% due to a larger tax expense. Total assets declined to P170.3mn due to land lease rights which were dampened by almost 25%.
Moreover the group sold its 44% interest in Lianshulu Lodge (Pty) on extended credit terms. Retrospectively, the group disclosed as per cautionary announcement mid-September that they were still negotiating renewal of some of the leases of operations.
Since then, camp Kanana and camp Moremi have been re-awarded to the group. Nonetheless the group conveyed that the outlook despite dim in terms of business enjoyed because of European travelers, a new emerging market has been realized in more buoyant economies of Asia and South America.
Renewal of Cautionary – Leases
Chobe Holdings has participated in the tender process in respect of Kanana. The adjudicators of tenders, the Botswana Tourism Organisation, for undisclosed reasons rejected all tenders requiring a retender which we have again participated in. To date the results of that tender have not been released despite our tenancy now purporting to end on 31st December 2012.
Similarly the leases of our Camp Moremi and Savute Safari Lodge are set to expire on 31st December 2012. We again have participated in the tender process. Camp Moremi has been re-awarded to the Group for an initial period of fifteen years expiring on 31st December 2027 with an option to renewal for a further fifteen years. We still await the results in respect of Savute Safari Lodge.
The uncertainty created by this process has caused serious challenges to staff moral and a damaging fall in confidence in the market place given that our long established traditional suppliers can no longer sell the destination with any degree of certainty.
The leases in respect of Shindi and Camp Okavango were also due to expire 31st December 2012. One year extensions have however been granted pending the Tawana Land Board completing its Land Use Management Plan for the area. The retendering process for these two properties is thus only expected to take place in the financial year ending 28th February 2014.
As per the Cautionary Announcement dated 18th September 2012, the Company’s directors wish to inform shareholders that non-renewal of leases would have a negative impact on the Group’s profitability.
However the Company’s directors are doing everything they can to ensure that the expiring leases are awarded to the Company’s subsidiaries under terms and conditions that are acceptable to the Group. The Company’s directors therefore advise shareholders to exercise caution and/or seek advice from their financial advisers when dealing in the Company’s securities until the results of the above tender procedures are known.