Monday, October 26, 2020

Chobe directors cause share value to drop

Chobe Holdings shares slid this week on the stock market following exchange of shares between the eco-tourism’s senior management. 

On Thursday, the company’s managing director Rodney David Gerrard sold 420,000 ordinary shares to Jonathan Moore Gibson, Chobe’s chief executive officer and deputy chairman, at a price of P9.50, causing the share price to fall by five percent from the all-time high of P9.90. According to the company’s annual report, Gerrard holds about 749,000 shares in Chobe, while Gibson has 2.9 million shares. In addition to the shares held directly Gibson, 28.6 million ordinary shares are held by African Finance Holdings Limited, which is owned by the Beacon Trust, a discretionary trust of which Gibson is a potential discretionary beneficiary.

Chobe owns and operates, through its wholly owned subsidiaries, twelve eco-tourism lodges and camps on leased land in northern Botswana and the Caprivi Strip in Namibia with a combined capacity of 317 beds under the brands of Desert & Delta Safaris, Chobe Game Lodge and Ker & Downey Botswana. Sedia Riverside Hotel, a 31-room hotel owned by the group operates in close proximity to central Maun. Safari Air, a wholly owned air charter operator provides air transport services to the group’s camps and lodges. North West Air Proprietary Limited, a wholly owned air maintenance operation provides maintenance services to the group’s aircraft as well as third parties. Desert & Delta Safaris (SA) (Proprietary) Limited, another wholly owned subsidiary operating in South Africa, provides reservation services to the group.

The company reported a 19 percent jump in profit after tax in its financial year ended February 2020, registering P97.3 million. However, following the outbreak of Covid-19 earlier this year, the company says its profit will fall, expecting recovery from next year.  According to the World Tourism Organisation, the COVID-19 pandemic, the illness caused by coronavirus,  has resulted in 22 percent fall in international tourist arrivals during the first quarter of 2020 and the crisis could lead to an annual decline of between 60 percent and 80 percent when compared with 2019 figures. 

“It is anticipated that signs of recovery will start emerging in the last quarter of 2020 but mostly in 2021 with leisure tourism expected to recover quickly. The recovery is however dependent on containment of the virus, easing of travel restrictions and reopening of borders,” said Gibson  in the company’s annual report.

“The marketing push of ‘don’t cancel, defer’ has been largely successful with more than 70 percent of the confirmed bookings that were scheduled to travel in the period April – June 2020 deferring their travel to 2021. Your Directors are therefore confident of a fairly quick recovery when it is deemed safe for international travel to resume,” he added.

Gibson revealed that Chobe’s strong cash and no debt position provides it with the ability to ride out the COVID-19 virus and the opportunity to take advantage of any expansion opportunities that may arise. However, the company’s directors have elected to defer the declaration of a dividend until such time as the group’s earnings potential is restored and cash flow allows. 

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