By Kabelo Seitshiro
Transactions relating to the acquisition of properties owned by Botswana Hotel Development Company (BHDC) and Letlole La Rona (LLR) are expected to be concluded in May 2019. This is according to Cresta Marakanelo Limited managing director – Mokwena Morulane.
Speaking at the group’s financial results presentation recently, Morulane said that the acquisition of the properties will result in a reduction in operating costs as rental costs will no longer be incurred.
It emerged last year that the hospitality group is eyeing a total of five hotel properties currently being leased from Letlole La Rona Limited (LLR) and Botswana Hotel Development Company Limited (BHDC).
In February 2019 the group announced that its shareholders, followed by the Competition Authority had given the transaction a thump up.
The hotel chain company says it will fund these transactions through debt financing, and added it will have no bearing on the net asset value. “The interest expense in the first year will be less that then current rental expense, therefore the transaction will have significant positive effect on the net profit of the company,” said Cresta in a circular sent to shareholders.
Meanwhile Morulane said last week that the group’s hotels had a strong financial performance during 2018 which resulted in the Group exceeding the prior year profit after tax by 9 percent from P26 million to P28.6 million.
Still in 2018 the group’s total assets increased by 6 percent, while equity increased by 8 percent compared to the same period last year. The increase in non-current assets is said to be due to the investment in capital expenditure, from cash held by the Group. Total cash balances reduced by P6.9 million following the investment of P48.7 million while in 2017 was at P21.9 million in capital projects across the Group. The Group ended the year with cash resources of P61.6 million (2017: P68.5 million), which will be utilised to fund refurbishments and expansion activities.