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Sefalana praises consumer segment for good 2014 performance

Sefalana Holdings Limited says improved performance of retail stores contributed significantly to the topline of the consumer goods segment and profit before taxation during the year, new data has shown.

The Botswana Stock Exchange (BSE) listed diversified group ÔÇô with market capitalisation of over P1.3 billion ÔÇô expanded its retail offering to the region while also opening new stores in the country including the now popular Shoppers supermarkets.

Group Managing Director of the company, Chandra Chauhan, said in the Sefalana annual report for 2014 that the group expects further growth as it looks at locations for future expansion.

“This has been largely achieved through better product offering at better prices and enhancing the shopping experience for our customers who are becoming more sophisticated in their spending,” Chauhan said in CEO’s statement in the report.

Sefalana Cash and Carry Limited (Sefcash) contributed 89 percent and 58 percent of the group’s revenue and profit before tax for the financial year respectively.

At the beginning of the financial year, Sefcash comprised of three Hyper Stores (Sefalana Hyper), 25 Cash and Carry Stores and 16 supermarket retail stores, known as Shoppers, across the country.

The group also opened its first store outside Botswana in Katima Mulilo in Namibia, a move seen as a significant milestone as it expanded into Southern African region. Sefalana then followed the drive by acquiring Metro Namibia group and its 12 stores across Namibia on 1 July 2014.

The acquisition is expected to increase group turnover by around P800 million in the first 10 months of trading and contribute approximately P30 million to profit, which will enable the group stake its Namibian retail market in a short space.

“This is expected to significantly grow both our top line and the bottom line profit for the forthcoming year,” Chauhan added.

During the year, Sefalana also increased its Botswana market presence by opening additional Shoppers supermarkets in Tonota and Gaborone West.

The group expressed excitement about two additional new stores planned for opening within the next three months and sent appreciation to the ‘very positive feedback from our’ expanding customer base as it grew Shoppers brand in the market.

However, during the year the company experienced delays in opening of one of its stores in Tlokweng whose opening is imminent.

“We are expecting further growth and success in this business segment during the ensuing years and continue to seek additional suitable locations for further store openings as we move towards our target of 40 retail stores across Botswana,” added Chauhan.

Apart from the fast moving consumer goods (FMCG) segment, the group has extended its market presence through diversifying its business into that of investment in property, vehicle dealerships (MAN, TATA and Honda), sale of agricultural and soaps and detergents, and the operation of a travel agency.

Commercial Motors (Pty) Limited won a number of government tenders during the period while service agreements in respect of vehicles sold to date have provided a positive income stream during the year.

According to Sefalana, the Mechanised Farming (Pty) Limited submitted a number of tenders during the year, but most of these have not yet been awarded.

“Results for this subsidiary have been disappointing. We look to improve the results of this business in the forthcoming year,” admitted Chauhan.

Chauhan said during the year, Foods (Botswana) (Pty) Limited (“FB”) completed the 2012/13 contract for the delivery of Tsabana and Malutu under the government feeding program adding that the four month gap between the completion of this order and the award of the 2013/14 contract was longer than expected resulting in a reduced level of activity during the year.

“Nonetheless, we are pleased to announce that the 2013/14 contract was awarded to FB and commenced in March 2014 enabling the feeding program to continue.”

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