The Sefalana Group has estimated that it’s recently concluded South African investment will earn the company a fixed annual return of R50 million for 5 years.
The company stated that they will have the option to convert this investment into a 30 percent equity stake in the consortium and that the investment into a South African consortium with an effective date of 1 July 2017.
“The aim of the consortium is to acquire a number of existing chains and grow the store compliment such that this is a significant business within a 10 year period. We have been working on this transaction for over 18 months and had to ensure it was structured in a manner suitable for us,” reads the statement.
Sefalana Group Managing Director (MD) Chandra Chauhan said that the structure allows them a five year period to determine their appetite for the South African market and during that time provides them with a solid guaranteed return. He added that the reported results therefore include P12.8 million of income pertaining to this investment.
Its recently released financials shows that in overall terms, the Group generated a Profit t Before Tax (PBT) of P83.1 million for the 6 months ended 31 October 2017. It is marginally higher than the comparative period ended 31 October 2016 (the prior period) at P81.1 million. Total comprehensive income, incorporating the foreign currency translation differences, amounted to P47.5 million as compared to P60.1 million in the comparative period.
For the five months to 31 October 2017, the Group’s revenue was P2.3 billion, which is up 13percent on prior period and gross profit was P139.4 million and went down 8 percent on prior period.
A look into the Botswana environment, the Group stated that the difficult trading conditions experienced in the previous financial year unfortunately extended into the period under review. S
“Spending remained significantly lower than in previous years as consumer spending continued to be cautious. This economic environment has put pressure on a number of industries in Botswana, some of which have responded with a reduction in employees in an attempt to reduce costs,” said Chauhan.
The company observed that with the challenges experienced in the local market, their diversification into neighbouring countries has helped them maintain the Group’s overall performance. Also stated that Namibia continues to grow and generate enhanced profitability. Lesotho, despite its political climate, is said to be also showing positive growth. The company stated that for the period, they have recorded a currency translation loss of P14 million mainly relating to the Namibian and Lesotho businesses. Stated is that this compares to a P2 million gain in the comparative period.
“South African Rand and Namibian Dollar had weakened considerably, but has since somewhat recovered. These translation gains and losses are therefore temporary and are recorded in other comprehensive income and losses,” reads the statement.