The company believes it has the tools to withstand the headwinds of drought, Brexit and superpower trade wars
Armed with a strong cash reserve, eco-tourism outfit Chobe Holdings Limited fancies its chances of expansion as soon as opportunities arise, Managing Director (MD) and Group Chairman, Jonathan Gibson, has said.
For the six months ending 30 August 2019, Chobe profits rose by P4 million to sit at P81 million. The company has over P100 million in cash reserves, although the money had declined from the P115 million seen during the previous corresponding period. Gibson said the group’s strong cash position provides it with the opportunity to take advantage of any expansion opportunities that may arise.
During the period under review, the number of bed nights sold increased by 7 percent compared to the same period in the prior year, according to Gibson. A 14 percent increase in revenue was recorded as a result of the aforementioned increase in bed nights sold, an increase in achieved bed rates in US Dollar terms and favourable exchange rates. An operating cost increase of 3 percent is considered satisfactory by Chobe in light of the volume of business and current inflation levels.
The group spent P13.5 million, financed from internally generated cash flows, on improving existing equipment, buildings and purchase of additional equipment. A further P16.3 million advance payment towards the purchase of a Cessna Caravan was made, an amount that has been accounted for under Trade and other receivables, pending delivery of the aircraft.
As previously reported, the company, through its wholly owned subsidiary Ker & Downey Botswana (Pty) Ltd, acquired the entire issued stated capital of Nelie Investments (Pty) Ltd, a property owning company holding leases for two game farms in the Hainaveld area for a cash consideration of P15.4 million financed using the group’s internal cash resources.
“These two properties will be utilised to increase the extent of the land holdings currently held by the Dinaka Conservancy. Desert & Delta Safaris (Pty) Ltd, a wholly owned subsidiary of the company, acquired the entire shareholding and loans in Quadrum (Pty) Ltd and Sedia Hotel (Pty) Ltd with effect from 1st August 2019 for a total consideration of P30 million,” Gibson announced.
The entities own the land lease and operate Sedia Riverside Hotel, a 31-room hotel in Maun. P25million, financed from internally generated cash resources, was paid on the effective date with the balance payable on the anniversary of the effective date for the following five years in equal installments of P1million each or the fulfillment of certain conditions.
Further, the lease for Xugana Island Lodge expired on 31st December 2018. “We remain in occupation and the lodge fully operational pending renewal, Gibson said. “Non-renewal of this lease would have a negative impact on the group’s profitability. However, the company’s directors are confident that the expired lease will be renewed under terms and conditions that are acceptable to the group.”
Gibson noted that economic uncertainty in the Northern Hemisphere exacerbated by Brexit, trade wars and economies performing just above recession, do not bode well for the travel industry in general and the group in particular.
“Your directors are however confident that the group’s superior marketing strategies, product offering and cost containment measures provide the group with the necessary tools to withstand the headwinds,” he added.
Further, he said, the extremely low water levels in the Okavango Delta are proving to be a challenge for water-based activities for a number of operators. This situation has resulted in negative sentiment about visits to the Okavango Delta in the marketplace. However, the group’s camps and lodges are positioned in prime areas and their water-based activities are largely unaffected, according to the Chairman. It is anticipated that this, coupled with an abundance of wildlife, will put the group’s camps and lodges in pole position to consolidate market share.