Sefalana : AUDITED GROUP FINANCIAL RESULTS THE 53-WEEK PERIOD ENDED 30 APRIL 2023 & DIVIDEND ANNOUNCEMENT

Revenue

Gross Profit

EBITA

Profit Before Tax

ROCE

Final dividend

21%

29%

27%

21%

16%

per share

50t

ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the 53 week

For the 52 week

ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

period ended

period ended

30 April

24 April

30 April 2023

24 April 2022

P'm

P'm

2023

2022

Revenue

9 116.2

7 519.5

ASSETS

P'm

P'm

Cost of sales

(8 440.5)

(6 996.4)

NON - CURRENT ASSETS

Gross profit

675.7

523.1

Other income and gains

47.7

51.5

Administrative expenses

(311.7)

(251.6)

Property, plant and equipment

936.4

857.4

Earnings before interest, tax and amortisation (EBITA)

411.7

323.0

Right of use asset

180.8

229.7

Amortisation

(7.3)

(7.1)

Investment property

237.8

230.1

Investment income

34.4

54.2

Intangible assets

110.1

123.4

Finance costs

(25.5)

(21.9)

Investment in associates

57.4

63.7

Profit before share of results of associates

413.3

348.2

Loan to associate

58.0

Share of results of associates

(10.6)

(14.4)

Deferred lease assets

4.6

4.7

Profit before tax

402.7

333.8

Deferred tax assets

31.5

29.7

Income tax expense

(102.2)

(112.7)

Trade and other receivables

4.6

6.3

PROFIT FOR THE PERIOD

300.5

221.1

Other comprehensive income:

Total non - current assets

1 621.2

1 545.0

Items that will not be reclassified to profit or loss

Net gain on revaluation of land and buildings

22.7

19.2

CURRENT ASSETS

Gross gain on revaluation of land and buildings

29.3

25.5

Income tax on gain on revaluation of land and buildings

(6.6)

(6.3)

Inventories

1 111.0

1 007.4

Items that may be subsequently reclassified to profit or loss

Trade and other receivables

302.0

327.8

Currency translation differences

(28.4)

27.4

Investment in preference shares

190.7

Other comprehensive (loss) / income for the period (net of tax)

(5.7)

46.6

Current tax assets

6.1

2.3

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

294.8

267.7

Cash and cash equivalents

525.4

575.2

PROFIT FOR THE PERIOD ATTRIBUTABLE TO:

Total current assets

1 944.5

2 103.4

Owners of the parent

299.5

219.6

Non - controlling interests

1.0

1.5

Asset classified as held for sale

34.8

TOTAL PROFIT FOR THE PERIOD

300.5

221.1

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:

TOTAL ASSETS

3 565.7

3 683.2

Owners of the parent

293.8

266.2

EQUITY AND LIABILITIES

Non - controlling interests

1.0

1.5

TOTAL COMPREHENSIVE INCOME

294.8

267.7

EQUITY

Dividends per share (thebe) - interim

12.0

10.0

Stated capital

686.4

686.4

Other reserves

252.0

257.7

Dividends per share (thebe) - final

50.0

30.0

Retained earnings

1 382.1

1 213.0

Equity attributable to owners of the parent

2 320.5

2 157.1

Dividends per share (thebe) - special

10.0

Non - controlling interests

20.2

16.5

Total Dividends per share (thebe)

62.0

50.0

Total equity

2 340.7

2 173.6

Basic earnings per share (thebe)

119.5

87.6

NON - CURRENT LIABILITIES

Lease liabilities

132.8

160.8

Total comprehensive income per share (thebe)

117.2

106.2

Loans and borrowings

104.2

105.8

ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS

For the 53 week

For the 52 week

Deferred tax liabilities

119.0

116.8

period ended

period ended

Total non - current liabilities

356.0

383.4

30 April 2023

24 April 2022

CURRENT LIABILITIES

P'm

P'm

Net cash generated from operating activities

45.1

284.9

Trade and other payables

619.9

862.4

Lease liabilities

73.2

93.3

Net cash flows generated / (utilised) in investment activities

102.1

(70.5)

Loans and borrowings

1.7

1.7

Dividends paid

(130.4)

(100.3)

Contract liabilities

15.8

15.0

Net cash flows from other financing activities

(63.5)

(61.7)

Current tax liabilities

10.0

33.8

Net movement in cash and cash equivalents

(46.7)

52.4

Bank overdrafts

49.0

44.6

Cash and cash equivalents at beginning of year

530.6

474.7

Provisions and accruals

99.4

75.4

Effect of exchange rate on cash and cash equivalents

(7.5)

3.5

Cash and cash equivalents at end of year

476.4

530.6

Total current liabilities

869.0

1 126.2

Represented by:

Total liabilities

1 225.0

1 509.5

Cash and cash equivalents

525.4

575.2

Bank overdrafts

(49.0)

(44.6)

TOTAL EQUITY AND LIABILITIES

3 565.7

3 683.2

Cash and cash equivalents at end of year

476.4

530.6

COMMENTARY

For the year under review, the Group generated a profit

Review of operations

Sefalana Cash & Carry Limited contributed 54% and 38%

Basis of preparation and accounting policies

before tax ("PBT") of P403 million, up 21% on the prior year.

of the Group's revenue and PBT for the year, respectively.

The effective tax rate for the year of 25% is significantly

Botswana Business units - 64% of Group PBT

Revenue amounted to just under P4.9 billion, which was an

The abridged consolidated financial results of Sefalana

lower than that of the prior year of 34% due to the payment

impressive 24% up on the prior year.

in 2022 of accelerated withholding tax on dividends

Overall Botswana business units have generated P259

Holding Company Limited and its subsidiaries ("Sefalana"

declared by subsidiary companies to Sefalana Holding

million of PBT for the year, compared to P192 million in the

Overall, a sterling performance by this division which

/ the "Group") are extracted from the Group financial

Company Limited, prior to the increase in Botswana

prior year. The most significant growth has been the Trading

this year, reports its best ever results to date. We are

statements that have been prepared in accordance with

withholding tax rates on 1 July 2021. This will allow a

consumer goods sector, with an impressive turnaround in

proud to note our core underlying Botswana business has

International Financial Reporting Standards ("IFRS"), under

significant element of future dividends to our shareholders

both the Wholesale and Retail business.

experienced the most significant growth this year from all

the historical cost convention except for the revaluation

to be paid net of little, or no further tax.

Trading - consumer goods

our segments.

of certain non-current assets being land and buildings,

Trading - others

investment in properties and preference shares, which are

Our net assets position at April 2023 amounted to P2.3

The Botswana FMCG businesses had been adversely

carried at fair value.

billion, net of dividend paid to shareholders during the year.

This segment which consists of Commercial Motors (Pty)

The market capitalisation of the Group at 30 April 2023

affected for much of the last 2 years by the trading

The accounting policies applied in the preparation of

amounted to P2.5 billion and our business is the largest

restrictions that had been in place. These restrictions have

Limited ("CML") and Mechanised Farming (Pty) Limited

the audited financial statements for the 53-week period

in the Retail and Wholesale sector listed on the Botswana

largely been lifted and consequently there has been a solid

("MFL") contributed 1.1% to both Group turnover and PBT.

ended 30 April 2023 (the "year"), are consistent with

Stock Exchange.

recovery of performance by this segment. There remain

This is a relatively small Group segment in line with our

those applied in the preparation of the audited financial

however, a number of import restrictions on confectionary,

focus on the core business of FMCG.

statements for the 52-week period ended 24 April 2022

Our share price at P9.79 has not seen significant

fruit and vegetables, but we have managed to mitigate the

CML historically relied on tender business, and over

("prior year").

movement during the year, predominantly because of the

downside impact of this through diversification into wider

Financial results of the Group - key factors to highlight

illiquid nature of our stock, where our large institutional

product and service offerings. We have also assisted a

recent years has been focusing on growing its private

shareholders opt to hold on to their holdings in Sefalana

selection of local farmers with short-term working capital

sales due to a general decline in tender activity. The move

Record breaking results!

despite an overweight position. Our consistent dividend

funding to enable them to grow their produce.

of the dealership to the new site last year has provided

policy of paying out approximately 50% of earnings in the

greater visibility and has helped promote our 3 brands.

During this financial year, we have noted significant

form of dividends has provided a regular and sustained

Consumers have begun to visit stores more often and

Performance of this segment is below our expectation and

income stream for our shareholders for many years.

basket sizes that had reduced significantly, have begun

may be considered for disposal in due course as it is not

recovery from the effects of the Pandemic, which has been

Third party valuations have suggested a share price value

to increase. The consumer is still somewhat cautious

core to our operations.

the centre of all trading activities and decision making

in excess of P12.50 illustrating an upside capital growth

and tends to focus more on value packs, necessities, and

across the Group over the last 3 years. During that period,

potential.

private label products, rather than luxuries. The desire

MFL focuses almost exclusively on the supply of

we have worked tirelessly to ensure we remain resilient and

for a one-stop shop is very much apparent and we have

components to Botswana Railways. This business no longer

respond quickly and appropriately to the uncertain and

During the year, we invested significantly in inventory

responded accordingly.

sells to walk-in customers and is not a primary focus for the

continuously changing environment.

to ensure supply constraints were minimized. This has

Due to the changes in legislation relating to liquor licensing,

Group.

Each business sector, and each geographical region, has

enabled us to avoid stock-outs and provide our customer

Manufacturing

base with a consistent product offering. There have been

the business now classifies and monitors liquor outlets

brought with it its unique circumstances and challenges.

a number of significant price increases from suppliers in

as separate stores. Consequently, at the end of the year,

Due to the complex nature of the sectors in which we

South Africa over the last 18 months, and where possible

the Botswana FMCG business consisted of 4 hyper stores

Foods Botswana (Pty) Limited ("FB") contributed 4% and

operate, navigating those changes has not been easy; but

we have increased procurement to mitigate against these

("Sefalana Hyper"), 25 cash and carry stores ("Sefalana

11% to Group turnover and PBT for the year respectively.

we have managed to do so, successfully.

increases. In doing so, we have been able to delay price

Cash & Carry"), 31 supermarket retail stores ("Sefalana

The profitability of this business is largely dependent on the

With challenges, comes opportunities, and there are a

increases to our end consumer wherever possible.

Shopper"), 58 liquor stores ("Sefalana Liquor"), 4

timing of orders placed by Government in respect of the

convenience stores ("Sefalana Quick"), and one catering

various feeding schemes and availability of raw materials.

number of new projects which we are pursuing, to support

Our cash and working capital position remains strong

outlet ("Sefalana Catering"), giving the Group a total of 123

Milling Division

a long-term sustainable profit stream for the Group. These

at April 2023, and allows us to make quick and strategic

stores in Botswana.

new opportunities are aimed at enhancing shareholder

decisions without the need to source additional funding.

In the first 3 months of the year, FB successfully and in time,

value. Some of these projects have taken longer than

This has helped us maintain and enhance margins, and will

On an on-going basis we are in search of suitable sites for

expected to materialize, due to factors and limitations

enable us to do the same in the ensuing year.

further growth. There are a number of locations in the

completed its previous tender to Government. There was

beyond our control. We do, however, look forward with

pipeline where progress is being made with landlords. We

then a 5-month waiting period before the interim 4-month

optimism and will keep our stakeholders informed of any

We are pleased to report that with this continued level

estimate an average rate of 5 new stores a year for the

contract was awarded to FB. We completed the supply of

developments in respect of these projects as soon as we

of growth, our Group has created employment for an

foreseeable future. We are, however, mindful of the level

the interim contract in April 2023. As a result, this sector

are able to do so.

additional 1,004 staff during the year taking our total

of saturation in the country and will only open new stores

of business was only available to FB for a total of 7 months.

In respect of our existing businesses, our greatest focus

number of staff to 6,623 representing an 18% increase.

where there is a sound business case to do so. During the

To avoid downtime in the factory, we continued to focus

We are pleased to be one of the largest private sector

year we opened 5 additional liquor stores across Botswana.

has for some time now, been on the core Fast Moving

employers in the country. Of the 1,004 additional staff,

on the manufacture and supply of branded products to

Consumer Goods (FMCG) businesses where we have

546 related to the Botswana businesses. Our citizen

As part of our annual birthday promotion, our Cash &

optimise factory capacity and to avoid unemployment.

placed considerable efforts to enhance margins and

employment rate in Botswana remains just over 99.4%.

Carry business has for the past 4 years rolled out its

Growth in this area is positive and showing an upward

relative contribution to Group results. Margin pressure

empowerment program and gave away a total of 144 mobile

trend. The Sechaba range of products has increasingly

continues especially during inflationary times where

Financial highlights

kiosks to Batswana to start their own businesses. This year,

become a popular household name and a preferred choice

disposable income is under strain. We have noted this

in order to reach a wider number of winners, we introduced

for many regions across the country.

trend worldwide. We are faced with constant price

For the 53-week period to 30 April 2023, the Group's:

our scratch card promotion where our customers stand a

In November 2022 we employed just over 60 staff to create

escalations from suppliers in South Africa who have

chance to win cash prizes. The benefit to our customers

experienced significant load shedding which has impacted

Revenue was P9.1 billion - up 21% on prior year;

was in excess of P3 million.

an internal sales and merchandising team to help promote

volumes produced and ultimately pricing. Through regular

Gross profit was P676 million - up 29% on prior year;

and deliver the sale of our branded products across the

dialogues with our suppliers, and through strategic

Earnings before interest, tax and amortisation

Our Retail birthday promotion once again benefited our

country. This team will also be responsible for the portfolio

procurement, we are pleased to have maintained, and in

("EBITA") was P412 million, up 27% on prior year;

customers with more than P2 million in the form of cash and

of Beverages products. We are actively growing this area, to

many instances enhanced, overall margins despite these

Profit before tax was P403 million - up 21% on the

mobile phone prizes. This generated a lot of excitement in

reduce the level of dependence on tenders.

on-going challenges.

prior year;

the market meeting the needs of our retail customers

We are pleased to report that in June 2023, we were

ROCE of 15.8% - up from 13.4% in the prior year; and

who prefer cash rather than prizes in kind, during these

Our manufacturing operations which support the FMCG

Final dividend of 50 thebe per share to be paid to our

challenging inflationary times.

awarded two-thirds of the 24-month tenders for both

businesses are also key focus areas for us. These have

Shareholders, up 67% on prior year.

Our loyalty card continues to be popular with our

Tsabana and Malutu. From a raw materials perspective, we

performed well during the year despite certain challenges

have procured adequate grain to fulfil all the volumes that

relating to procurement and import restrictions.

Segmental Reporting

customers and its usage has increased considerably during

Government has requested from us such that we anticipate

the year. Loyalty data is used to better understand our

that once again we will be able to successfully complete this

It is within this context, that we are pleased and proud to

The Group's business and geographical segments are

customer behaviour and provide a more tailored offering.

tender. Our grain procurement focuses firstly on Botswana

report to you, our best set of results to date. This is on the

reported separately. Intersegment transactions are

In the ensuing year we look to enhance the offering

producers and thereafter external suppliers.

back of reporting our best half year results to date, and full

eliminated, and costs of shared services are accounted for

further by the introduction of added benefits. These will

Further procurement of grain is required to support the

year results to 24 April 2022. Our diversification across

in a separate ("Intersegment or Unallocated") segment. All

be communicated to our customer base in the coming

sectors and territories has helped enable us to consistently

transactions between segments are at arm's length.

months.

branded products. We will be securing suitable supplies in

deliver better results year on year for our Shareholders.

the coming months.