Covid-19 wrecks Cresta

Revenue drops by 49%, assets also P96m down

Recorded a loss before taxation of P72 million

Cresta MD bewails 2020 as trying trading year

BAKANG TIRO

editors@thepatriot.co.bw

Traditional hospitality giant listed Cresta Marakanelo Limited Group continues to be negatively affected by the impact of the Covid-19 pandemic suffering a 49% drop on its revenue in 2020.

The tourism and hospitality outfit, which operates lodges in Botswana and Zambia, has said the P194.3 million revenue was lower than that of full year 2019.

Group Managing Director Mokwena Morulane disclosed in the 2020 Annual Report that Covid-19 that revenue contracted owing to the effects of international and regional markets travel restrictions.

The lockdown and hotel closures for 75 days, conferencing restrictions, low business sentiment and ban of sale of alcohol had a very negative impact on the business that survives with the people.

“The Covid-19 headwinds had us refocus the business to ensure survival.  The cost reductions together with a freeze of capital and discretionary expenditure became even more important in response to the curtailed top line because of the country lockdowns, travel, and the conferencing restrictions. Capital expenditure for the year was P19.0 million, which is 93% lower than P275.0 million,” said Morulane.

He said that the Group posted a Loss Before Taxation of P72 million as related to 2019’s P30.6 million.

Morulane said it is critical that the business preserves its cash and cash equivalents of P56.7 million compared to P100.3 million in December 2019 – a huge decline of 45%.

“According to the STR Africa Hotel Review Statistics report for the year ended 31 December 2020, the hotel occupancy achieved in Botswana was 29% compared to the 58% in 2019. Botswana faired significantly better than its regional counterparts, with reported annual occupancies in Namibia of 21%, South Africa 24% and Zambia at 19%,” said Cresta Marakanelo MD Morulane.

Furthermore, Cresta boss Morulane said due to the circumstances shaped by COVID-19, liquidity became the more prominent short-term objective ahead of profitability and growth.

“The Group continued to look for opportunities to increase its footprint in Botswana, with the agreements being signed for the lease of an existing property in Gaborone in December 2020. Unfortunately, as indicated in Note 33, certain conditions precedent in the lease agreement were not concluded and the deal was not consummated,” said Morulane on strategic priorities.

But, he said this has not deterred the Group from seeking other properties to lease, that will add value to the business, also noting board and management made efforts to keep staff engagement levels high.

Board Chairman Moatlhodi Lekaukau said Cresta total assets declined by P96.9 million (15%) as compared to the previous year ended 31 December 2019.

“The decline in assets was primarily as a result of the reduction in cash of resources during the period which accounted for 46% of the decline. The other 23% is attributed to the property, plant and equipment which had more depreciation than additions due to the capital expenditure freeze,” he said.

During the year, Lekaukau said the cash generated from operations declined by 91% as a result of a cash utilised in funding operating expenses during the period when the hotels were closed.

“Total cash utilised in operating activities amounted to P4.4 million, compared to cash generated from operating activities in the prior year of P90.4 million. Cash utilised in investing activities amounted to P17.8million primarily as a result of the acquisition of the Cresta Bosele Hotel property in February 2020 (2019: acquisition of four hotel properties for P251 million),” said Lekaukau on the losses.