Retail expansion anchors Sefalana profit growth
Boitshepo Majube | Wednesday January 29, 2014 15:10
In its unaudited financial results for the six months ended October 31, 2013, the group’s revenue was up two percent to P1.18 billion. The company's profit before tax rose 46% to P63.6 million. The results show that the growth rates have been predominantly underpinned by continued emphasis on improving retail store offering, focusing on the provision of a larger product range, improved quality of service and better understanding of market needs. Due to an aggressive expansion of its Shoppers supermarkets, Sefalana now operates over 42 wholesale and retail businesses across the country. The group is the second largest retailer after Choppies.
In the period under review, Sefalana Cash and Carry Limited (Sefcash) respectively contributed 87% and 56% of the group’s revenue and profit before tax. The group states that Food Botswana contributed eight percent of group turnover and just over 29% of profit.
The group says that its property portfolio in Botswana and Zambia, continues to perform well. 'Key properties, to be strategically positioned to provide long term value for our shareholders, are pursued on an ongoing basis,” the company said.
Sefalana has plans for the development of a number of existing properties over the next 36 months. 'A specific debt facility has been secured in respect of these developments,' the company said.
The development of the Broadhurst wholesale and the new head office for the company has commenced. It is expected that the projects would be completed later this year. 'Our Zambia property is fully let and continues to generate a very good rental stream,' the company said. The board of directors of Sefalana Holdings has declared an interim gross dividend of 10 thebe per ordinary share. “This dividend will be paid net of applicable withholding taxes as required under the income tax act of Botswana,” the directors said in a statement.
'Basic share is up 55% and net asset value (excluding non-controlling interest) is up 18%,” they added.
The Sefalana Holdings share price has steadily increased from P4.40 at May 1, 2013 to over P6.90 as at January 23, 2014. The share price increase represents over 50% rise during the nine-month period. In its unaudited group financial results for the six months ended October 31, 2013, the company states that it has started negotiations with a third party in the region that might have an impact on its share price. The fast moving consumer goods giant recently announced that it will expand into the Namibian market this year with the acquisition of 12 stores as the BSE-listed group implements its regionally focused growth strategy. The acquisition price is expected to be less than P186 million, which is 15% of the counter’s current market capitalisation of P1.24 billion on the domestic bourse.