Chobe Holdings Limited has seen a 10 percent decline in profits for the full year ended 28 February 2013 on the back of amortisation costs.
The Botswana Stock Exchange listed company revealed in their financial results statement that amortisation of land lease rights relating to Kanana was accelerated to completely write down the land lease rights by 31st December 2012 as the Tawana Land Board indicated that this was the actual termination date as opposed to 31 December 2018 per the agreement previously at hand. The development comes after the company Chief Executive Jonathan Gibson had mentioned that previously during the course of the year their Camp Kanana was advertised for renewal despite having in their hands a lease issued by the Tawana Land Board valid until 31 December 2017. Having sought legal advice in this matter, Chobe directors deemed it prudent to submit to the tender process, which by then could extend Kanana’s lease for an initial 15 years with an option for a further 15.
“The consequence of the above however required us to accelerate the amortisation of the property’s land lease right to completely write it down by the 31st December 2013,” Gibson said previously. Meanwhile taking into account what the amortisation would have been and the roll back of deferred tax, the net effect on profit after tax of this write down for the period under review was P7 million, therefore declining the profits by approximately 10 percent. For the period, Chobe profits settled at P26 million, tumbling from P29 million seen in the previous reporting period. This was despite the fact that revenue however rose by 13 percent, thanks to an increase in achieved bed rates in US Dollar terms and the weakening of the Pula against the US Dollar, which benefitted the company. Further, during the year under review occupancies increased only slightly over the prior year which, given the continuing downturn in the Northern Hemisphere is considered satisfactory.
The CEO said the company is however faced with uncertainties given the continued lack of financial confidence in the Northern Hemisphere, which remains the major source of the Group’s clientele, especially the European market. “This reduced demand is expected to result in a static to low increase in the number of travellers to the Group’s camps and lodges,” he said. However he took solace in the fact that marketing efforts in the non-traditional markets of Asia, Australia, Eastern Europe and South America are beginning to bear fruit.