Cresta Marakanelo : UNAUDITED SUMMARISED CONSOLIDATED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022

UNAUDITED SUMMARISED CONSOLIDATED FINANCIAL RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2022

Financial Highlights

Unaudited		Jun-22	Jun-21	%
From Continuing Operations		P'000	P'000	Change
Revenue		164,899	93,041	77%
Operating Profit/(Loss)		16,227	(23,543)	169%
Profit/(Loss) before tax		5,900	(35,247)	117%
Cash generated from /(utilised in) operations		29,242	(3,755)	879%
Total assets		523,381	485,618	8%
Total shareholder's equity		132,212	129,694	2%
Cash and cash equivalents		54,037	27,638	96%

BASIS OF PREPARATION AND CHANGES TO THE GROUP'S ACCOUNTING POLICIES

The interim condensed consolidated financial statements for the six months ended 30 June 2022 do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual consolidated financial statements as at 31 December 2021.

The Group has prepared the financial statements on the basis that it will continue to operate as a going concern. The Directors consider that there are no material uncertainties that may cast significant doubt over this assumption. They have formed a judgement that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, and not less than 12 months from the end of the reporting period.

New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2021, except for the adoption of new standards effective as of 1 January 2022. The Group has not adopted any other standard, interpretation or amendment that has been issued but is not yet effective. Several amendments and interpretations apply for the first time in 2022, but do not have an impact on the interim condensed consolidated financial statements of the Group. These amendments and interpretations are Amendments to IFRS 17, IAS 1, IFRS 3, IAS 16, IAS 37, IFRS 1, IFRS 9, IAS 41, IAS 8.

OVERVIEW OF OPERATIONS

Summarised Consolidated Statement of Comprehensive Income

Summarised Consolidated Statement of Changes in Equity

With the waning in strength of the negative effects caused by the COVID-19 pandemic, the Tourism & Hospitality industry experienced a surge in the rebound momentum in 2022, and Cresta Marakanelo Limited ("CML" or "the Company"), was no exception.

for the six months ended 30 June 2022

Revenue

Cost of sales

Gross profit

Sales and distribution expenses Administrative and operating expenses

Operating profit/(loss)

Finance income

Finance expense

Profit/(Loss) before income tax

Income tax credit

Profit/(loss) from continuing operations

Discontiued Operations

Profit from discontinued operations

Profit/(loss) for the period

	Unaudited	Unaudited	Audited
	6 months	6 months	12 months
	Jun-22	Jun-21	Dec-21
	P'000	P'000	P'000
164,899		93,041	216,352
(96,901)	(76,270)	(162,270)
	67,998		16,771	54,082
(4,626)	(2,881)	(6,323)
(47,145)	(37,433)	(78,593)
	16,227		(23,543)	(30,834)
1,318		268	2,182
(11,645)	(11,972)	(24,268)
	5,900		(35,247)	(52,920)
3,544		-	9,702
	9,444		(35,247)	(43,218)
-		1,127	3,024
	9,444		(34,120)	(40,194)

for the six months ended 30 June 2022

				Foreign
		Stated	Treasury	currency	Retained	Total
		translation
		capital	shares	reserve	earnings	equity
		P'000	P'000	P'000	P'000	P'000
Year ended 31 December 2021
Balance at 1 January 2021	18,500	(5,915)	(1,222)	152,043		163,406
Total comprehensive loss for the year	-	-	(444)	(40,194)		(40,638)
Loss for the year	-	-	-	(40,194)		(40,194)
Other comprehensive loss for the year	-	-	-	(444)		-
Transfer of reserves	-	-	1,666	(1,666)		-
Balance at 31 December 2021		18,500	(5,915)	-	110,183		122,768
Period ended 30 June 2022
Balance at 1 January 2022	18,500	(5,915)	-	110,183		122,768
Profit for the period	-	-	-	9,444		9,444
Other comprehensive income for the period	-	-	-	-		-
Balance at 30 June 2022		18,500	(5,915)	-	119,627		132,212

During the six months to 30 June 2022, as the ban on alcohol sales and various other COVID related restrictions such as the curfew and travel restrictions were removed, CML returned to profitability. International tour operator arrivals continue to rise steadily at our key tourism properties, while local travel has also been steadily rising both for corporates and individuals resulting in a significant increase in occupancies across all the Company's hotels.

The first quarter's performance was low in line with the seasonality of the business but was an improvement from the previous year as during the same time last year, the State of Emergency was still in effect with a number of other COVID-19 pandemic mitigation controls. The second quarter saw a rise in the performance of the business when compared to the first quarter, contributing 55% of the revenue generated for the six months ended 30 June 2022. The business enjoyed a steady month-on-month increase in revenues from January to June 2022.

The Group's six months Profit Before Taxation from continuing operations of P5.9 million, was P40 million higher in comparison to the same period last year which reported a loss of P35.2million. The main driver for the good performance is increased occupancies and the cost reduction measures implemented, some of which will be continued for the long term, even after the pandemic has been contained. Revenue for the period under review was P164.9 million, 77% higher than the same period last year. Earnings before interest, tax, and depreciation (EBITDA) achieved during the period

Other comprehensive income/(loss):

Currency transalation differences

(subject to subsequent recycling through profit or loss)

Other comprehensive income/(loss) for the period

Total comprehensive income/(loss)

Basic and diluted earnings /(loss) per share (thebe) Earnings/(Loss) per share from continuing operations

-	408	(444)
-	408	(444)
9,444	(33,712)	(40,638)
5.22	(18.86)	(22.21)
5.22	(19.48)	(23.89)

Summarised Consolidated Statement of Cash Flows

for the six months ended 30 June 2022

Cash flows from operating activities

Unaudited	Unaudited	Audited
6 months	6 months	12 months
Jun-22	Jun-21	Dec-21
P'000	P'000	P'000

was a profit of P40.2 million, an improvement on the prior year's EBITDA generated of P0.4 million.

From the beginning of the year, cash balances increased by P1.6 million for the six months to 30 June 2022, compared to a decline of P29.4 million during the same period in 2021.

ZAMBIA OPERATIONS

The Directors made the decision not to renew the lease for the Cresta Golfview Hotel

Summarised Consolidated Statement of Financial Position

as at 30 June 2022

			Unaudited	Unaudited	Audited
			6 months	6 months	12 months
			Jun-22	Jun-21	Dec-21
			P'000	P'000	P'000
ASSETS
Non-current assets	339,532
Property, plant and equipment	366,241	353,373
Right -of-use-asset	73,769	52,440	76,708
Intangible assets
	Lease rights/Software	234	699	418
	Goodwill	5,274	5,274	5,274
Deferred tax assets	21,421	8,119	17,821
	Total non-current assets		440,230	432,773	453,594
Currents assets	2,615
Inventories	2,104	2,027
Trade and other receivables	26,375	22,851	12,810
Current income tax assets	124	252	302
Cash and cash equivalents	54,037	27,638	53,241
	Total current assets		83,151	52,845	68,380
Total assets	523,381	485,618	521,974
EQUITY
Capital and reserves

Cash (utilised in)/generated from operations Interest paid

Tax refund/(paid)

Cashflows from discontinued operations

Net cash generated /(utilised) from operating activities

Cash flows from investing activities

Purchase of property, plant and equipment Purchase of computer software

Proceeds on disposal of plant and equipment Interest received

Cashflows from discontinued operations

Net cash utilised in investing activities

Cash flows from financing activities

Repayment of borrowings

Interest paid - finance lease

Payment of lease liabilities

Proceeds from loans and borrowings

Cashflows from discontinued operations

Net cash utilised in financing activities

Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Exchange gain/(loss) on cash and cash equivalents

Cash and cash equivalents at end of period

29,242	(3,755)	33,776
(8,923)	(8,894)	(18,047)
-	-	(88)
-	966	3,403
20,319	(11,683)	19,043
(4,475)	(2,748)	(8,309)
-	-	(22)
38	4	7
1,318	268	2,182
-	(1)	-
(3,119)	(2,477)	(6,142)
(6,079)	(2,140)	(14,941)
(2,724)	(3,240)	(6,221)
(7,601)	(8,240)	(14,245)
-	-	25,000
-	(1,575)	(3,700)
(16,404)	(15,195)	(14,107)

796 (29,355) (1,206)

53,241	56,693	56,693
-	300	(2,247)
54,037	27,638	53,241

in Lusaka Zambia, and the operation ceased trading on 30 September 2021. The entity has been accounted for as a discontinued operation.

STATEMENT OF FINANCIAL POSITION

Total assets increased by 8% compared to the half year ended 30 June 2021. The increase in assets was primarily due to a P21.3 million increase in right of use assets for a hotel lease extension signed in December 2021 as well as a P26.4 million increase in cash balances. The Group had cash resources of P54.0 million (2021: P27.6 million) at the end of the period under review.

CASH FLOW

During the half year, P20.3 million was generated in operating activities while in 2021, P11.7 million was utilized in operations. Net cash utilised in investing activities amounted to P3.1 million (2021: P2.5 million). The increase in cash outflow on investing activities was as a result of the additional capital expenditure incurred. With regards to financing activities, P16.4 million (2021: P15.2 million) was utilised with bank loan repayments being P6.1 million (2021: P2.1 million) and the costs of leasing hotel properties being P10.3 million (2021: P11.5 million).

SUBSEQUENT EVENTS

Other than matters discussed in this publication, the Board and Management are not aware of any material events that have occurred subsequent to the end of the reporting period that require adjustments and or disclosure in the financial statements.

OUTLOOK

Execution of expansion projects as a critical path to success for the year is a top priority, together with the refurbishment of the existing properties in the portfolio. The focus on cash generation continues as this will be key in funding the various projects in the pipeline. The Group will continue to implement its yielding strategy to ensure it remains competitive, while also leveraging on technology and digitalisation in order to optimise operations, service provision and cost effectiveness.

Stated capital	18,500	18,500	18,500
Treasury shares	(5,915)	(5,915)	(5,915)
	Foreign currency translation reserve	-	(814)	-
	Retained earnings	119,627	117,923	110,183
	Total equity		132,212	129,694	122,768
	LIABILITIES
	Non-current liabilities	207,831
	Borrowings	233,330	236,627
	Lease liabilities	77,039	59,522	81,843
	Total non-current liabilities		284,870	292,852	318,470
	Current liabilities	30,818
	Trade and other payables	24,169	31,500
	Borrowings	50,314	16,883	27,597
	Lease liabilities	14,379	14,382	13,064
	Contract liabilities		10,788	7,638	8,575
	Total current liabilities	106,299	63,072	80,736
	Total liabilities		391,169	355,924	399,206
	Total equity and liabilities		523,381	485,618	521,974

Summarised Consolidated Segmental Information for the six months ended 30 June 2022

			Cresta	Cresta	Cresta	Cresta
			Urban	Urban	African	African	Control
			Oasis	Heartbeat	Roots	Fingerprint	Unit	Combined
	CONSOLIDATED	P'000	P'000	P'000	P'000	P'000	P'000
	Revenue		35,280	33,905	56,551	39,306	(143)			164,899
	Operating profit/(loss)	2,976	3,770	8,049	2,387	(956)			16,227
	Reportable segment profit/(loss) before tax		2,438	3,752	7,102	1,303	(8,695)			5,900
	Income tax credit								3,544
	Net profit after tax								9,444
	Total assets		108,532	135,473	96,555	97,985	84,836			523,381
	Total liabilities		16,224	2,872	54,367	30,335	287,371			391,169

Summarised Consolidated Segmental Information for the six months ended 30 June 2021

		Cresta	Cresta	Cresta	Cresta
		Urban	Urban	African	African	Control
		Oasis	Heartbeat	Roots	Fingerprint	Unit	Combined
CONSOLIDATED	P'000	P'000	P'000	P'000	P'000	P'000
Revenue		18,547	22,142	35,521	16,092	739		93,041
Operating profit/(loss)	(6,030)	(3,398)	(3,942)	(11,658)	1,486		(23,543)
Reportable segment loss before tax		(6,625)	(3,408)	(5,149)	(12,840)	(7,225)		(35,247)
Income tax expense								-
Net loss after tax from continuing operations						(35,247)
Profit from discontinued operations							1,127
Net loss for the period							(34,120)
Total assets		116,360	139,809	75,569	106,695	47,185		485,618
Total liabilities		22,929	2,708	34,494	33,065	262,728		355,924

APPRECIATION

We would like to commend management, staff, and our fellow directors for their continued commitment during this challenging COVID-19 pandemic period. It is heartening that despite the devastating effects of COVID-19 on the economy in general and more so on the hospitality sector, the Group has been able to build up its cash resources; this is in no small part due to the laudable efforts of all stakeholders associated with the Group.

Signed on behalf of the Board.

M K Lekaukau	M Morulane
Chairman	Managing Director
22 September 2022

Sponsoring Broker:

Plot 113, Unit 30, Kgale Mews.

Private Bag 00223,

Gaborone, Botswana

COMPANY REGISTRATION NO:

BW00001308618

2nd Floor, Marula House, Prime Plaza,

New CBD, Gaborone, Botswana

Phone: [phone], Fax: [phone]

Website: www.crestamarakanelo.com