Cresta Marakanelo : UNAUDITED SUMMARISED CONSOLIDATED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023

UNAUDITED SUMMARISED CONSOLIDATED FINANCIAL RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2023

Summarised Consolidated Statement of Comprehensive Income

Summarised Consolidated Statement of Changes in Equity

OVERVIEW OF OPERATIONS

for the six months ended 30 June 2023

Revenue

Cost of sales

Gross profit

Sales and distribution expenses Administrative and operating expenses

Operating profit

Finance income

Finance expense

Profit before income tax

Income tax expense

CONSOLIDATED

Unaudited		Unaudited		Audited
6 months		6 months		12 months
Jun-23		Jun-22		Dec-22
P'000		P'000		P'000
180,887		164,899		355,728
(108,935)	(96,901)	(206,745)
71,952	67,998	148,983
(5,611)	(4,626)	(9,283)
(46,207)		(47,145)		(94,024)
20,134	16,227	45,676
815	1,318	2,537
(13,143)		(11,645)		(26,547)
7,806	5,900	21,666
(2,516)	3,544	(2,422)

for the six months ended 30 June 2023

			Stated	Treasury	Retained			Total
			capital	shares	earnings	equity
			P'000	P'000	P'000			P'000
Year ended 31 December 2021
Balance at 1 January 2022	18,500		(5,915)		110,183			122,768
Total comprehensive income for the year	-		-		19,244			19,244
Balance at 31 December 2022			18,500		(5,915)		129,427			142,012
Period ended 30 June 2023
Balance at 1 January 2023	18,500		(5,915)		129,427			142,012
Total comprehensive income for the year	-		-		5,290			5,290
Balance at 30 June 2023			18,500		(5,915)		134,717			147,302

Summarised Consolidated Statement of Cash Flows

for the six months ended 30 June 2023

The business saw a 10% increase in revenue against the period ended 30 June 2022. The main driver for the good revenue performance was on the back of higher average daily rates ("ADR"), predominantly propelled by hotels in the leisure destinations, given the increase in arrivals of foreign guests when compared to 2022. The Group revenue per available room ("RevPAR") closed the six months 8% ahead of the same period in 2022.

After returning to profitability in the 2022 financial period, Cresta Marakanelo Limited ("CML") continues to be profitable in the first half ended, 30 June 2023. This has been in line with the general and positive recovery across the tourism and hospitality industry. The first quarter's performance was relatively low in line with the seasonality of the business. The second quarter saw an increase in performance when compared to the first quarter, contributing 56% of the revenue generated for the six months ended 30 June 2023.

The stronger revenue performance, coupled with robust cost containment measures in

Profit from continuing operations

Other comprehensive income

Total comprehensive income

Basic and diluted earnings per share (thebe)

Earnings per share from continuing operations

5,290		9,444		19,244
-	-	-
5,290		9,444		19,244
2.92		5.22		10.64
2.92		5.22		10.64

Cash flows from operating activities

Cash generated from operations Interest paid

CONSOLIDATED

Unaudited	Unaudited	Audited
6 months	6 months	12 months
Jun-23	Jun-22	Dec-22
P'000	P'000	P'000
50,810	29,242	85,485
(9,604)	(8,923)	(20,601)

place, culminated in an operating profit, which was 24% stronger than in 2022 and profit before tax, which was 32% ahead of the same period last year. The good performance was notwithstanding that the Company strategically increased its absolute spend in sales and marketing costs as a deliberate investment in sustainable profitability of the business into the future, having significantly reduced this class of spend during the pandemic. The finance cost on the interest-bearing borrowings increased in 2022 by 8% due to the increase in the prime lending rate from 6.26% in 2022 to 6.76% as at 30 June 2023. Earnings before interest, tax, depreciation, and amortisation ("EBITDA") achieved during

Summarised Consolidated Statement of Financial Position

as at 30 June 2023

Tax refund

Net cash generated from operating activities

-		-		178
41,206		20,319		65,062

the period was P43.32 million, an 8% improvement on the prior year's P40.1 million.

ASSETS

Non-current assets

Property, plant and equipment Right-of-use-asset Intangible assets

Lease rights/Software Goodwill

Deferred income tax assets

Current assets

Inventories

Trade and other receivables Current income tax assets

CONSOLIDATED

Unaudited		Unaudited		Audited
Jun-23		Jun-22		Dec-22
P'000		P'000		P'000
418,418	440,230	422,180
339,294		339,532		336,164
57,496		73,769		64,827
379		234		516
5,274		5,274		5,274
15,975		21,421		15,399
74,715		83,151		79,466
3,577	2,615	3,072
25,083	26,375	20,141
-	124	124

Cash flows from investing activities

Purchase of property, plant and equipment Purchase of computer software

Proceeds on disposal of plant and equipment Interest received

Net cash utilised in investing activities

Cash flows from financing activities

Repayment of borrowings

Interest paid - finance lease

Payment of lease liabilities

Net cash utilised in financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at beginning of year Exchange loss on cash and cash equivalents

Cash and cash equivalents at end of period

(22,598)	(4,475)	(14,414)
-	-	(472)
3	38	56
815		1,318		2,537
(21,780)		(3,119)		(12,293)
(19,568)	(6,079)	(29,397)
(3,536)	(2,724)	(7,395)
(6,787)		(7,601)		(13,433)
(29,891)		(16,404)		(50,225)
(10,465)	796	2,544
56,129	53,241	53,241
391		-		344
46,055		54,037		56,129

STATEMENT OF FINANCIAL POSITION

The Group has increased the shareholder's equity during the period under review by 11% from P132.2 million in 2022 to P147.3 million. The upward trend in the shareholder's net worth is after offsetting the decrease in total assets by a more than proportionate decrease in liabilities. Total assets declined by 6% compared to the half year ended 30 June 2022, while total liabilities decreased by 12%. This was primarily due to the expected decline in book values in right-of-use assets and matching lease liabilities and the P7.9 million decline in cash and cash equivalents on the back of strategic deployment of cash into needful refurbishments and debt service payments.

CASH FLOW

During the half year 2023, the Group generated stronger positive cash flows from operating activities of P41.2 million (2022: P20.3 million), with a superior EBITDA cash conversion rate of 95% compared to 51% in 2022. Cash generated from operations was grew by 74% from P29.2 million in 2022 to P50.8 million. Net cash utilised in investing

Cash and cash equivalents

Total assets

EQUITY

Capital and reserves

Stated capital

Treasury shares

Retained earnings

LIABILITIES

Non-current liabilities

Borrowings

Lease liabilities

Current liabilities

Trade and other payables Current income tax liabilities Borrowings

Lease liabilities Contract liabilities

Total liabilities

Total equity and liabilities

46,055		54,037		56,129
493,133		523,381		501,646
147,302	132,212	142,012
18,500		18,500		18,500
(5,915)		(5,915)		(5,915)
134,717		119,627		129,427
222,641	284,870	257,315
164,150		207,831		188,015
58,491		77,039		69,300
123,190	106,299	102,319
41,777		30,818		31,674
616		-		-
51,138		50,314		46,839
18,220		14,379		14,507
11,439		10,788		9,299
345,831		391,169		359,634
493,133	523,381	501,646

Summarised Consolidated Segmental Information

For the six months ended 30 June 2023

			Cresta		Cresta	Cresta	Cresta
				Urban	African		Control	Com-
			Urban		Heart-	African	Finger-
			Oasis		beat	Roots	print		Unit	bined
			P'000		P'000	P'000	P'000		P'000		P'000
Revenue	39,173	38,305		56,209		46,413	787			180,887
Operating profit		1,414		73		1,793		4,973		11,881			20,134
Reportable segment profit	929	59		(277)	4,081	3,014			7,806
before tax
Income tax expense														(2,516)
Net profit after tax														5,290
Total assets	107,613	134,881		94,224		91,902	64,513			493,133
Total liabilities		32,425	13,204		57,625		68,357	174,220			345,831

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

			Cresta		Cresta	Cresta		Cresta
				Urban		African		Control	Com-
			Urban		Heart-	African		Finger-
			Oasis		beat	Roots		print		Unit	bined
			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		2,976		3,770		8,049		2,387		(955)		16,227
Reportable segment profit	2,438	3,752		7,102	1,303	(8,695)		5,900
before tax
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

activities amounted to P21.8 million (2022: P3.1 million), representing a 598% increase against 2022 due to the ongoing expansionary and refurbishment projects which entrenches the Group's strategic imperative of fostering sustainable profitability into the future. Cash outflow from finance activities in 2023 increased by 82% mainly due to the increase in the debt service obligations with loan capital repayments totalling P19.6 million (2022: P6.1 million) for the six months.

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

The top strategic priority for the Company is the continued implementation of expansion projects and refurbishments of the existing asset portfolio. Cash generation as a strategic imperative remains instructive as this will be key in self-funding some of the various projects in the pipeline. The Company will continue to closely monitor and proactively respond to the unique challenges and opportunities presented by the current operating environment, as well as entrench its revenue yielding tactics to ensure it remains competitive, while also leveraging on technology and digitalisation to optimise operations, service provision and cost effectiveness.

APPRECIATION

We would like to commend management, staff, and our fellow directors for their unwavering commitment to ensuring sustainable profitability. The Group has been able to maintain its leadership positioning in the hospitality industry, and this is, in no small part, on the back of the laudable efforts of all stakeholders associated with the Group.

Signed on behalf of the Board.

Financial Highlights

10%		24%		32%
	Revenue grew from P165.9m			Operating profit increased		Profit before tax grew from
	in 2022 to P180.9m in 2023		from P16.2m in 2022 to	P5,9m in 2022 to P7.8m
				P20.1m in 2023	in 2023
74%		6%		12%
	Cash generated from operations		Total assets declined	Total liabilities reduced from
	increased from P29,2m in 2022		from P523,3m in 2022 to	P391,2m in 2022 to P345,8m
	to P50,8m in 2023		P493,1m in 2023	in 2023
15%		11%
	Cash and cash equivalents			Total shareholder's equity
	decreased from P54.0m to		grew from 132,2m in 2022 to
	P46.1m in 2023		P147,3m in 2023

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

The interim condensed consolidated financial statements for the six months ended 30 June 2023 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 2022.

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 2022, except for the adoption of new standards effective as of 1 January 2023. 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 2023, but do not have an impact on the interim condensed consolidated financial statements of the Group. These amendments and interpretations, effective as of 1 January 2023, are amendments to IFRS 3, IFRS 4, IFRS 17, IAS 1, IAS 8, IAS 12.

M K Lekaukau	M Morulane
Chairman	Managing Director

29 September 2023
Sponsoring Broker:	Independent Auditors
	Deloite & Touche
Plot 113, Unit 30, Kgale Mews.	Deloitte House, Fairgrounds,
Gaborone, Botswana
Private Bag 00223,
P O Box 778, Gaborone, Botswana
Gaborone, Botswana
Tel: [phone], Fax: [phone]
	COMPANY REGISTRATION NO: BW00001308618
	2nd Floor, Marula House, Prime Plaza,
	New CBD, Gaborone, Botswana
	Phone: [phone] Fax: [phone]
	Website: www.crestamarakanelo.com