Sefalana : UNAUDITED GROUP FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2021 & DIVIDEND ANNOUNCEMENT

Unaudited Group Financial Results

for the six months ended 31 October 2021 & dividend announcement

Revenue	Gross Profit	EBITA	PBT	Interim dividend per
				share (thebe)
20%	11%	5%	3%	10t

ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Unaudited	Unaudited
	6 months	6 months	Audited
	ended	ended	year ended
	31 October	31 October	30 April
	2021	2020	2021
	P'000	P'000	P'000
Revenue	3 487 715	2 911 940	6 292 809
Cost of sales	(3 249 464)	(2 696 825)	(5 838 779)
Gross profit	238 251	215 115	454 030
Other income and gains	13 026	20 482	41 746
Administrative expenses	(105 809)	(97 002)	(216 421)
Earnings before interest tax and amortisation (EBITA)	145 468	138 595	279 355
Amortisation	(3 032)	(2 602)	(6 315)
Investment income	25 507	22 844	47 885
Finance costs	(12 502)	(10 467)	(22 955)
Profit before share of results of associates	155 441	148 370	297 970
Share of results of associates	(2 840)	368	(7 704)
Profit before tax	152 601	148 738	290 266
Income tax expense	(63 526)	(35 497)	(73 384)
PROFIT FOR THE PERIOD	89 075	113 241	216 882
Other comprehensive income:
Items that will not be reclassified to profit or loss
Net gain on revaluation of land and buildings			16 279
Gross gain on revaluation of land and buildings			21 362
Income tax on gain on revaluation of land and buildings			(5 083)
Items that may be subsequently reclassified to profit or loss
Currency translation differences	(1 898)	22 252	62 391
Other comprehensive (loss) / income for the period (net of tax)	(1 898)	22 252	78 670
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	87 177	135 493	295 552
PROFIT FOR THE PERIOD ATTRIBUTABLE TO:
Owners of the parent	88 928	112 997	216 198
Non - controlling interests	147	244	684
TOTAL PROFIT FOR THE PERIOD	89 075	113 241	216 882
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent	87 030	135 249	294 868
Non - controlling interests	147	244	684
TOTAL COMPREHENSIVE INCOME	87 177	135 493	295 552
Number of shares in issue at beginning and end of the period	250 726 709	250 726 709	250 726 709
Dividends per share (thebe) - ordinary - interim	10.00	10.00	10.00
Dividends per share (thebe) - ordinary - final	n/a	n/a	30.00
Basic earnings per share (thebe)	35.47	45.07	86.23

ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS

	Unaudited	Unaudited
	6 months	6 months	Audited
	ended	ended	year ended
	31 October	31 October	30 April
	2021	2020	2021
	P'000	P'000	P'000
Net cash generated from operating activities	102 845	101 605	257 178
Net cash flows from investment activities	(58 772)	2 096	(15 539)
Dividends paid	(75 217)	(68 949)	(94 021)
Net cash flows from other financing activities	(35 527)	(768)	(51 217)
Net movement in cash and cash equivalents	(66 671)	33 984	96 401
Cash and cash equivalents at beginning of period	474 737	365 875	365 875
Effect of exchange rate on cash and cash equivalents	(397)	4 965	12 461
Cash and cash equivalents at end of period	407 669	404 824	474 737
Represented by:
Cash and cash equivalents	411 616	405 329	478 261
Bank overdrafts	(3 947)	(505)	(3 524)
Cash and cash equivalents at end of period	407 669	404 824	474 737

ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Unaudited	Unaudited	Audited
	31 October	31 October	30 April
	2021	2020	2021
	P'000	P'000	P'000
ASSETS
NON - CURRENT ASSETS
Property, plant and equipment	795 644	748 535	790 504
Right of use asset	173 884	144 691	171 752
Investment property	227 338	231 213	211 082
Intangible assets	124 383	122 648	127 141
Investment in preference shares	187 266	185 717	194 997
Investment in associates	72 582	76 773	71 542
Deferred lease assets	5 001	4 264	4 404
Deferred tax assets	29 810	19 492	28 523
Trade and other receivables	8 233	8 883	7 207
Total non - current assets	1 624 141	1 542 216	1 607 152
CURRENT ASSETS
Inventories	944 051	795 084	870 505
Trade and other receivables	305 196	277 524	269 268
Current tax assets	28 583	3 809	2 782
Cash and cash equivalents	411 616	405 329	478 261
Total current assets	1 689 446	1 481 746	1 620 816
Asset classified as held for sale	23 958		23 958
TOTAL ASSETS	3 337 545	3 023 962	3 251 926
EQUITY AND LIABILITIES
EQUITY
Stated capital	686 354	686 354	686 354
Other reserves	209 163	154 643	211 061
Retained earnings	1 107 429	1 015 019	1 093 718
Equity attributable to owners of the parent	2 002 946	1 856 016	1 991 133
Non - controlling interests	15 242	15 225	15 095
Total equity	2 018 188	1 871 241	2 006 228
NON - CURRENT LIABILITIES
Lease liabilities	140 409	123 617	140 091
Loans and borrowings	106 592	108 483	107 634
Deferred tax liabilities	108 908	92 114	109 251
Total non - current liabilities	355 909	324 214	356 976
CURRENT LIABILITIES
Trade and other payables	806 455	699 043	722 602
Lease liabilities	57 007	42 180	54 666
Loans and borrowings	1 832	1 574	1 618
Contract liabilities	15 676	17 074	17 477
Current tax liabilities	30 591	22 047	21 189
Bank overdrafts	3 947	505	3 524
Provisions and accruals	47 940	46 084	67 646
Total current liabilities	963 448	828 507	888 722
Total liabilities	1 319 357	1 152 721	1 245 698
TOTAL EQUITY AND LIABILITIES	3 337 545	3 023 962	3 251 926

COMMENTARY

Basis of preparation and accounting policies

The unaudited abridged consolidated financial results of Sefalana Holding Company Limited and its subsidiaries ("Sefalana" / the "Group") are extracted from the interim Group financial information that has been prepared in accordance with International Financial Reporting Standards ("IFRS"), under the historical cost convention except for the revaluation of certain non - current assets being land and buildings, investment in properties and preference shares, which are carried at fair value.

The accounting policies applied in the preparation of the unaudited financial information for the six-month period ended 31 October 2021 (the "period"), are consistent with those applied in the preparation of the audited financial statements for the year ended 30 April 2021.

Financial results of the Group - overview

Despite the challenges we face in the current environment, we are delighted to be able to report to you our best half year results to date. This is on the back of reporting our best ever (in our 47 year history) full year results to 30 April 2021. We have been able to do this through sheer determination and perseverance by our people who are our most important asset. Our teams have remained motivated and driven and have been resilient throughout the period. For this we are truly grateful.

Our Group had put in place measures, as early as November 2019, in anticipation of the impact of the Pandemic and this has helped us navigate through these difficult times. On an ongoing basis we look at ways in which we can mitigate the effects of the Pandemic, and provide our customers with what they require, in as many channels as possible. We also endeavour to continually deliver and exceed the expectations of all our stakeholders.

Our greatest focus has for some time now, been on the core Fast Moving Consumer Goods (FMCG) businesses where we have placed considerable efforts to enhance margins and relative contribution to Group results.

Our manufacturing operations which support the FMCG businesses are also key focus areas for us. These have performed well during the period despite certain challenges beyond our control.

Our diversification strategy across both trade sectors and countries over recent years has helped maintain our Group performance, and support sustained long term growth. Relative contribution to overall Group profit from outside Botswana has been increasing.

The effective tax rate for the period of 42% is significantly higher than that of the prior period of 24% due to the accelerated withholding tax paid on dividends declared by subsidiary companies to Sefalana Holding Company Limited, prior to the increase in Botswana withholding tax rates on 1 July 2021. This will result in an enhanced net cash dividend available for distribution to our shareholders over time. The Group made an overall tax saving of just over P7 million from this accelerated declaration and this saving will be realised in the coming years.

Financial highlights

For the 6 months to 31 October 2021, the Group's:

• Revenue was P3.5 billion - up 20% on prior period;
• Gross profit was P238 million - up 11% on prior period;
• Earnings before interest, tax and amortisation ("EBITA") was P145 million, up 5% on prior period;
• Profit before tax was P153 million - up 3% on the prior period; and
• Interim dividend of 10 thebe per share to be paid to our
  Shareholders

Segmental Reporting

The Group's business and geographical segments are reported separately. Intersegment transactions are eliminated, and costs of shared services are accounted for in a separate ("Intersegment or Unallocated") segment. All transactions between segments are at arm's length.

Review of operations

Botswana Business units - 49% of Group profits

Overall Botswana business units have generated P75 million of the profit for the period, in line with the prior period. From the 3 African territories in which we are present, the Botswana operations have experienced the greatest impact of the Pandemic and related economic stress.

Trading - consumer goods

The Botswana FMCG businesses have been adversely affected for much of the last 18 months by the trading restrictions that have been in place. These restrictions have been gradually lifted in the current period and as a consequence there has been a recovery of performance by this segment.

Whilst consumers have begun to visit stores more often than during the initial phase of the Pandemic, this is not yet at the levels we have seen in the past. The consumer is still somewhat cautious and tends to focus more on necessities rather than luxuries. The desire for a one-stop shop is very much apparent and we have responded accordingly through offering a wider variety of goods and services both in-store and online.

At the beginning of the financial year, Sefalana operated 4 hyper stores ("Sefalana Hyper"), 25 cash and carry stores ("Sefalana Cash & Carry") and 33 supermarket retail stores ("Sefalana Shopper") across the country, giving the Group a total of 62 stores in Botswana. During the period, we expanded our national footprint through the opening of an additional Sefalana Shopper retail store in Ramotswa and at Molapo Crossing, Gaborone. Both these new stores are performing well and are proving popular with the customer base in the area. In December 2021 another Sefalana Liquor store was opened in Mahalapye.

As part of our annual birthday promotion, our cash and carry business gave away 29 mobile kiosks empowering Batswana to start their own businesses. Total cost of these kiosks amounted to just under P2 million. We are pleased to have empowered local entrepreneurs once again to run their own businesses. To date we have given away 116 kiosks, changing the lives of the winners.

Our Retail birthday promotion focused on giving away P1.8 million in the form of cash. This generated a lot of excitement in the market meeting the needs of our retail customers who prefer cash rather than prizes in kind. We were able to conduct these birthday promotions whilst observing all necessary Covid protocols.

Sefalana Cash & Carry Limited contributed 52% and 26% of the Group's revenue and profit before tax for the reporting period, respectively. Turnover amounted to just over P1.8 billion, which was 13% up on the prior period. Profit was P40 million which was up 15% on prior period.

Trading - others

This segment which consists of Commercial Motors (Pty) Limited ("CML") and Mechanised Farming (Pty) Limited ("MFL") contributed 1.2% and 1.5% to Group turnover and profit before tax, respectively. This is a relatively small Group segment in line with our focus on the core business of FMCG.

CML historically relied on tender business, and over recent years has been focusing on growing its private sales due to a general decline in tender activity. During the current period, the business relocated its 3 dealerships to a prime location adjacent to the Sefalana Head Office in Broadhurst. We believe this will help enhance brand awareness and put us in good stead for post Pandemic vehicle sales. The current Pandemic conditions have resulted in a general shortage of motor vehicles across the world and this has impacted on our ability to supply to certain customer requirements.

MFL focuses on the supply of components to Botswana Railways and management of their specialised spares stock. This business no longer sells to walk-in customers and is not a primary focus for the Group.

Manufacturing

Foods Botswana (Pty) Limited ("FB") contributed 3% and 6% to Group turnover and profit before tax for the period respectively. The profitability of this business is largely dependent on the timing of orders placed by Government in respect of the various feeding schemes and availability of raw materials.

Milling Division

During the period FB manufactured and supplied to Government for all 6 months however the business was only awarded one third of the total contract volumes in respect of the 24 month contract issued in April 2020. Despite the party who was awarded two thirds of the contract not being able to fulfil its obligation to supply the required volumes, FB was not awarded the balance of the contract.

We have in the meantime focused on the manufacture and supply of branded products to utilise factory capacity and to avoid unemployment. Growth in this area is positive and showing an upward trend. The Sechaba range of products has increasingly become a popular household name and a preferred choice for many regions across the country.

From a raw materials perspective, we have procured and entered into contracts to procure adequate grain to fulfil any additional volumes that Government might require from us. We have done this through securing the grain from BAMB in support of local farmers towards the end of the previous financial year.

Beverages Division

This division is heavily dependent on the manufacture and supply to Government for the children's feeding scheme. In March 2019 we were awarded the 24 month supply tender which we completed during the current period.

Raw material shortages in the Region over the last 12 months has resulted in a slowdown in production volumes and as a result we have not been able to supply the Trade consistently with the required volumes. Having explored various options, we have now put in place measures for the importation of pasteurised milk into Botswana. This is more expensive than raw milk but allows a more regular supply without interruption. This has consequently caused an erosion of margins which will continue to be in place until shortages in the raw milk supply taper off.

The 2021/22 Government tenders are now decentralised and require separate tender bids to be submitted for each region. We are pleased to report that the majority of these tenders have been awarded to us and we await feedback on required volumes and delivery dates. The decentralisation did result in delays in the award of some regional tenders and as a result there has been a longer than expected break between the completed prior year tenders, and the orders being placed on the new tenders.

Half Year

RESULTS

2021/22

Catering

Having secured the regular supply of pasteurised milk we are well placed to deliver on any volumes requested from us. For the period under review, we were only required to manufacture and supply Government for 3 of the 6 months.

Our focus also continues on building the Delta Fresh brand. Delta Fresh is now available throughout Botswana in most retailers and is increasing in market share and popularity. A new refreshed packaging of this brand will be launched in early 2022.

Properties

Botswana property portfolio

Our property portfolio held in Botswana performed well, contributing 1% and 16% to Group revenue and profit before tax respectively. Almost all properties are tenanted, and leases are in place for periods between 2 and 5 years.

The KSI property development of 5,000 sqm of warehouse space remains fully let with on-going demand for the sites.

We are currently evaluating and developing plans for a number of our properties. Further updates to be provided at the year end.

Our P100m loan taken out for the purpose of developing property will begin its five year repayment period in 2025.

Regional operations and foreign exchange exposure

Our diversification into neighbouring countries over the last 6 years has helped us maintain the Group's overall performance. Each economy has presented its own opportunities and put forward its unique challenges. Our model of business has been tailored to each economy accordingly.

Diversification into other regions brings with it foreign exchange exposure. For this period, we have recorded a retranslation loss of P2 million largely relating to the Namibian, South African and Lesotho businesses which are all ZAR denominated which has weakened against the Pula, offset by the appreciation of the Zambian Kwacha since the year end. This compares to a gain of P22.3 million in the comparative period. These currencies constantly fluctuate and therefore the retranslation gains and losses are largely temporary, and are recorded in other comprehensive income and losses in line with IFRS.

Since July 2020 we now include exposure to the Australian Dollar. This hard currency exposure often offsets the exposure on the ZAR and serves as a partial hedge. We will continue to invest in harder currencies to protect the overall Pula return for our shareholders.

Metro (Sefalana) Namibia

Metro Namibia contributed 36% and 40% of revenue and profit before tax for the period, respectively. Turnover amounted to P1.2 billion, a growth of 38% on the prior period. Profit before tax amounted to P61 million, up a staggering 54% from the prior period. Our operations in Namibia continue to grow despite indications of stress in the economy. This business now makes a significant contribution to overall Group results each year.

At the start of the period, we had 21 stores across the country. During the period one new store was opened in Katima Mulilo increasing our representation in that area.

We continue to look for additional suitable locations for store openings as we have now met our medium-term target of 20 stores. Growth will be cautious given the current economic environment.

Sefalana Lesotho

We have been operating in Lesotho for 6 years and the underlying business is performing well. We have 2 stores located in Maseru and 2 in Maputsoe. We remain the largest FMCG business in the country. We offer the widest range of products and our stores are well positioned to be accessible to the entire country. This business is expected to continue to grow and perform well.

Our discussions are on-going with the Lesotho Revenue Authority for the settlement of VAT due to us. This process has taken longer than anticipated, but we are hopeful for a favourable outcome by the year end. For some time now this matter has meant the business has experienced cash flow constraints and has required Group support to assist during peak times. A settlement would eliminate this pressure and allow us to progress with further growth and employment in the country.

Turnover of P345 million has been achieved for the period, which is 17% up on the prior period, and a contribution of 10% to total Group revenue. A profit of P3.8m was generated, almost double that of the prior period.

Investment in Preference shares

During the period, we received our fourth tranche of returns from our South African Preference share investment. For the first time since we made this investment in South Africa, that business has performed below expectation, and this is largely as a result of the tough economic conditions currently being experienced in the country.

ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

								Equity attributable to owners of the parent
								Stated			Retained				Non-controlling	Total
								capital	Reserves	earnings	Total		interests	equity
								P'000	P'000	P'000	P'000		P'000	P'000
				Balance at 30 April 2021				686 354	211 061	1 093 718	1 991 133		15 095	2 006 228
				Profit for the year							88 928	88 928			147	89 075
				Other comprehensive income for the year:
				Gain on revaluation of land and buildings (net of tax)
				Currency translation differences					(1 898)		(1 898)				(1 898)
				Transactions with non-controlling interests
				Dividends paid - 2021 interim and 2020 final							(75 217)	(75 217)				(75 217)
				Balance at 31 October 2021				686 354	209 163	1 107 429	2 002 946		15 242	2 018 188
				SEGMENT RESULTS
						BOTSWANA		ZAMBIA	LESOTHO	NAMIBIA	SOUTH AFRICA	GROUP
																Inter-
				For the six months period ended 31 October 2021	Trading						Trading	Trading			Investment	segment
				(unaudited)	consumer	Trading				consumer	consumer		in preference	or
					goods	others	Manufacturing	Property	Property	goods	goods			shares	unallocated	Consolidated
					P'000	P'000	P'000	P'000	P'000	P'000	P'000			P'000	P'000	P'000
				Revenue	1 800 790	39 010	115 867	32 296	1 841	345 843	1 239 850				(87 782)	3 487 715
				Cost of sales	(1 722 248)	(29 934)	(94 359)			(320 726)	(1 163 830)				81 633	(3 249 464)
				Gross profit	78 542	9 076	21 508	32 296	1 841	25 117	76 020				(6 149)	238 251
			Other income and gains / (losses)	6 507	2 112	761	(4)	(655)		9 086		(6 065)	1 284	13 026
			Administrative expenses	(37 458)	(9 202)	(13 481)	(3 904)	(487)	(16 014)	(14 979)				(10 284)	(105 809)
			Earnings before interest, tax and amortisation (EBITA)	47 591	1 986	8 788	28 388	699	9 103	70 127		(6 065)	(15 149)	145 468
			Amortisation	(270)						(798)	(1 964)					(3 032)
			Investment income	942	234	650	28		14	2 256		18 953	2 430	25 507
			Finance costs	(8 251)			(721)	(4 450)		(4 516)	(9 091)				14 527	(12 502)
			Profit before share of results of associates	40 012	2 220	8 717	23 966	699	3 803	61 328		12 888	1 808	155 441
			Share of results of associates												(2 840)	(2 840)
			Profit before tax (PBT)	40 012	2 220	8 717	23 966	699	3 803	61 328		12 888	(1 032)	152 601
						BOTSWANA		ZAMBIA	LESOTHO	NAMIBIA	SOUTH AFRICA	GROUP
																Inter-
				For the six months period ended 31 October 2020	Trading						Trading	Trading			Investment	segment
				(unaudited)	consumer	Trading				consumer	consumer		in preference	or
					goods	others	Manufacturing	Property	Property	goods	goods			shares	unallocated Consolidated
					P'000	P'000	P'000	P'000	P'000	P'000	P'000			P'000	P'000	P'000
				Revenue	1 590 865	42 151	124 986	31 773	2 357	295 661	896 816				(72 669)	2 911 940
				Cost of sales	(1 515 263)	(30 630)	(96 388)			(284 803)	(835 871)				66 130	(2 696 825)
				Gross profit	75 602	11 521	28 598	31 773	2 357	10 858	60 945				(6 539)	215 115
			Other income and gains / (losses)	4 843	1 859	1 716	(1 675)	447		3 912				9 380	20 482
			Administrative expenses	(39 397)	(10 604)	(14 529)	(4 636)	(1 350)	(4 432)	(14 520)				(7 534)	(97 002)
			Earnings before interest, tax and amortisation (EBITA)	41 048	2 776	15 785	25 462	1 454	6 426	50 337				(4 693)	138 595
			Amortisation	(106)						(718)	(1 778)					(2 602)
			Investment income	1 663	424	290	288		5 830	615		17 764	1 800	28 674
			Finance costs	(7 797)	(15)	(97)	(4 515)		(9 620)	(9 331)				15 078	(16 297)
			Profit before share of results of associates	34 808	3 185	15 978	21 235	1 454	1 918	39 843		17 764	12 185	148 370
		Share of results of associate												368	368
		Profit before tax (PBT)	34 808	3 185	15 978	21 235	1 454	1 918	39 843		17 764	12 553	148 738
						BOTSWANA		ZAMBIA	LESOTHO	NAMIBIA	SOUTH AFRICA	GROUP
				For the year ended 30 April 2021 (audited)												Inter-
					Trading						Trading	Trading			Investment	segment
					consumer	Trading				consumer	consumer		in preference	or
					goods	others	Manufacturing	Property	Property	goods	goods			shares	unallocated Consolidated
					P'000	P'000	P'000	P'000	P'000	P'000	P'000			P'000	P'000	P'000
				Revenue	3 397 750	93 696	250 969	62 864	3 687	647 214	1 991 532				(154 903)	6 292 809
				Cost of sales	(3 235 968)	(72 923)	(184 318)			(613 865)	(1 872 028)				140 323 (5 838 779)
				Gross profit	161 782	20 773	66 651	62 864	3 687	33 349	119 504				(14 580)	454 030
				Other income and gains / (losses)	10 206	4 232	1 971	17 155	(228)	55	12 949		(5 291)	697	41 746
				Administrative expenses	(79 488)	(22 827)	(36 617)	(9 338)	(1 817)	(16 105)	(24 667)				(25 562)	(216 421)
				Earnings before interest, tax and amortisation (EBITA)	92 500	2 178	32 005	70 681	1 642	17 299	107 786		(5 291)	(39 445)	279 355
				Amortisation	(437)						(1 488)	(4 390)					(6 315)
				Investment income	4 478	615	735	749			1 880		35 486	3 942	47 885
				Finance costs	(17 370)	(100)	(135)	(8 929)		(8 604)	(18 192)				30 375	(22 955)
				Profit before share of results of associates	79 171	2 693	32 605	62 501	1 642	7 207	87 084		30 195	(5 128)	297 970
				Share of results of associates												(7 704)	(7 704)
				Profit before tax (PBT)	79 171	2 693	32 605	62 501	1 642	7 207	87 084		30 195	(12 832)	290 266
				SEGMENT ASSETS AND LIABILITIES
							BOTSWANA		ZAMBIA	LESOTHO	NAMIBIA	SOUTH AFRICA	GROUP
				31 October 2021 (unaudited)												Inter-
					Trading						Trading	Trading			Investment	segment
					consumer	Trading				consumer	consumer		in preference	or
					goods	others	Manufacturing	Property	Property	goods	goods			shares	unallocated	Consolidated
					P'000	P'000	P'000	P'000	P'000	P'000	P'000			P'000	P'000	P'000
				Assets	1 150 286	73 304	224 325	638 915	40 105	190 664	700 441		187 266	132 239	3 337 545
				Liabilities	(908 139)	(26 438)	(76 561)	(230 718)	(792)	(79 252)	(479 196)				481 739	(1 319 357)
				31 October 2020 (unaudited)
				Assets	1 061 684	71 087	236 981	617 686	47 642	146 745	582 281		185 717	74 139	3 023 962
				Liabilities	(711 533)	( 24 099)	(31 231)	(198 165)	(700)	(126 818)	(418 170)				357 995	(1 152 721)
				30 April 2021 (audited)
				Assets	1 110 381	68 692	247 982	648 668	38 769	190 664	669 423		194 997	82 350	3 251 926
			Liabilities	(742 891)	(21 759)	(27 627)	(198 119)	(696)	(170 288)	(594 521)				510 203	(1 245 698)

The five year period relating to this Preference share investment ends in July 2022. We have carefully monitored the performance of the business over the last 12 months and the likely forward looking economic trends, and have concluded that it is in the Group's interest not to exercise our conversion option. We will be redeeming our investment of R250 million in full in July 2022. The carrying value of this investment inclusive of the conversion option was R258 million at April 2021. A fair value loss of R8 million has been reflected in the results of the current period (in other income and gains) to arrive at the redemption value in accordance with IFRS.

This segment contributed to P12.9 million to Group profit.

Zambia property

Following the significant increase in supply of warehouse and office space in Lusaka over the last few years, we have experienced a number of changes in our tenant composition. Our current occupancy is at around 70% and we actively look for suitable tenants for the remaining space.

With the recent elections in Zambia, there has been significant foreign exchange volatility and this has impacted on the results of this segment for the period. We have also noted shortage is the availability of the US Dollar which has meant some of our rentals have been received in Zambian Kwacha.

Namibia property portfolio

Since our entry into Namibia in 2013, we have aspired to establish a property portfolio similar to the one developed over the years in Botswana. In the prior year, we acquired the new Head office site in Windhoek and some additional property in Keetmanshoop.

During the period approximately P12 million was invested in the development of property in Namibia. We are looking at potential further investments in prime property across Namibia, and will make these investments if they are suitable. Further updates will be provided in due course.

Australian investment

Our investment in Australia is doing well and is in line with budget, generating a positive EBITA and cash position. As indicated previously, it is the norm in Australia for long leases of 20 years or more to be entered into on properties. In accordance with IFRS 16, this results in a front loaded interest and depreciation charge in the earlier years of the lease. As a consequence, the positive EBITDA is eroded by the related lease charges. In the latter period of the leases, this is expected to unwind, such that the reported PBT figures for this investment will grow significantly. This is aligned to our intended strategy to re-invest in that business for the first five years before dividends are declared to shareholders. The Group's share of results from this associate for the period amounts to a loss of P2.3 million.

Prospects

Manufacturing

In early 2022, we will be progressing on our planned construction of a 3,000 sqm warehouse at Foods Botswana Beverages to accommodate growth. This will also be used for storage when we proceed with our bottled water and fruit juice plant in late 2022, which was originally expected to be in place by September 2020, but had been put a hold due the onset of the Pandemic.

We are currently evaluating another manufacturing business in Botswana. Details of this potential venture will be provided to shareholders once firm plans are in place.

Australian business

In November 2021, we embarked on Phase 2 of this investment which includes the acquisition of an additional 5 stores. We have acquired the first of the 5 stores and will evaluate subsequent stores as soon as these are identified. Additional investment of AUD 0.6 million (P5.1 million) was made by the Group during the period.

South African investment

As indicated above, we will be fully redeeming our Preference share investment in July 2022.

National Lottery

Our 40% interest in Grow Mine Africa (Pty) Limited ("Grow Mine") remains in place. A number of matters have been raised with the Minister and the Gambling Authority regarding the Preferred Applicant status being withdrawn from Grow Mine. Further updates will be provided in due course.

Directors

It was with great sadness that we announced the passing of our Non-Executive Director Mr Moatlhodi Sebabole on 3 October 2021. Mr Sebabole had only been on our Board for a year but had made significant contribution in that short space of time.

No other changes to Directorships took place during the period.

The Board is currently evaluating other potential members and will accordingly notify shareholders of any appointments in the coming months.

Dividend

On 18 January 2022, the Board of Directors of Sefalana Holding Company Limited declared an interim gross dividend of 10 (ten) thebe per ordinary share.

The interim dividend will be paid net of applicable withholding taxes as required under the Income Tax Act of Botswana, on or about Wednesday 23 February 2022 to all Shareholders registered in the books of the Company at the last date to register, being close of business on Wednesday 16 February 2022, with an Ex-dividend date of Monday 14 February 2022.

By order of the Board

	CD Chauhan
(Chair)	(Group Managing Director)
28 January 2022
Gaborone, Botswana

Directors: JM Marinelli (Chair), CD Chauhan (Group Managing),	Registered office: Plot 10038,	Transfer Secretaries: Transaction Management	Auditors: Deloitte & Touche,
B Davis, S Swaniker-Tettey, KP Mere, MS Osman (Group Finance)	Corner of Nelson Mandela Drive and Kubu	Services (Pty) Limited, trading as Corpserve Botswana	Plot 64518, Fairground Office Park,
	Road, Broadhurst Industrial, Gaborone	Transfer Secretaries, PO Box 1583 AAD, Gaborone	PO Box 778, Gaborone