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Botswana cushions Turnstar as profits decline in Tanzania

Publishing Date : 06 May, 2019

Author : ALFRED MASOKOLA

Botswana retail and office rental space continues to be a major revenue spinner for diversified property giant Turnstar Holdings Limited even during sluggish Sub-Saharan economic growth.


According to the group‘s abridged audited financial results for the year ended 31st January 2019 Turnstar’s Botswana portfolios withstood the year’s challenging economic conditions to register 3 percent increase in rental revenues and contain operational expenses against unfavourable trading environment. On the other hand, Mlimani Holdings a wholly owned subsidiary of Turnstar housing the group’s Tanzanian portfolio suffered suppression from unfavourable trading conditions of the East African market.


According to the Botswana Stock Exchange listed property outfit, the current downturn in the Tanzanian economy has negatively affected Mlimani Commercial Office and Conference Centre revenues because of a significant number of the vacancies in the Commercial Office space experienced during the year under review. Turnstar however reports that according to their forecast several office blocks will be tenanted during the current year.


“The conference centre has been refurbished, and is currently attracting several new bookings” states Turnstar management in the report. On a positive noted for Turnstar‘s Tanzania business the retail mall is performing to its optimum capacity with satisfactory tenancy.
Furthermore, Turnstar says due to the downturn in the Tanzanian rentals, particularly in the Commercial Office space, Mlimani Holdings has reported a Fair Value loss for the year.


“It should be noted that Fair Values are calculated on current rentals, projected into the future on a discounted cash flow basis. It does not reflect the actual cost of the buildings, and may change from year to year, depending on occupancy levels,” reads an extract from the financial statement.  Against the fair value drop by the Tanzanian business Botswana properties recorded substantial Fair Value Gains to further back and push the group into a year fair value gain.


During the year under review the US Dollar appreciated against the Botswana Pula. The appreciation according to the report resulted in an exchange gain in the Turnstar and Group results for the year ended 31 January 2019. Foreign exchange translation gains and losses are dependent on the US $ / BWP exchange rate as at year end, therefore Turnstar says it ensured that, the US Dollar dominated liabilities are serviced by US Dollar income, and hence the Group was not exposed to actual exchange fluctuations during the 12 month trading period under review.


“The translation gain reported for the year ended 31st January 2019, occurred when translating the US Dollar denominated investments and other financial assets of the Group’s Tanzanian and Dubai subsidiaries to Botswana currency “reports the BSEL listed property outfit. For the previous financial year ended January 2018, US-dollar /Pula exchanges negatively affected the Group’ financial results. The group posted significant decline in profits after tax because of the depreciation of the US Dollar against the Botswana Pula.


This then intern adversely affected the Group results for the year ended 31 January 2018 because of translation loss reported occurred when translating the US Dollar denominated investments and other financial assets of the Group’s Tanzanian subsidiary, Mlimani Holdings Ltd to Botswana Currency. Turnstar subsidiaries report in US Dollar and UAE Dirham currencies; whilst the Group’s functional currency is the Botswana Pula.


 “It should be noted that, these foreign exchange translation gains are unrealized and dependant on the US $ / BWP exchange rate at the financial year end” further laments Turnstar top brass. The Group closed the year at a Goodwill impairment of US$1.1, equivalent to P11.5 million arrived at from an assessment of Goodwill carried out in terms of IAS 36.


Still in this year financial report the Botswana homegrown, now a diversified billion Pula property conglomerate reveals that its local subsidiary Turnstar Botswana intends to dispose of the Land and Buildings on Plot 14444 Gaborone West, to Zambesi Corporation (Pty) Ltd, at a proposed sale price of BWP 12 million.


The property constitutes 0.5 percent of the value of the Group’s Property portfolio. “The opinion of an independent professional valuer has been obtained, and it is confirmed that the property is being disposed at market value and that the transaction is at “arm’s length’” explains Turnstar Managing Director Gulaam Husain adding that Botswana Stock Exchange Limited has been notified and has no objection to the transaction while the approval of the Competition Authority has been sought.


Turnstar Holdings Limited is a diversified regional sub-Saharan African property loan stock company listed on the Botswana Stock Exchange (BSE) in 2002, currently one of the most diversified property company on the BSE with property assets valued at over P1. 7billion.
Turnstar’s unique sectoral and geographically diversified property portfolio comprises of 13 properties: 6 properties in Gaborone, 2 in Mogoditshane, 1 in Francistown, and 4 in Dar-es-Salaam, Tanzania through its subsidiary Mlimani Holdings Limited. Turnstar also owned a million-dollar property in Dubai through its subsidiaries Turnstar Investments Limited –United Arab Emirates and Palazzo Venezia Holdings Limited.

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