The group’s gross profits fell from over U$ 17.8m to U$ 16.75m (approx. from 40.6bn/- to 38.3bn/-) during the period.
In its latest report, the Botswana Stock Exchange listed company said delays in completion of the expansion of Mlimani City has also delayed leasing of new space to tenants hence impacting on revenue during the year.
“In Tanzania, the delay in the completion of the construction, resulted in a delay in the leasing of the new developments. The current downturn in the economy has affected the Mlimani commercial office and conference centre revenues,” the report stated.
The Turnstar Group’s audited results dated January 2018 further stated that due to the downturn in the Tanzanian rentals described above, Mlimani Holdings has reported a fair value loss for the year.
“However, it should be noted that the rental revenues from the areas which are being leased in the new developments, will largely convert into bottom line profits, since the overheads relating to these areas are already being incurred,” the report noted.
The Turnstar Group annual report also pointed out that apart from the Tanzanian subsidiary’s poor showing, in Botswana, Game City had also similar delaying problems.
“There was a delay in the completion of the construction of the new section of Game City. In addition, the government did not issue trading licences to the prospective tenants who had signed pre-leases. These issues delayed the leasing of the new wing of Game City,” the report stated.
However, the majority of the premises have now been rented and rentals revenues have been received during the last few months of the financial year under review, the audited report assured while noting that as a result, Turnstar Holdings Botswana posted substantial fair value gains during the period.
It also said depreciation of both the shilling and Botswana pula against the United State dollars also contributed in eroding the profit margin of the company. “The US Dollar depreciated against the Botswana Pula, significantly, during the year ended 31 January 2018. This has adversely affected the Group results for the year ended 31 January 2018. Stakeholders are however reminded that, the foreign exchange translation gains and losses are unrealised and dependant on the US $ / BWP exchange rate as at year end,” the report stressed.
The audited results added, “Further, the Group has ensured that, the US Dollar dominated liabilities are serviced by US Dollar income, and hence the Group is not exposed to actual exchange fluctuations. The translation loss reported for the year ended 31st January 2018, occurred when translating the US Dollar denominated investments and other financial assets of the Group’s Tanzanian subsidiary, Mlimani Holdings Ltd. The subsidiary reports in US Dollar currency, whilst the Group’s functional currency is Botswana Pula.”
Turnstar Holdings Groups consists of Turnstar Holdings Limited (Botswana), Island View (Proprietary) Limited (Botswana), Mlimani Holdings Limited (Tanzania), Turnstar Investments Limited (UAE) and Palazzo Venezia Holdings Limited (UAE).