Letlole la Rona has emerged as the sole listed property group to register an uptick in profits this reporting season, despite spending the coronavirus (COVID-19) affected period battling a scandal involving its chief executive officer (CEO).
Letlole’s board fired Chikuni Shenjere-Mutiswa in September after a disciplinary process over alleged misconduct involving the group’s long-term incentive plan. The board and its CEO had spent months wrangling over the charges and cases are still ongoing at the Industrial Court, the High Court and police.
Last week Friday, however, Letlole, unveiled a five percent uptick in pretax profit for the six months ended June 30, becoming the only property group on the Botswana Stock Exchange to register an increase for the period.
Other listed property groups such as Turnstar, RDC Properties and Far Property have all recorded declines in pretax profits for the same reporting period, as COVID-19 has depressed rental income and forced landlords to extend relief measures.
“When a lot of boards were focusing on how to thrive in a challenging environment, we were also facing a mountain of a case,” Oteng Keabetswe, Letlole director, told BusinessWeek.
“We were able to balance the two and also extract a bit of value in the last part of the period helping the excellent results.”
Letlole’s pretax profits for the half-year to June 30, rose to P78.2 million helped by stronger fair value adjustment of its properties and a higher share of profits from equity investments. The group also benefited from the non-recurrence in the interims of a P27 million book loss associated with the sale of Letlole’s hospitality portfolio to Cresta Marakanelo during the previous corresponding period.
Letlole sold President Hotel, Cresta Lodge, Thapama Hotel and Cresta Bosele to Cresta last year for P235 million, representing a 7.7 percent discount on the value of the four properties.
Keabetswe said Letlole retained the confidence of shareholders and other stakeholders, despite the issues around the former CEO. Letlole la Rona is 45% owned by the Botswana Development Corporation, and boasts properties valued at about P893 million mainly in the industrial and retail sectors.
“As we were investigating the CEO issue, we were issuing public statements and following that, we also held meetings with shareholders, including the minorities,” Keabetswe said.
“They understood what was going on, to the extent that our discussions did not prejudice the cases.
“There are several measures we have taken to improve governance and we have communicated them to the shareholders.
“They are comfortable with how we have handled the matter.”
The director said Letlole had also taken on the recommendations of the independent disciplinary panel to plug gaps in governance and other procedures.
“The misconduct of the CEO took us by surprise because we appoint to these powerful positions based also on trust,” Keabetswe said.
“We took this seriously and that is why we are moving to best corporate governance to avoid opportunities for this happening again in future.
“We are a listed entity and we have to act in the best interests of our stakeholders.”
The director confirmed that Letlole la Rona has begun a process to identify a new CEO, notwithstanding the cases before court.
“The court processes do not stop that,” he said.
While the axed CEO could not be reached for comment, it is understood he is defending Letlole’s case against him at the High Court. Shenjere-Mutiswa filed the Industrial Court challenge against his suspension and subsequent dismissal, while Letlole also reported him to the police’s Serious Crimes Squad. In a previous interview, the former CEO maintained his innocence while documents he has filed in his challenge indicate he is seeking a P15 million payment as part of an executive rewards plan.