Engen Botswana, the Botswana Stock Exchange-listed company has announced that it is expecting an improved performance for its financial results covering the year to December 2015.

In a filing to the domestic bourse, the Gaborone-based company said the increase  is mainly attributable to an increase  in volumes sold and relatively stable international crude oil prices, which mitigated inventory revaluation losses. International crude oil prices dropped from levels of over $100 per barrel at the beginning of 2014, to less than $30 per barrel by early January this year. 

In a statement signed by Engen Chairman, Dr. Shabani Ndzinge, shareholders are advised to exercise caution when trading in the company’s securities until a detailed announcement is made.  “Accordingly the shareholders of Engen Botswana Limited are advised that the group expects to release results for the year ended 31 December which will be significantly higher than the corresponding year,” reads the statement.

Engen, which has a market capitalisation of P1, 3 billion has managed to remain afloat in the past two years despite dropping fuel prices. In the half-year period ended June 30, 2015, Engen recorded a 25 percent increase in gross profit to P148 million from P118 million in the same period in 2014 while its operating profit increased by 47 percent to P105 million from P73 million recorded in the previous period.

This was due to an increase in the wholesale selling margin, increased sales volumes and controlled expenditure, which declined by 4.4 percent in February last year. However in its full year ended 31 December 2014, the company’s gross profit decreased by 26.9 percent from P247.4 million in 2013 to P180.9 million in 2014, mainly due to the decline in international crude oil prices.

The company’s overall performance indicated a 49.9 percent decrease in net profit after tax from P130.2 million in 2013 to P65.2 million at the end of 2014. Meanwhile, the company has declared a special dividend of 30thebe to its shareholders.

The dividend, which covers the year to December 2015, is payable on or about the 11th of March 2016. Engen sells petroleum products to retail and institutional customers. At BSE, Engen share closed Wednesday unchanged at 850thebe.

The African Development Bank (AfDB) has approved a loan package worth $1.1 billion to Tanzania to be paid out over five years to fund infrastructure projects and improve public sector governance, it said.

The line of credit will be used primarily to support the transport and energy sectors and improve the business environment in east Africa’s second-biggest economy.

The loans would support “transport and energy to promote domestic and regional transport connectivity and improve access to reliable, affordable and sustainable electricity,” AfDB said in a statement late on Thursday.
“The second pillar prioritises strengthening of financial management and improving the enabling environment for private sector investment and finance for sustainable job creation.”

The government plans to spend $14.2 billion to construct a new standard gauge rail network in the next five years financed with external loans. It also plans to build a new $10 billion port at Bagamoyo, expand existing airports and invest in new roads.

Tanzania, like its neighbour Kenya, wants to profit from its long coastline and upgrade existing rickety railways and roads to serve growing economies in the land-locked heart of Africa.

Tanzania boasts economic growth of 7 percent a year, yet it is largely driven by state investment and poverty remains stubbornly high.

It also has natural gas reserves that are estimated at more than 57 trillion cubic feet (tcf) and the central bank believes 2 percentage points would be added to its annual economic growth simply by starting work on a plant to process that would draw in billions of dollars of investment.

“Board members underscored the need for Tanzanian authorities to ensure that the country’ s high GDP growth delivers robust economic transformation, poverty reduction and improved livelihoods,” AfDB said.Reuters

Botswana could sell its troubled 600 megawatt (MW) Chinese-built power station, the energy minister said on Tuesday, after it suffered constant technical hitches since its launch in 2012.

Botswana’s Morupule B power station, built by the China National Electric Equipment Corporation (CNEEC) at a cost of $970 million has often broken down, leading to a reliance on diesel generators and imports from South Africa.

Minister of Minerals, Energy and Water Resources Kitso Mokaila said there had been enquiries from two or three interested buyers, but no deal had been reached.

“We could fix the power station ourselves or task the contractor to fix it. We also have an option of asking someone else who is not the contractor to fix it and lastly we could sell it,” Mokaila said.

Only one of the four 150 MW units is currently running, leaving Botswana with a deficit, which is partly being met by 195 MW from diesel generators and the remainder by imports from South Africa.
Reuters

China Resources Beer Holdings agreed to buy out the remaining stake in Snow Breweries, its Chinese joint venture with SABMiller, for $1.6bn, smoothing the way for a takeover of its partner by Anheuser-Busch InBev. The Chinese brewer’s shares jumped.

The deal values Snow at 11 times the brewer’s 2014 net income before taxes, or about half the median 21 times earnings before interest and taxes valuation for brewery acquisitions announced over the past 12 months, according to data compiled by Bloomberg.

The transaction was approved by the board and is subject to regulatory approval, China Resources said in a statement on Wednesday. Sale of the stake may help AB InBev secure Chinese antitrust approval for its acquisition of SABMiller. For China Resources, it will mean tackling the local market without an overseas partner, as beer consumption in the country is expected to grow with younger consumers increasingly migrating to high- end, foreign-brand brews.

“It will be tougher for China Resources Beer now as they have to develop their premium segment organically,” Mizuho Securities Asia analyst Jeremy Yeo said via telephone.

“Their priority now will be to accelerate consolidation within beer space in China; any other large asset that comes up, they will be ready to get it.” Yeo had expected China Resources to pay $3.3bn for the 49 percent stake it didn’t own, while analysts at Nomura Holdings and Sanford C. Bernstein previously estimated the stake’s value at about $5bn. The Chinese brewer’s shares rose as much as 32 percent to HK$16.80 in Hong Kong, the biggest jump in almost a year.

The benchmark Hang Seng Index rose 2.4 percent. AB InBev said February 25 that it was making progress with Chinese regulators on gaining approval for it to buy SABMiller; the beer industry’s biggest-ever deal. Beer sales in China, the world’s largest beer market by volume, are expected to rise 41 percent in the five years through 2019 to reach $104bn, according to a June report from research firm Euromonitor.

Snow is the world’s best-selling brand, Euromonitor’s data shows. The partnership between SABMiller and China Resources, which began with two breweries in 1994, operates more than 90 operations across China, according to SABMiller’s website.

Nomura and UBS Group AG advised China Resources on the deal, along with Rothschild & Co, Citigroup and HSBC Holdings.

The declaration signed by government, mining companies and labour unions put 16 000 potential job losses in the mining sector on ice, said Mines Minister Mosebenzi Zwane on Wednesday.

It was the first time in months that the minister attended a parliamentary oversight committee and Zwane was lauded for his willingness to attend. Zwane, who replaced Ngoako Ramatlhodi in September last year, and Acting Director General David Msiza briefed Parliament on the state of job losses in the industry.

The declaration, which has been in place for the past six months, has yielded positive results, said Msiza. “There are, for example, other rehabilitation activities to create alternative jobs for mineworkers who are about to be retrenched.”

Another initiative is to help new and emerging mining companies to buy some of the assets of multinational corporations, which are restructuring and unbundling their assets.

During question time, Democratic Alliance MP James Lorimer told Zwane it is not entirely realistic to expect junior and emerging mining companies to take over the assets of multinationals. “People who want to get involved don’t have the capital to develop that mine. Where will the money that will replace the money multinationals are taking out, come from?”

Lorimer also took issue with the reasons the Department of Mineral Resources gave for job losses in the industry. Msiza attributed job losses by and large to global economic challenges and the slowing down of demand for commodities and lower prices of key minerals.

“You ascribe the decline in jobs and profits in the industry to international conditions,” Lorimer said. “But the massive cost increases in South Africa arise out of poor regulation, electricity supply problems, increased labour cost, black economic empowerment requirements and the fact that we have months of strikes. Who can blame a company like Anglo American for selling their assets (coal and iron ore) in South Africa?”
SA ‘not unkind’ to miners

Zwane responded by saying international companies are not leaving South Africa because the country has been “unkind” to them in terms of legislation and black economic empowerment targets.

“It’s an open secret that Anglo is disinvesting in countries, such as Australia (and) Brazil, but they choose to remain in South Africa. Their CEO (Mark Cutifani) told me they’re selling assets because of financial problems and that South Africa has always been kind to them. He is disinvesting in this country of origin, but they are continuing operations in South Africa because we have been kind to them. Their future lies here.”

Botswana is a diploma and degree saturated country, Acting Director of the Human Resource Development Council (HRDC) in the department of Statistics, Research, Development and Innovation Masego Mokubung has said.

The country, she said, has a small number of students enrolled at the level of Philosophy Degrees (PhD) in both public and private tertiary institutions. Of the total 94 PhD students, 89 are enrolled in public tertiary institutions and five in other colleges. Only five of the 94 students are locals while the rest are foreigners, she said.

Mokubung was giving highlights of the 2015 tertiary education statistics at the dissemination seminar between HRDC and Statistics Botswana (SB) held in Gaborone last Friday. She was particularly grieved by the small number of women studying engineering courses and enrolling in vocational training, considering that vocational education is a route students can take in order to self- employ.

HRDC’s acting head honcho Dr Patrick Molotsi, who is retiring at the end of this month, also urged tertiary institutions to do more in grooming their graduates. He said there are still some institutions that don’t abide by Tertiary Education Council rules thereby compromising students.

He expressed concern that lack of employment for graduates of tertiary institutions was still persisting, adding that they had partnered with Statistics Botswana to build precise statistics capable of informing policy and development processes. Statistics Botswana External Relations Manager Koontse Mokgwathi explained the importance of official statistics as to enable stakeholders formulate policies, plan and make decisions.

“SB guides against unnecessary overlapping in the collection of publication of the data and information for statistical purposes, this ensures maximum utilisation of existing information and resources of data collection available in the system for statistical purpose,” said Mokgwathi. Speaking on the number of students placed outside the country, Mokubung observed a significant decline.

She said that in 2014/15, 14 017 or 98.05 percent of tertiary education learners were placed in local institutions while 279 or 1, 95 percent of learners were placed externally. “It can be noted that external placement has been declining over the past ten years, this indicates that study in Botswana initiative is showing positive results that even cut costs for the government it allowed for sponsorships of more students locally rather than sponsoring a few students externally,” said Mokubung.

Bogatsu was Head of Finance at Stanbic  Bank Botswana (Standard Bank Group) from October 2003 to December 2006 and Financial and Business Analyst at Barclays Africa Finance from March 2002 to October 2003.

Before then he worked as a Project Accountant for Breweries (subsidiary of SAB) from May 2001 to March 2002; Management Accountant at Kgalagadi Breweries October 1999 to April; Group Internal Auditor KBL June 1998 to October 1999 and Senior Auditor Ernst & Young February 1994 to June 1998.

Bogatsu holds ACCA and MSc from Botswana Accountancy College and University of Derbyshire. The man who took over from Lorato Boakgomo-Ntakhwana in March 2015, explains the ever-existent synergies and collaborations between the subsidiaries which enables one to be in touch with the entire FNB Group business.

First impressions, turnaround plan
Asked about his expectations and observations when first appointed, Bogatsu indicates that, the banking industry he left in 2013 when he took his plum post in Swaziland is structurally different from the current one.

“It is characterised by heightened competition, increased regulation and a low interest rate environment. The moratorium on fee rate increases continues to impact on fees and commissions for banks and puts pressure on our non-interest income. There has been a rapid shift from a market awash with liquidity to one characterised by liquidity constraints, chiefly due to structural reforms and aggressive lending on the one hand, and slowing deposits on the other. Streamlined government disbursements and the direct payment of taxes into government accounts have also negatively affected liquidity. Higher real rates in other emerging markets and capital flights from money markets indicate that more structural reforms are necessary,” says Bogatsu.

Notwithstanding the challenging operating environment, FNBB has shown its true measure as a stable and profitable organisation properly positioned for a successful future. He attributes this to the leadership success of “My predecessors and the tireless efforts of our staff across all corners of the country.” Leading a well laid foundation, he says, does not necessitate a turnaround plan, but rather enhances the solid foundation.

Bogatsu’s strategy is founded on four pillars: Customer centricity, service excellence, sales and solutions, and people. The success of FNBB and its growth as a company will continue to be bound directly to its determination to deliver outstanding, world-class customer service and its culture of innovation, which will continue to grow the Bank’s impressive list of market firsts. “Making all of this possible are people: our employees who live the service vision, the people we serve and the communities in which we operate,” adds Bogatsu.

The bank aspires to be a customer centric Bank, competitively and efficiently delivering fitting solutions and quality service to its customers. As a result, its operational model is focused on catering to the customer’s needs and expectations at all levels, and this permeates all it does.

Challenges
Falling interest rates in a low inflation environment have had a negative impact on the bank’s net interest margins, and credit extension is slowing despite the rate cuts. According to Bogatsu, increased costs to align the Bank’s systems and reporting requirements to comply with new regulations such as the National Credit Act will further erode interest margins.

He adds that FNBB expects increased competition from new entrants, particularly non-bank financial service providers, whose offering competes directly with some of the bank’s e-channel solutions, saying this will challenge its ability to maintain its market share. The Bank’s market capitalisation in the Botswana Stock Exchange currently sits at P9.4 billion.

Both businesses and households are under pressure in the prevailing tough economic conditions, increasing impairments and nonperforming loans, and banks are enforcing tighter credit requirements. The stringent requirements around the impending implementation of the Basel III regulations are expected to further have negative effect on liquidity and intermediation, as well as on capital, and therefore, on dividends. Basel III calls for enhanced standards on minimum capital and liquidity requirements, supervisory review processes, risk management, capital planning, risk disclosure and market discipline which no doubt will be achieved at considerable expense, he adds.

In January 2014 the Central Bank imposed a two year moratorium on fee rate increases which the banking industry says has had negative impact to its margins. In response to this, FNBB then developed diversified revenue streams such as eSolutions to contribute to its Non-Interest Revenue which increased by 11 percent. The bank also intensified its efforts to attract more customers through development of innovative products such as flexi-fixed accounts that create long terms benefits for the customers.

The moratorium ended in December 2015 and discussions are ongoing with the central bank to establish prospects around fee structures. Bogatsu says, “We expect to continue to price our product offerings competitively so that undue pressure is not put on our customers. Households are facing pressures of minimal growth in employment; eroded purchasing power as wages on average grow below inflation trends; high levels of indebtedness and rising cost of debt. All these points to a consumer under pressure, hence why there is a declining trend in consumer spending and borrowing.”

A further observation is that, credit frameworks have shifted to reflect the pressures faced by the consumer and thus lending to households has softened and gravitated more towards short-term financing and a concentration on low risk profiles.

The pressure on residential properties has also meant mortgages have significantly declined. This has seen an increase in unsecured lending against secured lending. The extension of short-term credit by the industry is prudential in managing non-performing-loans and impairments as the expectation is for interest rates to start rising beyond 2017.

However, Bogatsu indicates that, despite all the economic pressures, there is still a healthy credit demand from households. He said household lending is still expected to remain sound and outperform business lending in the short-term as fixed investments have declined to reflect the business environment which is undergoing weak demand.

“We expect credit growth in the banking sector to average around 10 percent in 2016, primarily led by households at around 15 percent growth, year-on-year,” he says. The growth concentration for households will be primarily led by short-term as opposed to long-term financing.

The future
Taking a peep into the crystal ball, the FNBB chief says the Bank continues with its policy of embedding its segmentation model aimed at providing tailor-made products and solutions and superior service in line with customer-centric strategies and accordingly is well positioned in what is a very competitive banking environment.

Notwithstanding the subdued expectations for the local and regional economies, he remains confident that the Bank is well placed to take advantages of certain carefully selected opportunities.

Botswana Insurance Company (BIC) has reported a huge increase in the number of claims for the year 2015 as compared to 2014.

In a report released on Monday, BIC stated that the total claims paid out in 2015 escalated by 41.7 percent. The highest claims were within motor segments, comprising commercial and personal motor vehicle, which also increased by 35 percent from 2014. Non-motor claims such as fire and allied perils, business interruption, public liability, professional indemnity, personal accident, theft, workmen’s compensation and contractors had also increased by 39 percent compared to claim submissions in 2014.

BIC marketing and Strategy Development Manager, Komissa Burzlaff told BG Business that a rise in the number of claims paid out ultimately leads to a decrease in the company’s net profits. “Decreased net earnings in the business would mean less investments in other markets such as the stock market, financial institutions and offshore markets because insurance companies make money by investing premium payments,” she said adding that a significant increase on claims submitted and paid out leads to a hike in premium rates.

However, she said on the other hand, rising claims may help the insurance industry to understand upcoming trends, and this will assist in planning ahead and coming up with risk management policies/systems that will lessen the severity of loss on the client and the business.

“Understanding claims trends will also enable underwriters to advise customers on preventative measures that they need to have in place to mitigate risks,” said Burzlaff.According to the report from BIC, top claims under business insurance included fire and commercial motor with payout allocations at 39.4 percent and 26.8 percent.

Most fire incidents result from electrical faults, storms, lightning arson and bush fires.  The report also indicated that in most cases large-spread fires are reported immediately and it takes about a week for small residential fire claims to be reported.

“Fire still remains a top cause of business interruption by value in most firms which leads to loss of revenue”, However the report stated that businesses that were affected by fire outbreaks were mainly large companies who had the right covers in place and were able to continue supplying products and services within an agreed period of time following the fire.

2015 has been another year of growth for the pan African micro lender, Letshego Holdings which saw its profit before tax exceeding P1 billion for the first time.

According to the company’s 2015 end of year financial results released last week, this year’s results show good fundamental growth in an environment of depreciating exchange rates against the Pula for most of the markets Letshego operates in. Excluding a foreign exchange loss for the year of P75.6 million, profit before tax was P1.1 billion, a 5 percent increase on the prior period.

Letshego saw a 14 percent rise in loans and advances, excluding Nigerian and Tanzanian acquisitions in 2015. In its home market –Botswana - despite strong competition it saw an increased loans and advances to customers by 7 percent to P2.2 billion, while Kenya’s smaller and more diversified portfolio increased by 110 percent to P400 million. A number of new products were launched including agriculture supply chain financing, asset financing and micro insurance, as well as enhancements to existing products.

Embracing financial inclusion remains the cornerstone of Letshego’s strategic agenda. In December 2015, Letshego was confirmed as an Alliance for Financial Inclusion (AFI) private partner, making Letshego AFI’s first Africa-focused private partner. AFI is a global network of financial policymakers from over 100 developing and emerging countries, covering the majority of Letshego’s footprint. According to the group’s Chief Executive Officer, Chris Low, “this partnership status is important for the group’s sustainability objectives, as it will enable accelerated dialogue with regulators sharing a common focus on creating policies conducive to financial inclusion.”

Additionally, he noted that, “we continue to seek deposit-taking licences to facilitate our financial inclusion agenda - this includes providing money transfer, bill payment and remittance services, as well as facilitating borrowings for micro and small enterprises for their productive needs. Access will be provided via third party agents and mobile telephony. This approach for enhanced customer experience has already commenced in Kenya, Tanzania, Rwanda and most recently Nigeria.”

Continued investment in people and systems has strengthened the group’s operating platform, with Letshego Mozambique having gone live this year with USSD mobile banking. It is understood that additional customer solutions in partnership with a local mobile operator in Mozambique are planned for 2016, with similar initiatives being progressed in other deposit-taking countries.

“The enhancement of existing products to ensure continued market relevance continues while for micro and small enterprises, agriculture, health and education solutions have been piloted in East Africa,” said Low. 

The use of mobile money is also well established in Kenya and following this, similar initiatives will be explored in other geographies with suitable environments, Low added. New developments include the securing of a dedicated Letshego short code number in Mozambique, Namibia, and Rwanda plus registration of Faidika’s customer access points in Tanzania as agencies for the newly acquired Advans Bank Tanzania.

A key part of the group’s strategy is to continue to diversify funding sources - in December 2015 Letshego refinanced R475 million of maturing bonds and raised an additional R180 million. Total ZAR bond issuance including commercial paper now stands at ZAR980 million.

In addition, the Group concluded various other refinancing and introduced new, predominantly Pula, funding lines, which on a blended basis, reduced the annual cost of borrowing to 10.5 percent from 11.3 percent in 2014. As a result debt to equity levels increased to 66 percent; this is in line with the strategic objective to optimise the Group’s balance sheet

There are now four businesses within the group with deposit taking licences: two from acquisitions in Nigeria and Tanzania as well as those established in Mozambique and Rwanda. Low said, “conversion of the provisional licence in Namibia is subject to satisfactory finalisation of certain conditions set by Bank of Namibia and is expected by mid-2016; the evaluation of opportunities for licensing in other countries continues.”

While it is expected that deposit taking will, over time, lower the group’s overall cost of funding, in the short to medium term, the benefits will lie in being able to access the customer’s transactional accounts and thereby offer them a broader based set of financial service solutions.

In December 2015 Letshego announced its acquisition of FBN Microfinance Bank, a deposit taking micro finance bank specialising in financing of MSEs in Nigeria. The transaction was closed on 31 December 2015 and provides Letshego with a national micro finance license that includes deposit taking. With over 80,000 depositors and approximately 10,000 MSE borrowing customers, the bank’s operations are directly aligned to Letshego’s financial inclusion agenda and provide a strong platform from which to grow the group’s business in Nigeria.

“Entry into Nigeria gives an exposure to Africa’s largest economy, while Tanzania provides the ability to provide broader financial service,” said Low.

Despite current market stresses from low oil prices and a weakened Naira, the management indicated that growth prospects in the low-to-middle income customer and MSE segments have significant upside potential.

With over 1500 fulltime staff, over 700 commission based agents; the group’s aim is to continue to deliver on its strategic agenda towards creating a leading African financial services group, with a focus on financial inclusion.

Bank of Botswana, the country’s regulator of banks will closely monitor developments at Barclays Botswana following a decision by Barclays plc to sell its controlling stake at Barclays Africa.

Barclays plc owns 62,5 percent of Barclays Africa, which in turn owns a majority stake at Barclays Botswana, the lender that among the top four banks in the country.

In statement, BoB spokesperson Andrew Sesinyi said the central bank is watching latest development and it will play it regulatory role. “Consistent with Bank of Botswana mandate, as enshrined in Bank of Botswana Act…the bank will monitor developments with a view to ensuring the safety and soundness of Barclays Bank operations in the country,” he said.

This week, Barclays plc, the majority shareholder at Barclays Africa indicated to the market that it will sell down its stake at the African operation in the next two to three years. The bank said it is now concentrating on its United Kingdom and international banking units. The bank has also cited regulatory changes for quitting the continent where it has been operating for more than 100 years.

☛Pays special dividends

☛Reduces production at Ghaghoo

Mining junior, Gem Diamonds this Tuesday presented a strong set of financial result in the midst of a downward trend in prices for rough and polished diamonds. 

A decision taken by the board, which emphasised focus on ‘maximising revenue from core assets through enhancing operational efficiencies’, is now paying dividends, said Non-Executive Chairman Roger Davis. 

For the year ended December 2015, the British-based company made a profit of $67, 4 million (about P741 million), a jump of 12 percent when compared to the year before. The group, which owns Botswana’s Ghaghoo diamond mine, has posted improved profits, shining above diamond stalwarts such as De Beers and Alrosa which are currently huffing and puffing as a result of a historic decline in diamond prices.  

Chief Executive, Clifford Elphick is thrilled that his company continues to sail far away from troubled waters. Muted global economy has affected the multi-billion Pula diamond business the world over. “Although 2015 was a challenging year for the diamond mining industry, it is encouraging to report that the group has delivered strong set of operational and financial results. The group continued to implement its strategic objectives of capital discipline by investing in low cost high return capital projects,” said the former Personal Secretary to Harry Oppeinheimer of De Beers’ group. 

The London Stock Exchange-listed group said key objectives for the development of phase 1 of Ghaghoo mine have been achieved. 

The average grade recovered during the year under review met the expected reserve grade. 

 This has led to the achievement of 2000 tonnes per day, said Elphick in an emailed statement. Ghaghoo is the company’s flagship project located right at the centre of Central Kalahari Game Reserve (CKGR). The group said it will cut production at Ghaghoo mine for 2016 in a bid to conserve cash consumed during its final development stage.

 “It is important to note that Ghaghoo remains a key future option for the group and its expansion opportunities, when diamond prices improve,” said the company. Meanwhile, shareholders of Gem Diamonds are also smiling as special dividend of $0, 35 has been declared. This is in addition to the ordinary $0, 05 dividend that has been recommended. Going forward, Gem Diamonds said there are signs that there will be improvement in prices in the short to medium term. 

This is amid weak economic growth prospects across most economies. Letseng mine in Lesotho was a star performer for the period under review. Diamonds at the mine contributed to the strong results at an average price of $2,999 per carat. 

The national oil company, Botswana Oil Limited (BOL), is looking at promoting investment in infrastructure that includes pipeline and storage facilities to increase reliability of petroleum supply.  Speaking at the company’s media roundtable recently, Chief Executive, Willie Mokgatlhe said Botswana has limited investment in the petroleum products and logistical infrastructure such as storage facilities and pipelines. Statistics show that annual national consumption of petroleum products is about 1.2million litres. Against this background BOL is working on a multi-product pipeline feasibility, coastal storages as well as local storages. “We want to increase the capacity countrywide to meet the supply demand. There will be a multi product pipeline project to supply Botswana and Zimbabwe and the feasibility is ongoing. We are talking to South Africa to see how we can extend the pipelines from Gauteng to Gaborone. We are also looking to extend Harare to Francistown. The coastal storages in Mozambique, Namibia and South Africa are also underway,” Mokgatlhe affirmed. 

Locally, BOL will execute Francistown depot expansion, a project aimed at increasing the capacity of strategic storage reserves in Francistown by 30million litres. This will bring the depot capacity up to 65million litres with the aim to meet the 60 day petroleum stock cover needs by 2020. 

Construction of Tshele Hill storage facility is of strategic importance also to BOL, as it will add about 141million litres to the current 20million litres in the South part of the country. Other depots expansions include Gantsi and Palapye. 

For the coastal storages, BOL’s New Ventures Manager, Gamu Mpofu indicated that BOL is in discussion with South Africa’s Transnet Freight Rail and Botswana Railways for a coastal storage. “We are looking at leasing or developing our own coastal storage. In Namibia, BOL and National Petroleum Corporation of Namibia (NAMCOR) are in discussions about developing storage at the coast. Namport is also being engaged on the acquisition of land. As for Mozambique, there is adequate storage there, hence the strategy to lease as opposed to constructing own storage. However, discussions with rail and port authorities are underway. 

BOL and Mozambique’s state owned petroleum products distributor, Petromoc have already signed a cooperation agreement,” Mpofu revealed. Collaboration between the Mozambique’s ports and railways company (CFM), Botswana Railways and National Railways of Zimbabwe have also been established. 

Although it seems funding will be an obstacle for Botswana Oil to deliver on its aspirations, the national oil company has indicated that it will approach other financing organisations to seek funding. The BOL management has indicated that currently discussions are ongoing with the major shareholder, being government to secure funding. 

Mokgatlhe indicated that, “there is a lot of funding uncertainty in terms of funding by our shareholder - government. But what we are doing at BOL is to start engagement with other financiers such as the African Development Bank and commercial banks. We believe we need to explore these avenues to be able to fund our projects and move forward.”

Meanwhile, BOL’s executives have also emphasised on the need to develop a coal based industry such as power and liquid fuels industries. “These are the key drivers to any economy,” Mpofu said adding that, “our main focus for 2016 will be to assess market and develop market entry strategy. This can only work when funding permits. We need to conclude the strategy and start implementation.” 

Liberty Life Botswana has introduced new platinum life cover and simple life plan, which are aimed at giving customers financial freedom and meaningful life solutions. Launching the products early this week Managing Director Lulu Rasebotsa described them as a welcome relief to lots of households. 

She said their customer centric business exists to change people’s realities and make their clients’ financial freedom possible by finding the best solutions that will best suit them. Platinum life cover offers policyholders up to P15 million cover for only P150 per month. It also offers 100 percent pay out on listed critical illnesses, no matter the severity. The simple life plan is the first of its kind in the local market and offers policyholders up to P1 million with no medical underwriting. Policy holders are not subjected to medical questions/checks, they can also be covered for up to 12 months should they travel out of Botswana. Professor Stephen Jurisich - a guest speaker at the launch explained that the insurance industry exists to protect clients against risk and plan for sensible accumulation of wealth against various risks.

 He said it is always advisable to have insurance when one is still young as the older one grows the more risk of being charged extra rates, which will result in failure to guard against one’s lifetime wealth. Jurisich who is also an Industry Expert in product development and risk management in the life and health insurance pointed out that there are plenty of risks. 

Daniel Matlhagela, the products developer explained that the two products offer customers the flexibility of creating a package suitable for their needs.

Retail giant, Choppies supermarket, ended the year 2015 on a high note after its revenue went up by 17 percent to P 3.5 billion for the half-year to December 2015.

According to the financial statement posted on the Botswana Stock Exchange (BSE) website this week, gross profit went up by 11 percent to P714 million. The company also managed to increase its footprint locally and beyond after increasing the total number of stores from 18 to 147 during the period while the total retail space increased by 22.19 percent to 214,052 sqm. According to the company, Botswana contributed 64 percent to group revenue.  “The sharp devaluation of the Rand continued in the current financial year, putting pressure on Pula-based sales prices. However, profitability continued to improve from the scale benefits of our mature infrastructure. We expect this process to continue going forward,” said the company. In South Africa, the company said trading conditions in the region were challenging, especially in mining towns.  “Rising power costs also negatively impacted profitability. Collectively these factors resulted in Choppies falling behind its profitability forecasts. Downward shifts in consumption patterns negatively impacted gross profit margins in all of our markets, including South Africa,” the company said in the statement.

However Choppies opened four new stores during the half-year in neighbouring South Africa, taking total stores to 40.  “Choppies’ plans to achieve significant scale in South Africa have been greatly enhanced by the acquisition, after 31 December 2015, of 21 Jwayaleni stores in KwaZulu-Natal and Eastern Cape,” read part of the statement. These stores, which are currently operating under the “Jwayelani” brand, generated revenues of over R1 billion in the year to August 2015 with a gross profit margin of 20.37 percent and profit before tax margin of 2.84 percent for that period. “The unaudited management accounts show Jwayelani’s gross profit grew by 8.93 percent in the same period. This acquisition creates a platform for profitable growth in the South African operations,” said the company. On the other hand, Choppies was impressed by the Zimbabwe market, which achieved revenue growth of 49 percent over the first six months of the previous financial year. However the company said an aggressive pricing and promotions strategy in new stores negatively impacted profitability, and start-up costs for the eight new stores opened during the period. “Macroeconomic pressures in Zimbabwe continue to affect the spending power of consumers. In addition, deflationary trends have continued due to the strength of the US Dollar,” said the company.

Operations in Zambia commenced on 25 November, 2015 with 1192 sqm store at Tafika Commercial Complex, Kanyama, Lusaka and a distribution centre in Makeni, Lusaka. The company is planning a further 10 stores during calendar year 2016.On the local market the company expanded through the addition of its 79th store, which started operation in Gabane on 4th March 2016. The retail giant is expecting to open a further two stores before the end of the current financial year. It also said that a deal has been concluded in Kenya under which 10 existing stores will be taken over during the next few months. 

“This operation commenced on 13 February, 2016 with the takeover of first store in Kisumu and, to date, a further 3 stores have been taken over. The entire process is expected to be completed by end of March 2016,” said the company.

According to the company, no interim dividend has been declared and a final dividend will be declared and distributed after the finalisation of the financial statements for the year ended 30 June 2016

Listing in the stock exchange market helps companies to increase their capital and expand their businesses, a property expert and also Manager Director of Prime Time has said.  Sandy Kelly was speaking as one of the panellists at the recent listing conference organised by Botswana Stock Exchange. He told multitudes of delegates that   being part of BSE has created a new business in the property market, as there is a pipeline for new investments in the company. “Listing has created a good value for the property business. We had an alternative to remain private and grow slowly so we decided to become a public entity by listing in Botswana Stock Exchange and this has been very profitable to us. However listing was never in my plans,” said Kelly. He explained that listing has created new businesses. “Listing was never my plans what we have done is that we have created a new business in terms of property asset management. Because we are the property investment company, we had an alternative of selling the property to the pension fund but this was going to result in slow growth,” said Kelly.

By listing in the stock exchange Kelly said they have grown Prime Time business from 175 million worth of assets to P800 million worth of assets. “We have listed to grow our capital and access more funds. If you know what you are doing you will gain more returns from the business,” he said. Kelly pointed out that among the challenges of listing includes strict regulations by Botswana Stock Exchange. “After listing there is a bit of slow for us to make adjustments in the company because you have to go to them every time you need to go to them, that’s a restriction,” said Kelly. He said listing in other markets will be determined by their performance in other countries. “Currently we have not yet planned to list in other markets but this will be determined by our property in Zambia which is still under construction. If the performance is satisfactory we will list in Zambia Stock Exchange,” said Kelly. 

He said Prime Time properties in Gaborone are performing satisfactorily. PrimeTime currently owns the Sebele and South Ring shopping malls in Gaborone, Nswazwi mall in Francistown as well as shopping centres in Ghanzi, Lobatse, Serowe and Ramotswa. PrimeTime now owns three buildings within Prime Plaza in the CBD comprised of Barclays House, Marula House and CEDA House. Kelly said the Prime Plaza location had attracted an equal calibre of tenants with Cresta, Stockbrokers Botswana, South Africa Express Airline and GIZ already renting out at Marula House. Prime Time portfolio stood at P764 million by the end of August 2015, which is an increase of four percent. Prime Time is currently in the process of completing the sale of two properties in Francistown - Blue Jacket Square and Barclays Plaza - to Botswana Public Officers Pension Fund (BPOPF) at a cost of P71 million. However Kelly said while these properties have “proved to be cash cows,” their impact on growth is likely to be limited going forward.  Speaking during the Botswana Stock Exchange listings conference, RDC Properties Managing Director Guido Giachetti said listing in the stock exchange is an opportunity for business growth but expanding into other African countries is a challenge due to political issues and currency ratios. G4S Managing Director Michael Kampani said primary listing in Botswana Stock Exchange is limiting as there are lot of regulations and this discourages start-up companies. 

“Abiding to Botswana Stock Exchange regulations limits most companies and this hinders expansion to other African countries,” said Kampani.

The role of a financial advisor in a listing is vital from the onset and even after listing as it allows for information disclosure and encourages good governance. This is according to Max Marinelli, a financial advisor and country Managing Partner at Deloitte & Touche who made the observation during a panel discussion on listings at last week’s Botswana Stock Exchange Inaugural Listing conference in Gaborone. For listing to be successful, Marinelli said there is a need for discipline, which requires the owner to give up the power he holds and separate his agenda from that of the business. He said this would allow for proper future strategies to be implemented knowing every aspect of the business including its financial standing. 

Sipho Ziga, an attorney and a partner at Armstrong Attorneys, shared the same views with Marinelli on the importance of disclosure of information saying it protects other stakeholders as they would be aware of what is happening in the company. 

Ziga pointed out that engaging an attorney is essential because in all the steps of listing a lawyer is needed in negotiations and even after the listing. On corporate governance, former Chief Executive Officer of Zambia’s Securities Exchange Commission Dr Evans Wala Chabala clarified that the concept entails the equal treatment of all shareholders by the company. 

He said that all shareholders are given the same information and that for a strategy to be approved by the board all shareholders should have approved it being as fit to bring development to the business. Chabala said that corporations usually remarkably collapse where corporate governance has failed. “Companies should ensure that corporate governance challenges are addressed across the eco-system of capital markets, even foreign investors would prefer high standards of corporate governance for them to invest as they would have assurance of the business moving forward with ease” explained Chabala. 

He added that corporate governance helps an organisation because it provides for more accountability by clearly articulating role and responsibilities of the board.

Aim-listed Botswana Diamonds has started an active programme of exploration in Orapa and Gope, in Botswana. The exploration programme was being led by a team from Botswana Diamonds’ joint venture partner Alrosa.

“The exploration programme on two licences in the Orapa area of Botswana has great potential. The new licence PL 260 already has known kimberlites containing diamonds. We want to test the belief that the grade improves at depth so we are taking a bulk sample to get reliable results,” Botswana Diamonds chairperson John Teeling said in a statement on Wednesday.

Geologists had begun sampling on PLs 260 and 210. PL 260 covered an area of 25 km2 between the Karowe and Orapa diamonds mines. It contained three kimberlites AK21, AK22 and AK23 that were known to contain diamonds. Alrosa and Botswana Diamonds had evaluated existing data and agreed that significant potential existed on the block. A soil sampling geophysics, diamond drilling and reverse circulation wide diameter drill programme was ongoing and would continue on the block until the end of April.

The two to three wide-diameter holes had a target depth of 300 m. A 90 t bulk sample would be analysed in a bulk sampling plant in Botswana.A second team was deployed to PL 210 where two holes were drilled in 2015. Targeted geophysics and soil sampling were designed to select drill sites for diamond drilling, which would begin in early April. 

There were extensive kimberlitic indicator minerals on PL 210 and Botswana Diamonds hoped the new drilling programme would identify the source. On the completion of sampling and geophysics on PLs 210 and 260 the teams would move to the Gope region, where follow-up work would be done on PLs 135, 136 and 137, where anomalies were confirmed in 2015. Early-stage fieldwork would also start shortly on the new Gope licences obtained in late 2015.
[Mining Weekly ]

Property development company, Turnstar Holdings expects more profits in its full year ended 31 January 2016 financial results. According to a statement signed by Turnstar Managing Director Gulaam Abdoola and other directors, this year’s results will be significantly higher than those reported for the year ended 31 January 2015.

“The board of Turnstar advises its stakeholders that the Group’s results for the year ended 31 January 2016 will be significantly higher than those reported for the year ended 31 January 2015. The results will be published before 30 April 2016,” reads the statement. Last year the company recorded six percent increase in revenue to P235.7 million. Botswana operations recorded an increase of 3.2 percent to P132.2 million while Tanzania recorded 9.1 percent increase to P103.5 million. The company’s operating profit increased by eight percent from the prior year to P158.6 million while the property operating expenses decreased by 18 percent from the prior year to P98.5 million.

In the company’s annual report for 2015, Abdoola said Botswana’s overall property market remains relatively strong in a challenging economic atmosphere. He said despite the economic factors both demand and property values have continued to rise. According to the report, the commercial office sector experienced an oversupply with vacancies increasing to 5.9 percent while the retail sector remained stagnant due to additional retail space entering the market. “The groups property portfolio shows attractive future prospects supported by strong underlying contractual cash flows, escalations and a healthy lease expiry profile,” said Abdoola, adding that Game City is the largest and only regional shopping centre in Botswana while Mlimani City is the largest purpose built indoor shopping centre in Tanzania.

From 2013, rental income has been gradually declining as the figures indicate that Botswana, portfolio recorded 61 percent, 57 percent in 2014 and 56 percent in 2015. Tanzania operation has been increasing recording 39 percent in 2013, 43 percent in 2014 and 44 percent in 2015. He said Turnstar’s portfolio has limited exposure to the Botswana office sector. The retail sector in Botswana portfolio constitutes 68 percent of tenants while the Tanzania portfolio constitutes 67 percent retail exposure by revenue excluding the conference centre.

Currently Game City expansion is ongoing. An additional 9000 square metres exhibition hall comprising restaurants, a food court, multifunction entertainment area and playground is being constructed at the upper level.Turnstar property assets in the Botswana Stock Exchange are valued at over P1.7 billion. Its Tanzanian operation generates US dollar revenue and 44 percent of the company’s total rental income is in US Dollars.

G4S Botswana, the country’s biggest security services company has posted improved profit for the past year despite challenging trading space. At the end of December 2015, Profit After Tax (PAT) of the sole listed security sat at P29, 5 million, up marginally when compared to P28, 8 million recorded the year before.

Like most security companies in the mining-rich economy, the BSE-quoted company faces stiff competition from mushrooming players especially in the manned security space, default or late payments by some clients and reduction in business due to muted economic growth. Led by Michael Kampani, the company has been involved in a turnaround strategy that is now bearing fruits, if the balance sheet is a measure to go with. “Revenue growth of 3,8 percent was achieved despite a challenging economic environment,” said a joint statement by long time Chairman, Lebang Mpotokwane and Kampani.

During the period under review, the Gaborone-based company reported that there was notable growth cash solutions, manned security and facilities management. The G4S Facilities Management is a unit, which was bought from Shield Security some few years ago. The directors of the security company said that there was decline in business within the electronic system unit. G4S, which listed in the domestic bourse in 1991,was forced to ‘right size’ the number of alarm monitoring subscriber base for credit reasons.

Earnings Before Taxation (EBT) expanded by 8,8 percent year on year as a result of new business and existing clients. The directors are content that their turnaround strategy is working and they are expecting better profits in future. “Having attained the key objective of consolidating and sustaining the gains made in the turnaround in the previous year, focus will continue towards implementation of productivity and other cost efficiency programs,” said Mpotokwane and Kampani. “Though the market remains challenging, there are good prospects across all products”

On top of the agenda will include improved customers service and a roll out of new products. When Kampani appear before the media this morning (Friday), it will be interesting to know how G4S’s Deposit machine has performed in the period under review. At the stock market, punters did not immediately react to the company’s modest results, as its share price closed the day flat at 363 thebe. Shareholders are smiling that a final dividend of 10,88 thebe has been declared.

Barclays Bank Botswana latest new account ‘Ignition’ has hit the market.

According to the bank, the account offers several incentives targeted at young people. The account’s opening deposit is P50 and a free Chip & Pin Debit Card. Users will have interests on account balance, free SMS Alerts with access to mobile and internet banking. They will also enjoy discounts at retailers such as Urban Soul and Cell City on different brands.

The bank‘s Consumer Banking Director Brighton Banda explained that the youth demographic is continuously changing and challenging the way they ‘do things as a bank’. Barclays, one of the country’s leading banks said it will come with products and services that are aimed at making banking easier and affordable to its youth clientele.

Barclays is a unit of Barclays Africa. Latest news is that, Barclays plc intends selling its majority at Barclays Africa. The process is expected to take some few years.