G4S feels the heat of Gov’t business exclusion
Local security services giant Group 4 Securities (G4S) suffered a 6 percent contraction in Group revenue during the year 2018. According to company audited financial statements for the year ended December 2018 released on Thursday the decline in revenues is mainly attributable to shrink in some of G4S’ major business segments.
The Group states that unfavourable market conditions suppressed in particular manned guarding and cash services therefore putting pressure on the margins. G4S explains that exclusion from government and other quasi-government agencies business has also impacted on the Manned Guarding business. The 6 percent Group revenue decline also comprises of major losses identified from Facilities Management Services business as a result of termination of non-profitable contracts.
In addition, G4S customers who had not honoured their direct debits also led to ultimate revenue downward adjustment in the company’s Security systems business. In more segmental details, the Manned guarding business closed the year at P1,035 ,000 Profit Before Taxation compared to P4,968,000 registered in the prior year ended December 2017 mirroring a whopping 79.167 percent decline.
Another segment that suffered at the hands of sluggish 2018 market is the cash solutions business which closed the year at 18.6 percent decline in profit before tax, the segment registered a year end of P17.899 million compared to 2017-year end of P21.989 million. G4S cleaning services profits before tax for the year were reduced by 3.29 percent closing the year at P3.318 million compared to P3.431 million gathered during the prior year ended December 2017.
G4S segments are distinguishable components of the group that are engaged either in providing related products or services or in providing products or services within a particular economic environment which is subject to risks and rewards that are different from those of other segments.
The company business activities are concentrated in the segment of security related services and are provided within the geographical region of Botswana. The Group consists of five segments all provided within the geographical region of Botswana, being Manned Guarding services, Cash solutions, Facilities Management, Cleaning services and Security Systems.
On a positive note the security systems business picked up by 39.15 percent to close the year at P18.989 million compared to P11.554 million recorded at 2017-year end. In total figures the Botswana Stock Exchange listed security outfit closed the 2018 trading year at P38.843 million in profit before tax compared to P40 .233 million gathered during the prior year mirroring a 3.4 percent drop.
G4S Group Managing Director Mokgethi Magapa says his company’s strategic priority of cost containment in the prior year and 2018 has built a solid cost run-rate into the business which has ensured that a very strong PBITA of P35m, which is -5 percent lower than Prior year and PBITA margin of 17 percent in line with prior year and thereby ensuring a strong profitability position for the group.
“We continue to automate our key processes which as delivered on efficiency gains and will set us up for enhanced cash collections from our customer in the Security Systems space being Alarm Monitoring and Response,” observes Magapa in the financial statement.
On the outlook G4S says it’s going forward into the year 2019 financial year and beyond with a well-resourced and capitalized business. The company further reveals that it has in this current year going into 2022 unlocked a 5-year strategy to push the group business into consolidated growth.
“We now shall be accelerating consolidation with organic top line growth in growing revenue in current year and the next 4 years, we are optimistic that our growth should come at above GDP growth for 2019 and generally over a period of 5 years,” explains G4S management in the statement. G4S further highlights that its new products in technology solutions space and cash space will drive this growth while expansion to other geographical areas will also add to the volume in the Security Systems and Cash business.
“We now are ready to deploy integrated security solutions aiming at offering a full package to our clients in order to include all our service lines offered. This will assist on customer retention and expansion on the already existing relationships bolstering towards business growth,” reveals the BSE listed security Group. The company says its 5-year strategic plan intends to raise revenue by 6 percent and achieve average PBITA growth at 9 percent and OCF growth at 10 percent.
“While competition is getting stiffer, our strong market position, commercial discipline and growing expertise in technology and positive cash growth will provide reassurance to the stakeholders to a positive outlook as outlined on our management’s 5-year strategy plan.”
Business
LLR transforms from Company to Group reporting
Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.
The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.
At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.
The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.
“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.
The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.
In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.
“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.
Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.
Business
Botswana’s Electricity Generation Dips 26.4%
The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.
Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.
Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.
Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.
Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.
The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.
The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.
In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.
Business
MMG acquires Khoemacau in a transaction valued at P23Bn
MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.
On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.
Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.
In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).
On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.
MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.
On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.
The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.
On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.
The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.
Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.
Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.