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G4S feels the heat of Govt 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.”

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Business

Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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Business

Global CEOs Back Plan to Unlock $3.4 Trillion Potential of Africa Free Trade Area

23rd January 2023

African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).

AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.

The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.

The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.

To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”

Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.

The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.

“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.

“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.

The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.

About the World Economic Forum Annual Meeting 2023

The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,

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Business

Electricity generation down 15.8%

9th January 2023

Electricity generation in Botswana during the third quarter of 2022 declined by 15.8%, following operational challenges at Botswana Power Corporation’ Morupule B power plant, according to Statistics Botswana Index of Electricity Generation (IEG) released last week.

The index shows that local electricity generation decreased by 148,243 MWH from 937,597 MWH during the second quarter of 2022 to 789,354 MWH during the third of quarter of 2022.

This decrease, according to the index, was mainly attributed to a decline in power supply realized at Morupule B power station. The index shows that as a result of low power supply from the plant, imported electricity during the third quarter of 2022 increased by 76.3 percent (123,831 MWH), from 162,340 MWH during the second quarter of 2022 to 286,171 MWH during the current quarter and Statistics Botswana added that the increase was necessitated by the need to augment the shortfall in generated electricity.

In the index Statistics Botswana stated that Eskom was the main source of imported electricity at 42.0 percent of total electricity imports. “The Southern African Power Pool (SAPP) accounted for 38.4 percent, while the remaining 10.1, 9.1 and 0.5 percent were sourced from Electricidade de Mozambique (EDM), Cross-border electricity markets and the Zambia Electricity Supply Corporation Limited (ZESCO), respectively. Cross-border electricity markets are arrangements whereby towns and villages along the border are supplied with electricity from neighbouring countries such as Namibia and Zambia.”

The government owned statistics entity stated that distributed electricity decreased by 2.2 percent (24,412 MWH), from 1,099,937 MWH during the second quarter of 2022 to 1,075,525 MWH during the third quarter of 2022. The entity noted that electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 85.2 percent during the third quarter in 2022 and added that this gives a decline of 11.8 percentage points. “The quarter-on-quarter comparison shows that the contribution of electricity generated to electricity distributed decreased by 11.8 percentage points compared to the 85.2 percent contribution during the second quarter of 2022.”

Statistics Botswana meanwhile stated that the year-on-year analysis shows some improvement in local electricity generation. Recent figures from entity show that the physical volume of electricity generated increased by 36.3 percent (210,319 MWH), from 579, 036 MWH during the third quarter of 2021 to 789,354 MWH during the current quarter. According to Statistics Botswana electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 57.7 percent during the same quarter in 2021. This gives an increase of 15.7 percentage points.

 

The entity noted that trends also show an increase in physical volume of electricity distributed from 2013 to the third quarter of 2022, thereby indicating that there are ongoing efforts to meet the domestic demand for power. “There has been a gradual increase of distributed electricity from the first quarter of 2013 to the third quarter of 2022, even though there are fluctuations. The year-on-year perspective shows that the amount of distributed electricity increased by 7.2 percent (71,787 MHW), from 1,003,738 MWH during the third quarter of 2021 to 1,075,525 MWH during the current quarter.”

The statistics entity noted that year-on-year analysis show that during the third quarter of 2022, the physical volume of imported electricity decreased by 32.6 percent (138,532 MWH), from 424,703 MWH during the third quarter of 2021 to 286,171 MWH during the third quarter of 2022. “There is a downward trend in the physical volume of imported electricity from the first quarter of 2013 to the third quarter of 2022. The downward trend indicates the country’s continued effort to generate adequate electricity to meet domestic demand, hence the decreased reliance on electricity imports.”

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