Botswana Development Corporation (BDC), a wholly owned government investment arm has bought out Imperial Group from Botswana transport and logistics conglomerate outfit, Transport Holdings (TH).
At a shares transfer ceremony held at TH workshops in Gaborone this week, Botswana Development Corporation announced that the successful management buyout, a 149 million pula transaction will see Transport Holdings now a 100 % Botswana owned company. The shares transfer deal will culminate with the transfer of majority shareholding of TH into local hands therefore making it a citizen-owned enterprise.
In addition to the management buyout of the majority shareholder, Imperial, which owns 80% of TH, BDC’s investment will finance the further growth acquisition of TH’s subsidiary, Imperilog Botswana, in which the minority shareholders hold the remaining 30%. Thirdly the deal is also purposed to finance growth capital for TH’s African expansion strategy.
“This is a golden moment for our Nation because a proudly Botswana business is now taking the reins of its destiny that shines with prospects of further growth. We are confident in the management team who Provide relevant industry experience which will continue to serve TH in taking-on the continental industry,” said BDC Managing Director, Mr Bashi Gaetsaloe.
According to the BDC MD, the Transport Holding transaction is testament to his corporation’s portfolio management strategy’s fruitful efforts of positioning home-grown talent to steer the growth of leading industries in the economy. “As the nation’s main investment operation for driving considerable commercial developments, it remains an imperative for us to engineer the growth of local enterprises,” he said.
Transport Holdings Group is a leading Botswana conglomerate of transport and logistics companies with a twenty-five-year history in the market. “Over out 25 years in business, Transport Holdings has grown from a 3-truck business, to a 100-truck operation with an asset value of approximately P77 million presently, I would like to thank my team for ensuring this transaction was a resounding success. I commend Mr. Lee and his team for the robust legacy they have so tirelessly built over the years,” said Gaetsaloe.
Current Managing Director, Anthony Lee explained that his management team has largely been responsible for driving the growth and profitability of TH through prioritizing the building of strong customer relationships, quality service delivery and maintaining effective cost-management systems.
When officiating at the event, the Minister of Investment Trade & Industry (MITI) Ms Bogolo Kenewendo, said her ministry continues to be committed to moving Botswana through sustainable industries by creating a conducive environment for local and foreign investment. She hailed the partnership saying it will go a long way in benefiting the country, bringing a variety of opportunities within the transport and logistics industry.
“This is clear indication of what we can do when we drive proactivity and collaboration between the public and private sectors. We must fully harness the potential of our people and our land, and today is a testament saying that indeed we can do so successfully. As a nation we all can be in the business of delivering dreams as Transport Holdings is in their unique profession," she said.
On the other hand Gaetsaloe reiterated that BDC’s strengthened partnership with TH through this transaction will allow Botswana a variety of opportunities to reap from. He explained that as Transport Holdings now strives to spread its wings competitively in Africa like many Botswana based companies, locals stand to benefit from emerging employment opportunities as well as Botswana benefiting from more fiscal revenue and value chain business opportunities that may arise from support industries across the logistic business.
He pointed out that for more opportunities to emerge to boost local employment more resources would be needed to drive production and introduce more market-relevant services adapted to the local industry. “We will also witness a proudly Botswana-business become a pan-African operation and see the exporting of Botswana’s business culture to external markets whilst attracting investors to our economy. This successful buyout is by-all-means a great win for Botswana,” he said.
Furthermore, Gaetsaloe said: “Given the narrow structure of our economy and the size of our population – a regional play – like the one exhibited by TH, is a major growth opportunity for Botswana companies and BDC stands ready to support those business that are ready and brave enough, and competitive enough to expand outside Botswana. We need more success stories of expansions outside Botswana and we stand ready to fund these projects.
This year we anticipate that we will disburse close to P700m to new projects. This will create much needed stimulus to the economy, further push our industrialization agenda, and build pan-African businesses. We are even more excited this we can do this with citizen owned businesses such as TH. Gaetsaloe said the second goal is to invest in the continent. He pointed out that Africa is an exciting place to be right now and analysts, investors, and economists have all remarked, “Ignore Africa at your peril.”
“We believe that Africa is our “back-yard” and have taken a deliberate strategy to invest across Africa.”
In his words, Gaetsaloe shared, “With GDP growth rates ranging from 5% to as high as 8.3% (in countries such as Ethiopia, Ghana, Rwanda, Senegal) and boasting populations that exceed 180m (in places such as Nigeria), serious business people looking for growth and new markets must look at the region and the continent. And the time is now. As an A-Rated government and with BDC’s own investment grade rating of Baa2 – we can export highly competitive financial services and products and do so profitably and sustainably. This is one of our competitive advantages as a country and as BDC.”
Through its clearing, forwarding, warehousing, and transportation arms, TH offers a full spectrum of services across all its 4 subsidiaries. With 100 trucks and an eye set of the regional market BDC’s new catch looks forward to many years of successful partnership as we open-up trade and transportation routes and deliver services and goods across borders.
Botswana has recorded its first trade surplus for 2021 since the only one for the year in January.
The country’s exports for the month of July surpassed the value of imports, Statistics Botswana’s July International Merchandise Trade data reveals.
Released last Friday, the monthly trade digest reports a positive jump in the trade balance graph against the backdrop of a series of trade deficits in the preceding months since January this year.
According to the country’s significant data body, imports for the month were valued at P7.232 billion, reflecting a decline of 6.6 percent from the revised June 2021 value of P7.739 billion.
Total exports during the same month amounted to P7.605 billion, showing an increase of 6.1 percent over the revised June 2021 value of P7.170 billion.
A trade surplus of P373.2 million was recorded in July 2021. This follows a revised trade deficit of P568.7 million for June 2021.
For the total exports value of P7.605 billion, the Diamonds group accounted for 91.2 percent (P6.936 billion), followed by Machinery & Electrical Equipment and Salt & Soda Ash with 2.2 percent (P169.7 million) and 1.3 percent (P100.9 million) respectively.
Asia was the leading destination for Botswana exports, receiving 65.2 percent (P4.96 billion) of total exports during July 2021.
These exports mostly went to the UAE and India, having received 26.3 percent (P1. 99 billion) and 18.7 percent (P1.422 billion) of total exports, respectively. The top most exported commodity to the regional block was Diamonds.
Exports destined to the European Union amounted to P1.64 billion, accounting for 21.6 percent of total exports.
Belgium received almost all exports destined to the regional union, acquiring 21.5 percent (P1.6337 billion) of total exports during the reporting period.
The Diamonds group was the leading commodity group exported to the EU. The SACU region received exports valued at P790.7 million, representing 10.4 percent of total exports.
Diamonds and Salt & Soda Ash commodity groups accounted for 37.8 percent (P298.6 million) and 6.2 percent (P48.7 million) of total exports to the customs union.
South Africa received 9.8 percent (P745.0 million) of total exports during the month under review. The Diamonds group contributed 39.9 percent (P297.4 million) to all goods destined for the country.
In terms of imports, the SACU region contributed 62.7 percent (P4.534 billion) to total imports during July.
The topmost imported commodity groups from the SACU region were Fuel; Food, Beverages & Tobacco, and Machinery & Electrical Equipment with contributions of 33.3 percent (P1.510 billion), 17.4 percent (P789.4 million) and 12.7 percent (P576.7 million) to total imports from the region, respectively.
South Africa contributed 60.1 percent (P4.3497 billion) to total imports during July 2021.
Fuel accounted for 32.1 percent (P1.394 billion) of imports from that country. Food, Beverages & Tobacco contributed 17.7 percent (P772.0 million) to imports from South Africa.
Namibia contributed 2.0 percent (P141.1 million) to the overall imports during the period under review. Fuel was the main commodity imported from that country at 82.1 percent (P115.8 million).
During the months, imports representing 63.5 percent (P4.5904 billion) were transported into the country by Road.
Transportation of imports by Rail and Air accounted for 22.7 percent (P1.645 billion) and 13.8 percent (P996.2 million), respectively.
During the month, goods exported by Air amounted to P6, 999.2 million, accounting for 92.0 percent of total exports, while those leaving the country by Road were valued at P594.2 million (7.8 percent).
Founders from twenty companies have been accepted into the program from Botswana, Namibia, and South Africa
The 4th Cohort of the Stanford Seed Transformation Program – Southern Africa (STP), a collaboration between Stanford Graduate School of Business and De Beers Group commenced classes on 20 September 2021. According to Otsile Mabeo, Vice President Corporate Affairs, De Beers Global Sightholder Sales: “We are excited to confirm that 20 companies have been accepted into the 4th Seed Transformation Programme from Botswana, Namibia, and South Africa. The STP is an important part of the De Beers Group Building Forever sustainability strategy and demonstrates our commitment to the ‘Partnering for Thriving Communities’ pillar that aims at enhancing enterprise development in countries where we operate in the Southern African region”. Jeffrey Prickett, Global Director of Stanford Seed: “Business owners and their key management team members undertake a 12-month intensive leadership program that includes sessions on strategy and finance, business ethics, and design thinking, all taught by world-renowned Stanford faculty and local business practitioners. The program is exclusively for business owners and teams of for-profit companies or for-profit social enterprises with annual company revenues of US$300,000 – US$15million.” The programme will be delivered fully virtually to comply with COVID 19 protocols. Out of the 20 companies, 6 are from Botswana, 1 Namibia, and 13 South Africa. Since the partnership’s inception, De Beers Group and Stanford Seed have supported 74 companies, 89 founders/CEOs, and approximately 750 senior-level managers to undertake the program in Southern Africa.
Minergy, the coal mining and trading company with the Masama coal mine, this week released results for the year ended 30 June 2021. The company achieved revenue of P193 million (2020: P81 million) with significant improvement in sales volumes surpassing 415 000 tonnes sold for the year.
The performance was divided into two distinct periods with very different operating environments. The first eight-month period (July 2020 – February 2021), was negatively impacted by delayed funding, COVID-19 impacts and excessive rain; and the last four-month period (March – June 2021), was a more stable production environment moving toward nameplate capacity.
According to Minergy CEO, Morné du Plessis, production and sales initially recovered in July and August 2020 with the easing of COVID-19 restrictions and recoveries were further bolstered by the successful launch of the rail siding. Delays experienced in concluding the funding contributed to contractors limiting operations to manage arrears.
“However, the heavy rains we experienced from December 2020 through February 2021 flooded the mine pit making access difficult and impacting both production and sales. Fortunately, the rain subsided in March 2021, and we entered a more stable environment, with a positive impact on operations. Good recoveries in production and sales were experienced during the last four-month period of the year, with the mine moving closer toward a breakeven position.”
“Despite these operational constraints, including the effects of COVID-19 on logistics and manning of shifts, we expect to reach consistent nameplate capacity in the 2022 financial year,” du Plessis added.
In addition to the revenue reported above, the company incurred costs of sales of P256 million (2020: P150 million) with operating costs of P23 million (2020: P31 million). This effectively resulted in an operating loss of P86 million (2020: P100 million). Finance costs of P51 million (2020: P17 million) were incurred, bringing the net loss before taxation to P136 million (2020: P117 million).
Du Plessis explains that the adverse conditions in the first eight-month period contributed to 86% of the gross loss, while the more stable four-month period alone contributed to 50% of total sales value, helping to decrease monthly gross losses, albeit below breakeven levels.
The company benefited from a strengthening in the South African Rand (“ZAR”) supporting higher back-on- mine sales prices.
“As announced, we’re pleased to have secured P125 million of additional convertible debt funding through the Minerals Development Company Botswana (Proprietary) Limited (“MDCB”). Minergy remains grateful for this support.”
He added that the first tranche of additional funding provided by the MDCB had been received in December 2020, which allowed Minergy to settle the majority of the contractor’s arrears and allowed their teams to be remobilised. The second and final tranche was paid post the financial year-end and will allow the business to reach nameplate capacity in the new financial year.”
COAL SALES AND MINE PERFORMANCE
Sales volumes increased by 110%, supported by increased sales in Botswana and internationally in South Africa and Namibia. Sales for June 2021 exceeded 56 000 tonnes, a record since the inception of the mine, with pricing increasing late in the financial year on the back of buoyant international prices and a strengthening ZAR.
Minergy also concluded a further 12-month off-take agreement to the existing off-take agreement, with a further agreement finalised post year end.
Overburden moved during the reporting period increased by 86% and extracted coal by 50%. Coal mined in June 2021 alone exceeded 100 000 tonnes. “This is a good performance considering the challenges faced such as sacrificing pre-stripping activities for a period to manage arrears, excessive rain and COVID-19,” du Plessis indicated.
“The wash plant was initially starved of coal due to the factors noted already. Despite this, overall plant throughput performance was 37% higher than 2020. Consistent output was supported by the completion of the Stage 2 rigid crushing section as well as the water saving dewatering screen with filter press contributing to a reduction in water usage of 60% per tonne of coal. A record throughput of more than 84 000 tonnes was achieved in March 2021 and this consistency has been maintained.”
According to du Plessis, the completion of Stage 4 of the Processing Plant, the rigid screening and stock handling section, remains a key optimisation step, which has associated benefits. “The completion was unfortunately delayed by a southern African wide shortage of structural steel but was commissioned post year-end.”
Minergy expects the positive momentum in international coal pricing for southern African coal to remain in place. Higher coal prices have resulted in coal being withdrawn from the inland market in favour of lucrative international markets. Du Plessis added that the regional market is currently under- supplied with sized coal, which supports higher pricing and new customer opportunities for Minergy.
“Our objective for the 2022 financial year is to achieve nameplate capacity by completing final ramp-up of operations. This will enable the company to generate sufficient cash flow to stabilise the business at breakeven or better. The bullish coal market is also providing support. COVID-19 will still be closely managed, and we look forward to the lifting of the State of Emergency, as announced, and trust that vaccination programmes will achieve herd immunity in Botswana during the next 12 months.”
Du Plessis expressed his excitement on prospects stating that, “The Eskom due diligence process is continuing, and we are hopeful of receiving feedback during the current financial year. In addition to this opportunity, Minergy is also investigating participation in the request by the Government of Botswana to provide a 300MW power station for which the company has been shortlisted.”
The approved process to issue shares for cash is showing positive leads and he concluded by saying that a listing in London is still being investigated.