Letshego rakes in p590 million before tax
Business
Botswana conceived Pan-African financial group Letshego Holdings Limited announced its financial results for the first six months of 2018, mirroring a sound and satisfactory performance across its spread African footprint.
Key financial highlights indicate that the Botswana Stock Exchange (BSE) listed financial outfit raked in an impassive double digit growth on its profit before tax as well as gross loans and advances, compared to the six month ended June 2017. Profit before tax expanded by 19 percent to P590 million, with gross loans and advances growing by 12 percent, to P8.7 billion against to the half year ended June 2017.
Operating income increased by 15 percent following expansion of various strategic initiatives being; agency banking, mobile digital platforms, strategic partnerships, cross-selling and the launch of new solutions in select markets amongst others. Letshego told its stakeholder on Monday that operating costs for the period under review increased by 17 percent, which included P10 million in once-off costs following a write-down of redundant IT equipment as the Group prepares to migrate to a cloud environment.
Letshego executives explained that however a higher effective tax rate of 38 percent resulted in a lower increase in profit after tax for the period, the latter only moved up by 11 percent. The company also dealt with impairment provision increase of 37 percent following the implementation of new accounting standards, ‘IFRS 9’ as of 1 January 2018.
Letshego Group Chief Financial Officer (CFO), Colm Patterson explained that this meant a P150 million decline in the Group’s retained earnings and an increase in impairment provisions from P402 million to P552 million during the 2018 first half. He said IFRS 9 has also resulted in an increase in the Group’s Coverage Ratio to 95 percent. Patterson is currently overseeing Group operations in the interim while recruitment is ongoing to find replacement for Chris Low who resigned last month after 5 years of leading the BSE listed Group.
He highlighted that on another positive note Letshego Group’s loan recoveries continue to improve with exception of Nigeria, Tanzania and Uganda business which experienced increase in impairments during the period under review. “The Group continues to see gradual growth in deposits, with Mozambique and Rwanda seeing greater momentum in deposits than other markets in the Group’s footprint, Letshego’s ongoing success in forging strategic partnerships, rolling out our LetsGo solution in select markets and mobilizing our focus and strategy continues to deliver dividends,” shared Letshego CFO.
Patterson revealed that borrowing customers have increased by more than 50% and deposit customers have doubled over the same period. “Although deposit customer growth remains at a low base, we hope to maintain this momentum for the second half of the year,” he said.
Colm explained that Letshego continues to make good progress with its diversification strategy into nongovernment segments across markets, with access remaining a core priority as the Group centers its focus on enhancing customer value.
“More specifically, Ghana and Tanzania have made the most progress in extending solutions to informal segments. Following Letshego Ghana’s launch of ‘Qwikloan’ late 2017, in partnership with MTN Ghana, more than 2.5 million loans have been disbursed to over 600,000 customers” he added. “Letshego’s Affordable Housing and Education Eco-System solutions remain key drivers of growth in the Group’s MSE (Micro and Small Entrepreneurs) loan book, together the two solutions constitute 6% of the total loan portfolio.”
Patterson explained that in support of Letshego’s financial inclusion agenda, the Group remains focused on increasing digital access channels, as opposed to adding more physical outlets to its regional footprint. “Digital channels include USSD, Agency Banking, Direct Sales Agents and Cards. In the first half of this year, Letshego has doubled the number of independent agent access points, and increased USSD registrations by more than 50 percent Cards, the Group’s most recently launched channel is achieving positive progress in roll out to customers in Namibia, Nigeria and Tanzania,” he said.
Letshego continues to reduce its dependence on bank loan funding by issuing notes off existing DMTN programmes in active domestic debt capital markets. Ghana recently issued GHS95 million (about P221 million) of new notes with 5, 6 and 7 year maturities, with all issuances being oversubscribed.
Letshego Ghana obtained approval to increase its DMTN Programme limit by GHS200mn. Three new bonds with a face value of GHS95million were issued in the first half of the year, maintaining a stable bond rating of BBB+(GH) from Global Credit Rating (GCR) – three notches above investment grade. The Group’s credit rating from Moody’s remains unchanged.
This first half also saw conclusion of P256million of funding from international investors. New funders include development finance institutions, investors who focus on micro and inclusive finance ventures and impact investors. “Most of these newer finance partners are headquartered in the UK and Europe, all with a keen interest in sustainable development in Africa.
The funding arrangements mentioned above are expected to deliver treasury benefits and mitigate funding risk for the Group by achieving geographical diversification in its funding base, increasing the current number of funders, securing longer tenors as well as reducing the Group’s overall open foreign exchange exposure by drawing new local currency-denominated facilities,” explained Colm Patterson
He echoed that Letshego Group remains on track and committed to its current strategy of increasing access to simple and appropriate solutions across its 11 market footprint, leveraging digital technology and strategic partnerships – ultimately achieving our collective objective in increasing financial inclusion across Africa.
Business
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The Botswana and Johannesburg Stock Exchange listed distributor of fast-moving consumer goods
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Business
Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.