Ramatlhakwane turnaround strategy bears fruits
Business
Botswana Post has registered and passed breakeven point for the first time since 2008, declaring profit before tax of over 4 million Pula. For the past 10 consecutive years, Botswana Post has relied on government bailout, but it appears Chief Executive Officer, Cornelius Ramatlhakwane’s 3 year turnaround strategy has all along been the missing link.
Ramatlhakwane joined Botswana Post in 2015 and at the time promised that the entity would be profitable in three years. Recently, he reminisced that he had a solution which entailed optimizing operational efficiency and reducing operational costs, which the Board of Directors approved at the time.
“With the blessings of the Board of Directors, we embarked on an organizational transformation journey and carried out an operational efficiency scan with the aim of identifying solutions to the challenges that we had as a business, which prevented us from being profitable. We needed to resolve these challenges in a short space of time so that we could reposition the business on a profitability path,” he said.
Botswana Post operational scan, which was concluded in 2016, identified 141 opportunities that could be leveraged on to drive the company towards a new path. Ramatlhakwane explained that since taking the driving seat at Poso House, together with his team they took full advantage of the opportunities and by the end of the 2016/2017 financial year the result of their hard work, determination and dedication were already showing as the company recorded significant improvements in the business.
During that year 2016/17 Botswana Post revenue grew by 6.8%, controllable costs reduced by 7.9%, Cost to income ratio reduced by 3.1%, while losses were reduced by 51.9%. “This business performance took our organization to another level. The level wherein came the increase in our reputation and that of our stakeholders’ confidence in us. We also got sharper and even more determined to achieve profitability,” noted Ramatlhakwane.
According to Botswana Post which relieved its board of directors of their duties last week, the strategy achieved even more efficiency, sustainability and profitability. “With this in mind, our focus, priorities shifted, and we embraced the following steps as a means to unleash our profitability,” he said. The company in this past financial year leveraged new technology and partnerships as additional revenue sources as they continuously increased efficiency and decreased controllable costs.“We also aimed to inculcate a culture of high performance among all members of staff through varied performance improvement measures as well as maximize customer impact at ground level and increase service value,” explained the CEO.
During the financial year under review Botswana Post registered year-on-year Revenue Growth of 3.8%, Cost to Income Ratio of 98.7% while controllable Costs reduced by 5.3%. The company‘s Balance Sheet grew by of 2.9%. “This is incredible output and financial performance, because we realized profit before tax of P4.1M, A first for Botswana Post since the inception of the Icon of Excellence Strategy; almost 10 years ago, I am confident to state that Botswana Post has now reached and gone past the Break–even point. I can say with conviction that we have turned a new leaf; the organization has changed direction forever,” he asserted.
Last week Botswana Postal & Savings Group (BPSG) Board of Directors relieved the entire board of Botswana Post off its duties. Botswana Postal & Savings Group is a holding company established by government to incorporate Botswana Savings Bank, Botswana Courier & Logistics and Botswana Post. The Holding Group was set up following a decision by Government in 2009 to merge the three state owned enterprises .BPSG was commissioned in 2013.
Reports suggest that the decision to constitute a new board at Botswana Post was influenced by the next stage of Botswana Post which is geared to positioning the company as a more profitable state owned Enterprise. It is reported that a whole management overhaul will be instituted in no time as the company is further transformed.
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.
Business
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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