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BTCL profits soar

The resurgent Botswana Telecommunications Corporation Limited (BTCL) says its financial results for the full year ended 31st March 2017 will be significantly higher than those reported for the previous full year. The market reacted positively to the news, pushing BTCL stock to its highest level this year.  


“The results will also be significantly higher than projections in the prospectus. This is mainly attributable to the favourable trading environment during the period,” the company said in a trading statement signed by Lorato Boakgomo-Ntakhwana, the board chairperson.
The announcement by the board of BTCL adds to the raft of good news that have been coming from Megalang House, a turn of events from the tumultuous months that followed after the historic Initial Public Offering (IPO) in April last year.

 

The oversubscribed IPO ushered in about 47, 125 new investors, representing 65 percent of all registered investors. The BTCL share price debuted at P1 and quickly reached highs of P1.34 on the first weeks of trading but the share price later retreated following litany of negative news. The share price started dropping after the company recorded a once off impairment loss which was larger than expected.


The anticipated loss was more than what BTCL let on in their listing prospectus, something which rattled investors who based some of their investment decisions on the information contained in the prospectus. Further complicating the matter was the fact that it was BTCL’s first loss in more than four years. In the prospectus, the company anticipated losses to be at P128 million due to impairment adjustment amounting to P306 million. However this was not to be as the losses shot up to P371 million as a result of underestimating the impairment exercise performed during the year 2016. The once off impairment amount of P522 million represented a write-down of some of property, plant and equipment due to technology changes.


After the shock drop in profits, and subsequently the huge loss due to impairment, BTCL share price suffered its steepest drop as it went below the IPO listing price. The fall in price spiked a flurry of trading, with some analysts saying that the increase in trading activities could be traced to novice investors who are still to get the hang of how the stock markets work. To mitigate against the distressed stock which was heavily traded, BTCL appointed a market maker to correct the mismatch between buyers and sellers.

It was realised that there was panic selling, particularly amongst novice investors who wanted to exit their positions before they could see the value of their investments eroded. The market maker held off the plummeting stock as the share price remained at 0.85t for more than 2 months despite frequent trading of the shares. The stabilization in the share price was later followed by a positive investor note from BTCL that they are expecting to deliver satisfactory financials later this year for their half year results ended 30 September 2016.


Indeed, the only listed technology and communications company on the BSE went on to deliver a set of strong financials. BTCL in that six months period increased its revenue to P774 million, up by 4 percent. The increase was largely driven by a 4.6 percent increase in sales of goods and services. The highest revenue growth achievements were mainly in the areas of National Telephony which went up by 9 percent, followed by a 6 percent increase in mobile services and an 8 percent surge in data services.


There was also marked improvement in the gross profit which went up by 4.5 percent to P468 million. However, the gross profit was later eroded by a slight increase in total costs. Total costs in the period under review totalled P400 million, a 3 percent increase from the previous corresponding period. While the uptick in total costs was in line with the 2016 prevailing inflation rate, the company’s board and management said the increase in costs calls for more robust cost management initiatives that will ensure long-term growth in net earnings and company value.


In the end BTC declared a profit of P88 million, an impressive increase of 19 percent from the previous interim results. BTC further announced that it remains well capitalised to fund its capital expenditures from internal resources. The company has grown its cash reserves by 23 percent to P502 million, putting it in an enviable position considering that the company has no large borrowings.


Now with the latest announcement projecting higher profits for this year, BTCL is expected to report profit way above its 2017 projected profit after tax of P115 million. The increase in profit will be on the back of improved revenues as well as declining total expenditure. The news of the anticipated higher profit on Wednesday was welcomed by shareholders as the share price went up by 0.8 percent, extending the capital gains that have delighted BTCL investors in recent months.


The uptick in the share price continues BTCL’s gravity defying stunts on the BSE this year. From trading below its IPO price last year, the stock has rebounded spectacularly in the last five months to become one of the hottest stocks to have in your portfolio. The rebound started shortly after BTCL appointed a market maker and their pleasing results in the interim.

 

The BTCL stock is currently leading the rally on the local bourse, helping to narrow down losses in the benchmark index. The hottest stock has so far surged by 31 percent to trade at P1.31. Shareholders who bought while the stock was at its lowest below the IPO at 0.85t are looking at huge returns of 54 percent, while those who bought at the IPO price will still be impressed by the 31 percent premium.


Other than share price gains, the BTCL shareholders are due for handsome returns in the form of dividends. Earlier this year, BTCL announced its new dividend policy which prescribes a dividend payout of 50-65 percent of earnings subject to the financial position of the company, investment strategy, future capital requirements, availability of cash and other factors the board may consider.

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Business

Botswana records first trade surplus since January

7th October 2021
Botswana-records-first-trade-surplus-

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).

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Business

The 2021/2022 Stanford Seed Transformation Program Begins

7th October 2021

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.

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Business

Minergy overcomes challenges – improves revenue and produces record breaking coal sales to date

7th October 2021
Minergy

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.

FINANACIAL REVIEW

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.”

OUTLOOK

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.

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