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BSE fired up for Listings conference

The Botswana Stock Exchange on Thursday held a media briefing for their upcoming 2nd annual listings conference to be held on the 9th of March.


In a written statement, the BSE says the theme for this year’s conference is “The BSE AS A GATEWAY FOR RAISING CAPITAL” and that the overall aim of the conference is to open up the BSE to the business community and bring together the BSE, private companies with the potential to list on the BSE, listed companies and experts in capital markets to discuss the value added to a private company by a listing on a stock exchange, the listing process and requirements.


“The BSE recognises the fact that the survival of the stock exchange is underpinned by its attractiveness towards not 0nly investors, but also companies. As such, the supply side of the market, being issuers of securities, has to be consistently nurtured. Because of this, it is essential that we as the BSE host this conference annually to spur the interest and to maintain a large platform where we can address issues relating raising capital by listing,” the statement read.


Still at the media briefing, Mr. Thapelo Tsheole, BSE CEO, told the audience that they go to the conference with strong intentions to increase the number of companies listed on the BSE. Mr. Tsheole said their efforts were emboldened by the success of the inaugural Listings Conference held last year. He sail while in 2016 they invited 150 companies, this year’s conference will be graced by the presence of the more than 300 invited businesses.


Mr. Tsheole said the BSE continues with its awareness raising campaigns in a bid to woe investors and companies. Furthermore, he said in these campaigns they invite listed companies to share their experience in the local bourse as well as other value adding companies, such as law and accounting firms, to help explain the journey to listing.


He explained that BSE contributed to the economy by offering different classes of investments. He said that they will be aggressive in pursuing the expansion of the BSE by increasing listed companies. To achieve this, Mr. Tsheole said they will be targeting mature citizen owned companies that have prospects to grow in the stock market even though it will prove to be a difficult undertaking.


“It is very difficult to convince Motswana to sell part of what they own,” he said before adding that this requires time as consultations tend to take long. The upbeat CEO said that they are pursuing some companies that they spotted at the previous conference and that talks and consultations are ongoing.


The timing of the conference comes at a time when BSE board has just recently approved the institution’s new 2017-2021 strategy that is big on expansion. In crunching the numbers, Mr. Tsheole said, the currently listed 34 companies make up 34% of the country’s GDP but under the new strategy are targeting to hit 40% of the GDP in five years.

 

He says this will be achieved through growing the number of domestic listed companies from 24 to 30. Mr. Tsheole said this will not be easy as it is difficult to get a listing in African stock markets. Still on the numbers, the BSE seeks to increase foreign listed companies from 10 to 15, number of listed bonds from 39 to 50 and increase the number of listed Exchange Traded Funds (ETFs) from 4 to 10.


“The strategy is very clear. It’s in the numbers,” said Mr. Tsheole. The BSE CEO says not only will they increase the number of listed companies but they are also introducing other asset classes. Currently the BSE offers four asset classes; Equities, Corporate and Government Bonds and ETFS. Amongst the touted investment products to be introduced are derivatives, Commercial Papers and Certificates of deposit.


Mr. Tsheole says their recent efforts align with their enduring interest to see many citizens participating in the stock market. To this end, the BSE will try to increase the number of investors in the BSE from 78000 to 100000 in 5 years. He said these are the same people who are powering the small, medium and macro enterprises (SMMES). Mr. Tsheole then said SMMEs are the backbone of the economy yet face immense challenges.


“There is a critical need for corporate financing especially in the SMMEs sectors,” Mr. Tsheole explained and also added that they are encouraging other stakeholders to come on board to solve this challenge. He said accounting and law firms can provide their expertise to help SMMEs access the appropriate funding method. Mr. Tsheole said part of the efforts to help the SMMEs may include introducing a specialised SMME board which will have special listings requirements.


The media was also briefed by Ms. Tebogo Keepetsoe, Public Relations, Communications and Marketing manager at Botswana Insurance Holdings Group (BIHL). BIHL is the diamond sponsor for the upcoming conference. “BIHL group has been a long standing listed company on the BSE. And I think if anything, it’s important that I share some thoughts on our BIHL journey to listing. And I’d also like to share on some key aspects that we have found of benefit from being a listed company,” she said.


Ms. Keepetsoe says BIHL has enjoyed a long history at the BSE, starting in 1991 with an oversubscribed initial public offering (IPO) that floated shares at 0.22t, and 26 years later the shares are trading at more than P17. She says as the main sponsors of the upcoming listings conference, it is a testament of their belief in the listing process and as a company they hope it will encourage other local companies to list on the BSE, especially if they are reviewing their growth strategies.


She said some of the benefits that accrued to them after listing include access to large scale fundraising as well as increased exposure to raise asset value through acquisitions. Moreover listing has brought them closer with the public and potential investors. According to Ms. Keepetsoe, this has greatly enhanced the group’s credibility and raised its corporate profile to expand in other markets.


“The BSE itself is an incredibly successful bourse to list on. It currently stands as the third largest in the region, in terms of market capitalisation. A feat which, if I may, commend Mr. Tsheole and his team for achieving at such a phenomenal pace, considering that our local economy still has a lot of growing to do,” she said.  


The BSE also raised similar praise from Ms. Tumi Ramsden, Head of Corporate Affairs, Brand and Marketing at Standard Chartered bank Botswana, who said that the bank shares a fruitful relationship with the BSE ever since it listed when the stock market was still at its infancy. Ms. Ramsden says the listings conference provides a platform to participants to find opportunities and collectively contribute to the growth and health of the economy.

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Sefalana releases best ever HY Financial results

23rd February 2021
Sefalana MD: Chandra Chauhan

Sefalana released their best ever half year financial results. Revenue grew by 2.3% to BWP2.91 billion (HY 2019: BWP2.85 billion). Gross profit increased by 17.4% to BWP215.1 million (HY 2019:

BWP183.3 million) yielding an improved gross profit margin of 7.4% (HY 2019: 6.4%). Administrative expenses went up by 7.8% to BWP97.0 million (HY 2019: BWP90.0 million). EBITA shot up by 31.5% to BWP138.6 million (HY 2019: BWP105.4 million) translating to EBITA margin of 4.8% (HY 2019: 3.7%).

Investment income was BWP22.8 million (HY 2019: BWP28.2 million). Profit before tax increased by 22.8% to BWP148.7 million (HY 2019: BWP121.1 million). Effective tax rate was lower at 23.9% (HY 2019: 28.4%) translating to a 30.7% hike in profit after tax to BWP113.2 million (HY 2019: BWP86.7 million).

Local Trading consumer goods segment was resilient despite a marginal decline in revenue. Revenue declined by 1.6% to BWP1.59 billion (HY 2019: BWP1.62 billion), however a 2.0% decline in cost of goods sold offset decline in revenue to see gross profit increase by 7.6% to BWP75.6 million (HY 2019: BWP70.3 million), an improved gross profit margin of 4.8% (HY 2019: 4.3%) was realized as a result.

Profit for the period was down 2.4% to BWP34.8 million (HY 2019: BWP35.7 million) mainly impacted by restrictions on liquor sales which have been in place for the entire reporting period. At the beginning of the financial year, the group manned 4 Hyper Stores (“Sefalana Hyper”), 25 Cash& Carry stores (“Sefalana Cash& Carry”) and 29 supermarket retail stores (“Sefalana Shopper”).During the period, Sefalana Shopper retail store in Shakawe, Sefalana Liquor outlet in Tlokweng were opened, and Sefalana Shopper Molepolole store was refurbished.

Lesotho has seen its revenue increase by 30.9% to BWP295.7 million (HY 2019: BWP225.8 million). Profit before tax spiked 162.4% to BWP1.9 million (HY 2019: -BWP3.1 million). Namibia has performed well to place it as the largest contributor to profit before tax. The segment’s revenue increased by 5.5% to BWP896.8 million (HY 2019: BWP850.2 million). Gross profit rose by 25.4% to BWP60.9 million (HY 2019: BWP48.6 million) translating to an improved gross profit margin of 6.8% (HY 2019: 5.7%). Profit before tax went up by 40.6% to BWP39.8 million (HY 2019: BWP28.3 million).

The Manufacturing arm had an excellent performance. Revenue rose by 26.7% to BWP125.0 million (HY 2019: BWP98.7 million). Gross profit increased by 39.4% to BWP28.6 million (HY 2019: BWP20.5 million), producing a gross profit margin of 22.9% (HY 2019: 20.8%). Profit before tax shot up by 96.5% to BWP16.0 million (HY 2019: BWP8.1 million). The profitability of this business is largely driven by the timing of orders placed by Government for its various feeding schemes and availability of raw material.

The milling division has for all six months manufactured and supplied in full to the Government, however only one third of the total contract volumes was awarded to the business in respect of the 24 month contract issued in April 2020. Raw materials have been procured and contracts entered into for procurement of grain to fulfill any additional volumes that the Government might require.

Beverages division was awarded a 24 month supply of milk tender to the Government for the children’s feeding scheme in March 2019 which is currently being fulfilled. There has been a shortage in raw materials in the region due to a reduced number of dairy cows during the pandemic as farmers placed more focus on meat production. Despite an underway catch up on reinstating dairy cow population the business expects shortages to continue in early 2021.

The Trading others segment experienced a decline on its top and bottom line figures. Revenue went down by 43.9% to BWP42.2 million (HY 2019: BWP75.2 million). Gross profit went down by 23.9% to BWP11.5 million (HY 2019: BWP15.1 million). Profit before tax went down 56.8% to BWP3.2 million (HY 2019: BWP7.4 million). The segment was impacted by a reduction in sales of motor vehicles as customers prioritized spending on essential goods and services.

The Property segment in Botswana performed well, with all most all properties tenanted for leases ranging between two-six years. Setlhoa site is complete, comprising of Sefalana Shopper store, petrol station and rentals to Ital Tiles and CTM. Just over 5000sqm of land remains vacant. The space initially set out for the group’s Motor Dealership will be considered for other alternative options in a bid to optimize return from the site. In contra, Zambia performed below the previous period as the past two years elapsed in search of replacement tenants for their premises due to an influx of similar properties.

A 3000sqm warehouse space is expected to commence development in February 2021 to house bottled water and fruit juice plants. Milling division anticipates expansion by the end of 2021, the expansion is to include a wheat milling plant which will leverage on existing infrastructure and complement existing milling activities.

A phase 2 investment in Australian business is expected in May 2021. Five more stores will be acquired through this investment to bring the stores to a total of 12 in that market. The investment amount is anticipated to be around P80 million, to be funded through existing cashflows.

The preference share agreement on the South African consortium matures in July 2022. The group’s appetite for conversion of its investment in to a 30% equity stake will be influenced by the covid-19 pandemic impact. As such a decision will be made closer to maturity date.

The group maintains that its 40% interest in Grow Mine Africa (Pty) Limited, the Preferred Bidder in the National Lottery remains in place. According to management, the judgement of urgent application was in favor of Grow Mine and the formal ruling by the courts will be issued next week. Accordingly, further negotiations with the Gambling Authority are expected in quarter one of 2021.

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Botswana Diamonds secures funding for CKGR exploration

23rd February 2021
Sekaka-Diamonds-Exploration

Botswana Diamond PLC, a Botswana Stock Exchange (BSE) listed exploration company has moved a step closer towards developing it’s much talked about gem deposits around the Central Kalahari area in Botswana.

On Tuesday the company notified its shareholders through a circular published on the BSE, that it has entered into a cooperation agreement to fund exploration of its prospecting licence assets in Botswana with Diamexstrat Botswana Pty Ltd (DESB), which in turn has an alliance agreement with Burgundy Diamond Mines Limited, an Australia Stock Exchange (ASX) listed mining company.

BOD’s prospecting assets comprise the recently acquired Sekaka Diamonds Exploration Pty Ltd (Sekaka) database and Prospecting Licenses, as well as the Prospecting Licences held by BOD’s subsidiary, Sunland Minerals Pty Ltd (Sunland Minerals).

According to the statement from Botswana Diamond, Diamexstrat Botswana and its partner, Burgundy would earn up to a 70% interest in BOD’s Botswana Sunland Minerals and Sekaka’s Prospecting Licences.

On the other hand BOD can earn a 15% interest in Prospecting Licences held by Diamexstrat and its partners on the first US$1.5m spent on exploration by Diamexstrat where BOD’s database assists in the discovery of a primary kimberlite.

On 3rd party Prospecting Licences where targets are identified in BOD’s database, a joint earn-in will be negotiated at the time. For new Botswana Prospecting Licences, Diamexstrat, and its partner, Burgundy can earn up to 70%.  Under the Agreement, the parties have agreed to utilize BOD’s diamond exploration database, which it acquired in last year as part of the acquisition of Sekaka Diamonds Exploration Pty Ltd (Sekaka).

The database contains the results of work undertaken by Sekaka’ former owner, Petra Diamonds, since 2005, and includes data in respect of airborne, including the Falcon survey, and ground magnetics (including gravity and EM), in addition to heavy mineral sampling.

DESB has six months to conduct an initial review of BOD’s database , in order to identify exploration targets within any of BOD’s existing Sunland and Sekaka Prospecting Licences (excluding the KX36 Kimberlite held by Sekaka) (the “Designated PL”).

DESB will be entitled to earn a 50% interest in a Designated PL by meeting the annual minimum exploration expenditure commitment on the Designated PL and in addition either discovering a kimberlite through the intersection of kimberlite in any drill holes or a potential secondary diamondiferous alluvial deposit through the intersection of gravels in a drill hole or pit.

DESB shall be entitled to earn an additional 1%, to hold 51% in any Designated PL, by proving the primary kimberlite or alluvial deposit to be diamondiferous through funding the required micro-diamond analysis or bulk sampling.

DESB will also be entitled to earn a further 19%, to hold 70% in the Designated PL, by subsequently funding and delivering a bankable feasibility study. Any Prospecting Licence not selected by DESB at the end of the six-month period will remain wholly-owned by BOD.

Where it is agreed that geological data present in the database that was not previously available to DESB has assisted in the discovery of a kimberlite or a secondary alluvial deposit within the Exploration Area , BOD shall be granted a 15% free carry for the initial approved US$1.5 million of Exploration Expenditure by DESB on the discovery. Once the Exploration Expenditure has been incurred, each party will contribute funding in accordance with its interest or be diluted pro-rata.

Sunland Minerals holds 12 active Prospecting Licences in the Gope/CKGR (Kalahari) area. As at 30 June 2020, the audited carrying value of BOD’s Sunland Minerals assets amounted to £1.1 million and Sunland’s loss before tax amounted to £43,101.

In the year ended 30 June 2020, Sunland’s Exploration Expenditure, mainly comprising licence fees and the costs of maintaining the licence in good standing, together with agreed fixed costs and expenses, amounted to £65,760.

On 30 November 2020, Botswana Diamonds completed the acquisition of Sekaka which holds three Prospecting Licences in the Central Kalahari Game Reserve in Botswana, PL169/2019, PL058/2007 and PL224/2007, which includes the KX36 kimberlite pipe.

The acquisition also included an extensive database. The consideration comprised a cash payment of US$300,000 and a 5% royalty on future revenues.  The first deferred consideration cash payment of US$150,000 will be payable on 27 November 2021, being the first anniversary of completion of the acquisition and the balance on or before 27 November 2022.

In Sekaka’s audited annual financial statements for the year ended 30 June 2019, Sekaka reported a loss before taxation of Pula 16,875,179 (equivalent to approximately £1.16 million, which included a non-cash foreign exchange loss of Pula 11,688,432 (equivalent to approximately £0.8 million) on the carrying value of the historic intercompany debt which was extinguished on acquisition.

As at 30 June 2019, Sekaka had audited total assets of Pula 6,565,700 (equivalent to approximately £425k). Diamexstrat is a privately owned company focused on diamond exploration in Botswana chaired by Gerard de la Vallee Poussin and with Barry Bayly as the Chief Executive Officer. Both Gerard and Barry have extensive experience in the exploration for diamondiferous kimberlites in Africa.

Commenting on the cooperation between BOD and Diaexstrat , James Campbell, Managing Director, of BOD said the partnership will progress the extensive and highly prospective exploration assets in Botswana which comprises Sekaka Diamonds and with our own drill-ready prospects in Sunland Minerals.

“I look forward to working with the Diamexstrat and Burgundy teams made-up of complimentary highly experienced and leading experts in the field of diamond exploration and project development”.  John Teeling, Chairman of Botswana Diamonds Board of Directors said Botswana is one of the world’s best addresses for diamond exploration. He explained that the combination of a fresh approach and advanced technology, supported by a recovering diamond market, presents both parties with significant opportunities.

“I am delighted to announce this partnership with experienced Diamexstrat, and its ASX listed-partner, Burgundy, which expands and deepens our exploration work.”

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Tlou Energy announces first carbon neutral plant

23rd February 2021
Tlou-Enegery

As countries continue to battle climate change which is a result of increased carbon dioxide in the atmosphere, local coal-bed Methane (CBM) exploration outfit, Tlou Energy this week revealed intent to make the Lesedi Power project the first carbon neutral power project in Botswana.

The multi-listed company, which is focused on generating cleaner power in Botswana for supply into the local and regional power markets said they have already negotiated land access and leasing agreements with relevant land-holders for the power generation facility and new field operations camp.

According to a statement from Botswana Stock Exchange (BSE) listed energy entity, there have been recent steps taken to acquire additional land for carbon sequestration and there is also availability of land and labour within the Lesedi project which favours Tlou Energy in developing carbon neutral power project.

Carbon sequestration involves capturing and storing carbon dioxide from the atmosphere so that it potentially reduces its contribution to global warming.  It is essentially the long-term storage of carbon in soil, plants, and geological formations. Carbon sequestration can occur naturally and as a result of human activities and typically refers to the storage of carbon that has the immediate potential to become carbon dioxide gas.

Tlou Energy Managing Director, Tony Gilby commented: “There is considerable scope for using the savanna ecosystem of the Lesedi region for carbon sequestration by protecting it from burning and intensive grazing leading to an increase in the ability of the vegetation to store carbon over time.” “This will assist Tlou to be able to supply carbon neutral power to the considerable number of potential customers in the region.”

Gilby also revealed that the regional power consumer, Orapa diamond mine operated by Debswana and located north of Tlou’s gas fields has publicly stated their objective to decrease their carbon footprint. According to Tlou Energy MD, the Lesedi project area is considered as shrub savanna containing various tree species. He however noted that subdivisions found within Tlou’s project area are predominantly rural with most of the land being deployed due to livestock agriculture.

“Tlou  is  in  the  process  of  negotiating  the  acquisition  of  land  to  reduce  livestock numbers  and  implement  fire mitigation measures. This will substantially increase the amount of available woody biomass which can be used to claim carbon credits within the project area,” he said.

The company said carbon credits will be offset against the carbon dioxide associated with Lesedi’s gas fired power generation component noting that the gas will in any event produce considerably less carbon dioxide compared to the ones generated by coal and diesel.

“Carbon reduction is part of Tlou’s commitment to the environment and part of the company’s Environmental, Social and Governance (ESG) program aimed at enhancing the lives of the local population and regional communities,” said Tlou energy MD.

“Tlou has a track record of supporting local charities and youth groups and looking to grow local employment with investment in community ventures. This includes programs aimed at growing higher nutritional value crops for local livestock so grazing could be reduced and biomass preserved, as well as promoting wildlife.”

Meanwhile, last month Botswana Government through Ministry of Mineral Resources, Green Technology & Energy Security (MMGE) underscored its intention to support power generation through Coal-Bed- Methane (CBM). Tlou’s MD Gilby commented, “It is great to see that Botswana is open for business and the Government is motivated to get the gas industry up and running.

Gilby revealed that his company plans to start development of the Lesedi project as soon as possible noting that “confirmation of the Government’s enthusiasm to provide the necessary support to ensure commercial development of CBM is very well received.” “In addition, we have also recommenced negotiations with Botswana based project financiers this month as we aim to close a deal for funding as soon as possible.

After what was an extremely challenging year the Company is already making progress in 2021 and anticipate further advancement on all fronts in the coming term. We look forward to updating the market with further developments in due course,” he concluded.

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