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Barclays still open for business in Africa

Barclays Bank Botswana is still open for business and is committed to investing in Botswana, Barclays Botswana Managing Director Rienette van der Merwe said this week.

This follows the UK banking group Barclays Group’s intention to sell its 62.3% stake in Barclays Africa Group. Barclays is scaling back its presence in Africa, by selling down its 62.3 per cent stake in  Barclays Africa Group, its Johannesburg-listed subsidiary, over two to three years to a level that allows it to be deconsolidated from the group.

Barclays Bank Plc currently owns 62.3% of Barclays Africa Group Limited (BAGL) which controls banks in 10 African countries including Ghana, Kenya, Tanzania and Uganda.

Addressing the media, van der Merwe said “This announcement will not affect you, our customers, in any way and we at Barclays Bank Botswana will continue to serve you as we have done for over 65 years.”

Barclays is being forced to sell assets, such as its  "Barclays set to exit African business" African subsidiary, because of punitive fines by authorities. Barclays Group said Absa is a well-diversified business and a high quality franchise.

The Chief Executive Director of the Barclays group, Jes Staley said “however the stake in BAGL presents specific challenges to Barclays as owners, such as the level of capital held in respect of BAGL, the international reach of the UK Bank Levy, the GSIB buffer, and MREL/TLAC and other regulatory requirements.”

“When conduct charges consume our profits, as they have for the past three years, we have no choice but to meet them by shrinking our franchise selling or closing businesses which reduces our capacity to support the real economy.”

The bank carries 100% responsibility with only 62.3% benefits, it said at its results presentation. Barclays said the sell-down will lead to further simplification of the group, resulting in cost reductions.

Barclays has seen its share price fall over 30 percent over the last two years amid a tumultuous period of changing leadership and restructuring.

Potential investors would need to raise nearly $4bn to buy Barclays. The intended sale is subject to shareholder and regulatory approvals.

The announcement came as the UK bank announced net losses more than doubled last year.

Barclays Group Africa on Tuesday reported a 17% return on equity for 2015 in its stand alone local currency results versus the 8.7% return reported for Africa Banking in Barclays’ results, the group said.

Staley said in his year-end review on Tuesday Africa Banking performed well despite currency headwinds. “Through Barclays Africa, we have excellent franchises in Africa, with a great management team,” said Staley.

Barclays Group Africa's share price dropped 3.20% to R131.65 shortly after the announcement.

BARCLAYS AFRICA REPORTS HEADLINE EARNINGS GROWTH OF 10%

Meanwhile Barclays Africa Group Limited this week announced a 10% increase in headline earnings for the year ended 31 December 2015, delivering a solid performance underpinned by a three-year strategy implemented in 2014.

Maria Ramos, Chief Executive of Barclays Africa Group Limited says: “We delivered solid results, demonstrating that our strategy is working. Our ambition to be Africa’s leading bank remains unchanged. We are a strong, well-capitalised and independently funded business that is uniquely positioned to achieve our goals across the continent.”

Group headline earnings increased to R14.3 billion on the back of increased income while costs remained well managed. 

Costs increased by only 5%, even as the group continued to make appropriate investments in our infrastructure to deliver material improvements to our service.

Return on equity improved to 17%, the highest level since 2008 and Barclays Africa is now top three by revenue in four of our five largest markets; that is, South Africa, Botswana, Ghana and Zambia. We are gaining revenue traction in key focus areas across geographies and businesses and we have seen strong loan growth in the right areas.

Retail and Business Banking (RBB), the group’s largest business unit, continued its turnaround and had another strong year with headline earnings growing 14%, playing a key role in driving overall Barclays Africa growth. RBB recorded solid revenue growth and managed costs well. The continued improvement in the quality of the home loans book and a strong collections performance in personal loans resulted in lower credit impairment. RBB’s non-interest income rose 7%.

“We added 855,000 new-to-bank customers in 2015 – an achievement that I am particularly pleased with,” says Ms Ramos. “Our RBB unit continues to make good progress in its turnaround and we have had one of our strongest revenue months on record in January 2016,” Ms Ramos says.

Improvements in the branch network and other channels, supported by investments in mobile and other technologies supported RBB’s progress.

In Corporate and Investment Banking (CIB), headline earnings increased 6% to R3.9 billion. The group’s pan-African strategy is working, with CIB’s business outside of South Africa increasing to now account for 37% of overall earnings, demonstrating that clients are seeing the benefit of the group’s integrated regional presence.

Wealth, Investment Management and Insurance (WIMI) delivered strong growth in headline earnings, increasing 11%. The WIMI offering was expanded into East Africa, with the launch of Barclays Life Assurance Kenya and the acquisition of a controlling stake in First Assurance, which also gives the group scale and presence in Tanzania.

While the commodity downturn and reduced economic growth weakened general sentiment towards the continent, Barclays Africa’s operations in the rest of Africa performed well and enhanced group growth. This shows that creating the Barclays Africa group in 2013 is working.

Revenue from operations outside of South Africa increased to 14% while headline earnings grew 17%. Operations outside of South Africa accounted for just over a fifth of revenue during 2015 and earnings growth in this region should continue to exceed those of South Africa. There is a clear path to increasing return on equity from those operations.

While the focus of the numbers we released today is on financial performance, this is only one component of our success as a business.

Barclays Africa has adopted a Shared Growth approach which for us, means generating a positive impact on society while delivering shareholder value.

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Business

LLR transforms from Company to Group reporting

9th April 2024

Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.

The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.

At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.

The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.

“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.

The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.

 

In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.

“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.

Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.

 

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Business

Botswana’s Electricity Generation Dips 26.4%

9th April 2024

The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.

Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.

Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.

Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.

Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.

The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.

The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.

In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.

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Business

MMG acquires Khoemacau in a transaction valued at P23Bn

9th April 2024

MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.

On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.

Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.

In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).

On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.

MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.

On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.

 

The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.

On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.

The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.

Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.

Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.

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