The Botswana Stock Exchange (BSE) market performance update released this week shows that during the first half of 2023 219.4 million shares worth P411.9 million were traded in the local equity market.
According to the update the top 3 traded companies during the period under review were Letlole La Rona (P157.1 Million), Far Property Company (P38.2 Million) and RDC Properties (P25.4 Million).
The update shows that total turnover from these 3 companies accounted for 53.6% of total equity turnover, with the leading counter Letlole La Rona accounting for 38.2% of total equity turnover. In comparison to the same period in 2022, the top 3 traded companies accounted for 74.9% of total equity turnover with the leading counter Letshego accounting for 59.9% (P425.4 Million) of total equity turnover. “Trading activity during the review period in 2023 amounted to P411.9 Million in comparison to P710.0 Million in the corresponding period in 2022. Though lower than the amount recorded in 2022, current year-to-date turnover levels are above the 2020 (P363.8 Million) and 2021 (P292.6 Million) levels. Similarly, the Average Daily Turnover (ADT) recorded in 2023 though lower than that in 2022 is significantly higher than in 2020 and 2021.” The update shows that during the corresponding period in 2022 a total equity turnover of P710.0 Million and a total volume of 327.1 Million shares traded were recorded. “The high level of turnover was due to two significantly high trades of P186.8 Million (23rd March 2022) and P142.9 Million (17th June 2022) that joined a series of record-breaking trade milestones in recent years. These include: P1.1 Billion (2021), P149.8 Million (2019), P458.6 Million (2018), P484.6 Million (2017) and P494.3 Million (2016).”
In the update the BSE stated that during the first half of 2023 local companies contributed 69.8% to total equity turnover or P287.7 Million in monetary terms while local individuals contributed 5.2% during this period or P21.6 Million in monetary terms. Foreign companies contributed 23.3% or P95.8 Million to total equity turnover while foreign individuals and brokers contributed 1.6% (P6.5 Million) and 0.1% (P0.37 Million) respectively.
During the period 1 January to 30 June 2023, the Domestic Company Index (DCI) appreciated by 4.3% in comparison to an increase of 2.5% during the corresponding period in 2022 and the Domestic Company Total Return Index (DCTRI) appreciated by 9.4% in comparison to 6.2% during the same period in 2022. The Foreign Company Index (FCI) increased by 0.1% on a year-to-date basis in 2023in comparison a marginal decrease of 0.1% during the corresponding period in 2022.
The share price performance of listed companies during the period under review shows that of the 31 listed companies including BBS on the Serala OTC Board, 6 depreciated in share price, 15 appreciated in share price while 10 experienced no share price change. The top three gainers over the 1 January to 30 June period were Stan Chart with a 43.9% growth in share price, followed by Chobe and CA Sales with gains of 26.4% and 23.2% respectively. Letlole La Rona experienced the largest decline in share price of 28.2%. The BSE stated that the overall market price to earnings ratio (P/E ratio) increased to 14.6 times in 2022 owing to the continued recovery of share prices fuelled by the implementation of the Transitional National Development Plan, Economic Recovery Transformation Plan (ERTP) and accommodative monetary conditions by Bank of Botswana following the economic slump brought about by the pandemic. Domestic companies sustained dividend payouts with a 4.9% Dividend Yield.
On the performance of Exchange Traded Funds (ETFS), the BSE noted that during the first half of 2023, trading activity on the ETFs Market has been phenomenal. “Total ETF turnover amounted to P86.5 Million, an increase of approximately 24% from P69.6 Million registered during the corresponding period in 2022. This was recorded from 353,541 units traded thus far in comparison to 522,564 units during the same period in 2022. The NewGold ETF gained 13.4% while the Satrix ILBI ETF and ADBF ETF lost 1.6% and 9.6% respectively in 2023.”
On bond market performance, the BSE noted that the value of bonds traded during the review period was P794.5 Million compared to P1.0 Billion traded during the same period in 2022. As at end of June 2023, there were 7 Government Bonds, 37 Corporate Bonds and 2 Commercial Papers listed on the BSE with a total market capitalization of approximately P24.7 Billion. “Government bonds continue to dominate the size of the bond market, accounting for 83.8% of market capitalization in 2022. Corporate bonds accounted for 16.2%, and within corporate we include the Quasi-Government (0.1%), Parastatals (4.9%), Corporates and (11.1%).”
In the recent BSE annual report BSE CEO Thapelo Tsheole noted that in 2022 513.3 Million shares were traded in comparison to 997.2 Million shares in 2021. The significantly high liquidity levels in 2021 were attributable to the acquisition of a majority stake of 78.15% in Banc ABC Botswana by Access Bank Limited, a Nigerian Bank with an international footprint. The value of the acquisition amounted to approximately P1.07 Billion which amounted to 59.1% of the total equity turnover. The trade which took place on 11th October 2021 represented a historic moment as the BSE recorded the highest turnover ever to be recorded in a day since inception. “In 2022 the top 5 most traded companies (Letshego, Letlole, FNBB, Sefalana and BIHL) accounted for 73.0% of turnover, whereas in 2021 the top 5 most traded companies (Access, Letshego, FNBB, Sefalana and Absa) accounted for 82.5% of turnover. Notably, Letshego accounted for the majority at 42.5% while Access dominated in 2021 and accounted for 59.1%,” said the CEO.
Tsheole stated that both foreign and domestic are active on the BSE and added that the stock exchange have initiated some strategies to attract more investors who can list their shares on the local bourse. “Ideally, a market should enjoy the participation of both domestic and foreign investors, institutional and retail. It takes a number of initiatives to attract mostly foreign investors and the BSE continuously deploys various strategies to attract foreign investors, ranging from affiliations with international bodies that publish our market information and statistics, international vendors, and international road shows to sell the BSE investing and listing value proposition, among others. Foreign investors generally are very active on the BSE, accounting for more than a third of trading activity over the years. In 2022, they accounted for 34.4% of trading activity of which foreign companies and foreign individuals contributed 30.1% and 4.3% respectively. On the local front, local companies accounted for 61.3% of trading activity emerging as the net buyers of domestic equities.”
With just four weeks to go, the Gambling Authority of Botswana has revealed that it is expecting a record attendance at the much anticipated International Association of Gambling Regulators (IAGR) Conference, which will be held in Botswana from 16 – 19 October 2023.
According to a communique from the IAGR, the Gambling Authority will most probably break the record in the number of accredited countries that will attend the conference in Botswana.
“We are on track to match and potentially exceed the incredible delegate turnout we saw in Melbourne last year,” read a statement from IAGR’s.
In its global reach alert, IAGR revealed a glimpse of jurisdictions that will be represented at the conference, among them Australia, Canada, Denmark, Japan, Jersey, Mauritius, United Kingdom, United States and Netherlands. African countries that have so far confirmed attendance include Zimbabwe, South Africa, Nigeria, Tanzania, Kenya and Burundi.
Commenting on the expected bumper attendance, IAGR said the amazing diversity elevates the conference to a whole new level, which will enrich discussions with a tapestry of regulatory perspectives and insights.
Botswana won the bid to host this year’s conference last year in Melbourne, Australia. The IAGR consists of representatives from gaming and gambling regulatory organizations from around the world; with a common mission to advance the effectiveness and efficiency of gaming regulation.
According to Gambling Authority Chief Executive Officer (CEO) Peter Kesitilwe, the Authority is a member of the IAGR by dictates of the Gambling Act; which compels it to align with international organizations whose objectives are to regulate gambling, and build collaboration among regulators.
“The IAGR conference is held annually and hosted by different member jurisdictions. It provides opportunities for gambling and gaming regulators from around the world to engage, learn and network with industry peers through events, workshops, research, information sharing, and the development of best practices,” explained Kesitilwe.
Funding requirements for the conference are shared between IAGR, the host country and conference participants. The government of Botswana has reaffirmed its commitment to supporting the Gambling Authority to host IAGR; as it is in line with its objectives of promoting the country as a Meetings, Incentives, Conferences, and Exhibitions (MICE) tourism destination.
According to Kesitilwe, the conference is coordinated by a Technical Committee of IAGR; together with a Local Organizing Committee (LOC) that comprises of representatives from the Ministries of Trade, Tourism, Foreign Affairs, Botswana Police Service and other stakeholders.
“We promise to deliver this hugely important event and showcase the best that Botswana has to offer. In addition to the exchange of ideas and culture capital, the Organizing Committee will also ensure maximum benefits for the tourism, hotel and hospitality industry, entertainment, transport, telecommunications, vendors, hawkers of cultural artifacts,” said Kesitilwe.
As part of preparations to host IAGR2023, the Gambling Authority recently went on a benchmarking mission to Great Britain.
“What we learnt there can assist the Gambling Authority as we enter a new era of growth and expansion. The meeting also provided a timely opportunity to catch up on preparations for IAGR2023. We are ready to host the conference and we look forward to meeting other regulators from across the world to share best practice, discuss common challenges and tackle illegal gambling,” concluded Kesitilwe.
In recent years, diversity and inclusion have emerged as crucial aspects of the corporate sector. Recognising the importance of inclusivity, the Botswana Development Corporation (BDC) has taken significant steps to signal its commitment to the inclusion of all regardless of age, gender, background. By implementing a comprehensive Diversity and Inclusion policy, BDC aims to create an environment that fosters equality, attracts top talent, and promotes creativity and innovation.
BDC has demonstrated its commitment to inclusion by crafting and implementing a bespoke Diversity and Inclusion policy. This policy recognises and values the differences within its workforce, striving to create a culture of equality. By fostering an environment where all employees feel respected and supported, BDC aims to attract and retain top talent, which in turn contributes to the organisation’s overall success.
The Corporation has implemented policies and strategies that promote diversity and inclusivity in the workplace. The Diversity and Inclusion policy emphasises the value and respect for employees from diverse backgrounds, creating an inclusive environment where everyone can thrive. By having this policy in place, BDC ensures that all employees are treated fairly and have equal opportunities for growth and development within the organisation.
In the realm of inclusivity, leading firms and companies have emerged as trailblazers, championing diversity and equity by implementing progressive policies and initiatives. These organisations have made significant strides in demonstrating their commitment to inclusivity through actions that support individuals with disabilities and foster work-life balance for all employees.
Microsoft actively recruits individuals with disabilities and fosters an inclusive workplace through accommodations and a dedicated resource group. Netflix offers generous paternity leave, Unilever supports surrogate parenthood and gender-neutral caregiver benefits, while IBM provides comprehensive adoption support. Companies like Google, Apple, and Facebook establish employee resource groups to amplify underrepresented voices. Adobe prioritises inclusive workplace design, and Accenture and Deloitte focus on diverse leadership representation. These companies set a powerful example, demonstrating the value of diversity and fostering a more inclusive corporate landscape.
Rising to the challenge, BDC has also taken several measures to respond to the different needs of its work force. These measures include fostering open and respectful communication, encouraging the formation of employee resource groups or affinity networks, and promoting diverse perspectives and contributions. The Corporation has also shown its commitment to inclusivity by recruiting persons with disabilities, providing paternity leave benefits, and recognising and supporting surrogate parenthood, primary caregiver benefits regardless of gender, as well as the adoption of children. These efforts demonstrate BDC’s progressive approach to embracing diversity and supporting employees in all aspects of their lives.
By so doing, The Corporation exemplifies the essence of progressiveness, embracing inclusivity as a core value. By championing diverse talent, providing supportive benefits, and fostering inclusive cultures, BDC is part of a movement that is shaping a future where every individual is valued and empowered.
Inclusion and diversity are not only moral imperatives but also strategic investments for success. BDC’s commitment to fostering diversity and inclusion, sets an example for other organisations in Botswana and beyond. By implementing policies and strategies that create an inclusive environment, celebrating diversity, and supporting employees from all walks of life, BDC paves the way for a more equitable and inclusive corporate sector in Botswana. Embracing diversity is not only the right thing to do; it also drives innovation, boosts employee morale, and contributes to the overall success of organisations.
Choppies Enterprises Limited, a supermarket chain led by Botswana businessman Ramachandran Ottapathu, reported an increase in profit after tax which is up 3.4%, hence improving from P145 million realized in 2022, to P150 million in 2023.
The results demonstrate sustained increases in consumer demand, improved operational flexibility, efficiency, cost-effectiveness and despite stiff competition, the Group managed reduce its debt levels by paying off P263 million debt from the previous fiscal year.
The chain supermarket realized growth in Group retail sales which went up 6.5% to BWP6 433 million compared to P6 042 recorded in 2022. The growth is attributed to a broad presence across Botswana and a growing footprint in three other African countries, being South Africa, Zambia and Zimbabwe, according to a recently financial results statement.
In Pula terms, gross profit grew by 4.0% to BWP 1 359 million (2022: BWP 1 307 million) despite the challenging economic environment. Botswana and Namibia marginally grew gross profit rates while rates in Zambia and Zimbabwe declined.
During the period under review, the group’s Group net cash generated from operating activities rose by 4.5% to P484 million, this is a significant improvement when compared to P463 million recorded in 2022. This segment was boosted by strong showing from Botswana and Namibia, which performed exceptionally despite the challenging trading conditions. Furthermore, it was driven by sixteen new stores coupled with price growth of 6.8%.
As a result of the robust financial performance, the group’s total assets increased from P1 886 million to P2 177 million, while retained losses decreased from P811 million to P664 million.
Meanwhile, the Group faced a demanding economic environment characterised by stubbornly high inflation, higher interest rates and unemployment, all of which continue to constrain consumer spending and the consumer’s ability to digest higher prices. Sales volumes were lower in many categories, exacerbated by competitor discounting, with cost pressures only partly recovered through price increases.
According to the audited results, the gross profit margin accordingly reduced to 21.1% from last year’s 21.6% due to higher supply chain costs, including fuel and managing prices in response to higher cost inflation and competitor discounting.
Furthermore, while expenses increased 5.1% excluding the depreciation restatement, expenses grew 9.8% partly due to new stores and inflation. Foreign exchange losses on lease liabilities of P31 million (against a gain of P28 million last year) were partly offset by foreign exchange gains on Zimbabwean legacy debt receipts of P18 million (2022: BWP15 million).
Operating profit (EBIT) reduced by 1.8% from BWP 279 million to BWP 274 million whilst Adjusted EBIT, which excludes foreign exchange gains and losses on lease liabilities, movements in credit loss allowances, Zimbabwean legacy debt receipts and the reassessment of depreciation, reduced by 7.5% as costs grew faster than gross profit.
According to the Choppies Enterprises financial statement commentary, the Group continues to manage its cash resources and liquidity prudently with a reduction of P132 million in debt with P87 million paid out of internally generated funds and the balance of P45 million paid out of the proceeds of the rights issue.
In addition, capital expenditure increased to P185 million when compared to 2022 fiscal year which had recorded P122 million. This was a result of the Group strategy to invest in new stores and maintaining the distribution fleet.
Choppies Enterprises raised BWP50 million from leases to fund the fleet, an improvement because in 2022 only P36 million was raised.
Despite the growth in sales, inflation and new stores, Choppies Enterprises inventory reduced by P20 million helped by more stable global supply and the benefits of implementing an inventory optimisation system.
Finally, commentary from the Choppies Enterprises Group observes that as the economies in which the Group operates recover and the new stores reach full potential, an improvement in margins is expected. “With a value proposition that resonates with customers and with the cost of everyday items still stubbornly high in too many categories, more customers are choosing Choppies for the value and assortment we are known for. While we have strong and resilient brands, affordability is a growing constraint for consumers, limiting their ability to digest higher prices,” reads a commentary on the Group’s Financial statement.
Choppies Enterprises Limited (“the Company”) is a Botswana-based investment holding company operating in the retail sector in Southern Africa. Dual-listed on the Botswana Stock Exchange (“BSE”) and Johannesburg Stock Exchange (“JSE”), its are food and general merchandise retailing as well as financial service transactions supported by centralised distribution channels through distribution and logistical support centres. Each week, approximately 2.0 million customers visit 177 stores under five formats in four countries. With annual revenue of more than BWP6 billion, Choppies employs 10 000 people and is the largest grocery retailer in Southern Africa, outside of South Africa.
EVENTS AFTER REPORTING DATE
On 19 July 2023, Choppies acquired 76% (seventy-six percent) of the Kamoso Group for BWP2.00 (two Pula) and took cession of shareholders’ loans to the value of BWP22 million. The Botswana Development Corporation (BDC) will retain its 24% stake.
This acquisition will take Choppies to become a P8 billion business in revenue with 11 000 employees and 274 retail stores.
SNEAK VIEW: COUNTRY PERFORMANCES
According to the financial results, Botswana experienced sales growth to BWP4 459 million an improvement from P4 209 million recorded in 2022. This was supported by volume growth from new stores and double-digit price inflation. Sales from Botswana increased by 5.9% and like-for-like sales growth was 2.2%, as the business continued to show strong resilience in an increasingly challenging economic environment. The Botswana economy continues to experience elevated inflation, high unemployment, and low economic growth.
EBITDA grew 5.8% and adjusted EBITDA was flat on last year. The performance for the second half was much stronger than in the first half as our strategies, leadership and inventory optimisation system have started to come to fruition.
As for the Rest of Africa being Namibia, Zambia and Zimbabwe sales increased by 7.7% to P 1 974 million, yet another improvement from 2022, which had realized P1 833 million sales. The increase was driven by the addition of nine new stores, inflationary increases in Zimbabwe and Zambia and volume growth in Namibia and Zambia. “However, this was offset by a very weak Zimbabwean Dollar resulting in Zimbabwe’s Pula sales declining by 48.3%.”
Meanwhile Namibia has successfully turned around with sales growth of 60.0% and like-for-like sales growth of 14.4%. Five new stores were opened during the year. EBITDA grew 140% with EBIT loss reducing from BWP9 million to BWP2 million. Adjusted EBIT, excluding the depreciation reassessment, reduced from BWP9 million to BWP6 million.
Connectedly, Zambia continues to grow with sales up 44.7% and like-for-like sales growth of 33.3%. Three new stores were opened during the year. While EBITDA declined by 26.4% due to the foreign exchange loss on the lease liability, adjusted EBITDA grew 27.1%. Adjusted EBIT declined marginally at 2.6%. Choppies Enterprises Directors are confident that Zambia will generate taxable profits in the foreseeable future.
Lastly in Zimbabwe, the Zimbabwean Dollar (ZWL) has significantly weakened especially in the last two months of the financial year. As a result of the above mentioned factors, Pula sales declined by 48.3%. EBIT and EBITDA declined by 151.6% and 125.5% respectively as cost inflation reduced margins. Adjusted EBIT and adjusted EBITDA declined 133.3% and 108.1% respectively.