Botswana Development Corporation Presentation to Investor Community - - PowerPoint PPT Presentation

botswana development corporation
SMART_READER_LITE
LIVE PREVIEW

Botswana Development Corporation Presentation to Investor Community - - PowerPoint PPT Presentation

Botswana Development Corporation Presentation to Investor Community Gaborone January 2016 Executive Summary BDC is a development finance Institution founded in 1970 with the Government of Botswana as the sole shareholder. It was formed to


slide-1
SLIDE 1

Botswana Development Corporation

Presentation to Investor Community

Gaborone January 2016

slide-2
SLIDE 2

2

BDC is a development finance Institution founded in 1970 with the Government of Botswana as the sole

  • shareholder. It was formed to promote and facilitate the development of industrial, commercial, and

agricultural enterprises within the framework of the Government’s plan for economic development

As the country’s main agency for development, BDC remains one of the biggest investors in Botswana with investment assets worth over BWP 2 billion, from a humble ZAR 20,000 worth of investment assets held as at the commencement

  • f operations in 1971

After four decades of uninterrupted operations several factors combined to inform a decisive Transformation Road Map that the Corporation adopted in 2013. These factors include the need to re-focus on core mandate, the need to re-align the business model to current business climate, the need to build an operational model and structure more responsive to investor needs, and the need for more optimal capital and funding structure BDC's business is supported by a strong balance sheet with a well diversified portfolio of investments which has proven resilient during tough economic conditions BDC’s Strategic Plan centres on a single, unifying Strategic Goal of “doubling the business in 5 years”. The new investment strategy, directly aligned to the Company’s medium term strategic plan and it’s mandate has turned BDC into a more efficient entity with refreshed governance, operational and risk management practices and structures, thus making it ready to earnestly implement its 2014-2018 business strategy BDC is therefore meeting investors to broaden its credit audience and further enhance its market access

Executive Summary

slide-3
SLIDE 3

3

  • 1. Presentation Team
  • 2. BDC’s Strong and Growing Franchise
  • 3. Funding Requirements
  • 4. Questions
  • 5. Appendix

Agenda

slide-4
SLIDE 4

4

Managing Director

Mr Bashi Gaetsaloe BA (Economics), MA, (Economics)

  • Mr. Gaetsaloe assumed the top position at BDC in March 2014
  • Prior to that, he was Country Managing Director at Accenture Botswana
  • Bashi has specific experience working across various sectors covering business strategy, organizational

transformation, business start-ups and business turnaround, change management, and financial management

Chief Risk Officer

Mr Mbako Mbo IBAcc, BSc (Hons), MBA, FCCA, CPA (Botswana), AMCT

  • Mr. Mbo officially joined BDC in May 2015 from African Development Bank where he held the position of Financial

Management Expert

  • Mbako has previous experience from Deloitte, Barclays, Botswana Telecommunications, Botswana Power Corporation

where he held various roles including: financial accounting, management accounting, financial planning, and auditing

Chief Operations Officer

Mr Bafana Molomo Bcomm (Economics and Finance), MBA, Post Grad Diploma (Business)

  • Mr. Molomo officially joined BDC in June 2015
  • He began his career as an investment analyst with Fleming Asset Management Botswana followed by Vantage Capital
  • He brings extensive experience in: Private equity, corporate finance, venture capital, mezzanine finance, structured

finance, project finance, deal origination, market research and strategy

Chief Financial Officer (Ag)

Ms Maranyane Makhondo BAcc, ACCA

  • Ms. Makhondo is currently the acting Chief Financial officer of the Corporation
  • Prior to joining the Corporation Ms. Makhondo had accumulated a wealth of experience in both the private and quasi-

public institutions in manufacturing and property industries where her roles included financial accounting, credit control, capital accounting and overall financial management

Introduction to BDC’s Strong Leadership Team

BDC has reinforced its executive team which now includes experienced venture capital, risk management and finance skills with both regional and international experience

slide-5
SLIDE 5

5

Chief Audit Executive

Ms Marina Khan Bcomm , MSc (Strategic Management)

  • Ms. Khan joined BDC in assumed the top position at BDC in August 2015
  • Prior to that, she was Country Head of Audit at Standard Chartered Bank of Botswana
  • She also previously held senior internal audit roles at Barclays Bank of Botswana and Botswana Power Corporation

Head of Marketing Communications

  • Ms. Boitshwarelo Lebang BSc (Computer Science), MSc (Strategic Management)
  • Ms. Lebang joined BDC in March 2008 as a Principal Public Affairs Officer before she rose through the ranks to

become the Manager, Corporate Communications and Public relations before being elevated to the Corporation’s Head of Marketing Communications

  • Prior to joining BDC she worked as a media practitioner in both television and radio and also did extensive work as a

media consultant

Head of Human Capital

  • M. Thabile Moilpolai BSc (Business Administration)
  • Ms. Moipolai officially joined BDC in July 2015
  • She was previously with De Beers Global Sight holder Sales where she held the position of Human Resources Business

Partner

  • She brings extensive experience in the areas of HR service delivery, talent & performance management, capacity

building among others

Introduction to BDC’s Strong Leadership Team (cont’d)

BDC has reinforced its executive team which now includes experienced venture capital, risk management and finance skills with both regional and international experience”

slide-6
SLIDE 6

6

  • 1. Presentation Team
  • 2. BDC’s Strong and Growing Franchise
  • 3. Funding Requirements
  • 4. Questions
  • 5. Appendix

Agenda

slide-7
SLIDE 7

7

  • To provide, facilitate and support financing of

commercially viable developments in order to contribute to a sustainable and diversified Botswana economy

  • To develop new and existing industrial,

commercial, property and agricultural businesses and property development

  • To stimulate the growth of the private sector,

diversify the economy and create wealth for the shareholder

  • To invest in the region and internationally
  • To conduct its business on a commercial

basis and exercise special care and regard to economic and commercial merits

Our Mandate BDC Quick Facts

BDC is Integral to the Development of Botswana’s Economy

Botswana Development Corporation is an investment arm of Government

  • Structure: A company limited by shares
  • Ownership: 100% Government of Botswana
  • Governance: Independent Board
  • Products: - Debt and equity financing
  • Mezzanine financing
  • Structured financing
  • Company Assets (2015): BWP 2.5 billion

Company Revenue (2015): BWP 311 million

  • Industries: Energy, Mining, Services, Industry,

Property, Technology, Infrastructure

Source: BDC Annual reports, Audited Financial Statements

slide-8
SLIDE 8

8

Introduction to BDC

Key Performance Indicators

Company 2012 2013 2014 2015 Total Assets (BWP millions) 2,071 2,178 2,265 2,488 Total Revenues (BWP millions) 172 152 211 311 Profit Before Tax (BWP millions)

  • 176
  • 222
  • 67

110 Net Interest Margin (%) 27 9 8 9 Cost to Income Ratio (%) 70 84 72 42 Total Equity to Total Assets (%) 69 64 62 67 ROE (%)

  • 13
  • 17
  • 5

6 ROA (%)

  • 8
  • 10
  • 3

4 Tier 1 Capital Ratio (%) 41 45 43 40 Capital Adequacy Ratio (%) 45 42 43 41

Transformation Journey

  • In late 2013 the Board

instituted a major review of the business under a Re-Modelling Programme in order to address major challenges facing the business

Business Lines

  • Debt and

equity financing

  • Mezzanine

financing

  • Structured

financing

History

  • Since 1970, our mandate

has been to provide, facilitate and support financing of commercially viable developments in

  • rder to contribute to a

sustainable and diversified Botswana economy

Strategic Goal

  • Double the business

in 5 years

History of Success Strong Government Support Strong Balance Sheet Diversified Portfolio Resilient Business Strategic Plan 2014 - 2018 As the country’s main agency for development and one of the biggest investors in Botswana, BDC is ready to lead the way in the industrialisation of Botswana through the creation and growth of viable, sustainable, and innovative local and regional businesses

Source: BDC Annual reports, Audited Financial Statements

slide-9
SLIDE 9

9

Company 2011 2012 2013 2014 2015 Operating Revenue (BWP millions) 400 104 102 150 194 Profit Before Tax (BWP millions) 46

  • 176
  • 222
  • 67

110

  • Changed business landscape
  • Increased risks
  • Skill gaps
  • Redundant structures
  • Changing development priorities
  • Changing business landscape
  • Changing client needs
  • Changing shareholder expectations

BDC Transformation Journey

During the past few years, a combination of factors has dampened our performance... ... However, in late 2013 the Board instituted a major review of the business under a Re-Modelling Programme in order to address major challenges facing the business

Source: BDC Annual reports, Audited Financial Statements

slide-10
SLIDE 10

10 Grow The Business Prepare The Business Re-align the Business

1

Build Capacity:

  • Create a platform for

sustainable and viable growth

  • Introduce new skills
  • Build teams

Execute at speed:

  • Double the investments

assets in 5 years

  • A comprehensive deal

pipeline

  • Optimize current

portfolio structure

  • Forge strategic alliances

Decisive actions:

  • Restructure the Business
  • Restructure governance
  • New policies
  • New systems
  • New processes

2 3

A Three-Phased Approach

The focus has been to build a viable and sustainable BDC that will successfully operate within the new business reality

slide-11
SLIDE 11

11

#NewBDC will leverage partnerships to execute its mandate

 Support emerging industries  Sustain critical industries  Drive rural industries  Promote regional cooperation through strategic investment partnerships with regional peers

Going forward BDC will focus on commercially viable businesses over BWP 30 million

  • 1. Pioneer new industries
  • 2. Unlock value in existing industries
  • 3. Stimulate private sector growth and linkages
  • 4. Drive diversification and exports
  • 5. Create significant employment
  • 6. Generate wealth from outside the country

BDC’s Strategic Plan 2014 – 2018

BDC’s Strategic Plan centres on a single, unifying Strategic Goal of “doubling the business in 5 years”. The new investment strategy, directly aligned to the Company’s medium term strategic plan and it’s mandate has since been developed and it aims to:

slide-12
SLIDE 12

12

  • Strong governance
  • New teams
  • Improved organizational structure
  • Best practice risk management & governance

policies and frameworks

  • Improved portfolio quality
  • Strengthened business development

capabilities

  • A new culture of #FAST

Transformation Achievements

 Operating Revenue: ↑ 29%  Total Revenue: ↑ 47%  Expenses: ↓ 28%  Provisions: ↓ 48%  Profit Before Tax: ↑ 264%

Transformation Results (FY15)

What Has Been Achieved to Date

Implementation of the Re-Modelling Programme began in April 2014 and the #NewBDC is now “live” in the new environment. The initiative turned BDC into a more efficient entity with refreshed governance,

  • perational and risk management practices and structures, thus making it ready to earnestly implement

its 2014-2018 business strategy

Source: BDC Audited Financial Statements

slide-13
SLIDE 13

13

  • Debt and Equity Financing
  • Mezzanine Financing
  • Structured Financing

Pioneering New Industries Industrialisation Facilitating Sustainable Employment

A History of Successful Investments and Positive Impact on the Economy

BDC’s contribution has permeated every major industry in Botswana and the Corporation has been responsible for some of most important companies in Botswana

Source: BDC Annual reports, Audited Financial Statements

  • 200
  • 100

100 200 300 400 500 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

BDC's Profit Before Tax and Revenue: 2001 - 2011

Revenue (Million Pula) PBT(Pulas) Revenue Profit Before Tax

BWP millions

slide-14
SLIDE 14

14

Supported by a Strong Balance Sheet

Capital Structure Assets: BWP 2.5 billion

Investment in Subsidiaries Other Investments assets PPE Inter company balances

Source: BDC Annual reports, Audited Financial Statements 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

BWP billions

Total investment assets

Company Group 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

BWP billions

Shareholder funds

Company Group Group net Shareholder funds

0,0 0,5 1,0 1,5 2,0 2,5 Assets Liabilities Shareholder's Equity BWP billions

slide-15
SLIDE 15

15

  • 4%
  • 2%

0% 2% 4% 6% 8% 10% 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

BWP billions

Assets and GDP Growth

Company Group GDP Growth

Resilient Business During Tough Economic Conditions

BDC’s business has proven resilient even during tough economic times and poor financial performance

Source: BDC Annual reports, World Bank Data

slide-16
SLIDE 16

16

  • 1. Presentation Team
  • 2. BDC’s Strong and Growing Franchise
  • 3. Funding Requirements
  • 4. Questions
  • 5. Appendix

Agenda

slide-17
SLIDE 17

17

Funding Strategy

As part of BDC’s Strategic 2014 – 2018 Plan, the Corporation aims to optimise its funding structure by introducing more longer term debt to be acquired both locally and internationally during the short to medium term

The Present Capital Structure

0,0 1,0 2,0 3,0 Assets Liabilities Shareholder's Equity 0.2 0.4 1.6 Short term borrowing Long Term borrowing Shareholder Funds

Current Funding Mix Targeted Funding Mix: Short to Medium Term

Cash Flows

2%

Internal Sources Short term credit lines (local commercial banks) Creditors

16%

Short Term Revolving Credit Lines Long term borrowings

15%

Long Term Sources Ordinary share Capital Retained Earnings Reserve

72%

Shareholder Financing Cash Flows – including divestment proceeds from selling non strategic investments

5%

Internal Sources Short term credit lines (local commercial banks) Creditors

3%

Short Term Revolving Credit Lines Long term borrowings

55%

(This includes resources to be channelled to co-financed investment undertakings)

Internal Sources Ordinary share Capital Retained Earnings Reserve

37%

Shareholder Financing

Source: BDC Annual reports, Audited Financial Statements, BDC Internal Reports

BWP billions BWP billions

slide-18
SLIDE 18

18

Sector Number of projects Investment requirement (BWP million) Agri-processing 4 415 Energy & emerging industries 6 1,487 Infrastructure 3 7,825 Property 2 700 Services 1 30 Total 16 10,457

Total employment creation: Between 3500 and 6000 direct and indirect jobs over the medium term

Solid Pipeline of Projects

Our pipeline includes 16 major projects valued at over BWP 10 billion. These are linked to our strategy and to Botswana’s development agenda

Source: BDC Internal Reports

slide-19
SLIDE 19

19

Up to 2017

Funding new investments BWP 700 million Refinancing BWP 230 million Seed capital buffer BWP 70 million Total required BWP 1 billion

2017 and Beyond

Funding new investments: 2017 - 2019 BWP 2 billion Funding new investments: beyond 2019 BWP 5.5 billion

70% 23% 7% Funding Pipeline Projects Restructuring of Short Term Debt Capital Buffer

Capital Funding Requirements

BDC has determined its total capital funding requirement to be BWP 3 billion in the short to medium

  • term. There is a clear demonstration of the ability of the projects to be financed to generate the required

returns and repay the financial resources expended to them

Source: BDC Internal Reports

slide-20
SLIDE 20

20

  • 1. Presentation Team
  • 2. BDC’s Strong and Growing Franchise
  • 3. Funding Requirements
  • 4. Questions
  • 5. Appendix

Agenda

slide-21
SLIDE 21

21

  • 1. Presentation Team
  • 2. BDC’s Strong and Growing Franchise
  • 3. Funding Requirements
  • 4. Questions
  • 5. Appendix

Agenda

slide-22
SLIDE 22

22

Select Key Indicators 2013 2014 2015

Composition of income Dividends 49% 55% 51% Interest 18% 17% 12% Other 33% 28% 37% Current Ratio 0.31 0.26 0.65 Leverage Ratio 1.51 1.44 1.27 Gearing 24% 26% 17% Liquidity Coverage Ratio 20% 71% 75%

Key Ratios

Source: BDC Annual reports, Audited Financial Statements, BDC Internal Reports

slide-23
SLIDE 23

23

  • 300
  • 200
  • 100

100 200 300 400 2013 2014 2015 2016 (b) 2017 (f) 2018 (f) 2019 (f)

BWP millions

Financial Performance and Projections

Total Revenue Total Expenditure PBT

Our Journey Over the Next Four Years

A steady growth in profitability, driven by growing revenues and expenditure management

Source: BDC Annual reports, BDC Internal Reports

slide-24
SLIDE 24

24

Corporate Social Responsibility Programme and Initiatives

The Corporation’s Corporate Social Responsibility Programme is deliberately made diverse to meaningfully benefit a significant number of individuals in communities within which we operate. Over the past 5 years, education, arts and environmental preservation have immensely benefited from the Corporation’s Corporate Social Investment (CSI) initiatives BDC CSR POLICY VALUE STATEMENT

“To be the leading development and investment financier that makes a significant contribution to the sustainable development of the communities in which we operate.”

BDC CSR PURPOSE VALUE

The purpose of BDC CSR programme is to build passion and pride for the BDC brand through the use of our human and financial resources to address the needs of the communities in which we operate and invest. For the current year, the Corporation is in the process of implementing a Corporate Social Investment Project that is aligned to its mandate:

  • The targeted project will address entrepreneurship/business skills development especially among youth
  • This is where the bulk of the CSR budget will go and the rest will be utilised in donations and sponsorships
  • The programme is aimed at benefiting a considerable number of youth who will benefit from it at intervals over a

period of 3-5 years

  • Donations and sponsorships will continue to benefit a wide array of members of our communities
slide-25
SLIDE 25

25

Disclaimer

IMPORTANT: You must read the following before continuing. The following applies to this document, the oral presentation of the information in this document by Botswana Development Corporation Limited (“BDC”) or any person on behalf of BDC, and any question-and-answer session that follows the oral presentation (collectively, the “Information”). In accessing the Information, you agree to be bound by the following terms and conditions. The Information is confidential and may not be reproduced, redistributed, published or passed on to any other person, directly or indirectly, in whole or in part, for any purpose. This document may not be removed from the premises. If this document has been received in error it must be returned immediately to BDC. The Information is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located in, any locality, state, country or other jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. The Information does not constitute or form part of, and should not be construed as an offer or the solicitation of an offer to subscribe for or purchase the Securities, and nothing contained therein shall form the basis of or be relied on in connection with any contract or commitment whatsoever, nor does it constitute a recommendation regarding the Securities. Any decision to purchase Securities should be made solely on the basis of the information to be contained in a related offering memorandum (or equivalent disclosure document) produced in connection with such offering of Securities. Prospective investors are required to make their own independent investigations and appraisals of the business and financial condition of BDC and the nature of its Securities before taking any investment decision with respect to its Securities. Any prospectus (or equivalent disclosure document) which may be prepared in relation to any

  • ffer of Securities may contain information which is different from the Information.

The Information has been prepared by BDC and Standard Chartered acting exclusively; neither BDC nor any other person and will be responsible for providing advice in connection with the Information to any other party. Subject to applicable law, none of BDC and Standard Chartered accepts any responsibility whatsoever and makes no representation or warranty, express or implied, for the contents of the Information, including its accuracy, completeness or verification or for any other statement made or purported to be made in connection with BDC and nothing in this document or at this presentation shall be relied upon as a promise or representation in this respect, whether as to the past or the future. BDC and Standard Chartered accordingly disclaim all and any liability whatsoever, whether arising in delict, contract or otherwise (save as referred above) which any of them might otherwise have in respect

  • f the Information or any such statement.

The Information contains forward-looking statements. All statements other than statements of historical fact included in the Information are forward-looking statements. Forward-looking statements give BDC’s current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “estimate,” “plan,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond BDC’s control that could cause BDC’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding BDC’s present and future business strategies and the environment in which it will operate in the future. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the Information

  • r the opinions contained therein. The Information has not been independently verified and will not be updated. The Information, including but not limited to forward-looking statements,

applies only as of the date of this document and is not intended to give any assurances as to future results. BDC expressly disclaims any obligation or undertaking to disseminate any updates or revisions to the Information, including any financial data or forward-looking statements, and will not publicly release any revisions it may make to the Information that may result from any change BDC’s expectations, any change in events, conditions or circumstances on which these forward-looking statements are based, or other events or circumstances arising after the date of this document. Market data used in the Information not attributed to a specific source are estimates of BDC and have not been independently verified.

slide-26
SLIDE 26

Thank You