It’s been four years since the shareholders of BBS Limited have received a “love letter” from their company. But now the company directors have expressed concerns over the failure to pay dividend to the shareholders who also wait for good news in the form of a commercial bank license. BBS Limited, which has operated as a building society for most part if its life has intentions to turn into a fully-fledged commercial bank. Should the bank tick all the boxes, it will largely be regarded as the country’s first indigenous bank.
But before that, the company directors have a sad note for the shareholders. They want them to know that dividend payments will only resume once the Group and Company becomes profitable again and subject to solvency and capital adequacy requirements not being compromised.
“In the meantime, we continue to ask for Shareholders’ support and understanding. We assure you that with the interventions we are implementing, the fortunes of the Group and Company will improve”, reads part of the notes accompanying BBS Limited’s interim Financial Results for the period ended 30 June 2022.
According to the financials, BBS Limited recorded a loss of P20 million compared to a profit of P15 million during the period ended 30 June 2021. The figures also shows that as at the end of the interim period ended 30 June 2022, the banker-to-be reported total net assets of P474 million which comprise ordinary share capital of P487 million and net revenue reserves of negative P13 million. The group’s revenue reserves have been depleted by the recurring operating losses in the past four years. The company has been reporting losses since 2018 following a successful demutualisation process.
“As we explained previously, the losses were mainly triggered by the change in capital structure which was necessary to transition the Company into a commercial bank. Part of the funds that formed equity under the building society model changed to liabilities (deposits) in the new Company thereby attracting interest expense as opposed to dividends”, says BBS Limited board.
BBSL went through a demutualisation process by converting from a building society to a company limited by shares. This process was part of the company’s journey to convert to a commercial bank which also involved selling shares to existing account holders and registering of 487 million shares on the Botswana Stock Exchange’s Over the Counter (OTC) dubbed Serala board. Currently BBS Limited’ biggest shareholders include the Botswana Privatisation Asset Holdings, Motor Vehicle Accident Fund and the Botswana Police Savings and Loans Guarantee Scheme.