Sunday, July 5, 2020

How to recover from a P700 million knock: BDC’s return to profitability

Largely referred to as the government’s investment agency– BDC believes it has a story to tell. The story is about how at one point, it was cash constrained until it voluntarily tipped the scale from its development bedrock to focus strongly on commercial opportunities in a bid to build cash reserves.

A flashback into the corporation’s financials for the past years paint a not so gloomy picture. For instance, in 2017, the corporation reported a decline in its revenue of about 3 percent from P281 million to P273 million. BDC’s brief case man then, Mbako Mbo attributed the decline to the correcting structure of BDC’s income, which was not indicative of operational performance.

Still during that financial year, 12 of BDC funded company registered a revenue decline whereas 7 others recorded revenue growth which resulted in mixed performance. A positive for that year was however the fact that the corporation reduced the number from nine to three.

Fast forward to 2019, the man currently at the helm of BDC – Acting Managing Director – Moatlhodi Lekaukau shared with the “captains” of the investment industry that the state-owned agency has “successfully completed its ambitious 5-year transformation strategy”.

The end results of the strategy, according to Lekaukau is a P4.8 billion investment group.

“BDC has come full circle and is successfully positioned for further growth. We are confident that as the Corporation pursues its next strategic period, we will continue to be a driving force making viable contributions to the Botswana economy that steer it to become knowledge-based and export-led, in line with Vision 2036.”

Lekaukau was speaking in Cresta Lodge in the capital Gaborone when the corporation presented its financial results for year ended 30 June 2019 on 05 December 2019.

Apart from the 2019 financials, BDC indicated that during the 2014 -2019 period it returned to profitability with over P1 billion in cumulative profits. The corporation also says it grew its net worth of the business by P700 million to a record P2.1 billion while its Total Asset Base growth also reached a record P4.8 billion

Meanwhile the corporation says it did not only return to profitability but also “showed off” its return by paying its sole shareholder – the Botswana government a dividend of P90 million during the strategy period. The value of listed stock that BDC transferred into the hands of the locals has been pegged at P285 million. BDC says it has also transferred businesses and assets worth P340 million to local companies and Batswana.

From Lekaukau’s presentation it seems like while BDC seems to have recognised the need to achieve a balance between development and commercial projects during the five-year strategy, the focus was much on projects that generate an immediate financial return.  

Lekaukau said the corporation, will, going forward solidify a bold new direction bed rocked upon maximising long-term value for the shareholder and creating sustainable wealth for future generations by deeply integrating Botswana into the global economy, through investments and partnerships.

The corporation says its’s strategic ambition overall is to explore ventures that further build and enhance Botswana industries that transform the economy and return high yields that contribute towards the Vision 2036 ambition to realise a high-income country standing.

Meanwhile for the financial year 2019 BDC’s Operating Profit grew by 40 percent to reach P277 Million. The corporation’s net worth is now pegged at P2.1 billion, the first time in 49 Years while its Total assets experienced a 12 percent year on year growth owing to increase in investment assets.

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Sunday Standard June 28 – 4 July

Digital copy of Sunday Standard issue of June 28 - 4 July, 2020.