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 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 of 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 2

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

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 Mr Bashi Gaetsaloe BA (Economics), MA, (Economics) • Mr. Gaetsaloe assumed the top position at BDC in March 2014 Managing • Prior to that, he was Country Managing Director at Accenture Botswana Director • Bashi has specific experience working across various sectors covering business strategy, organizational transformation, business start-ups and business turnaround, change management, and financial management 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 Chief Risk Officer 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 Mr Bafana Molomo Bcomm (Economics and Finance), MBA, Post Grad Diploma (Business) • Mr. Molomo officially joined BDC in June 2015 Chief Operations • He began his career as an investment analyst with Fleming Asset Management Botswana followed by Vantage Capital Officer • He brings extensive experience in: Private equity, corporate finance, venture capital, mezzanine finance, structured finance, project finance, deal origination, market research and strategy Ms Maranyane Makhondo BAcc, ACCA • Ms. Makhondo is currently the acting Chief Financial officer of the Corporation Chief Financial • Prior to joining the Corporation Ms. Makhondo had accumulated a wealth of experience in both the private and quasi- Officer (Ag) public institutions in manufacturing and property industries where her roles included financial accounting, credit control, capital accounting and overall financial management 4

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” Ms Marina Khan Bcomm , MSc (Strategic Management) • Chief Audit Ms. Khan joined BDC in assumed the top position at BDC in August 2015 • Executive 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 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 Head of become the Manager, Corporate Communications and Public relations before being elevated to the Corporation’s Marketing Head of Marketing Communications 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 M. Thabile Moilpolai BSc (Business Administration) • Ms. Moipolai officially joined BDC in July 2015 • Head of Human She was previously with De Beers Global Sight holder Sales where she held the position of Human Resources Business Capital Partner • She brings extensive experience in the areas of HR service delivery, talent & performance management, capacity building among others 5

Agenda 1. Presentation Team 2. BDC’s Strong and Growing Franchise 3. Funding Requirements 4. Questions 5. Appendix 6

BDC is Integral to the Development of Botswana’s Economy Botswana Development Corporation is an investment arm of Government Our Mandate BDC Quick Facts • • Structure : A company limited by shares To provide, facilitate and support financing of commercially viable developments in order • Ownership : 100% Government of Botswana to contribute to a sustainable and diversified • Governance : Independent Board Botswana economy • Products: - Debt and equity financing • To develop new and existing industrial, - Mezzanine financing commercial, property and agricultural businesses and property development - Structured financing • To stimulate the growth of the private sector, • Company Assets (2015): BWP 2.5 billion diversify the economy and create wealth for Company Revenue (2015): BWP 311 million the shareholder • Industries: Energy, Mining, Services, Industry, • To invest in the region and internationally Property, Technology, Infrastructure • To conduct its business on a commercial basis and exercise special care and regard to economic and commercial merits Source: BDC Annual reports, Audited Financial Statements 7

Introduction to BDC 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 Strong History of Strong Diversified Resilient Strategic Plan Government Success Balance Sheet Portfolio Business 2014 - 2018 Support Key Performance Indicators History Business Lines • Since 1970, our mandate • Company 2012 2013 2014 2015 Debt and has been to provide, equity Total Assets (BWP millions) 2,071 2,178 2,265 2,488 facilitate and support financing • financing of commercially Total Revenues (BWP millions) 172 152 211 311 Mezzanine viable developments in financing Profit Before Tax (BWP millions) -176 -222 -67 110 order to contribute to a • Structured sustainable and diversified Net Interest Margin (%) financing 27 9 8 9 Botswana economy Cost to Income Ratio (%) 70 84 72 42 Transformation Journey • In late 2013 the Board Strategic Goal Total Equity to Total Assets (%) 69 64 62 67 • Double the business instituted a major review of the ROE (%) -13 -17 -5 6 business under a Re-Modelling in 5 years ROA (%) -8 -10 -3 4 Programme in order to address major challenges facing the Tier 1 Capital Ratio (%) 41 45 43 40 business Capital Adequacy Ratio (%) 45 42 43 41 Source: BDC Annual reports, Audited Financial Statements 8

BDC Transformation Journey During the past few years, a combination of factors has dampened our performance... • Company 2011 2012 2013 2014 2015 Changed business landscape • Increased risks Operating Revenue 400 104 102 150 194 (BWP millions) • Skill gaps Profit Before Tax 46 -176 -222 -67 110 • Redundant structures (BWP millions) ... 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  Changing development priorities  Changing business landscape  Changing client needs  Changing shareholder expectations Source: BDC Annual reports, Audited Financial Statements 9

A Three-Phased Approach The focus has been to build a viable and sustainable BDC that will successfully operate within the new business reality 1 2 3 Prepare The Business Grow The Business Re-align the Business Build Capacity: Decisive actions: Execute at speed: • • • Create a platform for Double the investments Restructure the Business sustainable and viable assets in 5 years • Restructure governance growth • A comprehensive deal • New policies • Introduce new skills pipeline • New systems • • Build teams Optimize current • New processes portfolio structure • Forge strategic alliances 10