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BDC is a development finance Institution founded in 1970 with the Government of Botswana as the soleshareholder. It was formed to promote and facilitate the development of industrial, commercial, andagricultural 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 investmentassets worth over BWP 2 billion, from a humble ZAR 20,000 worth of investment assets held as at the commencementof operations in 1971
After four decades of uninterrupted operations several factors combined to inform a decisive Transformation Road Mapthat the Corporation adopted in 2013. These factors include the need to re-focus on core mandate, the need to re-alignthe business model to current business climate, the need to build an operational model and structure more responsiveto 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 provenresilient during tough economic conditions
BDC’s Strategic Plan centres on a single, unifying Strategic Goal of “doubling the business in 5 years”. The newinvestment strategy, directly aligned to the Company’s medium term strategic plan and it’s mandate has turned BDC intoa more efficient entity with refreshed governance, operational and risk management practices and structures, thusmaking 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
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1. Presentation Team
2. BDC’s Strong and Growing Franchise
3. Funding Requirements
4. Questions
5. Appendix
Agenda
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 managementand finance skills with both regional and international experience
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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 managementand finance skills with both regional and international experience”
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1. Presentation Team
2. BDC’s Strong and Growing Franchise
3. Funding Requirements
4. Questions
5. Appendix
Agenda
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
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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-ModellingProgramme 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 order 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 isready 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
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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-ModellingProgramme in order to address major challenges facing the business
Source: BDC Annual reports, Audited Financial Statements
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Grow The BusinessPrepare The BusinessRe-align the Business
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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 newbusiness reality
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#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”. Thenew investment strategy, directly aligned to the Company’s medium term strategic plan and it’s mandatehas since been developed and it aims to:
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• 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” inthe new environment. The initiative turned BDC into a more efficient entity with refreshed governance,operational and risk management practices and structures, thus making it ready to earnestly implementits 2014-2018 business strategy
Source: BDC Audited Financial Statements
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• Debt and Equity Financing
• Mezzanine Financing
• Structured Financing
Pioneering New Industries IndustrialisationFacilitating 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 beenresponsible for some of most important companies in Botswana
Source: BDC Annual reports, Audited Financial Statements
-200
-100
0
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
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Supported by a Strong Balance Sheet
Capital StructureAssets: 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
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
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1. Presentation Team
2. BDC’s Strong and Growing Franchise
3. Funding Requirements
4. Questions
5. Appendix
Agenda
17
Funding Strategy
As part of BDC’s Strategic 2014 – 2018 Plan, the Corporation aims to optimise its funding structure byintroducing more longer term debt to be acquired both locally and internationally during the short tomedium 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
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Sector Number of projectsInvestment 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 strategyand to Botswana’s development agenda
Source: BDC Internal Reports
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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 mediumterm. There is a clear demonstration of the ability of the projects to be financed to generate the requiredreturns and repay the financial resources expended to them
Source: BDC Internal Reports
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1. Presentation Team
2. BDC’s Strong and Growing Franchise
3. Funding Requirements
4. Questions
5. Appendix
Agenda
21
1. Presentation Team
2. BDC’s Strong and Growing Franchise
3. Funding Requirements
4. Questions
5. Appendix
Agenda
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
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-300
-200
-100
0
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
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Corporate Social Responsibility Programme and Initiatives
The Corporation’s Corporate Social Responsibility Programme is deliberately made diverse tomeaningfully benefit a significant number of individuals in communities within which we operate. Overthe past 5 years, education, arts and environmental preservation have immensely benefited from theCorporation’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 sustainabledevelopment 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 humanand 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 isaligned 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
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Disclaimer
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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
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