According to the financials released via the Botswana Stock Exchange on Monday, the BDC fell into losses, from pretax profits of approximately P32 million in the year to June 2021.
“The corporation was faced with adverse market forces which resulted in significant adverse variances in finance costs and valuation impairments of equity investments,” directors said. “With global increases in interest rates, as well as full draw down on approved facilities, BDC experienced an increase in finance costs of 30% during the year.”
The BDC is amongst the country’s biggest investors, with equity across various sectors as well as debt arrangements with various firms seen as key to the country’s economic diversification.
Directors said the investment portfolio suffered hits during the year under review, with two assets adversely affected by supply chain disruptions in the market. The two unnamed entities reported underperformance on existing contracts and exposures, resulting in additional impairment adjustments of P97 million.
“In addition, the strengthening of the US dollar against the Pula resulted in the company experiencing an unrealised foreign exchange loss of P33 million,” directors stated.
The corporation’s balance sheet, however, remained strong, with total assets at P5.3 billion, representing an 18% growth from the prior year. Asset performance continued to improve with the non-performing loan ratio improving to 17.9% from the 20.5% reported at the end of the prior financial year.
The BDC is set to receive a P437 million boost in recapitalisation from government this year, according to draft budget estimates released recently. The funds will be sourced from two spending lines under the Ministry of Environment and Tourism.
Meanwhile, directors signalled confidence that the corporation is on track to return to positive earnings, with plans to invest in alpha return opportunities across the globe.
“The corporation aims to invest globally in high-return commercial and strategic projects, while also integrating Botswana into the world economy through key partnerships with global economic players,” the directors said.
