BDC embarks on major restructuring exercise
Isaac Pinielo | Tuesday February 3, 2015 18:00
With plans to nurture a new corporate culture and introduce new ways of working, partnering and executing, the corporation is optimistic that the BDC journey to recovery has begun.
BDC managing director Bashi Gaetsaloe enthused Friday that on completion of the restructuring, which is at the initial stage, the corporation will immediately be profitable. He noted that the business remodelling programme, which began in October 2013, is aimed at reducing wastage, preserving cash, preserving the integrity of the balance sheet, and creating a platform for sustainable and viable growth.
According to the MD, priority areas for improvement include financial restructuring, review of legal and governance frameworks, organisational structure review, process redesign, and the introduction of best practice risk management policies and frameworks.
“In the current financial year, BDC will bed-down many of the changes that will be necessary for the corporation to achieve long term success. The corporation is confident that through this re-modelling programme BDC will not only rebuild trust with its stakeholders, but will also emerge as the leading investment company in Botswana and the region,” he said.
Going forward, Gaetsaloe said BDC will focus on commercially viable projects that pioneer new industries, unlock value in existing industries, stimulate private sector growth and linkages, drive diversification and exports, create significant employment and generate wealth from outside the country.
He acknowledged that the transformation journey will be challenging and that they look forward to working with the board, shareholder, and the business community on the important and urgent task of transforming BDC.
Meanwhile, the group’s revenue declined by 10 percent in the year ended June 2014, from P317.9 million in the previous year to P286.8 million in the current year.
The BDC group of companies refers to the corporation’s investment subsidiaries while the BDC company is the corporation itself.
BDC chief financial officer (CFO), Magdalene Tsiane noted that the slow-down in revenue at the group level reflects the challenges and changes that the organisation is managing within its subsidiary and associate company structures.
Whilst the net loss for the group was P7.8 million, a total comprehensive income of P215 million was achieved compared to P107 million in the previous year after taking into account the net gains on investments and revaluation of property, plant and equipment.
Tsiane pointed out that the steady financial improvement is a positive development, adding that it demonstrates that the remodelling programme displayed early signs of success.
“In the year under review the group’s financial performance showed steady gains. The group realised a profit before tax of P35.7 million representing a 166 percent increase over the prior year,” she said.
The group’s statement of financial position also grew by 15 percent to P3.6 billion from P3.2 billion while the net assets of the company were P2.5 billion, a 12 percent increase on the previous year. Revenue for the BDC company grew from P101.7 million to P150.4 million representing a 48 percent increase from the previous year.
At company level, BDC experienced a loss before tax of P67.1 million against a loss before tax of P222.2 million in the previous year. Tsiane indicated that the loss at company level is substantially less than the loss in the previous year and that it is reflective of key initiatives to manage operating costs and improve collections.
“Indeed, despite incurring expenses of the remodelling exercise, total expenses for the corporation were reduced by 25 percent which is reflective of key initiatives to manage operating costs,” she said.