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1989Launch
1994New legislation
2003Fully independent entity
2006Developing the capital market
2008BSE Board Charter
2013 and beyondReaching new heights
BOTSWANA STOCK EXCHANGE Annual Report 2013 BOTSWANA STOCK EXCHANGE REACHING NEW HEIGHTS
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2013 HIGHLIGHTS
COMPANY OVERVIEW
BOARD MEMBERS
MANAGEMENT TEAM
OUR STAFF
COMPANY REVIEWS
CHAIRPERSON’S STATEMENT
CEO’S REVIEW
COMPANY STRATEGY
CORPORATE GOVERNANCE
ANNUAL FINANCIAL STATEMENTS
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TABLE OF CONTENTS
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2013 HIGHLIGHTS
• TradingRulesforbothEquityandDebtInstruments infinalstagesofreview
• ShumbaCoallistedontheForeignVentureBoard throughprivateplacement
• BSElaunched3bondindices,theGovI,CorpIandthe BBI(Composite)
• BondIndexAdvisoryCommitteeappointed• BotswanaBondMarketAssociation(BBMA) successfullyregisteredwiththeRegistrarofSocieties inSeptember
• BotswanaBondMarketAssociation(BBMA) Committeeappointed
• InauguralSeniorSecondarySchools’BSEFinanceand InvestmentQuizsuccessfullyhosted
• Two-dayworkshoponGlobalDepositaryReceipts (GDRs)conducted
• WorkshoponExchangeTradedFunds(ETFs)hosted
• BSEadoptedtwoprimaryschoolsandrefurbished theirlibrariesundertheAdopt-A-SchoolInitiative
• TheBSE’s2012AnnualReportclinchedtheBest AnnualReportintheNot-for-ProfitsectoratthePrice WaterhouseCoopersAnnualReportAwards
P2.3Bnachieved
Recordturnoverof
BettaBetaETFreacheditshighestpricesincelistingontheBSE,of
P40.60inOctober
DCI appreciatedby
20.5%
Regular tradingsessions intheATS extended by a total of 1hour,from1hour45minutesto2hours45minutes
NumberofAccountsopenedCSDincreasedby13.5%to
20,027accounts
1hr
BOTSWANA STOCK EXCHANGE Annual Report 2013 BOTSWANA STOCK EXCHANGE REACHING NEW HEIGHTS
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VISIONTo be the leading Stock Exchange in Africa
MISSIONTo provide and operate a fair, transparent and efficient stock market for all stakeholders in order to optimise national economic empowerment.
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MISSION &VISION STATEMENTS
VALUES
WetakePRIDEinwealthcreation
PASSION • Creativity&Innovation
• PersonalLearning,Growth, Development • Coaching&Developingothers
RESPECT • Teamwork&Collaboration
• KnowledgeSharing& Communication
• CustomerOrientation
INTEGRITY • Corporate&PersonalEthics
• Credibility,Transparency& Accountability
• RiskManagement
DISCIPLINE • CommittedtorealizingValue andconvertingValuetoa CompetitiveAdvantage
• CommittedtoContinuous Improvement
EXECUTION • AchievementDriven
• Excellence
• ResultsFocused
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Reaching new heights isthe result of strategic planning and strong determination””
COMPANY OVERVIEW
BOTSWANA STOCK EXCHANGE Annual Report 2013 BOTSWANA STOCK EXCHANGE REACHING NEW HEIGHTS
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BOTSWANA STOCK EXCHANGE Annual Report 2013
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COMPANY OVERVIEW
Therewereonly5 listedentitieswithasinglebrokingfirmi.e.Stock Brokers Botswana Ltd (SBB), which was also chargedwith facilitating tradingon theexchangevia thematchingoforders.InordertoencourageforeigninvestorstoBotswanaaninterimexchangecommitteewassetupinOctober1990withrepresentativesfromtheprivateandpublicsector,includingthesecretaryoftheZimbabweStockExchange,thechiefexecutiveofSBB,thepermanentsecretaryoftheministryoffinance,andtheDeputyDirectoroftheBankSupervision.Thecommitteehadthepowertolistandtode-listastock,andwasalsoresponsiblefor ensuring that the BSE traded ethically [Ruben Lee, 1998].Thenecessitytodetachtherunningoftheexchangefromthebrokingbusinesssetinmotionaprocessfortheestablishmentofanindependentexchange.
In September 1994, the legislation to transform theBSM intoa full exchangewaspassedbyParliamentpaving theway fortheestablishmentoftheBotswanaStockExchange(BSE)wheretrading opened inNovember 1995. InMarch 1998, Ernst andYoungtookthefulladministrationoftheBSE.WitheffectfromJuly2001,afulltimeChiefExecutiveOfficerwasappointedwiththe aim ofmaking the BSE completely independent. In April2003, in order to better execute the affairs of the Exchange,better serve stakeholder, and be more responsive to globalevents and to remain competitive, the BSE discontinued thesecretarialroleofErnstandYoungBotswanatobecomeafullyindependententity.
TheBSEcontinuestobepivotaltoBotswana’sfinancialsystem,and in particular the capital market, as an avenue on whichgovernment, quasi- government and the private sector canraisedebt and equity capital.TheBSEplays host to themostpre-eminent companies doing business in Botswana. Thesecompaniesrepresentaspectrumof industriesandcommerce;theseareBanking,FinancialServices,WholesalingandRetailing,Tourism, Energy, Funeral Services, Property, Security andInformationTechnology.Currently,thereare35listedentitiesintheBSEandcompriseof23domesticand12foreigncompanies.
BOTSWANA STOCK EXCHANGE REGULATORY ENVIRONMENT
The main law which governs all the activities between theExchange and its members, the proceedings of the MainCommitteeand itscomposition; the relationshipbetweentheMinisterandtheExchangetogetherwiththerelationsbetween
theRegistrar,istheBotswanaStockExchangeActNo11of1994.TheBSEisregulatedbytheNonBankingFinancialInstitutionsRegulatoryAuthority.
ThemembershavepromulgatedRules (MemberRules)whichprovide the requirements to be fulfilled for the securitieslistedandtradedontheExchange.MembersRulesprovideasthe main objective thereof, “to operate a Stock Exchange inBotswanawithdueregardtothepublicinteresttomaintainfairandefficientdealinginsecuritiesfortheprotectionofinvestorsandregulatetheaffairsofmembers”.
In addition, the Exchange has a set of Listing Requirementswhich provide the pre-listing requirements and post listingrequirementstobeobservedbytheissuersoflistedsecurities.The emphasis is to make sure issuers disclose as muchinformation to thepublic and investors so that the latter canmakeinformedinvestmentdecisions.
CORPORATE INFORMATION
BSE Office:OfficeBlock6Plot64511,FairgroundsPrivateBag00417Gaborone
Independent Auditors:KPMG
Bankers:BarclaysBankofBotswanaLimited
OUR PRODUCTS
TheBSEaimtobecomeafinancialsupermarket,meaningitaimstoprovidetherightkindofproductstosuitinvestorandissuersothat itmeetgrowingcustomerdemandsandchallengesoftheglobalisationoffinancialmarkets.Thiscanbedonethroughproduct innovation and diversification. Current products thatcan be listed include Equities, Corporate Bonds, GovernmentBonds,ExchangeTradedProductsandCommercialPaperswhileproducts being developed are Global Depository Receipts,SecuritisedProductsandDerivatives.
The Botswana Stock Exchange (BSE) is Botswana’s national stock exchange given the responsibility to operate
and regulate equity and the fixed interest security market. Formally established in 1989, the BSE trace its humble
beginnings to when it was known as Botswana Share Market (BSM). At that time there was no formal stock exchange
in Botswana and the BSM traded as an informal market.
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BOARD MEMBERS
PATRICK O’FlAHERTYCHAIRPERSON
REGINA VAKAVICE-CHAIRPERSON
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GREGORY MATSAKETREASuRER
BOARD MEMBERS
ElAINA GONSAlVES MEMBER
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KABElO MOHOHlOMEMBER
IPONENG SENNANYANAMEMBER
BOARD MEMBERS
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BOARD MEMBERS
GOITSEONE KGAOdIMEMBER
JOHN KIGGuNduMEMBER
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MANAGEMENT TEAM
HIRAN MENdIS CHIEF EXECuTIVE OFFICER
THAPElO TSHEOlEdEPuTY CHIEF EXECuTIVE OFFICER
Mr.HiranMendiswasappointedCEOoftheBSEinJuly2006.Prior to joining the BSE he was the Director General of theColomboStockExchangeinSriLankafor9years.MrMendisisaFellowMemberofCIMAandholdsMBAandMA(Economics)degrees from the University of Colombo having graduatedSummaCumLaude inbothMastersdegrees.MrMendiswasPastPresidentofCIMASriLankaDivisionandhasservedasaco-optedMemberontheCouncilofCIMAinLondonandasaDirectoroftheSouthernAfricanregionalBoardofCIMA.HeisarecipientoftheCIMABronzeMedal.
Mr Tsheole joined the BSE in February 2007 as ProductDevelopment Manager. Prior to joining the BSE he workedfor Bank of Botswana on different units of the FinancialMarket Department as a Dealer and Settlement Supervisor.He graduated with a BA in Economics from the Universityof Botswana, and holds aMaster of Commerce in FinancialMarketsfromRhodesUniversity(RSA).HealsoholdsaMasterinBusinessAdministration(MBA)fromtheGraduateSchoolofBusiness,UniversityofCapeTown-UCT(RSA).HeisaRegisteredPerson (RPE) under the South African Institute of FinancialMarkets and Agricultural Product Dealer with FinancialDerivatives Division (SAFEX). He is a Member of Institute ofSouth Africa Financial Markets. He attended the LeadershipDevelopment Programme at the University of StellenboschBusinessSchool(RSA).
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MANAGEMENT TEAM
Ms.PhetojoinedBotswanaStockExchangeinDecember2007asCSDManager.PriortojoiningtheBSEshewasMarketRiskManageratStanbicBank,Botswana.Beforethen,sheworkedforBankofBotswanaondifferentunitsoftheFinancialMarketDepartment as a Dealer, Settlement Officer and PortfolioAnalyst. She graduated with a BA in Economics from theUniversity of Botswana, and holds a MA in Economics fromUniversity of Stellenbosch (RSA). She is currently pursuingCIMAManagerialLevelhavingcompletedtheCIMADiplomainManagementAccounting.
Mrs. Akanyang joined BSE in January 2007 as a MarketDevelopment Manager. Prior to joining the BSE, she helddifferent positions at international institutions such asGeneralElectricandFirstStarBankintheUSA.SheholdsaBSBA Economics/Human Resources from Xavier University(USA)andMAinEconomicsfromtheUniversityofCincinnati(USA).
MASEGO P. PHETOCENTRAl SECuRITIES dEPOSITORY MANAGER
lAME AKANYANGMARKET dEVElOPMENT MANAGER
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KOPANO MOGOROSIINFORMATION TECHNOlOGY MANAGER
Mr.MogorosijoinedtheBSEinJanuary2008asaSystemandNetworkAdministrator.InJune2009,hewasredeployedtotherole ofDatabaseAdministrator, a position that he held untilOctober2011,whenhewasappointedtotheroleofActingITManager.HeassumedtheroleofITManagerinMay2012.Priorto joining the BSE,MrMogorosiworked for Rural IndustriesPromotions Company Botswana (RIPCO) as a SystemsAdministrator.HehasalsoworkedforDCDMConsultingasanAnalyst/Programmer.MrMogorosiholdsaBSc inComputerEngineeringfromtheUniversityofMiami,FL(USA).
lATElANG CHAKAlISACORPORATE AFFAIRS MANAGERMrs.ChakalisajoinedtheBSEinJune2009asCorporateAffairsManager. Prior to joining the Botswana Stock Exchange, shewas Senior Manager, Securities at Stanbic Bank BotswanaLimited. Before then, she worked for the Attorney General’sChambers as a Senior State Counsel in the Civil LitigationDepartment.SheholdsanLLBfromtheUniversityofBotswanaand is currently pursuing an MSc Strategic ManagementthroughtheUniversityofDerby,UK.SheisaBoardMemberoftheBotswanaInstituteofTechnology,ResearchandInnovation.
MANAGEMENT TEAM
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MANAGEMENT TEAM
MPHO MOGASHAFINANCE ANd AdMINISTRATION MANAGER
Mrs.Mogasha joined the BSE in 2006 as OperationsOfficer-Finance & Admin, a position she held until July 2013, whenshe was appointed to the role of Acting Finance & AdminManager.SheassumedtheroleofFinanceandAdministrationManagerinFebruary2014.PriortojoiningtheBSEsheworkedfor Motswedi Securities as Accountant. Before then, sheworked for Grunwald Construction as Assistant Accountant.Mrs. Mogasha graduated with a BA in Accounting from theUniversityofBotswana.SheisACCAqualifiedandamemberoftheBotswanaInstituteofCharteredAccountants(BICA).
TSAMETSE MMOlAIlISTINGS ANd TRAdING MANAGER
Mr. Mmolai joined BSE in May 2008 as Listings and TradingOperations Officer. Prior to joining BSE, he was the BranchManagerforMetropolitanLifeFrancistownoffice.Beforethen,heworkedforBifmasanInvestmentAccountant.Mr.MmolaigraduatedwithaBCom (Finance) fromMacquarieUniversityinAustraliaand isanAccreditedMemberof theComplianceInstituteofSouthernAfrica.
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COMPANY STRUCTURE
Board
Human Resource Manager
Human Resource
Administrator
Receptionist
Driver
Information Technology
Manager
Database Administrator
Network System
Administrator
Finance Manager
Management Accountant
Financial Accountant
Product Development
Manager
Product Development
Officer
Listings and Trading
Manager
Listings and Trading
Officer
Monitoring and Surveillance
Officer
Market Development
Manager
Market Development
Officer
Legal and Corporate Affairs
Manager
Legal and Corporate Affairs
Officer
CSD Manager
CSD Officer
Human Resource Manager
Chief Executive Officer
Internal Auditor Executive Assistant
Deputy
Chief Executive Officer
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OUR STAFF
BackRow(righttoleft):TebogoLehubitsa,KopanoBolokwe,HiranMendis,ThapeloTsheole,JudithGabonewe,TebogoTebogo,KgosiTherego3rdRow(righttoleft):AmbrosiaKhupe,TsametseMmolai,MafokoMakhao,KelemosadiGaorengwe,LatelangChakalisa,2ndRow(righttoleft):MphoMogasha,BaboniKhupe,JusticeBakwadi,NomsaOtsogile,FrontRow(righttoleft):TapiwaTamocha,NonofoPhalatse,LameAkanyang,OnkabetsePitso
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We believe that our quest to reach new heights, does notbelong solely to us, but encompasses our communities aswell.WeunderstandthechallengesthatourfellowBatswanaface and are aware that even though people may bedisadvantaged,theystillhavegoalsandambitions.
Our initiatives are geared to ignite possibility in the livesof those less fortunate than us.We are unwavering in ourdetermination to help others reach new heights in theirpersonallivesandcommunities.
OurCorporateSocialInvestmentinitiativewassuccessfullyundertakenwiththeadoptionoftwoprimaryschoolsin2013, namely Sebele Primary School and Xakao PrimarySchool.WealsoworkedwithSassyDivaonthe‘DonateaPad’project.
GIVING BACK
Weareunwaveringinour
determinationtohelpothers
reachnewheightsintheirlives
andcommunities.
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Reaching new heights, amidst seemingly insurmountable challenges, is achieved through the strength of the collective.””
• Chairman’s Statement• Chief Executive Officer’s Review• Graphical Review• Market Statistics
COMPANY REVIEWS
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PATRICK O’FlAHERTY CHAIRPERSON
“Another achievement in 2013 was the notable rise in the number of Central Securities Depository
accounts opened with the number of accounts increasing by 13.5% to 20,027 compared to 17,638
in the previous year. This highlights the current growth of Botswana’s equity market and the
continued rise in individual investor interest and participation. This rise is furthermore indicative of
the effectiveness of the BSE’s market development initiatives during the year which strived to garner
as much participation from stakeholders as possible.”
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CHAIRPERSON’S STATEMENTDearStakeholders
IamdelightedtoreportontheremarkableperformanceoftheBotswanaStockExchange(BSE)duringtheyear2013.Despitechallengesbothregionallyandglobally,thereisnodoubtthattheBSE’soverallperformancewasaidedbytheimplementationof theAutomatedTrading System in 2012 and the continuedgradualrecoveryoftheeconomyfromtheglobalfinancialcrisisof2008.
It is pleasing to note that in the year under review the BSEregisteredthehighestturnoverlevelssinceitsinceptionin1989,recordingtotalturnoverofBWP2.3billion,orBWP9.3mperday.This is 2.6 times the turnover recorded theprevious year andapproximatelytwicetheturnovergeneratedontheBSEin2008(highestupto2013).
The Domestic Company Index (DCI) reached its highest levelsinceNovember2007,recordingasignificantincreaseof20.5%in2013(thehighestannualappreciationintheDCIsince2007).The BSE successfully launched 3 bond indices in April 2013.These were the; GovI – a government bond index, CorpI – acorporatebondindexandtheBBIwhich isacomposite indexcomprisingbothgovernmentandcorporatebonds.Thebondindices are a welcome development and have provided abenchmarkforportfoliomanagerstoevaluatetheperformanceoftheirbondportfolios.ThelaunchofthesethreebondindicesbeartestamenttotheBSE’scommitmenttoinnovationandthedevelopmentofBotswana’sbondmarket.
The BSE was instrumental in registering the Botswana BondMarketAssociationwiththeRegistrarofSocietiesinSeptember2013.Theobjectivebehindthisinitiativewastocreateaforumfor the discussion of Bond market related issues and moreimportantly, for the BSE to take into account the views ofparticipantsinitsdevelopmentstrategy.
Another achievement in 2013 was the notable rise in thenumber of Central Securities Depository accounts openedwith the number of accounts increasing by 13.5% to 20,027compared to 17,638 in the previous year. This highlights the
currentgrowthofBotswana’sequitymarketandthecontinuedriseinindividualinvestorinterestandparticipation.ThisriseisfurthermoreindicativeoftheeffectivenessoftheBSE’smarketdevelopmentinitiativesduringtheyearwhichstrivedtogarnerasmuchparticipationfromstakeholdersaspossible.
Throughouttheyear,theBSEcontinuedtoundertakeitsmarketdevelopmentoperations,particularlywiththeaimofimprovingthestateoffinancialliteracyinthecountry.Theseactivities,suchasthefar-reachingpresentationstonumerouscompaniesandparastatalsaroundthecountry,newspaperarticlesandnationalradio and television programme features; have continued tostimulateparticipation inBSE listed investmentsbyBatswana.Severalon-on-onemeetingswithprivatecompanieswerealsoconducted during the year to inform them about the listingprocess and also to communicate the benefits that could begainedbylistingontheBSE.
Theneedforthecorporatesectortoengagemeaningfullywithlocalcommunitiescannotbeoverstated.Duringtheyearunderreview, theBSEadoptedtwoprimaryschoolsandrefurbishedtheir libraries under the Adopt-A-School Initiative. This waspartoftheBSE’sinitiativetomakeameaningfulimpactonthelivesofBotswana’sfutureleaders.AnothersuccessfuloutreacheffortwasthehostingoftheBSE’sInauguralSeniorSecondarySchools’ Finance and Investment Competition. Four schoolscompetedinthe2013eventandweanticipatethatparticipationin the competition will grow extensively as the competitionprogresses.
Wehaveonceagainaccomplishedalotoverthepast12monthsand I would like to extend the BSE’s sincere gratitude to allour stakeholders, our customers, our business partners whocontinuetosupportusandourendeavorsaswelookforwardtothefuturewithinterest.
Finally, I would like to thank my fellow Main CommitteemembersandtheBSEstaffandCEO,Mr.HiranMendis,fortheircontinuedsupport,adviceandhardworkduring2013andfortheirservicetotheExchange,itsclientsanditsstakeholders.
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“All in all, 2013 has been the best year, to date. A year in which the BSE has been propelled to ‘new
heights’ in more ways than one. The strides made in 2013 are just a miniscule realization of the
latent potential that exists for the development of the capital market in Botswana. The challenge in
front of all stakeholders is how to create momentum to sustain this change. Technology is only part
of the equation. The rest involves a change in thinking on the part of all stakeholders.”
HIRAN MENdIS CHIEF EXCECuTIVE OFFICER
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CEO’S REVIEW
Botswana is a country that is richly blessed with numerouscomparativeadvantages.Ithasrichendowmentsindiamonds,minerals and other resources that are indispensable to thegrowthoftheglobaleconomy.Thecountry’swildliferesourcesand its diversity has made it a much sought after touristdestination.SomehavereferredtoBotswanaas“thelastEden”.Thisistrueinmorewaysthanone.
Botswana also has many competitive advantages that it hascreatedforitself;astableeconomy,astablepoliticalsystem,thehighestcreditratinginAfrica,thelackofexchangecontrolsandbeinganexporterofsavingsmakeBotswanasomewhatuniqueintheworldofemergingmarkets.
Thiscombinationofcomparativeandcompetitiveadvantagescreates an ideal environment for economicdiversificationnotonlyinareassuchasinthevalueadditiontodiamondsbutalsoin thecreationoffinancial services, thecenterofwhich is thecapitalmarket.
ItistakingintoaccounttheseadvantagesthattheBSEmouldedandremouldeditsstrategysince2006culminatingininitiativesover a broad spectrumof areas engulfing the capitalmarket.Broadly speaking, these pillars of development includeinfrastructure, legislation, regulation and market & productdevelopment,amongstothers.
The BSE is indeed happy to note that progress has beenachieved onmany fronts in the year 2013. Most importantlythe Automated Trading System (ATS) has helped propel theBSEforwardandgeneratearecordturnoverofP9.3Mnperdayin2013.ThishasnotonlybeenthehighestturnoverrecordedsinceinceptionoftheBSEin1989butwas2.6timestheturnoverachievedin2012andwasalmostdoubletheturnoverachievedin2008,whichuntilthatpointhadbeentheyearwiththebestperformance.
In the CEO’s Review for 2012 I stated that “reaching out toinvestorsisallaboutbuildingrelationships”.Iftheserelationshipsare only limited to a few institutional investors then clearlyautomationasastrategyhaslittlevalue.
If theATS andCentral SecuritiesDepository (CSD) systemaretocontinue tocreatevalue then“reachingout”has toextendbeyond institutional investors. The information for 2013indicates that this process has indeed commenced. Localindividualturnoverin2013morethandoubledincomparisonto2012.
The BSE’s contribution to the continuation of this processinvolves further technological developments such as websitedevelopment, introduction of Internet based trading andinformation dissemination via data vendors. The Brokers’contributiontotheprocesshastodowithproactivelyreachingouttoinvestors,retailinvestorsinparticularandsupportingthemarketdevelopmentinitiativesoftheBSE.
TheBSEtracksitsperformanceincomparisontootheremergingmarketsinordertobenchmarkitself.TheExchangeishappytonote that theBSEhasmade large strides inbridging thegapthatexistsbetween itselfandothermarketsbenchmarkedforcomparative purposes. As can be seen from Section 8.3, theBSEfootprintincomparisontotheStockExchangeofMauritius(SEM)is72.8%in2013incomparisonto35.1%in2012and24.4%in 2011. If the Pulamovementwith theUSDollar is adjustedto reflect the movement of the Mauritian Rupee against theGreenback,theBSE’sfootprintwouldincreaseto75.5%ofthatofSEM.
Further,theincreaseinliquidityandturnoverin2013wasnotattheexpenseofstability.Stabilityofturnoverinfacthasimprovedin the year under review as evidenced by the coefficient ofvariationandotherstatisticsdetailedinSection3.5.On the financial front, the BSE did not have to depend onthe Government subvention to meet its operations anddevelopmentexpenditureforthethirdconsecutiveyear.Ontheotherhand,CSDBotswana(CSDB)whichhashadtodependonthesubventionsinceitsinception,didnothavetodosoin2013.
Allinall,2013hasbeenthebestyear,todate.AyearinwhichtheBSEhasbeenpropelledto“newheights”inmorewaysthanone.
1. REACHING NEW HEIGHTS
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Thestridesmadein2013arejustaminisculerealizationofthelatentpotential thatexists for thedevelopmentof thecapitalmarketinBotswana.Thechallengeinfrontofallstakeholdersishowtocreatemomentumtosustainthischange.Technologyisonlypartoftheequation.Therestinvolvesachangeinthinkingonthepartofallstakeholders.
Onthepartof theBSE ithastodowith lookingat innovativeways and means of serving the interests of all stakeholdersand balancing the competing interests of regulation anddevelopment.
Thebrokerscannotbepassiveobserversbutneedtoproactivelyreachouttoinvestorsespeciallyindividualinvestorswhoholdthekeytoimprovingthestabilityofturnover.
Listedcompaniesneedtoseevalueinbeinglistedandhavingaccesstoalargebodyofinvestorsratherthanbeingdependentonaselectfew.Itisamistaketonarrowlydefinetheobjectivesoflistedcompaniesbasedonwhattheydo.Alistingenablesacompanytobecomeindependentoffunctionalfocusandlookatbusiness froma farmorecomplexperspective. Itpromotesgood governance and enables the process of financialdisintermediation, thus creating the environment to createcompetitiveadvantagesandopportunitiesforgrowththatmaynothavebeenpossibleifitremainedunlisted.
Itisonlythroughtheinteractionofthevariousstakeholdersandeachappreciatingtheother’sresponsibilitiesthattherequiredmomentumcanbecreatedtosustainthechange.
2. ECONOMIC BACKDROP
2.1 World Economy
The International Monetary Fund’s (IMF) World EconomicOutlookupdatereleasedinJanuary2014,hasestimatedworldoutputtohaveexpandedby3.1%in2012,downfrom3.9%in2011. Global output is projected to expand by 3.0% in 2013,beforerecoveringslightlytogrowby3.7%in2014,underpinnedlargelybytherecoveryinadvancedeconomies.
Growth in advanced economieswas estimated to be 1.3% in2013comparedto1.4% in2012.Projections for2014 indicatethat advanced economies are expected to recover modestly
andregisteragrowthof2.2%duetoexpectationsofcontinuedaccommodativemonetarypolicyandfiscalconsolidation.
Emerging markets weakened slightly in 2013 with growthdecliningfromanestimated4.9%in2012to4.7%in2013.Therecoveryinemergingmarketsisforecastedtogetunderwayin2014withoutputexpectedtogrowby5.1%primarilyliftedbystrongerexternaldemandfromadvancedeconomies.
The update reiterates the downside risks to the forecastsdiscussed intheWorldEconomicOutlookreleased inOctober2013.Emergingeconomiesareverymuchatriskofcapitalflowvolatilitygiven that theFed (USCentralBank) is likely tostarttaperingitsmonetarystimulusin2014exertingupwardpressureon interest rates. This, combined with domestic weaknesses,could result incapitalflight toadvancedeconomiesandspurexchange rate volatility, in the process dampening growthprospectsforemergingmarkets.
2.2 Botswana Economy
The latest economic data for Botswana shows that in realterms,GDPgrewby5.9%in2013comparedtoarevised4.3%in2012. According toStatisticsBotswana, theacceleration inreal GDP growth in 2013 was mainly attributable to mining,which recorded an increase in value added of 10.6%. Theincrease inmining outputwas a reflection of the recovery indiamondproductionwhichwassubdueddueto lowdemandin2012.Miningremainedamajorcontributor toGDPwith itscontributionrisingto22.4%in2013comparedto19.9%in2012.
According to the 2014/2015 Budget Speech, the Ministry ofFinanceandDevelopmentPlanning(MFDP)hasestimatedthatrealGDP is expected togrowby5.1% in2014, fuelledby theexpectedgrowth innon-mining sectors such asTrade,Hotels&RestaurantsandFinance&Business sectors. It isnoted thattherelocationoftheDiamondTradingCentrefromLondontoGaboroneattheendof2013isexpectedtocontributepositivelyto theprospectsofgrowthof thedomesticeconomy,despitethe uncertainty that still exists in the external demand fordiamonds.However,forthemostpart,growthinthedomesticeconomy will continue to be guided by the recovery of theworldmarketgivenBotswana’sdependenceondiamonds.
Domestic inflation averaged 4.1% in 2013 in comparison to7.4%in2012.Thelowerinflationin2013reflectedthegeneral
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slowdowninpriceincreases.SinceJune2013,inflationhasbeenwithin theBankofBotswana’s (BoB)objective rangeof3% to6%.
On the back of the positive medium term inflation outlook,BoBpursuedanaccommodativemonetarypolicyduring2013,reducing the bank rate from 9.5% by a cumulative 200 basispoints(2%)betweenMayandDecember2013.During the yearunder review, thePuladepreciatedby 10.8%and14.9%againsttheUSDollarandtheEurorespectivelyandappreciatedby9.7%againsttheSouthAfricanRand.
According to the 2014/2015 Budget Speech, the subdueddemandfordiamondsbyadvancedeconomiesandtheslowinggrowth of emerging economies will negatively impact therecoveryintheminingsector.Inadditiontotheuncertaintyoftheminingrevenues,thedomesticeconomyisalsosusceptibletoshockstoSACUrevenuesandthiscouldhaveabearingonthe forecasted revenues and expenditure for 2014/2015. Therevenuefromthesetwosourcescollectivelyaccountedforover60%oftotalrevenuesin2013.
2.3 Implications for Capital Markets
It is expected that the forecasted increase in Governmentexpenditure, as reflected in the 2014/2015 Budget Speech,wouldstimulateprivatesectoreconomicactivitywhichisalsolargelydependentonGovernmentspending.
Itisexpectedthatanenvironmentoflowpredictableinflationwillallowforpositiverealinterestrateswhich,inturn,couldfostermobilisation of financial savings and productive investment.In particular, investors are expected to continue to seek realreturns in alternative investments such as in listed securities.
In 2013, the BSE embarked on a strategy to develop GlobalDepository Receipts (GDRs) which would enable equities offoreignlistedcompaniestobelistedandtradedontheBSE.Asthe global economy continues to recover, local investors willbebetterpositionedtodiversifyandbenefitfromexposuretointernationalstocksusingtheBSEasaconduittogainexposuretosuchmarkets,throughGDRs.
As stated in the 2014/2015 Budget Speech, Governmentintends toprivatisesomeof thestateownedentities in2014.The anticipated listing of the Botswana TelecommunicationsCorporation (BTC)andtheNationalDevelopmentBank (NDB),
will promote citizen economic empowerment and contributetoeconomicdiversification.TheBSEwelcomesthisprocessasitwilladdtoanincreaseinmarketcapitalisationandliquidityoftheBSEanddeepenthecapitalmarket.
3. EQUITY MARKET PERFORMANCE
3.1 Domestic Company Indices
TheDomesticCompany Index(DCI)closedtheyearat9,053.4points, its highest level since 21 November 2007, recordingan increase of 20.5%.This is the highest annual appreciationin the DCI since 2007. The performance of the DCI in 2013,overshadowed its performance in 2012 when the DCIappreciated by 7.7%. The DCI signalled a recovery from theeffectsofthefinancialcrisisin2008whenitregisteredapositivegrowthin3consecutiveyearsuptoandincluding2013.
Themodest appreciation in theDCI towards the endof 2012resultedintheDCIpickingupmomentuminQuarter1of2013,leading to an increase of 11.8%.The DCI further appreciatedby3.4%inQuarter2,beforeexperiencingadeclineof1.1%inQuarter3.InQuarter4,theDCIgained5.3%.
AnanalysisofthedifferencebetweentheDCIandtheDomesticCompany Free Float Index (DCFFI) and the relative impact ofdividendsandliquiditywhichaccountedforthedifferencewascarried out by computing a new index which measured thereturnsoftheconstituentsoftheDCIonamarketcapitalisationweightedandtotal returnbasis.Thenew indexcomputed forthepurposeofanalysisistheDCITotalReturnIndexorDCI(TRI).
All dividends paid during the year have been input into thecomputationoftheDCI(TRI)assumingtheex-dividenddateofthepaymentofsuchdividendsasbeing31December2013.ThishasbeendonetoeasethecomputationoftheDCI(TRI)forthepurposeofthisanalysis.
The difference of the percentage change between the DCIandtheDCI (TRI)canbeexplainedbythedividend impactastherelativeweightsused for thecomputationofboth indicesarebasedonmarket capitalisation. In contrast, thedifferencebetween the DCFFI and the DCI (TRI) explains the liquidityimpactofthepercentagechangeasbothindicesarecomputedtakingintoaccounttotalreturns.
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TheDomesticFinancialSectorIndex(DFSI)appreciatedby
in201317.0%
REACHING NEW HEIGHTS
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AcomparisonoftheDCIandtheDCFFIisdetailedinChartAofFigure1.Thedifferencebetweentheappreciationof23.3%and20.5%intheDCFFIandtheDCIcanbeexplainedbyadividendimpactof4.4%andaliquidityimpactofanegative1.6%.
The Domestic Financial Sector Index (DFSI) appreciated by17.0% in 2013 in comparison to a growth of 22.0% in theDomesticFinancialServicesFreeFloatIndex(DFSFFI).Itisnotedthat the Financial Services sector is the largest component intheDCIandDCFFI.
Chart B of Figure 1 further confirms the impact the differentindexcomputationmethodologieshavehadonthemovement
oftheindices.Inthiscasethedifferenceof5percentagepointsbetweentheDFSIandDFSFFIcanbeattributedtotheliquidityimpactinherentintheDFSFFIsincebothindicesarecomputedusing total returns thus negating any influenceof a dividendimpact.
AfurtheranalysisoftheliquidityimpactbetweentheDCIandDCFFIrevealsthatthefinancialsector’sliquidityimpactwas5%whereas the liquidity impact of the other sectors included intheDCIwasnegative6.6%.This indicatesthatthemoreliquidcompaniesinthefinancialsectorcontributedtoanappreciationofpricesincomparisontoothersectorswhichsawtheoppositeeffect.
Figure 1: Performance of Indices Computed on Domestic Companies
Weighting Returns Annual 2013Quarterly
MarketCap
Liquidity CapitalGains
TotalReturn
2012 2013 Q1 Q2 Q3 Q4
DCI 7,510.2 9,053.4 8,400.0 8,688.5 8,594.9 9,053.4
%Change 7.7 20.5 11.8 3.4 (1.1) 5.3
DCFFI 2,143.7 2,643.7 2,592.7 2,496.0 2,456.2 2,643.7
%Change 12.5 23.3 20.9 (3.7) (1.6) 7.6
DCI(TRI) N/A 24.9 N/A N/A N/A N/A
DFSI 911.8 1,067.1 1,035.9 1,057.7 1,018.4 1,067.1
%Change 5.7 17.0 13.6 2.1 (3.7) 4.8
DFSFFI 3,199.1 3,901.3 3,993.3 3,750.7 3,600.1 3,901.3
%Change 13.2 22.0 24.8 (6.1) (4.0) 8.4
Source: BSE
CHART A: DCI vs DCFFI CHART B: DFSI vs DFSFFI
95
100
105
110
115
120
125
130
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
DFSI DFSFFI
98
103
108
113
118
123
128
133
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
DCI DCFFI
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TheDomesticCompanyIndex(DCI)appreciatedby
in201320.5%
REACHING NEW HEIGHTS
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3.2 Foreign Company Indices
The Foreign Company Index (FCI) depreciated by 1.0% inQuarter 1, andby0.2% inQuarters 2 and3.TheFCIhoweverappreciatedby0.3%inQuarter4.Asat31December2013theFCIhaddeclinedby1.0%toclosetheyearat1,583.5points
comparedtoadepreciationof6.1% in2012.Asseen inChartCinFigure2,theForeignResourcesSectorIndex(FRSI)closelyreflectedthegrowthpatternfollowedbytheFCIgiventhatthelargestsectorincludedintheFCIistheResourcessector.
Figure 2: Performance of Indices Computed on Foreign Companies
Weighting Returns Annual 2013Quarterly
MarketCap
Liquidity CapitalGains
TotalReturn
2012 2013 Q1 Q2 Q3 Q4
FCI 1,599.5 1,583.5 1,584.3 1,581.2 1,578.8 1,583.5
%Change (6.1) (1.0) (1.0) (0.2) (0.2) 0.3
FRSI 731.9 720.3 724.3 722.3 721.1 720.3
%Change (7.4) (1.6) (1.0) (0.3) (0.2) (0.1)
Source: BSE
CHART C: FCI vs FRSI
98.2
98.4
98.6
98.8
99
99.2
99.4
99.6
99.8
100
100.2
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
FCI FRSI
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BOTSWANA STOCK EXCHANGE Annual Report 2013
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3.3 Local Asset Sector Companies
TheLocalAssetStatus Index (LASI)andtheLocalAssetStatusFreeFloatIndex(LASFFI)compriseofalldomesticcountersandforeigncompanies thathavebeenawarded localasset status.Bothindicesaretotalreturnindicesandthedifferencebetweenthe performances of the 2 indices is solely explained by theweightingmethodology.
In 2013, the LASI’s appreciation of 1.1% against the LASFFI’sappreciationof22.4%canbeexplainedbytheperformanceofliquid domestic companies. The appreciation of 22.4% in theLASFFIislargelyattributabletotheappreciationof23.3%intheDCFFIasthemajorityofdomesticcompaniesintheDCFFIcontributeasignificantproportionoftheLASFFI.
Fromaliquiditystandpoint,theimpactoflargecompaniesbymarket capitalisation, such as Anglo American, is minimizedin the computation of LASFFI whereas it remains significantintheLASI.ThemutedperformanceoftheLASIcanthereforebeattributed to theperformanceofAngloAmerican. In2013Angloconstituted88.1%ofthetotalmarketcapitalisationoftheLASIanditssharepriceontheBSEdidnotchange.AsaresultthegoodperformanceoftherestoftheconstituentsoftheLASIwasweigheddownbytheinertiaofAnglo,resultingintheLASIonlyappreciatingby1.1%.
Chart D: LASI vs LASFFI
Figure 3: Performance of Indices Computed on Local Asset Companies
Weighting Returns Annual 2013Quarterly
MarketCap
Liquidity CapitalGains
TotalReturn
2012 2013 Q1 Q2 Q3 Q4
LASI 752.7 760.8 754.1 755.3 753.4 760.8
%Change (5.4) 1.1 0.2 0.2 (0.3) 1.0
LASFFI 1892.1 2315.3 2268.4 2179.8 2149.6 2315.3
%Change (12.8) 22.4 19.9 (3.9) (1.4) 7.7
Source: BSE
98
103
108
113
118
123
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
LASI LASFFI
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3.4 Sector Contributions to Performance of the DCI and the FCI
Figure 4 details the analysis of sector contributions to theperformance of the DCI and the FCI. As can be deduced,all sectors other than Information Technology and SecurityServices,contributedpositivelytothe20.5%growthintheDCI.
In2013,theBankingsectorwasthedominantsectorcontributing8.1 percentage points to the growth in the DCI. This sectorhasgreatlyinfluencedtheDCIin2010and2011andwasonlyovershadowedbytheRetail&Wholesalingsectorin2012whichin 2013was the second largest contributor at 7.2percentagepoints.AscanbeseenfromFigure4,FinancialServices,Retail&WholesalingandBankingsectorshaveaccountedforover90%ofthegrowthintheDCI.Thisisnotsurprisinggiventhatthese3sectorsarethemostliquidandaccountformorethan84.2%ofthedomesticmarketcapitalisationoftheBSE.
ThecontributionbytheBankingsectorismainlyattributedtotheappreciationinthesharepriceofFNBB.Atcompanylevel,the share price of FNBB appreciated by 43.9%, resulting in acontributionof8.2percentagepointstotheoverallgrowthof20.5%oftheDCI,despiteotherstockshavingappreciatedmorethanFNBBin2013.FNBB’scontributionwasunderpinnedbyitshighweightageintheDCIin2013.
Choppieswas the secondbest contributor to theDCI,with acontributionof3.9percentagepoints.Letshego,whichwasthemostliquidstockin2013,wasthethirdhighestcontributorat3.3 percentage points. In addition to these companies, othermaincontributorstotheDCIwereSefalanaandSechabawhichcontributed1.6%and1.3%respectively.
In2013,thetop5companiesaccountedfor89.1%ofthegrowthintheDCIincomparisonto86.0%in2012.
On the Foreign Equity Board the Mining & Minerals sectorcontinued its dominant influence on the performance of theFCI.Thissectorcontributedanegative1.03%andoutweighedtheFinancialServicessector’scontributionofapositive0.03%.ThisresultedintheFCIdepreciatingby1.01%.
ThisisnotsurprisinggiventhatthemarketcapitalisationoftheMining&Mineralssectoraccountedfor95.2%of total foreigncompanies’marketcapitalisationin2013,andthattheFCI isamarketcapitalisationweightedindex.
Figure 4: Sector Contributions to Performance of the DCI and the FCI
2013
DomesticBoard 2012 2013 Q1 Q2 Q3 Q4
FinancialServices 2.36 3.34 3.77 0.68 -0.99 0.23
Retail&Wholesaling 3.29 7.22 3.02 0.97 1.29 3.11
Property 0.95 1.10 0.06 0.09 0.20 0.80
Banking 1.35 8.14 5.20 1.71 -1.51 0.29
InformationTechnology 0.01 -0.03 -0.00 -0.00 0.00 -0.03
SecurityServices -0.03 -0.57 -0.00 -0.04 -0.30 -0.44
Tourism -0.39 0.17 -0.35 -0.09 -0.01 0.65
Energy 0.25 0.81 0.11 0.09 0.25 0.48
FuneralServices -0.04 0.36 0.05 0.03 -0.01 0.24
DCI 7.74 20.55 11.85 3.43 -1.08 5.33
ForeignBoard
FinancialServices 3.03 0.03 0.00 0.00 0.00 0.00
Mining&Minerals -9.16 -1.03 0.00 0.00 0.00 0.00
FCI -6.13 -1.01 -0.95 -0.20 -0.15 0.30Source: BSE
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3.5 Liquidity
Figure5detailstheturnoverandliquidityontheBSEsince2009.The average daily turnover for 2013 was P9.3 Mn per day incomparisontoP3.6Mnin2012andP4.1Mnin2011.Thevolumeofsharestradedin2013wasarecord710.5Mnincomparisonto 409.9Mn in 2012 and 458.7Mn shares in 2011.Themaincontributorstoturnoverin2013wereLetshegoandChoppies.
Theyear2013standsoutastheyearinwhichtheBSEregisteredthehighestturnoversinceitsinceptionin1989.Theamountofturnoverin2013isalmostdoubletheturnoverrecordedontheBSEin2008(highestupto2013)andis2.6timestheturnoverin2012.Thevolumeofsharestradedin2013was1.7timesthevolumein2012.Theyear2013canalsobedescribedasayearinwhichthestabilityofturnovercontinuedto improve,albeitmarginally.
The coefficient of variation of turnover was lowest in 2013,further compounding that stability of turnover has indeedimproved. From the BSE’s point of view this is a welcomedevelopmentsinceturnoverwasgeneratedinamoreconsistentmanner,anindicationofthegrowingsustainabilityinliquidity.
ItcanbeobservedthattradingactivityintermsofvolumeandvalueofsharestradedwashighestinQuarter4incomparisonto the other quarters of 2013. The average daily turnover ofP13.8MnperdayachievedinQuarter4of2013isthehighestturnoverachievedinanyQuarterinthehistoryoftheBSE.Thiswas largely due to the turnover generated from transactionsin Choppies. Choppies generated a turnover of P204.4Mn inQuarter4throughthetransactionof66.8Mnshares.
Figure7 shows the LorenzCurveanalysis for turnover for theyears2010to2013.InthiscontexttheLorenzCurveanalysisisused to illustrate the relative dispersion of turnover from theaveragedailyturnoverfortheseyears.Thelessconvexthecurverelativetothelineofzerodispersion,theloweristhedispersionand consequently the more stable the turnover. The LorenzCurveprovidesfurthersupporttothedeductionthatturnoverwasmore stable in 2013 in comparison to the other years asseenfromChartAinFigure7.
Fromanalternativepointofview,thepercentagecontributiontoturnoverbycompaniesonacumulativebasisshouldreflectthepercentageofthenumberofcompaniesfromwhichsuchturnoverisgenerated.ThisanalysisisdetailedinChartBofFigure
Figure 5: Indicators of Liquidity: 2009 to 2013
Indicators 2009 2010 2011 2012 2013
Turnover(P'Mn) 763.8 962.8 1,007.9 894.7 2,315.4
AverageDailyTurnover(P'Mn) 3.1 3.9 4.1 3.6 9.3
Turnover/AverageMarketCap(%) 2.7 3.5 3.5 2.7 5.9
StandardDeviation 7.7 8.6 13.5 6.9 15.9
CoefficientofVariation(CoV) 2.5 2.2 3.3 1.9 1.7
No.ofSharesTraded(Mn) 167.6 308.7 458.7 409.9 710.5
SharesTraded/SharesListed(%)Note1 2.9 3.9 4.8 4.3 6.3Note 1: For Domestic Companies and based on average shares traded
Source: BSE
Figure 6: Quarterly Market Turnover: 2013
Indicators Quarter1 Quarter2 Quarter3 Quarter4
Turnover(P’Mn) 250.8 684.1 510.4 870.1
AverageDailyTurnover(P‘Mn) 4.1 11.0 8.2 13.8
Turnover/AverageMarketCap(%) 0.7 1.8 1.1 2.0
StandardDeviation 6.4 11.8 9.5 23.5
CoefficientofVariation 1.6 1.1 1.4 1.7
No.ofSharesTraded(Mn) 99.8 229.3 134.5 246.9
SharesTraded/AverageSharesListed%)Note1 0.9 2.0 1.1 2.2Note 1: For Domestic Companies
Source: BSE
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Figure 7: Analysis of the Stability of Turnover using the Lorenz Curve
0
10
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60
70
80
90
100
0 10 20 30 40 50 60 70 80 90 100
Cum
ulat
ive
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)
Cumulative Turnover (%)
Line of Zero Dispersion 2013 2012 2011 2010
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Cum
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Cumulative % of Number of Companies
Line of Zero Dispersion 2010 2011 2012 2013
CHART B: Cumulative % Contribution of Turnover by Companies: 2010 to 2013
CHART A: Cumulative % Frequency of Turnover: 2010 to 2013
Source: BSE
7.AscanbeseenfromChartBofFigure7thecontributiontoturnoverbycompanieswasmarginallymoreevenlydistributedin2013,incomparisontopreviousyears.AlthoughtheFinancial
Services sector continues to be the dominant sector in thisregarditisnoted,thattheturnovercontributedbyothersectorssuchasBankingandRetail&Wholesalinghasimprovedin2013.
CumulativeFreq
uenc
y(%
)Cu
mulative%ofTurno
ver
CumulativeTurnover(%)
Cumulative%ofNumberofCompanies
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Figure8depictsthetrend inaveragedaily turnoveroverthemediumand long term.For thepurposeof this analysis, themedium term trendwas defined as the period 2005 to 2013whereasthelongtermwasdefinedastheperiod2000to2013.
The results as presented in Chart A of Figure 8 show thatthe average daily turnover of P9.3 Mn achieved in 2013 haspositively impacted the medium term trend by shifting thetrendupwards.As canbe seen fromChartAof Figure 8, the
Figure 8: Analysis of Medium and Long Term Average Daily Turnover TrendCHART A: Medium Term Trend of Average Daily Turnover: 205-2012 compared with 2005
CHART B: Long Term Trend of Average Daily Turnover: 2000-2012 compared with 2000-2013
Source: BSE
y = 2E-‐100e0.1148x R² = 0.64243
y = 1E-‐111e0.1278x R² = 0.6527
0
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2
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4
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8
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10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Aver
age
Dai
ly T
urno
ver (
P' M
n)
Year
Long Term Trend for the Period 2000 to 2012 Long Term Trend for the Period 2000 to 2013
y = 6E-‐138e0.1578x R² = 0.63123
y = 2E-‐165e0.1893x R² = 0.68239
0.0
1.0
2.0
3.0
4.0
5.0
6.0
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2005 2006 2007 2008 2009 2010 2011 2012 2013
Aver
age
Dai
ly T
urno
ver (
P' M
n)
Year
Medium Term Trend for the Period 2005 to 2012 Medium Term Trend for the Period 2005 to 2013
Averag
eDailyTurno
ver(P’Mn)
Averag
eDailyTurno
ver(P’Mn)
Year
Year
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forecast turnover for 2013 using the trend computed for theperiod2005to2012isP5.9MnincomparisontotheP7.0Mnasperthetrendcomputedfortheperiod2005to2013.Over the longterm, theaveragedaily turnoverof P9.3Mn in2013hasresultedinashiftinthetrendfromP5MnperdaytoP5.6Mnperday.
In order tomaintain the upwardmomentum of themediumtermtrendanaveragedailyturnoverofatleastP8.4Mnperdaywillneedtobeachievedin2014.
InordertosustainthelongtermtrendanaverageturnoverofP6.3Mnperday,attheminimum,willneedtobeachievedin2014.
Source: BSE
Figure 9: Average Daily Turnover Trend Analysis: Pre and Post Financial Crisis
CHART A: Average Daily Turnover and Trend: 2005 to 2008
CHART B: Average Daily Turnover and Trend: 2009 to 2013
Averag
eDailyTurno
ver(P’Mn)
Averag
eDailyTurno
ver(P’Mn)
Year
y=0.3095x+0.109R2=0.7943
Year
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2005
6.0
2.0
4.0
0.0
16.0
12.0
8.0
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14.0
10.0
6.0
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2006 2007 2008
y=0.3181x+1.4462R2=0.3658
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2009 2010 2011 2012 2013
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ChartAof Figure9presents the analysisof the averagedailyturnover on a quarterly basis from 2005 to the start of thefinancialcrisisin2008.Thequarterlyturnovertrendduringthepost-financialcrisisperiodisshowninChartBofFigure9.
AscanbeseenfromChartsAandBofFigure9thegrowthinaveragedailyturnoveronaquarterlybasiswasmorestableandconsistentinthepre-financialcrisisperiod.Thisisdepictedbytheclosenessofthedistribution ofturnovertothetrendline
Figure 10: Analysis of Average Daily Turnover and Monthly Contribution to Turnover
CHART A: Yearly Average Daily Turnover Distribution: 2009-2013
CHART B: Quarterly Average Daily Turnover Distribution: 2012-2013
CHART C: Monthly Average Daily Turnover Distribution (P’Mn): 2011-2013
Source: BSE
0
5
10
15
20
25 JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC 2013 2012 2011
-
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10.00
2009 2010 2011 2012 2013 M
ean-
to-M
edia
n Ra
tio (
times
)
Turn
over
( P'
Mn)
Average Daily Turnover Median Turnover
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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013
Mea
n-to
-Med
ian
Ratio
( tim
es)
Turn
over
( P'
Mn)
Average Daily turnover Median Turnover Mean to Median Ratio
Turnov
er(P
’Mn)
Mean-to-M
edianRa
tio(tim
es)
Turnov
er(P
’Mn)
Mean-to-M
edianRa
tio(tim
es)
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and by the higher coefficient of determination or R-squared.Essentially,therandomnessofturnoverwasminimalinthepre-financialcrisisperiod.
The post-financial crisis periodwas characterized by a highlydisperseddistributionofquarterlyturnover,especiallyasfromQuarter2of2011.
From this period up to Quarter 1 of 2013 turnover remainedbelowthetrendline.MoreevidentrecoverybeganinQuarter2of2013.
Figure10depictsthedistributionofturnoverasmeasuredbythemeanandmedianturnover.Thefigurealsoshowsthestabilityofturnoverasmeasuredbythemeantomedianturnoverratio.Generally,thevariationbetweenthemeanturnoverandmedianturnoverhasnarrowedovertheyears,implyingthatstabilityhasindeedimproved.
Ascanbenoted,themeantomedianturnoverratiohasbeenonadownwardtrendsince2011reachingitslowestpointin2013.Themeantomedianratio in2013was2.7timescomparedto3.4timesin2012.
The cob-web diagram in Chart C of Figure 10 indicates therandomness of monthly turnover over the past three years.Inorder to sustain the stabilityof turnover it is ideal that thepercentage contribution to turnover remains sticky at levelsthatwouldresembleaweblikeshape.Inthepastthreeyearsitcanbenotedthatmonthlypercentagecontributiontoturnoverhasbeenratherrandomthanuniform.
3.6 Sector Contributions to Liquidity
AscanbeseenfromFigure11theliquidityoftheBSEishighlyconcentratedondomesticcounters.Intermsofthenumberofsharestraded,theFinancialServicessectorwasthemostliquidsectorontheBSEforthefourthyearrunning.Atotalof261.1MnsharesweretradedintheFinancialServicessectorofwhich91.0%weretradesonaccountofLetshego.
Letshego’s overall dominance in terms of shares traded hasgradually reduced over the past years. In 2013, Letshegoaccounted for 33.5% of all shares traded on the DomesticBoardincomparisonto54.7%in2012and68.7%in2011.Thisisapositivedevelopmentasitshowsthatliquidityisgraduallyspreadingacrossdifferentcounters.
Figure 11: Sector Contributions to Liquidity: 2012 and 2013
2012 2013
Turnover/AvgMarketCap(%)
SharesTraded(Mn)
SharesTraded/
AvgSharesListed(%)
Turnover/AvgMarketCap(%)
SharesTraded
(Mn
SharesTraded/
AvgSharesListed(%)
Note1 Note2 Note1 Note2 Note1 Note2 Note1 Note2
DOMESTIC
FinancialServ. 1.26 0.10 229.99 10.18 2.02 0.19 261.1 10.78
Retail 0.37 0.03 50.96 4.04 1.53 0.15 159.3 7.49
Property 0.29 0.02 57.28 5.04 0.45 0.04 100.8 5.71
Banking 0.63 0.05 46.35 1.19 1.54 0.15 133.9 3.38
IT 0.00 0.00 1.53 4.85 0.00 0.00 0.00 0.10
SecurityServ. 0.03 0.00 1.49 3.38 0.01 0.00 0.54 0.68
Tourism 0.02 0.00 4.65 0.92 0.05 0.00 10.5 2.07
Energy 0.02 0.00 1.26 0.79 0.05 0.00 2.37 1.49
FuneralServ. 0.06 0.00 13.32 11.06 0.20 0.02 39.7 32.87
FOREIGN
FinancialServ. 0.00 0.00 0.56 0.01 0.00 0.00 0.00 0.00
Mining 0.00 13.63 2.54 0.07 0.00 0.00 2.13 0.04Note 1: Computed separately for the domestic & foreign board.
Note 2: Computed for all shares listed on the BSE
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Figure 12: Liquidity Indicators Pre & Post ATS Implementation: 2012 - 2013
Pre-ATS Post-ATS 2012 2013
4Jan2012to22Aug2012
24Aug2012to31Dec2012
AverageDailyVolume(Mn) 1.3 2.3 1.7 2.9
AverageDailyTurnover(P’Mn) 2.9 4.9 3.6 9.3
StandardDeviationofTurnover 5.5 8.7 6.9 15.9
CoefficientofVariationofTurnover 1.9 1.8 1.9 1.7
LiquidityRatioNote1 1.4 1.2 2.7 5.8Note 1: Based on Average Domestic Market Cap
Source: BSE
3.7 Impact of the ATS on Liquidity
Arguably the single most important development that hascontributed to an increase in liquidity is the implementationof theATS inAugust2012. Inorder tounderstandthe impacttheATShashadonliquidity,acomparisonwasmadepreandpost theATS implementation.The statistics examined for thispurposearedepictedinFigure12.
As can be noted from Figure 12, the average daily turnoverincreased from P2.9 Mn pre-ATS to P4.9 Mn following theimplementation of the ATS in 2012. Average daily volume ofsharesalsoincreasedfromP1.3Mninthepre-ATSperiodtoP2.3Mnpost-ATSin2012.ThestatisticsdepictedinFigure12for2013
furthersubstantiatesthedeductionthattheimplementationoftheATScontributedsignificantlytoliquidityandalsotostabilityofturnover.
It is noted that the ATS is still in its infancy, having beenimplementedforscarcely16months.Assuch,itisexpectedthattheATS’impactonliquiditywillneedtobeobservedoveralongerperiodbeforeamoreconclusivedeterminationcanbemadeastoitsimpactonliquidity.
3.8 Investor Contribution to Equity Turnover
Localinstitutionalinvestorsaccountedfor59.8%ofturnoverin2013,maintainingtheirdominantpositionfrom2012. In2012
Figure 13: Local Investor Contribution to Turnover Pre & Post ATS Implementation
Pre-ATS Post-ATS 2012 2013
Jan2012toJuly2012
Sep2012toDec2012
AverageDailyTurnover(P’000) 297.0 555.4 382.1 813.0
ContributiontoTurnover(%) 10.4 10.9 10.6 8.7Source: BSE, CSDB
Figure 14: Investor Contribution to Turnover: 2010 to 2013
Investors Turnover(%)2011 Turnover(%)2012 Turnover(%)2013 %ContributiontoLiquidity
ForeignCompanies 46.2 39.0 29.0 1.7
ForeignIndividuals 2.5 2.5 2.2 0.1
LocalIndividuals 5.9 10.6 8.7 0.5
LocalCompanies 44.7 47.5 59.8 3.5
Brokers 0.7 0.3 0.3 0.0
TOTAL 100.0 100.0 100.0 5.9
Source: CSD Botswana
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Figure 15: Investor Contribution to Turnover on a Quarterly Basis
Investors 2012 2013
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
ForeignCompanies 31.0 28.6 47.1 44.8 39.3 24.2 26.4 29.5
ForeignIndividuals 2.4 2.2 3.2 2.4 8.1 1.7 2.4 0.8
LocalIndividuals 7.1 15.3 8.6 10.7 7.1 7.6 3.0 12.9
LocalCompanies 58.8 53.5 40.8 42.0 44.9 66.4 68.0 56.5
Brokers 0.8 0.4 0.3 0.1 0.6 0.1 0.2 0.3
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0Source: BSE, CSDB
Figure 16: Net Purchases/ (Sales) of the top 5 Counters Contributing to Turnover Analysed by Investor Category (P’ Mn): 2013
Investors Quarter1 Quarter2 Quarter3 Quarter4 2013
Brokers 0.88 0.05 0.46 (0.55) 0.84
ForeignIndividuals (29.75) (10.36) (0.75) (6.58) (47.44)
ForeignCompanies 65.21 167.10 39.93 292.42 564.66
LocalIndividuals (15.27) (34.68) (5.80) (184.43) (240.18)
LocalCompanies (21.08) (122.10) (33.83) (100.86) (277.87)Source: BSE, CSDB
local institutional investors contributed 47.5% to turnoverfrom44.7% in 2011. Local individual contribution to turnoverin2013was8.7%.Participationbylocalindividualinvestorshasincreasednearly threefoldover thepastfiveyears from3% in2008to8.7%in2013.
Overthepastthreeyears,localindividualinvestorcontributionto turnover has averaged 8.4%. The growth in retail investorparticipation is awelcome indication of financial inclusion ofcitizens in theeconomyof thecountry.However,Botswana isstillwaybehindcountriessuchasMauritiusandAsianEmergingMarketsifacomparisonwastobemadeofindividualinvestorparticipation intheCapitalMarket.Themainreasonforthis isthelackoffinancialawarenessandopportunitiesforinvestment.Although,institutionalinvestorsstill“crowd-out”retailinvestorsin periods of rising liquidity, the BSE is happy to note thatturnover generatedby individual citizens, inmonetary terms,increasedsignificantlyintheyearunderreviewrelativeto2012.Thisisanindicationofincreasedparticipationoflocalindividualcitizensinthestockmarket.
In 2013, local individual investments in the BSE more thandoubled and totalled P201.7 Mn as measured by theircontributiontoturnover,anincreaseof111.4%incomparisonto2012.
AnanalysisofinvestorcontributiontoturnoveronaquarterlybasisisshowninFigure15.
AscanbeseenfromFigure15,foreigncompanyparticipationinBSEtradingactivityincreasedto29.5%inQuarter4showingasteadyimprovementinparticipationfromQuarters2and3.Thelocalcompanycontributionwasdominant inall fourQuartersof2013.
Figure 16 below analyses turnover generated from the top5 traded companies in 2013 and investor contribution totransactions.ThesecompanieswereLetshego,Choppies,FNBB,BIHL and Sechaba. The analysis presents the net purchaseswhere net purchases is defined as total purchases less totalsales.
Theanalysisindicatesthatthe5companiesattractedsignificantforeigninvestor interest in2013asforeignerswerenetbuyersof these domestic companies. Further analysis shows that93.0%(P564.7Mn)oftheforeigncompanies’netpurchaseswereconcentratedonthese5companies.Intotal,foreigncompaniesspentanetP42.6MnbuyingotherstocksotherthanLetshego,Choppies, FNBB, BIHL and Sechaba. On the other hand, localinstitutionalinvestorswereactiveacrossalllistedcounters.
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Note: The contribution to turnover in 2012 is indicated in parenthesis
Source: CSD Botswana
CHOBE:0.0%(0.0%)
NGAMILAND:0.1%(1.4%)
NORTH-EAST:0.1%(0.6%)
GHANZI:0.1%(0.5%)
FRANCISTOWN:0.8%(2.2%)
GABORONE:86.2%(73.8%)
KGATLENG:3.9%(3.5%)
KGALAGADI:0.2%(0.4%)
KWENENG:1.2%(3.3%)
CENTRAL:1.4%(4.0%)
SELIBE-PHIKWE:1.5%(4.9%)
SOUTH-EAST:3.6%(1.9%)
SOUTHERN:0.8%(3.6%)
Figure 17: Retail Investor (Resident in Botswana) Contribution to Turnover by Districts in Botswana: 2012 and 2013
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FRANCISTOWN:0.8%(2.2%)
3.9 Geographical Distribution of Retail Investor Turnover
Figure 17 shows the distribution of retail investor turnoveranalysedacrossdistrictsinBotswana.Turnoverformajortownsis shown separately to avoid distortion of total turnover bydistrictinwhichthesetownsarelocated.
AscanbeseenfromFigures17and18theareasinSouth-EastBotswana, recorded a growth in contribution to turnover in2013. Investors from Gaborone, Kgatleng and the South-EastDistrictscontributedincreasinglytoturnoverin2013from2012.Thiscontinuestosupporttheconclusionthatturnoverismoreconcentrated in the Southern and Eastern parts of Botswanawhichcomprisemoreeconomicactivityinsemi-urbanvillagesrelativetotheotherdistrictsinBotswana.
AsnotedinSection10.2ofthisreview,theBSEhascontinuedto engage in market development activities in various partsof Botswana, with a view to creating greater awareness andimproving financial literacy. Market development initiativeshavebeencarriedouteveninareaswithrelativelylesseconomicactivity.The BSE is confident that in the long run, deepeningfinancialawarenesswill translate into increased retail investorparticipation in the capital market, and thus justify theinvestmentinbothtimeandresourcesexpendedbytheBSEto“reachout”toinvestors.
Figure 18: Retail Investor Contribution to Turnover by District: 2012 and 2013
District 2012 2013
Turnover(P’Mn) Turnover(P’Mn) %Change
Gaborone 70.328 168.818 140.0
Selibe-Phikwe 4.689 2.991 (36.2)
Francistown 2.100 1.602 (23.7)
Southern 3.434 1.628 (52.6)
Kgatleng 3.303 7.584 129.6
SouthEast 1.774 6.972 293.1
Kweneng 3.175 2.366 (25.5)
Central 3.803 2.835 (25.5)
NorthEast 0.555 0.093 (83.2)
Chobe 0.018 0.091 405.6
Ngamiland 1.301 0.290 (77.7)
Ghanzi 0.480 0.109 (77.3)
Kgalagadi 0.364 0.466 28.0
Note: Turnover by local individual investors resident outside Botswana was P0.091 Mn and P5.845 Mn in 2012 and 2013 respectively
Source: CSD Botswana
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4.1 Global ETF Landscape
AccordingtoBlackRock’s“ETPLandscape”,anExchangeTradedProduct (ETP) Research Report, (December 2013), the globalETPindustrycontinuedtogrowin2013asinvestorscontinuedto seekefficient, tailormade instruments toaccessdiversifiedmarketsandinvestments.InvestmentallocationtoETPsgloballyhasoutstrippedtheallocation tomutual funds.Thishasbeenattributed to increased investment by institutional investors,growth in retail markets and continued innovation that offerinvestorsaplethoraofrisk-returnoptions.
Globally,GoldETPsexperiencedsignificantoutflowsin2013asthepriceofGold fell from its2012peakand investors turnedto other asset classes formore attractive returns. Contrary totheglobaltrendtheBSE’srecordsindicatenetinflowsintotheNewGoldETFin2013.Thisisevidencedbyanincreaseof1.5MnunitsoftheNewGoldETFintheBotswanaregister.
TheBSElistedtheNewGoldETFinJuly2010andsubsequentlylisted the BettaBeta ETF in May 2011. Both securities areprimarilylistedontheJSE.
4.2 Performance of the NewGold ETF
TheGoldBullionpriceintheLondonmarketreacheditshighestprice for 2013 of US$ 1,693.75 per ounce on 2 January 2013.Consequently,theNetAssetValue(NAV)oftheNewGoldETFinUSDollartermsalsoreacheditsall-timehighonthesamedate.Thepriceof theNewGoldETFon theBSE reached itshighestpointofP130.30perunitfor2013on7Februaryafteralagof26marketdays.
ThepriceofGolddeclinedgraduallyfromits2013hightoclosetheyearwithadepreciationof27.8%.TheNAVandpriceontheBSEinPulatermsoftheNewGoldETFdepreciatedby19.1%and17.2%in2013respectively.
ThedifferenceinthedepreciationoftheBSEpriceof17.2%andthedecreaseintheNAV(inPulaterms)of19.1%asatend
December2013wasprimarilyduetothemannerinwhichtheBSEdeterminesclosingprice,whichisdefinedasthelasttradedprice.Assuch,thedifferencebetweentheBSEpriceandtheNAV
(inPulaterms)canbematerialwhentherearenotradesonagivendate.However,ondaysthattheNewGoldETFtradedthecorrelationbetweentheNAVandthetradedpricewas99.4%in2013comparedto98.9%in2012.ThedifferencebetweentheNAVandpriceinPulatermsisduetomanagementfees.ThisisillustratedinFigure19.
TheNAV(inPulaterms)onagivendateiscomputedusingtheNAV(inUSDollarterms)andtakingintoaccounttheexchangeratebetweenthePulaandtheUSDollaronsuchdates.TheNAV(inUSDollar terms) isderived fromtheUSDollarpriceof theGoldBullionintheLondonmarket.AsexplainedinpastreviewsadepreciationofthePulaagainsttheUSDollarwillpositivelyimpact the price of the NewGold ETF. Hence, investments intheNewGoldETFcanbeusedasanindirecthedgeagainstthedepreciationofthePulaincomparisontoUSDollar.
ChartAofFigure20indicatesthattheNAVoftheNewGoldETFin Pula terms outperformed the NAV of the ETF in US Dollarterms in 2013. In 2013, the NAV (in Pula terms) appreciatedstronglyagainsttheNAVinUSDollarterms.TheappreciationoftheNAV(inPulaterms)isattributedtothedepreciationofthePulaagainsttheUSDollarby10.8%in2013.
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Figure 19: Performance of the NewGold ETF on the BSE and the NAV of the NewGold ETF (BWP)
Note: The graph is based only on dates on which the NewGold ETF tradedSource: BSE, Absa Capital
4. THE EXCHANGE TRADED FUND (ETF) MARKET
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Figure 20: Performance of the NAVs of NewGold ETF against the Gold Bullion
Source: BSE and Absa Capital
Chart A: NewGold ETF NAV (BWP & US$ Terms): 2013
Chart B: NewGold ETF NAV (US$) and the London Gold Price (US$): 2013
AssuchtheoveralldepreciationoftheNAVoftheNewGoldETFby19.1%inPulatermsincomparisontoadepreciationof28.1%inUSDollartermsislargelyattributabletothedepreciationofthePulaagainsttheUSDollarby10.8%in2013.
SincetheNAV(inUS$terms)oftheETFisderivedfromtheUSDollarpriceoftheGoldBullionandgiventhattheNAVofGoldhada100%correlationtothepriceofGoldasdepictedinChartBofFigures20thedifferencebetweenthetwoisattributedtomanagementfees.
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TheBettaBetaETFreacheditshighestpricesincelistingontheBSE,ofP40.60perunit,on24October2013.Thisrepresentedanappreciationof23.2%onitslistingpriceofP32.95inMay2011.
Attheendof2013,thepriceoftheBettaBetaETFhaddepreciatedby5.6%ontheBSEincomparisontoadepreciationof2.7%ofitsNAV(inPulaterms)asindicatedinChartAofFigure21.
ChartBofFigure21depictstheperformanceoftheBSEpriceoftheBettaBetaETFandtheNAVinBWP.ItcanbeseenthatthepriceoftheBettaBetaETFontheBSEiscloselycorrelatedwiththeNAVofthesameinPulatermsonthedaysonwhichtheETFhadtraded.
CHART A: Performance of BettaBetta ETF NAV and BSE Price
CHART B: Performance of BettaBetta ETF NAV (BWP) and BSE Price
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Note: The graph in Chart B is based only on dates on which the BettaBeta ETF traded on the BSE
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Figure 21: Performance of the BettaBeta ETF NAV and BSE Price: 2013
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4.3 Performance of the BettaBeta ETF
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Figure 22: Performance of the BettaBeta ETF NAVs and the selected indices: 2013
CHART B: Performance of the BettaBeta ETF NAV (BWP and ZAR)
CHART A: Performance of BettaBetta ETF (BSE Price), the JSE Top40 Index (BWP) and the BBEQWT 40 Index (BWP)
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Thecorrelationbetween the two setsofdata is 94.8%,whichindicatesthehighefficiencyinpricediscoveryondaysthattheBettaBetaETFistradedontheBSE.
ThedifferencebetweentheNAVandpricecanbeattributedtomanagementfees.
It isnotedthatthepriceof theBettaBetaETFontheBSEalsounderperformedtheJSETop40IndexandtheBBEQWT40IndexwhentheperformanceofthetwoindicesarecomparedinPulatermsascanbeseeninChartAofFigure22.
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TheNAVoftheBettaBetaETFisquotedinSouthAfricanRands(ZAR) on the JSE.Hence, the appreciationof the Pula againsttheRandwillnegativelyaffecttheNAVoftheETFinPulatermswhich is computed taking into account the exchange ratebetweenthePulaandtheRand.
The difference between the depreciation of the NAV (in Pulaterms)of2.7%incomparisontoanappreciationinRandtermsof 7.5% is largely explained by the appreciation of the PulaagainsttheRand.In2013thePulaappreciatedby9.7%againsttheZAR.
Figure23detailsthequarterlydividendspaidbytheBettaBetaETFin2013.ThedividendpayoutsontheETFareduetotheETFreceivingdividendsfromtheunderlyingsecuritiesbackingtheETF.The BettaBeta ETF is an investmentwhich provides bothincome and capital returns to its unit holders. The dividendpayouttranslatesintoanestimatednetdividendyieldof2.3%
basedontheaveragepriceofP38.25perunitin2013.
Figure 23: Dividends Paid by the BettaBeta ETF in 2013
Quarter Dividends(Thebe)
EndofMarch2013 22.99
EndofJune2013 17.59
EndofSeptember2013 30.62
EndofDecember2013 15.61
TOTAL 86.81Source: Nedbank Capital
If the dividend pay-out is taken into account it is estimatedthat theBettaBetaETFwouldhavegiven investorsa returnofnegative3.2%onatotalreturnbasisin2013incomparisontoanegativereturnof5.6%ifonlycapitalgainsareaccountedfor.
Figure 24: Efficiency of Price Discovery Based on Traded Prices
Company 2011 2012 2013
MPD(P) MPD/Avg.Price(%)
MPD(P) MPD/Avg.Price(%)
MPD(P) MPD/Avg.Price(%)
NewGoldETF 1.14 1.08 0.93 0.76 0.85 0.74
BettaBetaETF 0.37 1.16 0.36 1.00 0.38 1.00Source: BSE, I Net Bridge
4.4 Liquidity and Efficiency of Price Discovery in the ETF Market
ETFshaveadvantagesthatarenotexperiencedwithequitiesatthepresentmoment.Themarket-makingmodel,whichmakesit easier for investors to access ETFs without facing liquidityconstraints, and the highly competitive transaction costs aresomeoftheattractivefeaturesofETFs.
BoththeNewGoldandtheBettaBetaETFshavebeenawardedLocal Asset Status. As such pension fund managers, withstringent weight allocations between domestic and foreignassets, canallocateaportionof thedomesticportfolio to theNewGoldandtheBettaBetaETFs,whicharebackedbyforeignsecurities,withoutviolatingtheirallocationguidelines.
The efficient price discovery in ETFs can be attributed to themarket-makingmodelwhichhas ensured these securities arehighly liquid andhighly accessible to investors.The extentofthepriceefficiencyinETFsoveraperiodof3yearsisdepictedin Figure 24. This has been computed using the Mean PriceDifferential(MPD)andMPDrelativetoaveragepriceoftheETFsintheJSE,whichistheprimarymarket.
AscanbeseenfromFigure24andifacomparisonweretobemadewithotherduallistedsecuritiesasdetailedinFigure27,theefficiencyofpricediscoveryofthe2ETFslistedontheBSEexceedsthatoftheothersecuritiesbyfar.
Despite these advantages it has been noted that investorinterest inETFs,especiallytheBettaBetaETF, is lowandthis ismainlyduetoassetmanagersnotmakingsignificantallocationstoETFsintheirportfolios.Ithasbeenbroughttotheattentionof the BSE that asset managers do not include ETFs in theirlocalportfolioholdingsbecauseunlikedomesticequities, theperformance of which is benchmarked by the DCI and otherindices,ETFsdonothaveadomesticbenchmarkeventhoughboththeNewGoldandBettaBetaETFshavebeenawardedLocalAssetStatus.
TheBSEisconsideringincludingtheETFsintheLASIandLASFFItoaddresstheissue.Thisstepwillbetakeninconsultationwithpensionfundsandassetmanagers.
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In order to improve the liquidity in ETFs, BSE and NedbankCapital,issuersoftheBettaBetaETFconductedanETFseminaron23May2013 toeducate and sensitizemarketparticipantsespeciallybrokersandbusinessjournalistsaboutETFs.TheBSEwillcontinuetoeducatethepublicaboutETFsandtheiruseinan investment portfolio, with a view to improving awarenessandpromotingturnoverinETFs.
As noted earlier, turnover in the NewGold ETF improvedsignificantlyin2013relativeto2012.TheNewGoldETFtraded1.2MnunitsforavalueofP131.2Mn,incomparisonto223,026unitswithavalueofP27.6Mnin2012.TheETFwastradedatpricesrangingbetweenP100.50andP130.30perunit.Arecord2.3MnunitswereheldintheBotswanaregisterasattheendof2013,thehighestnumberofunitssincetheNewGoldETFwas
listedontheBSE inJuly2010.This increasedcreationofunitsunderpinnedtheproportionateincreaseinvolumeandinflowsin2013.
Incontrast to theNewGoldETF the turnoverof theBettaBetaETFwasthelowestsincebeinglistedontheBSE.TheBettaBetaETF traded 20,519 units at prices ranging from P33.55 andP40.60perunit.
TurnoverandliquidityintheETFmarketisdetailedinFigure25.
Figure 26 shows investors’ contribution to ETF turnover for2013onaquarterlybasis.ActivityintheETFmarketwasmostlydrivenbylocalfundmanagers,whowerenetbuyersofETFsin2013,withtheparticipationbyotherinvestorsbeingminimal.
Figure 26: Investors Contribution on a Quarterly basis (%): 2013
Quarter1 Quarter2 Quarter3 Quarter4 2013
ForeignCompanies 0.0 0.0 0.0 0.0 0.0
ForeignIndividuals 0.1 0.0 0.1 1.1 0.1
LocalIndividuals 3.3 0.2 0.4 0.7 0.3
LocalCompanies 46.6 49.9 49.7 48.3 49.6
Brokers 0.4 0.0 0.0 0.0 0.0
MarketMakers 49.6 49.9 49.7 49.9 49.9
TOTAL 100.0 100.0 100.0 100.0 100.0Source: BSE, Nedbank, Absa Capital
Figure 25: Turnover of Exchange Traded Funds in 2013
Quarter1 Quarter2 Quarter3 Quarter4 TOTAL
NewGold ETF
Turnover(P) 3,958,880 104,182,200 13,217,394 9,816,525 131,174,999
AverageDailyTurnover(P) 64,900 1,680,358 213,184 155,818 528,931
No.ofUnitsTraded 31,681 908,570 121,737 94,567 1,156,555
BettaBeta ETF
Turnover(P) 157,206 332,480 143,578 141,625 774,890
AverageDailyTurnover(P) 2,577 5,363 2,316 2,248 3,125
No.ofUnitsTraded 4,018 8,966 3,897 3,638 20,519
TotalNo.ofETFDeals 56 61 58 31 206Source: BSE
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Thedeviationbetweenthepricesofduallistedstocksquotedintheprimarymarketandthosequotedinthesecondarymarketcanbeusedtogaugeefficiencyinpricediscoveryofduallistedcounters.Theinefficiencyinpricediscoveryofduallistedstocksin theBSE is toa largerextenta functionof low liquidity.TheMeanPriceDifferential(MPD)andMPDrelativetoaverageprice
ofthesecuritycanbeusedtoanalysetheextenttowhichpricesin the BSE reflect prices in the primary market. A low MPDindicatesefficientpricediscovery.
ThecomputationofMPDandMPDasapercentageofpriceisdetailedinFigure27.
2011 2012 2013
MPD(P) MPD/Avg.Price(%)
MPD(P) MPD/Avg.Price(%)
MPD(P) MPD/Avg.Price(%)
AngloAmerican 16.17 5.30 4.21 1.78 N/A N/A
AfricanCopper 0.12 51.10 0.05 15.63 0.07 36.80
FirestoneDiamonds 0.54 20.96 0.58 32.67 0.11 18.84
LucaraDiamonds 0.43 6.69 0.24 3.70 1.55 18.74
A-CapResources 0.58 20.54 0.17 12.36 0.18 21.07
AfricanEnergy 3.61 150.53 0.56 20.81 0.08 13.35
GalaneGold N/A N/A 0.52 7.12 5.84 79.41
BlueFin.Services 0.04 10.18 0.04 8.62 0.23 56.57
InvestecLtd 5.47 10.23 N/A N/A N/A N/A
DiscoveryMetals 0.38 4.33 0.42 3.71 0.42 10.34
Source: BSE, I Net Bridge
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5. INEFFICIENCY IN PRICE DISCOVERY OF DUAL LISTED STOCKS
Figure 28: BSE FCI Compared to FCI based on Prices from Primary Markets: 2010 – 2013
Source: BSE, Reuters, ASX
Figure 27: Efficiency in Price Discovery Based on Traded Prices Company
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It canbenoted fromFigure27 thatover theyearsdual listedsecuritiesintheBSEwiththeexceptionofETFs,haveexhibitedinefficienciesinpricediscovery.ThisisevidentfromtheMPDsoftheduallistedsecuritiesbothinabsolutetermsandrelativetopricedetailedinFigure27.
A challengeemanating from this situation is that the ForeignCompany Index (FCI)whichtracks theperformanceof foreignstocks listed on the BSE consequently becomes inefficient inmeasuringperformanceofthereturnsofduallistedcompanies,giventhemethodologyusedtocomputetheFCI.
TheFCI iscomputedusingtheclosingpriceof thedual listedsecurities as traded on the BSE. Hence, low liquidity andinefficient price discovery have a direct influence on thecomputationoftheFCI.Ifacomponentsecurityhasnottradedon the BSE for some time, its last closing price is unlikely torepresent itsvalueandhencewill lead to inefficiencies in thecalculationoftheFCI,FRSIandLASI.
AscanbenotedfromFigures28and29,theBSE’sFCIisindeedaninefficientrepresentationofpricemovementsofitsconstituentstocks,themajorityofwhichareminingstocks.Ascanbeseen,theFCIcomputedusingBSE’sclosingpricesmovesin“fitsandstarts”andhasaweakcorrelationwiththeFCIbasedonprimarymarketprices.ThisisinstarkcontrasttotheETFslistedontheBSE.
InordertoimprovetheefficiencyoftheFCItheBSEisconsideringthefollowingstrategies;a) Introducingmarket-makersforduallistedsecurities. ThedraftListingRulesduetobeimplementedin Quarter4of2014addressestheissue.
b) Redefiningclosingpricesbasedontheclosingprices intheprimarymarket.c) Makinglocalinvestorsandbrokersawareofthe intricaciesofinvestinginforeignsecuritiesduallisted ontheBSEinordertominimizeopportunitiesfor arbitrage.
As stated earlier, the largest constituent of the FCI are theMining&Mineralstocks.EventhoughmarketcapitalizationofMining & Mineral sector companies is significant, liquidity inthesecountersisnon-existent,asdetailedinFigure29.
Accordingtotheresultsofthe2012/2013FraserInstituteGlobalMining Survey, Botswanawas once again the highest rankedAfricanminingcountryinoverallminingattractiveness.Globally,Botswanawasrankedthe7thattractiveminingaddressintheworld.
The BSE plays host to a wide range of mining explorationcompanieswhoarebenefitingfromtheconduciveenvironmentafforded by Botswana. By extension, the BSE can be viewedasaminingdominantstockexchangegivenitstrackrecordinattractingmultipledual listings fromforeignstockexchanges.These listings however have not helped to promote citizenparticipation in themining sector,mainlydue to the liquidityinthesesecuritiesandthelackofawarenessoflocalinvestors,analysts and brokers of the intricacies of investing inminingcompanies.
Figure 29: Relative Performance of Mining Companies listed on the BSE
2011 2012 2013
GDPfromMining(P’Mn) 25,841.00 22,011.90 30,829.80
ContributiontoGDP(%) 24.7 19.9 22.4
MarketCapofMiningCompaniesonBSE(P’Mn) 357,293.96 362,304.27 365,754.65
MiningGDPtoMiningCompaniesMarketCap(%) 7.1 6.1 7.8
Turnover/MarketCapofMiningCompanies(%) 0.00 0.00 0.00Source: BSE, Statistics Botswana
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BOTSWANA STOCK EXCHANGE Annual Report 2013
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The BSE launched 3 bond indices in April 2013 in responseto a request from members of the Botswana Bond MarketAssociation.Thesewere;GovI–agovernmentbondindex,CorpI–acorporatebondindexandtheBBIwhichisacompositeindexcomprisingbothgovernmentandcorporatebonds.
TheGovIandtheCorpIareequallyweightedindicescomputedonatotalreturnbasis.ConstituentbondsintheCorpIandGovIare weighted equally rather than on a market capitalizationor liquidity basis as done in the computation of BSE’s equityindices.
This was done taking into account the need for the indicesto better represent market movements given the low levelof liquidity in almost all the constituent securities.The BBI iscomputedasthemeanoftheGovIandCorpI.Theperformanceoftheindicesandthemovementininflationfor2013isdetailedinFigure30.
Much like equity indices computed by the BSE, the bondindiceswillassistfundmanagerstobenchmarkreturnsofbondportfolios against the indices. Further, itwould help promoteinvestmentinstrumentssuchasbondindexfundsandETFs.
Inresponsetodeclining inflation,theBankofBotswana(BoB)MonetaryPolicyCommittee(MPC)cuttheBankrateby50basispoints(0.50%)eachtimeon2May,18June,13Augustand10December 2013. Overall, this reduced the Bank rate to 7.5%from9.5%sincethepreviousratecutinDecember2010.
Bond indices experienced an upward movement in 2013reflecting the significant downward adjustment in yieldsfollowingthefourratecuts.Consequently,theBBIregisteredareturnof10.3%,whilst theCorpIandtheGovIappreciatedby9.6%and10.9%respectively in2013.ReturnsonboththeBBIandtheGovIoutperformedinflationfor2013whichwas4.1%.
6. BOND MARKET PERFORMANCE
6.1 Botswana Bond Index Series
Source: BSE
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Figure 31: Quarterly Analysis of Bond Trades: 2013
Quarter1 Quarter2 Quarter3 Quarter4
Value(P’Mn)
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Value(P’Mn)
Value(P’Mn)
BW003 5.3 7.4 0.3 -
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BW007 1.7 22.9 12.1 1.8
BW008 3.6 0.3 - 15.0
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BW010 16.5 - 0.3 10.0
TOTAL 33.4 31.7 12.8 16.8Source: BSE
Debt market turnover decreased substantially in 2013 whencomparedto2012.Thetotalvalueofdebt instrumentstradedin 2013 amounted to P94.7 Mn, compared to P332.2 Mn in2012. The total debt market turnover was accounted for bygovernment bonds. A quarterly analysis of debt turnoverindicatesthatactivitywascomparativelyhighinQuarters1and2of2013.
ThedeclineinturnovertookplaceinayearinwhichtheBSEtooksignificant steps to develop the bond market. Unfortunately,some initiativescouldnotbe implementedsincetherequiredapprovals have not been received. The BSE is confident thattheseinitiativeswillcometofruitioninduecourseandimproveliquidityofdebtinstruments.
6.3 Debt Market Capitalisation and Issuer Profile
The totalnumberofbonds listedon theBSEasat theendof2013stoodat35,unchangedfrom2012.Figure32belowdetailsthegrowthofthedebtmarketcapitalisationanalysedbyissuerprofilesince2009.
ThetotalnominaldebtmarketcapitalisationofthebondslistedontheBSEamountedtoP9.3Bnin2013incomparisontoP8.5Bnin2012.
ThemarginalincreaseinmarketcapitalisationisattributabletoanetissueofP766Mningovernmentandcorporatebonds.
6.2 Debt Market Turnover
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Figure 32: Debt Market Capitalisation (Nominal Values) by Issuer Category: 2009 to 2013
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The BSE’s P/E ratio closed the year at
in comparison to 9.2 times in 2012.
11.5 times
REACHING NEW HEIGHTS
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7. MARKET INDICATORS
7.1 Indicators of Value
CommonlyusedindicatorsofvalueinastockmarketincludethePrice-to-Earnings (P/E) ratio, DividendYield and Price-to-BookValueratio.
AsmuchasaP/Eratiocanbecomputedforanindividualshare,itcanalsobecomputedforthemarketasawhole.TheP/Eratiofor themarket is computed by dividingmarket capitalisationby totalearnings (profits)of listedcompanies.As canbe seenfromFigure33,themarketP/EratiooftheBSEincreasedin2013followingthreeyearsofsteadydeclinesince2009,reflectingtheappreciationofsharepricesincomparisontoearnings.TheBSE’sP/Eratioclosedtheyearat11.5timesincomparisonto9.2timesin2012.
Intandemwiththerise intheP/Eratio, theDividendYield forthemarketdecreased to4.1% in2013 from4.9% in2012.Thedecrease inDividendYield isdirectlyrelatedtothe increase insharepricesasevidentfromtheseveralindicescomputedbytheBSE.ThePrice-to-BookValueratioincreasedsteadilyto2.7timesforthesamereason.
Changesinmarketindicatorscouldreflectoneoftwounderlyingreasons; that the market is overheated or that it has morepotentialtocreatevalueforinvestors.
As at the end of 2013, the BSE’s P/E ratiowas below its longterm(10year)average,indicatingthatinvestorsarepayinglessfor earnings than theywerepayingover thepast 10 yearsonaverage.
All in all, theBSE isof theview that theappreciation in shareprices in recent years is due to the gradual recovery of themarketfromthefinancialcrisisin2008.
As can be seen from Figure 37, the BSE’s P/E multiple is stillthe lowest in comparison to the JSE and theSEMwhich is anadvantage to attract foreign portfolio investment to the BSEprovidedliquiditycanbeimproved.
Figure 33: Market Indicators for Domestic Companies Listed on the BSE: 2009 to 2013
DomesticCompanies 2009 2010 2011 2012 2013 10YRAVG
Marketindicators
P/ERatio(times) 13.5 10.8 10.2 9.2 11.5 12.1
DividendYield(%) 4.3 4.9 5.2 4.9 4.1 5.0
Price/BookValue(times) 4.8 3.9 2.8 2.5 2.7 5.4Note: The statistics are based on the most recent audited financial statements
Source: BSE
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TherelativesizeofdomesticcompanieslistedontheBSEcontinuedtoimprovein2013.TheBSE’sdomesticmarketcapitalisationforequitywasP43.5Bnasattheendof2013,anincreaseof22.3%incomparisontoP35.5Bnin2012.
Thesizeofdomesticcompaniesrelativetothesizeoftheeconomy,indicatedbytheratioofmarketcapitalisationtoGDP,alsoincreasedin2013to33.6%from30.8%in2012.
Figure 34: Market Capitalization and Relative Performance: 2009 to 2013
2009 2010 2011 2012 2013
Market Capitalisation
DomesticCompanies(P’Mn) 28,536.2 26,245.7 30,694.3 35,530.8 43,457.6
ForeignCompanies(P’Mn) 346,001.1 408,380.3 380,909.5 376,818.2 373,132.8
Total (P’Mn) 374,537.2 434,626.0 411,603.8 412,349.0 416,590.4
Relative Performance
DomesticMarketCap/GDP(%) 38.0 33.1 28.8 30.8 33.6
Turnover/DomesticCoMarketCap(%) 2.7 3.5 3.5 2.7 5.9
Turnover/AllCoMarketCap(%) 0.2 0.2 0.2 0.2 0.6
Note 1: Computed using average domestic market capitalisation, average total market capitalisation and average annual GDP (at current prices) subsequent to the rebasing of economic statistics by Statistics BotswanaSource: BSE, Statistics Botswana
As depicted in Figure 35, the increase in the BSE’s domesticequity market capitalisation is attributed to the cumulativeimpactofapriceeffectof20.6%andaquantityeffectof1.8%.Thisisnotsurprisingas2013wascharacterisedbyrapidgrowthinsharepricesandnomajorcorporateactionsthatresultedinsignificantshareissues.
As canbe seen in Figure 35, the price effect outweighed thequantity effect and contributed 92.1% of the percentagechange inmarketcapitalisation in2013. In2012, thequantityeffectwasmarginally higher than the price effectwhereas in2011theoppositetookplace.
7.3 Price Changes for Domestic Companies
In 2013, most listed companies experienced movements intheirshareprices.Figure36showsthatpricesof18companiesappreciatedwhereas 5 companies recorded declines in shareprices.Thisshowsanimprovementinsharepriceperformancein comparison to 2012 where the prices of 15 companiesappreciatedwhilstthoseof7companiesdeclined.
The Property sector ended the year with all constituentstocks recordinggains in shareprices, except forNewAfricanProperties (NAP) whose share price remained unchanged.Sefalana doubled its share price to record the largest gain of107.1%in2013.Itisnotedthatin2012thehighestgainerwasChoppieswhosesharepriceappreciatedby78.3%.
7.2 Equity Market Capitalisation
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Figure 35: Price and Quantity Effect on the Growth of Domestic Market Capitalisation for Equity: 2007 to 2013
Source: BSE
Source: BSE
Figure 36: Price Changes of the Domestic Companies: 2013
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Figure 37: Comparative Performance with Other SADC Stock Exchanges: 2012 and 2013
IndexChange(%) P/ERatio(times)
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JohannesburgStockExchange
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StockExchangeofMauritius
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8. COMPARISON WITH SELECTED MARKETS8.1 Relative Valuations
Asreferredtoearlierinthereport,BSE’sPrice-to-EarningsRatio(P/ERatio)closed2013at11.5times,belowthatoftheJSEandSEM.TheP/ERatiosofboththeJSEandtheSEMhaveincreasedover the past year to 18.6 times and 14.2 times respectivelyas a result of the appreciation in prices as reflected by thebenchmarkindicesin2013.
Fromavaluationperspective,thelowerP/EratiooftheBSEisindicativeoftheBSE’scompetitivenesswhencomparedtoJSEandSEM,andevenwhencomparedwithitslongtermaverageP/E ratioas indicatedearlier.However, theexploitationof thecompetitivenessisafunctionofliquidityasstatedearlierinthereview.EventhoughBSE’sliquidityhasimprovedtremendouslyin 2013 it is still lower than that of the competition, adisadvantageinattractingforeignportfolioinvestment.
As can be seen from Figure 38, the DCI’s performance iscomparable to SEMDEX but it outperformed the JSE AllShare Index (ALSI) and the MSCI Emerging Markets Index,havingappreciatedby20.5%incomparisontotheSEMDEX’sappreciationof21.0%andALSI’sappreciationof17.8%.
An analysis of the 4 indices in US Dollar terms is detailed inFigure39.DuringtheperiodunderreviewtheDCIappreciatedby7.5% inUSDollar terms in comparison to anappreciationof 20.5% in Pula terms, due to the depreciation of the Pulaby 10.8% against the US Dollar. The SEMDEX appreciated by22.6%inUSDollartermsasaresultoftheappreciationoftheMauritianRupeeby1.3%in2013.Incomparison,boththeALSIandMSCI EmergingMarkets Index depreciated by 4.4% and4.9%respectively.
Figure 38: Comparative Performance of DCI with other African Markets and MSCI Emerging Markets Index standardised as at 1 January 2013 (Domestic Currencies)
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Figure 39: Comparative Performance of DCI with other African Markets and MSCI Emerging Markets Index standardized as at 1 January 2013 (US$)
Monetarypolicyandexchangeratemanagementarecomplexsubjects inwhichtheBSEhasnoexpertise.However,astrongandstablecurrencyisahugeadvantageinpromotingfinancialmarkets and marketing Botswana as a financial centre. Asstatedearlier intheReview,Botswanahasseveralcompetitiveadvantages that sets it apart from the competition but thecomparatively weak Pula especially in comparison to theMauritianRupeehaserodedpartofthecompetitiveadvantage.September 2008 was a changing point for capital marketstheworldover. Itwas so for theBSEaswelleven though the
financialcrisishittheBSEcomparativelylate.Sincetheadventof the crisis the BSE has tracked the performance of the DCIespecially incomparisontotheJSEandSEM.ThiscomparisonisdetailedinFigure40.
AsdetailedinFigure40,theDCIhasrecovered49.1%since13May2009,thepointatwhichtheindexbottomedsubsequenttothefinancialcrisis. IncomparisontheJSEALSIandSEMDEXhaveappreciatedby159.7%and127.8%respectively.
Figure 40: Comparative Performance of Indices since the Financial Crisis
INDEX SteepestDeclineSince13_Sep-08 Recoveryto31-Dec-13
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%Change DateRecorded (%)Change (%)Change (%)Change
JSEALSI 32.0 20-Nov-08 159.7 76.9 17.9
SEMDEX 44.4 03-Mar-09 127.8 26.7 21.0
BSEDCI 24.4 13-May-09 49.1 12.0 20.5
BSEFCI 57.6 12-May-09 45.6 (38.3) (1.0)Source: BSE, I-Net Bridge
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8.3 Footprints
Figures41&42showthedevelopmentoftheBSEoverthepastyearsrelativeto2009.Forthispurpose,thefootprintoftheBSEin2008hasbeenstandardisedandreferencetootheryears ismaderelativeto2008.Itisnotedthat2008wasthebestyearupto2013fortheBSEintermsofitsperformance.
The footprint for the purpose of the analysis is computedtaking into account relative size of themarket (measured byMarket Capitalisation/GDP), turnover (measured by AverageDaily Turnover), liquidity (measured by Turnover/MarketCapitalisation)andvalue(measuredbythereciprocaloftheP/Eratio).
Ascanbeseen fromFigures41&42,2013 is thebestyearasmeasuredbythefootprintduetotherecordturnoverandtherelativesizeofthemarket.
Itisnotedthatincomparisonto2008thefootprintfor2013is1.6timesthesizeofthefootprintfor2008.AscanbeseenfromFigure41,2013hasovershadowedallprioryearsastheresultofincreasesinturnover,liquidityandvaluerelativeto2008.
The only area in which 2008 has surpassed 2013 is size,measuredbymarketcapitalisationtoGDP.Aswasnotedearlierinthereview,marketcapitalisationontheBSEincreasedmainlyasaresultofan increase inprices.Thecontributionfromnewshareslistedtomarketcapitalisationwasminimal.
Figure 41: BSE Footprint in Relation to 2008
2008 2009 2010 2011 2012 2013
MarketCap/GDP(%) 1.00 0.90 0.77 0.68 0.73 0.80
Turnover/MktCap(%) 1.00 0.70 0.92 0.92 0.70 1.52
E/PRatio(x) 1.00 0.92 1.11 1.18 1.30 1.04
AverageDailyTurnover(P) 1.00 0.66 0.82 0.87 0.78 1.99
Area of footprint 2.00 1.24 1.65 1.66 1.50 3.23
Relative Area of Footprint in relation to 2008 (x) 1.00 0.62 0.82 0.83 0.75 1.61Source: BSE, Statistics Botswana
Note 1: Market Capitalisation/ GDP, Turnover/ Market Capitalisation. E/P ratio and Average daily turnover for 2008 were
standardized to 1 and the BSE’s footprint for 2009 to 2013 was compared to the standardized footprint for 2008
Figure 42: BSE Footprint: 2008 to 2013
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1
2
3 Market Cap/GDP(%)
Turnover/Market Cap (%)
E/P Ratio(x)
Average Daily Turnover(P)
2008 2009 2010 2011 2012 2013
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Figures43to44detailthefootprintoftheBSEinrelationtothefootprintoftheJSEandSEMin2013.
According to Figure 45, 2013 was a phenomenal year inthe history of the BSE in relation to its size especially whencomparedwithSEM.The footprintof theBSE increasedmorethantwofoldinrelationtothefootprintoftheSEMfrom35.1%
in2012to72.8%in2013.ThisincreasecanbeattributedmainlytoanincreaseinLiquidityandValue.
ItisnotedthatifthePulaperformanceagainsttheUSDollarisadjustedtomirrorthatoftheMauritianRupee,BSE’sfootprintwouldhaveincreasedto75.5%thefootprintofSEM.
Figure 45: BSE Footprint in Relation to JSE & SEM: 2008 to 2013
2008 2009 2010 2011 2012 2013
BSErelativetoSEM(%) 32.07 27.44 33.41 24.44 35.07 72.76
BSErelativetoJSE(%) 0.03 0.03 0.02 0.01 0.01 0.03
Source: BSE, Statistics Botswana
GDP figures South Africa and Mauritius based on IMF revised GDP estimates for the respective countries
2013 BSE JSE SEM
MarketCap/GDP(%) 1.00 9.07 1.68
Turnover/MktCap(%) 1.00 7.03 0.95
E/PRatio(x) 1.00 0.62 0.81
AverageDailyTurnover($) 1.00 1,480.91 1.25
Area of footprint 2.00 7,206.08 2.75
BSE footprint in relation to JSE and SEM (%) 100.00 0.03 72.76
Figure 43: BSE Footprint Relative to JSE & SEM: 2013
Source: Statistics Botswana, BSE, JSE, SEM, IMF
Figure 44: BSE Footprint in Relation to JSE & SEM: 2013
Note 1: Scale; Turnover/Mkt Cap 1:1, Avg Daily Turnover1:1000, Mkt Cap/GDP 1: 1, E/P Ratio 1:1Note 2: Market Capitalisation/GDP, Turnover/Market, E/P ratio and Average daily turnover for the BSE were standardized to 1 and the footprint for SEM and JSE was computed relative to the BSE’s footprint Source: Statistics Botswana, BSE, JSE, SEM, IMF
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Share split on 14 October 2013
On14OctoberRDCPropertiesundertooka share splitona5for 1 basis resulting in its pricemoving from P7.11 per shareto P1.42 per share. Share splits are usually carried out toimprove affordability of the company’s shares making them
more marketable while the existing shareholders retain thesameproportionofownership.Asaresultofthesharesplitthenumberofissuedsecuritiesincreasedfivefold.
Source: BSE
Source: BSE
9. PRIMARY MARKET
9.1. Equity
Figure 46: RDC Properties Share Adjusted for Share Split
Figure 47: Funds Raised Through the Equity Market: 2008 to 2013
SharePrice(The
be)
2.3
137.2
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As canbe seen fromFigure46, the share split resulted inanappreciationofthepriceofRDCPropertiesby26.8%between14October2013and31December2013.
In previous Annual Reports, the BSE has articulated theadvantagesofsharesplitsand itspositive impacton liquidity.The pre and post share split performance of RDC Propertiesfurther confirms the advantages of share splits. In the caseof RDCP, it was noted that the value of transaction per dayincreased post- share split in comparison to a similar periodpre-sharesplit.Onadailybasis,thecountertradedshareswithavalue3.3 timeshigher than thepre-sharesplitvaluedue toincreasedtradingvolumearisingfromthesharesplit.
Shumba Coal Limited, a mineral exploration company, listedontheBSE’sForeignVentureCapitalBoardon8April2013.Thecompany listed168.8Mnsharesatan indicativeofferpriceofP1.05pershare.
Aviva Corporation and Hana Mining delisted from the BSE’sForeignVentureCapitalBoardwitheffect from27September2013and25February2013respectively.
Onthedomesticboard,RPCDataLimiteddelistedwitheffectfrom12December2013astheresultofmanagementbuyout.
Overall,theBSElistedonecompanyin2013incomparisonto3companieshavinglistedin2012.ThreecompaniesdelistedfromtheBSEin2013incomparisonto1companyin2012.
9.2 Bonds
9.2.1 Government Bonds
On6September, theBankofBotswana (BoB)auctionedP450Mnworthofbonds,ofwhichP449Mnwasallotted.Inadditiontothetwobonds,asixmonthTreasuryBillwasissuedforavalueofP340Mn(TreasuryBillsarenotlistedandtradedontheBSEatpresent).
Additional issues were made in respect of 2 existing bonds,BW008andBW010.TheBoBalso issuedanewbond (BW011)whichwillmatureon10September2031.
Issues in respect of BW008 and BW010 were fully allotted atP150Mn and P100Mn respectively. BoB offered P200Mn onaccount of BW011 of which P199.0 Mn was allotted. Overall,the3bondswere3.6 timesoversubscribed.TheBW009bondmaturedon11September2013.BW011waslistedontheBSE
on29October2013.On6December2013,BoBauctionedP840Mnworthofbondsand the issuewasallotted in full.Theauctioncomprisedof3bondsonaccountofBW008,BW010andBW011anda6monthTreasuryBillforP340Mn.ThenominalvalueinissueofBW008,BW010andBW011increasedbyP150Mn,P150MnandP200Mnrespectively.Thebondauctionwas2.4timesoversubscribed.
9.2.2 Corporate Bonds
On6December2013,FurnmartLimitedlistedabond(FML025)with a nominal value of P150Mn. FML025 is a 12 year bondmaturingon23October2025.Thebondpaysafixedcouponof8.20%perannumpayablehalf-yearly.
Letshego issuedand listed4bondswith semi-annual couponpaymentson8November2013.TheissuesaredetailedinFigure48.
Figure 48: Corporate Bonds Listed by Letshego in 2013
BondCode AmountIssued(BWP)
Maturity(Years)
CouponPayment(%)
LHL005 50,000,000 4 8.25
LHL006 200,000,000 10 10.50
LHL007 75,000,000 12 10.50
LHL008 25,000,000 14 11.00Source: BSE
Stanbic Bank Botswana redeemed three bonds in issue byexercising call options. The SBBL046, SBBL049 and SBBL052wereredeemedon11June,13Augustand17December2013respectively.
DPCF003andtheSCBB005maturedon2Juneand27November2013respectively.
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10. DEPARTMENTAL REVIEWS
10.1 CENTRAL SECURITIES DEPOSITORY (CSD)
10.1.1 Dematerialization Status of Equities
Asdetailed inFigure49,asatendof2013,59.3%ofdomesticcompanysharesweredematerializedascomparedto48.9%in2012.TheBSEiscurrentlyindiscussionswithNBFIRAregardingmakingdematerializationofsharescompulsory.
Theadvantagesof100%dematerializationare that it reducesthe risk of fraud and forgery associated with paper sharecertificates,ensuresthatinformationonshareholdingisreadily
availablefromCSDBandalsoallowsinvestorstotradeanytimeandfromanywherebysimply instructingthebrokerswithouttheneedtolodgeapapercertificate.Dematerializationalsodoesawaywithinefficienciesassociatedwiththepresenthybridsysteminwhich2shareregistersrequiretobemaintained;onefor dematerialized securities and the other for physical sharecertificates.
Figure 49: Dematerialization Status of Domestic Companies: 2012 and 2013
2012 2013
Security %ofSharesinCSD NumberofSharesinIssue
NumberofSharesDepositedintoCSD
%ofSharesinCSD
ABCH 48.7% 256,885,694 151,624,186 59.0%
Barclays 29.4% 852,161,252 252,745,524 29.7%
BIHL 96.4% 281,070,652 273,163,757 97.2%
Chobe 42.1% 89,405,139 35,795,559 40.0%
Choppies 98.1% 1,174,207,583 1,151,028,324 98.0%
Cresta 26.3% 184,634,944 48,771,479 26.4%
Engen 28.8% 159,722,220 46,197,956 28.9%
FNBB 27.9% 2,563,700,000 732,362,553 28.6%
FSG 88.0% 120,875,000 113,207,543 93.7%
Furnmart 22.2% 606,446,080 138,272,480 22.8%
G4S 27.1% 80,000,000 21,935,280 27.4%
Letshego 98.3% 2,167,540,271 2,130,599,403 98.3%
Olympia 15.8% 28,600,000 4,525,987 15.8%
Primetime 64.4% 179,890,200 115,998,345 64.5%
RDCP 25.6% 220,344,890 209,806,520 95.2%
Sechaba 80.6% 133,014,875 107,105,206 80.5%
Sefalana 90.8% 185,724,463 172,933,839 93.1%
Stanchart 22.3% 298,350,611 67,039,218 22.5%
Turnstar 93.4% 572,153,603 536,586,414 93.8%
Imara 72.0% 59,113,641 43,290,644 73.2%
Wilderness 36.9% 231,000,000 87,617,111 37.9%
NewGold 100.0% 2,250,000 2,250,000 100%
BettaBeta 100.0% 206,671 206,671 100%
Letlole 68.1% 280,000,000 191,080,926 68.2%
NAP 15.0% 604,397,124 90,514,829 15.0%
RPCData 47.5% Delistedin2013 Delistedin2013 Delistedin2013
MARKET 48.9% 11,331,694,913 6,724,659,754 59.3%Source: CSD Botswana
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Figure 50: Dematerialisation of Foreign Companies: 2012 and 2013
2012
2013
Security %ofSharesinCSD NumberofSharesonBotswanaRegistry
NumberofSharesDepositedintoCSD
%ofSharesinCSD
A-CapResources 56.0 663,327 399,070 60.2%
FirestoneDiamonds 100.0 132,000 132,000 100.0%
BotswanaDiamonds 82.1 4,247,654 3,307,108 77.9%
LucaraDiamonds 99.1 25,956,352 25,497,628 98.2%
AfricanEnergy 100.0 187,935 187,935 100.0%
GalaneGold 100.0 3,800 3,800 100.0%
Shumba NotListed 168,225,782 126,007,445 74.9%
Aviva 86.7 Delistedin2013 Delistedin2013 Delistedin2013
Hana 100.0 Delistedin2013 Delistedin2013 Delistedin2013
MARKET 94.4% 199,416,850 155,534,986 78.0%Source: CSD Botswana
As at the end of 2013 dematerialization of foreign companyshares in the Botswana registry was 78% in comparison to94.4% and 91.1% in 2012 and 2011 respectively.The reasonsforthedeclineindematerializationstatuscanbededucedfromFigure50.
Dematerialization of listed company shares has been madecompulsory in many markets in which CSDs have beenintroduced.Thishasbeendoneinordertomakeclearingand
settlement more efficient and to provide the environmentfor CSDs to operate effectively. It is the viewof the CSD thatBotswanatoocanbenefitfromsuchaninitiative.
10.1.2 Progress on Account Opening
The number of authorised accounts opened by clients in theCSD(excludingjointaccounts)was20,027asatDecember2013incomparisonto17,638in2012.
Figure 51: Status of CSD Accounts as at December: 2012 and 2013
2012 2013
ClientClassification TOTAL SBB MOTS CAPS AA SCBB STAN FNBB TOTALForeignCompanies 1,753 36 29 82 5 1,623 231 0 2,006ForeignIndividuals 333 187 46 154 11 0 0 0 398ForeignResidents 884 382 184 393 26 0 0 0 985ForeignJuniors 35 14 9 19 0 0 0 0 42LocalCompanies 1,309 398 349 219 226 171 41 48 1,452LocalIndividuals 12,446 6,063 3,628 4,009 513 0 0 0 14,213LocalJuniors 878 374 257 278 22 0 0 0 931Total 17,638 7,454 4,502 5,154 803 1,794 272 48 20,027
Source: CSD Botswana
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Figure 52: CSDB Client Holdings by Client Category
2012 2013
ClientSuffix Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
LocalCompany
64.3% 66.0% 65.5% 65.7% 62.3% 66.2% 63.4% 62.6%
ForeignCompany
16.8% 15.5% 17.1% 17.0% 17.9% 18.4% 19.7% 24.9%
LocalIndividual
17.5% 17.0% 15.9% 15.8% 15.6% 14.0% 15.6% 11.2%
OtherClients
1.4% 1.5% 1.5% 1.5% 4.2% 1.4% 1.3% 1.3%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%Source: CSD Botswana
2012 2013
DomicilesofClients Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
LocalCitizens 81.8% 83.0% 81.4% 81.6% 80.9% 80.3% 79.1% 73.9%
USCitizens 6.5% 6.4% 6.3% 6.3% 6.4% 5.8% 6.1% 6.5%
UKCitizens 3.4% 3.4% 3.4% 3.2% 5.0% 4.1% 4.9% 7.2%
SADCRegion 3.3% 3.2% 4.6% 4.5% 7.7% 9.8% 9.9% 12.4
OtherRegions 4.9% 4.0% 4.3% 4.4% 80.9% 80.3% 79.1% 73.9%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%Source: CSD Botswana
AsdetailedinFigure52,localcitizensdominatetheoverallholdingsontheCSDB.Holdingsbyforeigninstitutionalinvestors,especiallybyUKcitizensincreasedsignificantlyin2013ascomparedto2012whilsttheholdingsbyUScitizensremainedalmostunchanged.
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10.2 MARKET DEVELOPMENT
10.2.1 Public Awareness Programmes
In 2013, the BSE continued to pursue its objective of increasing investor awareness on the stockmarket by undertakingmarketdevelopment activities. The initiatives included presentations to various organizations around the country, national radio andtelevisionprogrammesaswellasnewspaperarticles.
ThepresentationsconductedbytheBSEin2013aredetailedinFigure53.
Figure 53: Presentations Conducted by the BSE: 2013
Date Organisation Attendees No.ofParticipants
07Feb NalediSSS TeachersandOtherstaffMembers 31
13Feb SeroweIHS Employees 31
19Feb MinistryofDefenceJustice&Security Employees 43
21Feb NanogangCJSS TeachersandOtherstaffMembers 27
19Mar MonthofYouthAgainstAIDSWorkshop Employees 26
20Mar UBFinanceSociety Students 72
11Apr JuniorAchievementBotswana Students 45
14May MediaBriefingonBSEStrategy BusinessJournalists 20
23May ETFSeminar BrokersandBusinessJournalists 25
07Jun TeachersDayCelebration-Dibete Teachers,ParentsandStudents 60
27to30Jun GhanziAgricultureShow Public
18Jul Maru-A¬-PulaSchool Students 32
22to28Jul ConsumerFair Public 389
31Jul MophanePrimarySchool AllCommerceteachersfromvariousschools 102
31Jul DepartmentofHousing Men’sworkshop 43
05Aug BatananiCJSS Teachers 29
12Aug GakutoVillage Residents 24
13Aug DitshengSACOS ManagementRepresentatives 2
04Sept Kopong Villagers&Teachers 45
23&24Sept NorthWestDistrictCouncil(withPEEPA) DistrictCouncillorsandseniorcounciladminstaff-Maun
105
9&10Oct GhanziBrigade Students,Teachers&Villagers 329
16October Thebrotherhood BACStudents 9
22Oct PrivatizationPitsoforTradeUnions(withPEEPA) TradeUnionLeaders 67
4&5Nov SouthEastDistrictCouncillors(withPEEPA) DistrictCouncillorsandseniorcounciladminstaff-Oodi
98
13Nov BDF Employees 32
27Nov BotetiSubDistrictCoucil CouncilMembers 18
7Dec ShoshongFinanceSociety Public 208
TOTAL 1,912Source: BSE
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10.2.2 Radio and Television Programmes
The BSE has partnered with various media houses to helppromotecapitalmarketsbycontributinginformativearticlestonewspapersandtakingpartinradiotalkshowstoeducatethepublic.The BSE undertookpresentations on theweekly radioprogrammes of “Tsele Le Tsele” and “Business Thriller” everyFridayonRB1andRB2,at5:30pmand4:00pmrespectively.TheExchangealsopublishedaweekly“MarketPerformance”reportin the Botswana Government newspaper, “The Daily News”.TheBSEalsoransnippetsonETFsonYaronaFM,alocalprivatecommercialradiostation.TheBSEpresentedstatisticsonmarketperformanceandaseriesofprogrammestoeducatethepublicabout investing in the stock market. The presentations wereaired through a television program called“First Issues” everyTuesdayfrom7:30pm–8:00pm.
10.2.3 Consultations with Private Companies to Promote Listings on the BSE
The BSE conducted one-on-one meetings with companiesto take them through the process and advantages of listingon the BSE. A workshop was held in June 2013 to educatecompanies on how they can realize synergies by listing ontheBSE.Theworkshopwas attendedby representatives fromprivate companies, parastatals, entrepreneurs, capital marketregulators as well as other parties involved in the process oflistingcompaniesontheBSE.
10.2.4 Corporate Social Investment (CSI)
The BSE is of the view that today’s students are tomorrow’sinvestors and hence thought it fit to invest in the educationof young students. In 2013, theBSE embarkedon the“Adopta School” initiative, adopting two primary schools beingBoitumeloPrimarySchoolandXakawePrimarySchoolinSebeleandMaunregionsrespectively.Throughthis initiativetheBSEhasmanagedtorefurbishthelibraryfacilitiesofthetwoschools.
10.3 PRODUCT DEVELOPMENT
The Product Development initiatives undertaken by the BSEin2013continued to focuson introducingnewproductsandespeciallyonthedevelopmentoftheBondMarket.ThefollowingisasynopsisofworkcarriedoutbytheProductDevelopmentDivisionoftheBSEinthisregards.
10.3.1 Introduction of a Botswana Bond Index Series (BBIS)
Asnotedearlier,theBSElaunched3bondindicesinApril2013.Itisnotedthatthebondindiceshavebeenwellreceivedbythemarketwithmostcustodians looking toadopt the indices forbenchmarkingandperformanceevaluationofbondportfolios.
ThisisawelcomedevelopmentintheBotswanaBondMarket.As stated earlier, bond indices would also form the basis fordevelopingbondindexfundsandotherbondrelatedproducts.Thebondindicescouldalsobeusedbyinvestorstojudgeandobjectivelychoosebetweeninvestinginalternativedebtfunds.
A Bond IndexAdvisoryCommitteewas appointed to overseeand advise on best practice in constructing indices and onmatters relating to rules governing the management of thesaid indices. The committee comprises representatives fromasset management companies, brokerage firms, commercialbanks,pensionfundsandconsultingfirms.TheroleoftheBSEis toprovide secretarial services to the committee.NedGroupBeta Solutions, ofNedBank SouthAfrica, hasbeen appointedconsultants to theadvisory committee.The committeemeetseveryquarter following an audit of the indices, to review theaudit, market opinion and discuss issues of best practice inrelationtothemanagementoftheindices.
10.3.2 Workshop on Exchange Traded Funds (ETFs)
The BSE and Nedbank Capital held a media educationalworkshop on 23 May 2013. The workshop was attended bybrokers and business journalists.The aimwas to educate theattendees about analyzing the performance of ETFs.The BSEisoftheviewthatraisingawarenessaboutinvestinginETFsisextremelyimportanttoincreaseliquidityinthesesecurities.
10.3.3 Global Depository Receipts (GDRs)
TheBSEheldatwodayworkshopon12and13June2013withfundmanagers,NBFIRA, brokers andbusiness journalists thatwasaimedatexploringthefeasibilityofintroducingGDRs.TheBSE held theseworkshops in collaborationwith Bank ofNewYorkMellon(BNYMellon).ThroughtheworkshoptheBSEwasabletogaugetheappetitefortheseproductsinthemarketandtherequirementswithregardtothestructureoftheproductsasproposedbyfundmanagers.
It isalsonotedthatthereareotherstrategicpartnerswhoareinterested in partnering with the BSE in launching GDRs forthe Botswana market. More awareness programmes will beundertakenin2014toeducatethepublicaboutGDRs.Further,a surveywill be conducted amongst institutional investors tohelpidentifyglobalstocksthatcouldbeusedtocreateGDRstogiveinvestorsexposuretointernationalstocks.
10.3.4 Registration of the Bond Market AssociationTheBSEfacilitatedtheregistrationoftheBotswanaBondMarketAssociation (BBMA)with theRegistrar of Societies, fundedbysponsorshipsfrommarketparticipants.TheBBMAwillbegin
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formal implementationof itsmandate in2014.TheBSEplanstoworkwith the BBMA to resolve structural issues impedingbondmarketdevelopmentwith a view topromoteefficiencyand liquidity of the bond market. A liquid bond market willprovideaconduciveenvironmentfortheprivatesectortoraisecapital directly from investors. Investors in turn are providedwithdifferingrisk-returnoptionsthatwillenablethemtobetterstructuretheirinvestmentportfolios.
The BBMA is administered by a Committee comprisingrepresentativesfromassetmanagementcompanies,brokeragefirms, commercial banks and bond issuers. The BSE providessecretarialservicestotheAssociation.
10.3.5 Distribution of Trade Statistics to International Data Vendors
Following the implementation of the Automated TradingSystem (ATS) on 24 August 2012, the BSE began exploringopportunities to commercialise and generate income fromthesaleoftradestatisticstodatavendorsbyprovidingvariousformsofdataand information.Commercialisationofdata isarevenue generating activity undertaken by stock exchangeswhichhaveimplementedautomatedtrading.
TheATShasfunctionalitytodisseminaterealtimeinformation,snapshots of trading information over a configured period(presently configured for 30 minutes) and snapshots oftrading information configured based on a given number ofmessages.TheBSEhassigneddatadisseminationagreementswithDirectFNand I-NetBridge.Discussionsonsigningsimilaragreements are on-going with Bloomberg and Reuters whohaveexpressedinterestinsubscribingtotheBSEdatafeed.ThedistributionofBSEtradestatisticswillgiveBSEmoreexposureto international investors and will complement its marketdevelopmentinitiatives.
10.3.6 Dual Listing of the New Platinum ETF (NewPlat ETF)
AbsaCapitalofSouthAfricaintendstoduallisttheNewPlatETFontheBSE.TheETFisprimarilylistedontheJSE.TheNewPlatETFisexpectedtobelistedinthefirsthalfof2014.
10.4 INFORMATION TECHNOLOGY (IT)
10.4.1 IT Policies
During2013,theBSEembarkedonanexercisetoformaliseanddocument IT Policies, Procedures and Processes.This exercisewasmotivatedbytheincreaseincomplexityoftheIT
infrastructureandtheconsequentialneedforbettercontrolofthe interaction of the userswith IT Systems, Information andrelatedservices.
TheBSEengagedtheservicesofRealfin(Pty)Ltdasconsultantsto document the IT Policies and Procedures. The project wascompleted in January 2014. Once approved by the MainCommittee,theITPolicieswillguidethedaytodaymanagementoftheITDepartmentandwillgoalongwayinensuringthattheBSE,withitsincreasingrelianceonITsystems,meetsitsstrategicobjectives.
10.5 LEGISLATION AND REGULATION
10.5.1 Amendment of the Equity and Debt Listing Rules
The BSE has completed drafting the amended Equity ListingRules and the draft has been circulated to the BSE MainCommittee.Thepurposeofamendingtherulesistomakethemuptodate,preciseanduserfriendly.TheBSEhascommencedthe process of consultationwith listed companies, regulatorsandotherstakeholdersandexpectstoimplementtherules inthelatterpartof2014.
10.5.2 Securities Bill
TheBSEishappytoreportthattheSecuritiesBillwasapprovedbyCabinetinFebruary2014andwillbepresentedtoParliamentinduecourse.
ThedraftingoftheBSETransitionBillhasbeencompletedandisexpectedtobesubjecttotheenactmentprocessinduecourse.
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10.6 HUMAN RESOURCES DEVELOPMENT
10.6.1 Staff Welfare
TheBSEcontinuedtopursuestaffwelfareandwellnessactivitiesin2013.Theaimwastocreateawarenessonissuesrelevanttostaffmembers, theirworking environment and their personalwellbeing.TheBSEhassetupacommitteeofstaffvolunteerswho have been entrusted with the task of organising staffwelfareactivitiesinasystematicmanner.
Amongst the activities undertaken in 2013 included thosethatwerespirituallyoriented,workshopsonpersonalfinancialmanagement and talks on motivation and a team buildingexercise. Details of the staff welfare activities undertaken in2013arepresentedinFigure54.
Figure 54: Activities Undertaken by the BSE Staff Welfare Committee: 2012 -2013
Date ActivityUndertaken
06-Jun-12 SpiritualWellbeing
30-Aug-12 Presentation and Health Tests: NutritionalWellness
01-Aug-12 MotivationalTalk:PersonalDifferentiation
18-Jan-13 Fitness&Lifestyle
15to17-Mar-13 TeamBuildingExercise
05-May-13 Athletics:GaboroneSteinmertzMarathon
15-May-13 Presentation:SilentKillerDiseases
19-Jul-13 Presentation:Health&Safety
04-Sep-13 Presentation: Personal Branding for theWorkplace
Source: BSE
10.6.2 Staff Training
Anyorganisationisonlyaseffectiveasthosethatdrive it.TheBSEiscommittedtodevelopingandretainingstaffwhoarethekeydriversoftheBSEStrategy.
Inordertodevelopandempowerstaffbothinthescienceandart of managing stock exchanges and depositories, the BSEdedicated 6% of total operational expenses in 2013 to stafftraining. Members of staff were nominated to participate incourses and conferencesdependingon their respectivefieldsofexpertise.
Thefollowingtrainingprogrammeswereattendedbystaff:• SecuritiesMarketsOperations&RiskManagement ProgrammeconductedbytheFinancialTechnologies KnowledgeManagementCompany(FTKMC)• OECDConferenceonAfricanPublicDebt ManagementandBondMarkets• Planning,Budgeting&RollingForecastsMasterclass• ElectronicRecords&InformationManagement• BankofNewYorkMelonAnnualDepositoryReceipts Seminar• WorkshoponBondsconductedbytheBondSchool ofHongKong• ProgrammeonProfessionalQualificationfor Regulators• ProgrammeonGlobalSecurities
10.7 FINANCE & ADMINISTRATION
TheconsolidatedrevenueoftheBSEincreasedby17%in2013.This was mainly due to the record turnover achieved in theyear.Theconsolidatedexpensesgrewby9.6%afteradjustingfor reversal of provisionsmadeon account of doubtful debtsamountingtoP2.6Mnin2012.
Interest generated on funds invested in money marketfunds and call deposits doubled in comparison to 2012. Thegrowth in investment income is attributed to the setting upofan InvestmentCommitteewhich is responsible for treasurymanagement.
For the first time since its inception, the CSDB generatedsufficient revenue tomeet its expenditure andmake a profitof P190, 000without depending on the subvention.This is acommendable improvementwhencomparedtoa lossofP1.9Mn(beforeaccountingforthesubvention) in2012.Thistooisattributedtothehighturnoverin2013.
ForthethirdsuccessiveyeartheBSEdidnothavetodependontheGovernment subvention.TheExchangeearnedaprofitofP5.4Mnin2013.
The strong financial performance and the Governmentsubvention contributed P14.9 Mn to reserves in 2013. As at31December2013thereservesoftheBSEwereP31Mn.OnaconsolidatedbasisthereserveswereP35Mn.Itisexpectedthat
BOTSWANA STOCK EXCHANGE Annual Report 2013 BOTSWANA STOCK EXCHANGE REACHING NEW HEIGHTS
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Figure 55: Financial Performance of BSE: 2010 to 2013
2010P’000
2011P’000
2012P’000
2013P’000
BSE CSDB CONSOL BSE CSDB CONSOL BSE CSDB CONSOL BSE CSDB CONSOL
INCOME
CommissionIncome
2,620 1,940 4,560 2,699 2,092 4,791 2,507 1,813 4,320 6,192 4,667 10,859
ListingsandAnnualSusutainingfees
8,335 - 8,335 12,635 - 12,635 16,777 16,777 13,048 - 13,048
OtherIncome 360 304 664 751 441 1,192 529 512 1,041 1,386 648 2,034
Total Income from Operations
11,315 2,244 13,559 16,085 2,533 18,618 19,813 2,325 22,138 20,626 5,315 25,941
-
EXPENDITURE - -
DevelopmentExpenditure
1,356 633 1,990 799 746 1,545 1,492 741 2,233 1,643 975 2,618
AdministrativeExpenditure
10,318 2,810 13,128 11,762 3,074 14,836 10,277 3,463 13,740 13,596 4,150 17,746
Total Expenditure 11,674 3,443 15,117 12,561 3,820 16,381 11,769 4,204 15,973 15,239 5,125 20,364
Profit/(Loss)PriortoSubvention
(359) (1,199) (1,558) 3,524 (1,287) 2,237 8,044 (1,879) 6,165 5,387 190 5,577
Subvention required to break even
359 1,199 1,558 - 1,287 - - 1,879 - - - -
Subventionreceived
1,591 934 2,525 4,039 3,037 7,075 3,145 4,143 7,288 5,025 4,263 9,288
Profit 1,232 (265) 967 7,563 1,750 9,312 11,189 2,264 13,453 10,412 4,453 14,865
ExtenttowhichIncomefromoperationsmeetadministrativeexpenses
100% 80% 100% 100% 82% 100% 100% 67% 100% 100% 100% 100%
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ThecontributionandeffortmadebyeachandeverystaffmemberwhoenabledtheBSEnotonlyto“talkthewalk”but“walkthetalk”isgratefullyacknowledged.
REACHING NEW HEIGHTS
BOTSWANA STOCK EXCHANGE Annual Report 2013 BOTSWANA STOCK EXCHANGE REACHING NEW HEIGHTS
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thesereserveswillbecapitalizedwhentheBSEisconvertedintoacompanyposttheenactmentoftheSecuritiesBill.
11. REGIONAL COOPERATION AND PARTICIPATION AT CONFERENCES
TheCommitteeof SouthernAfrican Stock Exchanges (COSSE)held several meetings in 2013. The BSE participated inmeetingsheldinZimbabweandJohannesburginFebruaryandSeptember2013respectively.
The BSE attended the annual conference hosted by AfricanStockExchangesAssociation (ASEA) inAbidjan, IvoryCoast inDecember2013.
CSDBwasrepresentedattheAfricanandMiddleEastDepositoryAssociation(AMEDA)meetingheldinDubaiinSeptember2013andattheNationalSettlementofDepositoriesconferenceheldinRussiainMay2013.
12. APPRECIATION
IthasbeenmyprivilegetobetheCEOoftheBSEforalmost8years.DuringthisperiodtheBSEhasundergonemanychangesand developments as articulated in the CEO’s Reviews since2006.ManymorechangeswilltakeplaceaftertheenactmentoftheSecuritiesBillandtheBSETransitionBill.
Therehavebeenmanywhohaveassistedustogettothisstage:TheMinistryofFinanceandDevelopmentPlanning(MFDP)hashad the foresight to recognize the importance of the CapitalMarketandtheBSEintheeconomicdevelopmentofBotswana.TheircontinuedsupporttotheBSEisgratefullyacknowledged.I thankNBFIRAandtheBankofBotswanafortheirsupporttotheBSEandCSDBin2013.
Iwishtoacknowledgethesupportandtheguidancereceivedfrom the BSE Main Committee and several Sub-Committees.I wish to thank the Chairman, Mr Patrick O’Flaherty, and allCommitteeMembersfortheircontribution.
BSEreliesheavilyonitsstakeholderstoachieveitsobjectives.IwishtoacknowledgethesupportreceivedfromMemberFirms,Stockbrokers, Participants of CSDB, Settlement Bank, ListedCompaniesandInvestors.
MrMoshe Libengo, Finance and AdministrationManager lefttheBSEinJune2013.IthankhimforthecontributionmadetotheBSEandwishhimsuccessinhisfutureendeavours.
TheBSEoperatesinacontinuouslychangingenvironmentthatis not always congenial and supportive of its objectives. TheBSE’s corporate culturehasbeen forgedbearing this inmind.Frommyperspective, I see the BSE as an organizationwhichis knowledge driven, flexible, adaptable and is continuouslylearning. It isthosewhoworkforanorganizationthatgives itshapeandformitsculture.
“The stuff that allows most pros to succeed cannot be [taught]; among them are willingness to work long and hard, to study and learn, and a fierce determination to succeed.”–ArthurMorris.
The contribution and effort made by each and every staffmemberwhoenabled theBSEnotonly to“talk thewalk”but“walkthetalk”isgratefullyacknowledged.
Hiran Mendis ChiefExecutiveOfficer
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GRAPHICAL REVIEW
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-
1
2
3
4
5
6
7
8
9
10
-‐
500
1,000
1,500
2,000
2,500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cum
.Ave
rage
Dai
ly T
urno
ver (
P'M
n)
Cum
ulat
ive
Turn
over
(P'M
n)
Month
Cumulative Turnover (P'Mn)
Cum. Average Daily Turnover (P'Mn)
211.4 238.6
414.7
824.56
1166.19
763.84
962.8 1007.9 894.7
2,315.4
0
500
1000
1500
2000
2500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Valu
e (P
'Mn)
Year
Equities: 2013
ValueofSharesTraded
ComparisonwithOtherMarkets
VolumeofSharesTraded
TotalMarketCapitalisation
61.93 44.16 87.25
124.6
193.31 167.6
308.7
458.7 409.9
710.5
0
100
200
300
400
500
600
700
800
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
No.
in m
illio
ns
Year
0
100,000
200,000
300,000
400,000
500,000
600,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
P (M
illio
ns)
Year
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GRAPHICAL REVIEW
MonthlyMarketCapitalisation2013
DCI%MonthlyChange
DomesticMarketCapitalisationasa%ofGDP
FCIMonthly%Change
32,000
34,000
36,000
38,000
40,000
42,000
44,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
P (M
illio
ns)
Month
44.83
53.07
40.26 39.14
33.49 30.93 31.55
37.14
0
10
20
30
40
50
60
2006 2007 2008 2009 2010 2011 2012 2013
Perc
enta
ge (%
)
Year
-‐2.00 -‐1.50 -‐1.00 -‐0.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Perc
enta
ge (%
)
Month
-1.00
-0.80
-0.60
-0.40
-0.20
0.00
0.20
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Perc
enta
ge (%
)
Month
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Equities: 2013
MarketPricetoBookValue
DCI&FCIYearly%ChangeIndicesPerformance
PriceEarningsRatio
0
1
2
3
4
5
6
7
8
9
10
2007 2008 2009 2010 2011 2012 2013
Tim
es (X
)
Year
0
2
4
6
8
10
12
14
16
18
2007 2008 2009 2010 2011 2012 2013
Tim
es (X
)
Year
80
84
88
92
96
100
104
108
112
116
120
124
1-Ja
n 14
-Jan
27
-Jan
9-
Feb
22-F
eb
7-M
ar
20-M
ar
2-A
pr
15-A
pr
28-A
pr
11-M
ay
24-M
ay
6-Ju
n 19
-Jun
2-
Jul
15-J
ul
28-J
ul
10-A
ug
23-A
ug
5-Se
p 18
-Sep
1-
Oct
14
-Oct
27
-Oct
9-
Nov
22
-Nov
5-
Dec
18
-Dec
31
-Dec
Inde
x Le
vel
2013
BSE DCI
SEMDEX
JSE ALSI
MSCI EM
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GRAPHICAL REVIEW
Dividendyield
Domesticcompaniesbygainsinmarketcapitalisation
DomesticCompaniesByGainsInPrice
MonthlyTurnover(P’Mn)
0
1
2
3
4
5
6
2007 2008 2009 2010 2011 2012 2013
Perc
enta
ge (%
)
Year
0%
2000%
4000%
6000%
8000%
10000%
12000%
Sefalana FSG
Choppies
FNBB
Engen
Furnmart
ABCH
Primetim
e
Letlole
Sechaba
Chobe
Letshego
Stanchart
Turnsta
r
Cresta
BIHL
Perc
enta
ge
Company
-
50
100
150
200
250
300
350
400
450
500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Turn
over
(P'M
n)
Month Sefa
lana
Sech
aba
Cres
taBI
HL
Chop
pies
Chob
e
Prim
etim
e
Stan
char
t
Wild
erne
ss
Turn
star
Furn
mar
t
Enge
n
Lets
hego
Letlo
le
RDCP
FNBB
ABCHFS
G
0
20
40
60
80
100
Increasein
MarketC
ap(%
)
NAP
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The size of domesticcompanies relative tothesizeoftheeconomy,indicatedby the ratioofmarket capitalisation toGDP,increasedto
in201333.6%
REACHING NEW HEIGHTS
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MARKET STATISTICSTable 1: Number of Companies Listed
2007 2008 2009 2010 2011 2012 2013
NumberofNewListings 2 2 0 2 6 3 1
NumberofDe-listings 2 2 0 3 1 1 3
ForeignListings 11 11 11 9 12 13 12
DomesticListings 20 20 20 21 23 24 23
Total 31 31 31 30 35 37 35
Table 2: Market Capitalization of BSE Listings: 2013
NumberofShares PricePerShare(P) MarketCapitalisation(P)
NewForeignListings(Dual)
ShumbaCoal 168,846,078 1.05* 177,288,382
Total 168,846,078 168,846,078*The price given is the bid price on the listing date of 08 April 2013.
Table 3: BSE Market Capitalization as at Year ended December (P’000,000)
2007 2008 2009 2010 2011 2012 2013
DomesticMarketCapitalisation 32,702.6 27,706.1 28,536.2 26,245.7 30,694.3 35,530.8 43,457.6
ForeignMarketCapitalisation 535,325.0 286,260.2 346,001.1 408,380.3 380,909.5 376,818.2 373,132.8
Total Market Capitalisation 568,027.54 313,966.31 374,537.22 434,625.97 411,603.77 412,349.01 416,590.41
Table 4: Market Capitalisation as at Quarter ended (P’000,000)
2012 2013
Mar Jun Sep Dec Mar Jun Sep Dec
DomesticMarketCapitalisation 32,910.4 33,873.5 34,962.1 35,530.8 39,740.2 41,654.9 41,206.3 43,457.6
ForeignMarketCapitalisation 382,120.4 388,952.7 387,877.1 376,818.2 373,045.8 372,593.4 372,034.8 373,132.8
TotalMarketCapitalisation 415,030.8 422,826.2 422,839.2 412,349.0 412,786.0 414,248.4 413,241.1 416,590.4
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Table 5: Market Capitalization by sector as at Year ended December (P’000,000)
2007 2008 2009 2010 2011 2012 2013
Banking 19,304.4 16,563.2 16,858.3 12,953.8 16,116.8 16,674.8 19,815.1
FinancialServices&Insurance 25,391.5 19,486.8 20,466.1 21,353.5 21,574.8 24,560.7 25,958.9
Retailing&Wholesaling 12,978.1 3,532.9 3,134.7 2,617.5 3,098.3 6,099.8 8,884.8
Property&PropertyTrust 934.8 907.9 944.7 1,083.7 2,788.2 3,180.4 3,603.8
Mining&Materials 508,427.8 272,109.5 331,978.3 393,608.9 365,238.4 359,135.9 355,342.4
SecurityServices 220.0 181.1 188.8 263.0 480.0 465.6 246.4
InformationTechnology 18.9 15.7 7.9 7.6 7.9 11.0 0.0
FuneralServices 0.0 132.0 187.2 224.4 175.2 157.1 297.4
Energy 769.9 702.8 586.2 1,022.2 881.7 983.9 1,296.9
Tourism 295.4 334.4 185.1 1,491.5 1,242.6 1,079.9 1,144.8
Table 6: Market Capitalization by sector as at Quarter ended (P’000,000)
2012 2013
Mar Jun Sep Dec Mar Jun Sep Dec
Banking 16,363.0 17,009.1 17,591.7 16,674.8 18,521.9 19,715.4 19,087.9 19,815.1
FinancialServices&Insurance 21,994.2 21,469.7 21,464.1 24,560.7 26,002.1 25,866.8 25,446.5 25,958.9
Retailing&Wholesaling 4,738.5 5,031.5 5,656.3 6,099.8 7,171.6 7,834.8 8,370.9 8,884.8
Property&PropertyTrust 2,944.6 3,290.6 3,129.9 3,180.4 3,201.6 3,333.6 3,416.9 3,603.8
Mining&Materials 366,203.0 373,308.0 372,238.0 359,135.9 355,263.5 354,816.3 354,266.3 355,342.4
SecurityServices 492.0 473.6 474.4 465.6 464.0 394.4 268.8 246.4
InformationTechnology 7.9 11.0 11.0 11.0 9.8 9.1 9.1 0.0
FuneralServices 158.4 174.1 180.1 157.1 175.3 217.6 215.2 297.4
Energy 881.7 881.7 998.3 983.9 1,022.2 1,135.6 1,237.9 1,296.9
Tourism 1,247.6 1,177.2 1,095.3 1,079.9 954.2 924.7 921.6 1,144.8
Table 7: Trading Statistics as at Year ended December
2009 2010 2011 2012 2013
VolumeTraded(Mn) 167.6 308.7 458.7 409.9 710.5
ValueTraded(P’Mn) 763.9 962.8 1,007.9 894.7 2,315.4
No.ofDeals 4,135 4,971 5,022 6,488 12,029
LiquidityRatio 2.7 3.5 3.5 2.7 5.9
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MARKET STATISTICS
Table 8: Trading Statistics as at Quarter ended
2012 2013
Mar Jun Sep Dec Mar Jun Sep Dec
VolumeTraded(Mn) 75.1 88.4 70.7 175.7 99.7 229.3 134.5 246.9
ValueTraded(P’Mn) 171.6 195.58 146.3 381.3 250.8 684.1 510.4 870,1
No.ofDeals 1,170 1,412 1,366 2,540 2,467 3,824 3,011 2,727
Table 9: BSE Indices as at Year ended December
2007 2008 2009 2010 2011 2012 2013
DCI 8,421.6 7,035.5 7,241.9 6,412.9 6,970.9 7,510.2 9,053.4
FCI 2,201.0 1,192.0 1,418.3 1,673.9 1,703.9 1,599.5 1,583.5
LASI 558.7 670.5 776.2 795.3 752.7 760.8
DFSI 835.7 911.9 771.9 862.5 911.8 1,067.1
FRSI 536.5 654.5 776.3 790.1 731.9 720.3
DCFFI 2,014.6 1,904.7 2,143.7 2,643.7
DFSFFI 3,034.1 2,825.0 3,199.1 3,901.3
LASFFI 1,760.5 1,677.5 1,892.1 2,315.3
Table 10: BSE Indices as at Quarter ended
2012 2013
Mar Jun Sep Dec Mar Jun Sep Dec
DCI 7,037.5 7,238.1 7389.3 7,510.2 8,399.9 8,688.5 8,594.9 9,053.4
FCI 1,709.3 1,668.0 1661.7 1,599.5 1,584.3 1581.2 1,578.8 1,583.5
LASI 797.9 781.4 779.3 752.7 754.1 755.3 753.4 760.8
DFSI 879.4 896.6 905.4 911.8 1,035.9 1,057.7 1,018.4 1,067.1
FRSI 790.5 770.7 766.2 731.9 724.3 722.3 721.1 720.3
DCFFI 1,901.0 1,871.9 1,951.7 2,143.7 2,592.7 2,496.0 2,456.2 2,643.7
DFSFFI 2,820.5 2,723.6 2,809.9 3,199.1 3,993.3 3,750.7 3,600.0 3,901.3
LASFFI 1,676.9 1,649.1 1,719.8 1,892.1 2,268.4 2,179.8 2,149.6 2,315.3
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Table 11: Top Ten Domestic Companies by Volume Traded (Mn)
2012 2013
Company Volume Company Volume
Letshego 224.12 Letshego 237.52
Choppies 37.74 Choppies 140.13
Turnstar 33.54 FNBB 107.34
FNBB 28.04 Turnstar 75.69
Barclays 16.48 FSG 39.73
FSG 13.32 BIHL 23.33
NAP 7.96 NAP 15.60
Letlole 7.85 Stanchart 10.82
Primetime 7.75 Sechaba 8.86
Sefalana 5.87 ABCH 8.31
Table 12: Top Ten Domestic Companies by Value Traded (P’ Mn)
2012 2013
Company Value Company Value
Letshego 359.22 Letshego 550.51
Barclays 114.61 Choppies 415.79
FNBB 78.64 FNBB 393.52
Choppies 69.68 BIHL 246.32
BIHL 56.13 Sechaba 157.63
Turnstar 51.40 Stanchart 125.15
Sechaba 28.19 Turnstar 124.38
FSG 18.58 FSG 78.37
NAP 17.58 Barclays 49.53
Sefalana 16.85 ABCH 41.53
Table 13: Top Ten Foreign Companies by Volume Traded (Mn)
2012
2013
Company Volume Company Volume
Disc.Metals 0.947 Lucara 0.694
AfricanCopper 0.761 AfricanCopper 0.547
BOD 0.631 Shumba 0.498
Blue 0.422 BOD 0.245
Aviva 0.138 Discovery 0.118
Lucara 0.150 Aviva 0.054
A-Cap 0.040 A-Cap 0.025
AFR 0.021 Blue 0.002
CICEnergy 0.014 AfricanEnergy 0.001
Hana 0.007 GG 0.000
BOTSWANA STOCK EXCHANGE Annual Report 2013 BOTSWANA STOCK EXCHANGE REACHING NEW HEIGHTS
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MARKET STATISTICSTable 14: Top Ten Foreign Companies by Value Traded (P’ Mn)
2012
2013
Company Value Company Value
Disc.Metals 11.075 Lucara 7.180
Lucara 0.609 Shumba 0.527
Anglo 0.465 Discovery 0.319
BOD 0.279 AfricanCopper 0.096
AfricanCopper 0.260 BOD 0.095
Blue 0.183 Aviva 0.046
CICEnergy 0.144 A-Cap 0.018
Aviva 0.097 Firestone 0.001
AFR 0.057 GG 0.001
A-Cap 0.047 Blue 0.001
Table 15: Top Ten Domestic Companies by Market Capitalisation (P’ Mn)
2012
2013
Company MarketCap Company MarketCap
FNBB 7,178.36 FNBB 10,331.71
Barclays 5,581.66 Letshego 5,093.72
Letshego 3,817.40 Barclays 4,695.41
Stanchart 2,983.51 Choppies 3,921.85
BIHL 2,909.08 Stanchart 3,490.70
Choppies 2,407.13 BIHL 2,965.30
Sechaba 2,093.65 Sechaba 2,525.95
NAP 1,323.63 NAP 1,329.67
Furnmart 988.51 ABCH 1,297.27
Engen 983.89 Engen 1,296.94
Table 16: Top Ten Foreign Companies by Market Capitalisation (P’ Mn)
2012
2013
Company MarketCap Company MarketCap
Anglo 347,612.36 Anglo 347,613.03
Investec 14,814.01 Investec 15,185.10
Disc.Metals 6,287.00 Lucara 4,331.13
Blue 2,758.64 Blue 2,605.38
Lucara 1,881.46 AfricanEnergy 1,156.84
Firestone 1,093.70 Firestone 869.50
AFR 957.30 Discovery 375.22
Hana 392.00 GG 355.61
GG 355.61 AfricanCopper 267.32
AfricanCopper 250.78 Shumba 184.04
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BOTSWANA STOCK EXCHANGE Annual Report 2013
Table 17: Bond Market Statistics: 2013
BondCode MaturityDate Nominalamount(P) CouponRate% Trade(P)
BBB001 30/10/2014 100,000,000 -
BBS002 15/12/2016 115,000,000 12.00 -
BBS004 26/11/2019 75,000,000 11.10 -
BBS005 03/12/2023 150,000,000 11.20 -
BBS006 04/08/2018 110,000,000 -
BHC017 10/12/2017 286,000,000 -
BHC020 10/12/2020 103,000,000 10.10 -
BW003 31/10/2015 1,642,000,000 10.25 12,924,861
BW005 12/09/2018 1,233,000,000 10.00 5,466,573
BW007 05/03/2025 1,295,000,000 8.00 38,402,188
BW008 08/09/2020 858,000,000 7.75 18,739,044
BW009* 11/09/2013 - 7.25 2,289,988
BW010 08/03/2017 618,000,000 7.75 16,836,922
BW011 10/09/2031 399,000,000 -
BVI001 07/05/2018 70,000,000 11.23 -
BVI002 14/07/2015 50,000,000 -
DPCF004 02/06/2016 220,000,000 10.45 -
DPCF005 02/06/2019 100,000,000 10.60 -
DPCF006 02/06/2022 55,000,000 10.75 -
DPCF007 02/06/2025 35,000,000 10.90 -
FML015 12/07/2015 50,000,000 -
FML025 23/10/2025 150,000,000 8.20 -
LHL005 08/11/2017 50,000,000 8.25 -
LHL006 08/11/2023 200,000,000 10.50 -
LHL007 08/11/2025 75,000,000 10.50 -
LHL008 08/11/2027 25,000,000 11.00 -
NDB001 01/08/2017 165,000,000 11.25 -
SBBL003 01/06/2017 100,000,000 10.50 -
SBBL048 11/06/2015 175,000,000 10.70 -
SBBL056 13/06/2021 50,000,000 -
SCBB003 20/12/2020 50,000,000 10.50 -
SCBB006 12/05/2021 70,000,000 -
SCBB007 27/06/2022 50,000,000 -
SCBB008 27/06/2022 127,260,000 8.20 -
WU001 26/06/2018 195,000,000 10.65 -
WU002 26/06/2026 205,000,000 10.60 -
TOTAL 9,251,260,000 94,659,578
*The BW009 bond matured on September 11, 2013 and had a market capitalisation of P433,000,000 at maturity.
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MARKET STATISTICSTable 18: Bond Market Capitalization by Sector: 2013
Bonds MaturityDate IssueSize
Government
BW003 31/10/2015 1,642,000,000
BW005 12/09/2018 1,233,000,000
BW007 05/03/2025 1,295,000,000
BW008 08/09/2020 858,000,000
BW010 08/03/2017 618,000,000
BW011 10/09/2031 399,000,000
6,045,000,000
Quasi
DPCF004 02/06/2016 220,000,000
DPCF005 02/06/2019 100,000,000
DPCF006 02/06/2022 55,000,000
DPCF007 02/06/2025 35,000,000
410,000,000
Parastatals
BBS002 15/12/2016 115,000,000
BBS004 26/11/2019 75,000,000
BBS005 03/12/2023 150,000,000
BBS006 04/08/2018 110,000,000
BHC017 10/12/2017 286,000,000
BHC020 10/12/2020 103,000,000
BVI001 07/05/2018 70,000,000
BVI002 14/07/2015 50,000,000
NDB001 01/08/2017 165,000,000
WU001 26/06/2018 195,000,000
WU002 26/06/2026 205,000,000
1,524,000,000
Corporate
BBB001 30/10/2014 100,000,000
FML015 12/07/2015 50,000,000
FML025 23/10/2025 150,000,000
LHL005 08/11/2017 50,000,000
LHL006 08/11/2023 200,000,000
LHL007 08/11/2025 75,000,000
LHL008 08/11/2027 25,000,000
SBBL003 01/06/2017 100,000,000
SBBL048 11/06/2015 175,000,000
SBBL056 13/06/2021 50,000,000
SCBB003 20/12/2020 50,000,000
SCBB006 12/05/2021 70,000,000
SCBB007 27/06/2022 50,000,000
SCBB008 27/06/2022 127,260,000
1,272,260,000
TOTAL 9,251,260,000
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COMPANY STRATEGY
Only with rigorous planning and foresightcan we reach our targets””
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market development
product development
innovation
success
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BSE STRATEGY
1.1 INFRASTRUCTURE DEVELOPMENT • CSDimplementedinMay2008,followedby subsequentsharesdematerialisation• Dematerialisationofsharescontinuingsatisfactorily intheCSDSystem• ElectronicCSDaccountstatementslaunchedin2010• DematerialisationofbondsintotheCSDSystem commencedin2011• Morethan20,027investoraccountsopenedasatend ofDecember2013• Morethan59.3%ofdomesticcompanieswere dematerialisedasatendofDecember2013• AutomatedTradingSystem(ATS)wasimplementedin August2012• ATSwassuccessfullyupgradedinJune2013• DocumentationoftheITServiceCatalogueisin progress• Systemshavebeenimplementedtodisseminate onlineinformationtodatavendors• Upgradeofdesktopinfrastructure,ITAuditandre- implementationofpowerinfrastructureintheserver roomhasbeencompleted• DocumentationofITPolicies,Processesand Proceduresisinprogress• Implementationofadataminingsystemisinprogress
1.2 REGULATION
• Codeoncorporategovernanceforlistedcompanies implementedin2008• CSDrulesdraftedbyBSEandimplementedin2008• SettlementcycleoftransactionsintheBSEreduced fromT+5toT+4,andT+3effective2012• Strategiesimplementedtoimprovecomplianceby listedcompanies• CommitteeappointedbyMFDPtoreviewthedraft SecuritiesBillcompleteditsreviewandrecommended severalamendmentswhichhavenowbeen incorporatedintothedraftbill.TheSecurities
BillisexpectedtobepresentedtoParliamentinthe secondhalfof2014• EnactmentoftheSecuritiesBillwillenableBSEto proceedonseveraldevelopmentinitiativeswhichwill includethecorporatizationoftheBSE• ATSTradingRulesforDebtandEquityinstruments implementedin2012• TradingintheATSextendedbyonehoureffective4 Novemberin2013• Rulesformarketmakersandforshortsellingisin progress• Digitizationoflistingfilesisinprogress
1.3 MARKET DEVELOPMENT
• ImprovementsmadetoBSEpublications• SelectedBSEpublicationstranslatedintoSetswana• Seriesofroadshowsheldnationwidetoeducate generalpublicabouttheBSE• BSEalsoparticipatedatexhibitionsandfairsaroundthe country• Continuedawarenesscreationcampaignsconducted targetingretailinvestors• Commencedawarenesscreationonthelistingprocess targetedatcompanieswiththepotentialtolist• PromotedpublicityoftheBSEoperationsbyinviting thepublictoviewliveBSEtradingsessions• HeldConferencesandworkshopstomarketthe BSEbrand,productdevelopmentandstrategy.These conferencesare;CreatingWealthforBatswanain2007, ExchangeTradedFundsin2008,Securitisationandthe BondMarketin2008,CreditRatingWorkshopin2008.• Strategicallianceswithkeyinstitutionsfostered• PartneredwithBotswanaTelevisiontosponsorthe businesssegmentofthe“DailyBreakfastShow”• Partneredwiththemediabycontributingarticlesand takingpartinradioandtelevisiontalkshows• BSEconductingmarketperformancepresentations
1. PROGRESS ON THE BSE STRATEGY
TheBSEhasmadeprogressinachievingstrategicobjectivesasdetailedintheBSE’sstrategicplan.Asynopsisofprogresstodateisgivenbelow:
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onRB1programmesof“TseleleTsele”and“Sefalana SaPapadi”andtheRB2programmeof“Business Twighlight”everyyear• BSEconductingmarketperformancepresentationson BTVprogrammeof“FirstIssues”• BSEpublishedacartoonstripbooklettitled“Sheleng”• ATSsnippetsonYaRonaFMranafterATS implementationin• ETFssnippetsonYaRonaFMairedtoadvertiseETFs• InauguralBSESeniorSecondarySchoolsFinanceand InvestmentQuizin2013• IncreasedvisibilityoftheBSEbyputtingup7billboards invariousplacesinBotswanain2013• Re-vampingoftheBSEwebsitetostartin2014• CorporateSocialInvestmentinitiativesuccessfully undertakenwithadoptionoftwoprimaryschoolsin 2013;SebelePrimarySchoolandXakaoPrimarySchool• WorkingwithSassyDivaonthe‘DonateaPad’project undertheCSIinitiatives
1.4 PRODUCT DEVELOPMENT
• Seriesofindicesconstructedusing“totalreturn” methodology• Seriesofindicesbasedon“freefloat”constructed• Librarytoassistresearchestablished• StrategicAlliancesformedwithAbsaCapitalSA& NedbankCapitaltoimplementETFsintheBSE• DuallistedtheNewGoldExchangeTradedFundinJuly
2010inpartnershipwithAbsaCapital• NedbankCapitalmadeseveralpresentationstofund managers,brokersandotherinterestedpartiestoraise awareontheBettaBetaETFin2011• DuallistedtheBettabetaEquallyWeightedTop40ETF inMay2011inconjunctionwithNedbankCapital• Heldseveralmeetingswithstrategicpartnersto appraisethemoftheBSE’splanstointroduceContract forDifference(CFDs)• PartneredwithGeometricProgressionCCofSouth Africatoconductfinancialmarketcoursessince2010• BondMarketAssociationestablishedin2010,with representationfromseveralmarketparticipants• ConsolidatedtheBondMarketDevelopmentStrategy Paperin2011• BondMarketAssociationofficiallyregisteredwith theRegistrarofSocietiestobecomeafull-fledged Association• ConceptpapersonCFDsapprovedbyBSEBoard• Compiledaresearchpaperaimingatprovidingfindings andrecommendationsforpromotingthetrading, clearingandsettlementofgovernmentbonds throughtheBSEtoenhanceliquidity,pricediscovery andthedevelopmentofamarketdeterminedyield curve.• AmendedDebtListingandTradingRulesin2012• BSEcurrentlyrevisingDebtListingRequirements• Threebondindiceslaunchedin2013inconjunction withNedbankCapital• 3BondIndiceslaunchedin2013
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• HeldaworkshoponGlobalDepositoryReceipts(GDRs) andanotheroneonETFsin2013• BSEdraftedlistingrulesforGDRs• BrochuresforETFsanddebtinstrumentscompleted• Contractnegotiationwithinternationaldata vendorsfordisseminationoftradingdatasecured, negotiationswithotheron-going
1.5 ORGANISATION STRUCTURE AND HUMAN RESOURCE DEVELOPMENT
•Performanceappraisalsystemforstaffimplemented• BSEcontinuedtotrainstaffthroughworkshops, conferencesandcoursesonoperationsofthestock exchange• TheBSEcontinuestoofferinternshiptograduates underthegovernment’sinternshipprogramme• AprojectaboutevaluatingtheBSE’sorganisation structure,jobprofiles,HRpoliciesandprocedures,Code ofConductaswellassuccessionandretentionplans completedin2012• Internalauditfunctionimplemented• InternalAuditfunctionisbeingreviewedwiththe intentiontointernaliseitinfuture• Teambuildingexercisesbeingdoneannually• Staffwelfareandwellnessactivitieshosted
1.6 GOVERNANCE STRUCTURE
• BSEBoardCharteradopted• Differentiationbetween“independent”and“non independent”committeemembersmadeinthe constitutionofsub-committees
1.7 FINANCIAL RESOURCES
• BSEBoardCharteradopted• Differentiationbetween“independent”and“non- independent”committeemembersmadeinthe constitutionofsub-committees• BSEfeesontransactionsrationalisedtoreduce dependenceongovernmentsubventionaswellas rationalisationofexpenditurebybenchmarking againstotherexchanges• BSEStrategicplanreviewinprogressaimedat CommercialisationoftheExchange• Breakevenlevelsofturnoverandlevelofdependence ongovernmentcomputed• Implementationofactivitybasedmanagementsystems isinprogress
BSE STRATEGY
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It is only through theinteractionofthevariousstakeholders and eachappreciating the other’sresponsibilities that therequiredmomentumcanbecreated
REACHING NEW HEIGHTS
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CORPORATE GOVERNANCE2. BOARD SUB-COMMITTEES
2.1 Listings and Trading Sub-Committee
The Listings and Trading sub-committee sets policy andformulatesruleswithregardtolistingsandtradingmatters.Itapproveslistingapplicationsthatrequirespecialdispensationfrom the listing rules referred to them by the ExecutiveCommittee.
ThemembersoftheListingsandTradingsub-committeeare:
MEMBER ATTENDANCE
PatrickO’Flaherty 1/1
ReginaVaka* 1/1
KabeloMohohlo 1/1
GregoryMatsake 1/1*Appointed with effect from June 2013
2.2 Audit Sub-Committee
The Audit sub-committee assists the main committee indischarging itsdutiesrelatingtothesafeguardingofassets,theoperationofadequatesystems,controlprocessesandthepreparation of accurate financial reporting and statementsin compliance with all applicable legal requirements andaccountingstandards.
ThemembersoftheAuditsub-committeeare:
MEMBERS ATTENDANCE
IponengSennanyana 8/8
SelekaMokama* 2/5
ElainaGonsalves 6/8
GoitseoneKgaodi 1/8
GregoryMatsake 6/8* Term ended June 2013
1. Main Commitee
The Main Committee of the BSE established in terms of theBSEAct ismadeupof 3members appointedby theMinisterof Finance and Development Planning and a maximum of 6memberselectedbymemberbrokers,subjecttoamaximumof2personselectedfromanyonebrokingcompany.
The functions of themainCommittee are to set the strategicdirectionoftheBSEandtoensurethattheBSEisbeingmanagedinlinewithpoliciessetbythecommittee.The BSE Board for the year was constituted by the followingmembers:
MEMBER POSITION DATE AND PERIOD OF APPOINTMENT
Elected Members
PatrickO’Flaherty Chairperson Firstelectedin2010
MartinMakgatlhe* Member Firstelectedin1998
SelekaMokama* Treasurer Firstelectedin2008
KabeloMohohlo Member ElectedinMay2011
GregoryMatsake Treasurer ElectedinMay2012
GoitseoneKgaodi Member ElectedinMay2012
Appointed Members
IponengSennanyana
Member First appointed in2010
ElainaGonsalves Member Appointed inOctober2011
ReginaVaka** Vice-Chairperson Appointed in June2013
Prof.JohnKiggundu**
Member Appointed in June2013
* Term ended June 2013
**Appointed with effect from June 2013
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Thestridesmadein2013arejustaminisculerealizationofthelatentpotentialthatexistsforthedevelopmentof the capital market inBotswana.
REACHING NEW HEIGHTS
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2.3 Investigations and Disciplinary Sub-Committee
The Investigations and Disciplinary sub-committee hearscomplaintsmade against any broker or broking firm (tradingparticipant)referredtoitbytheBSEoranymemberofthepublicand determines its findings following a hearing; including, ifapplicable,pronouncementofsanctions.
The members of the Investigations and Disciplinary sub-committeeare:
MEMBERS ATTENDANCE
IponengSennanyana 1/1
Prof.JohnKiggundu* 0/0
ElainaGonsalves 1/1 *Appointed with effect from June 2013
2.4 Governance and Remuneration Sub-Committee
Governance and Remuneration sub-committee is responsibleforallmatters relating tocorporategovernanceandpracticesoftheBSE,nominationsofmemberstobeappointedtotheBSECommitteeandsub-committeesaswellastermsandconditionsofemploymentformanagementoftheBSE.
ThemembersofGovernanceandRemunerationsub-committeeare:
MEMBERS ATTENDANCE
ElainaGonsalves 8/8
IponengSennanyana 8/8
Prof.JohnKiggundu* 3/6*Appointed with effect from June 2013
2.5 Botswana Stock Exchange Security Fund Sub- Committee
Botswana Stock Exchange Security Fund was establishedto provide compensation for losses incurred under certaincircumstances by registered stockbrokers, employees orassociates and agents of registered stockbrokers or brokingmembers. The sub-committee is responsible for all mattersrelating to thegovernanceof the fundasoutlined in theBSEAct.
ThemembersoftheBSESecurityFundsub-committeeare:
MEMBERS ATTENDANCE
ElainaGonsalves 2/2
KabeloMohohlo 2/2
MartinMakgatlhe** 1/1
ReginaVaka* 0/1*Appointed with effect from June 2013
** Term ended June 2013
Members MainComm. Listings&Trading
Audit Invest.&Discip.
Gov.&Renum.
SecurityFund
BSEAGM
P.O’Flaherty 5/5 1/1 1/1
M.Makgatlhe** 0/0 1/1 0/1
E.Gonsalves 4/5 6/8 1/1 8/8 2/2 1/1
I.Sennanyana 5/5 8/8 1/1 8/8 1/1
G.Kgaodi 5/5 1/8 1/1
S.Mokama** 2/3 2/5 1/1
G.Matsake 5/5 1/1 6/8 1/1
K.Mohohlo 5/5 1/1 2/2 1/1
Prof.JohnKiggundu* 2/2 0/0 3/6 0/0
ReginaVaka* 2/2 1/1 0/1 0/0*Appointed with effect from June 2013
** Term ended June 2013
3. ATTENDANCE AT MEETINGS OF THE MAIN COMMITTEE AND SUB-COMMITTEES
COMMITTEEFEESTheBSEpaysMembersasittingallowancebasedontheratessetbyGovernment.
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FINANCIAl STATEMENTS
By purposefully planning for prosperity, we will achieve the greatness we aspire to””
StatementofMainCommittee’sresponsibilities 103
Reportoftheindependentauditors 104
Statementsofprofitorlossandothercomprehensiveincome 105
Statementsoffinancialposition 106
Statementsofchangesinequity 107
Statementsofcashflows 108
Accountingpolicies 109-116
Financialriskmanagement 117-120
Criticalaccountingestimatesandjudgments 121
Notestothefinancialstatements 122-129
Supplementary information
Detailedstatementofprofitorlossandothercomprehensiveincome 130
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TheMainCommitteeofBotswanaStockExchange (the“Exchange”) is responsible for thepreparationandfairpresentationof the
annualgroupfinancial statements, comprisingof theExchangeandgroup statementsoffinancialpositionat31December2013
andthestatementsofprofitorlossandothercomprehensiveincome,changesinequityandcashflowsforyearthenended,andthe
notestothefinancialstatements,whichincludeasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation,in
accordancewithInternationalFinancialReportingStandards.
TheExchangemaintainssystemsofinternalcontrol,whicharedesignedtoprovidereasonableassurancethattherecordsaccurately
reflect its transactions and to provide protection against seriousmisuse or loss of company assets. TheMain Committee is also
responsibleforthedesign,implementation,andmaintenanceandmonitoringofthesesystemsofinternalfinancialcontrol.Nothing
hascometotheattentionoftheMainCommitteetoindicatethatanysignificantbreakdowninthefunctioningofthesesystemshas
occurredduringtheyearunderreview.
TheMainCommitteehasperformedanassessmentofthegroup’sabilitytocontinueasagoingconcernbasedonthegroup’sbudgets
andavailablecashresourcesandhavenoreasontobelievethatthegroupwillnotbeagoingconcernintheforeseeablefuture.
Theexternalauditorisresponsibleforreportingonwhethertheannualgroupfinancialstatementsarefairlypresentedinaccordance
withInternationalFinancialReportingStandards.TheexternalauditorshaveunrestrictedaccesstotheMainCommittee.
Thefinancialstatementssetoutonpages105to129andthesupplementaryinformationonpage130wereauthorisedforissueby
theMainCommitteeon25thApril2014andaresignedonitsbehalfby:
MEMBERMEMBER
STATEMENT OF THE MAIN COMMITEE’S RESPONSIBILITIES FOR THE YEAR ENDED 31 DECEMBER 2013
BOTSWANA STOCK EXCHANGE AND ITS SUBSIDIARY COMPANY
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BOTSWANA STOCK EXCHANGE REACHING NEW HEIGHTS
Independent Auditor’s Report
BOTSWANA STOCK EXCHANGE AND ITS SUBSIDIARY COMPANY
WehaveauditedtheconsolidatedandseparatefinancialstatementsofBotswanaStockExchange(the“Exchange”),whichcomprise
the statementsoffinancialpositionat31December2013and the statementsofprofitor lossandother comprehensive income,
changesinequityandcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatory
notes,assetoutonpages105to129.
Main Committee’s responsibility for the financial statements
The Main Committee is responsible for the preparation and fair presentation of these financial statements in accordance with
International FinancialReportingStandards, and for such internal control as thecommitteedetermine isnecessary toenable the
preparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Auditor’s responsibility
Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.Weconductedourauditinaccordance
withInternationalStandardsonAuditing.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformthe
audittoobtainreasonableassurancewhetherthefinancialstatementsarefreefrommaterialmisstatement.
Anaudit involvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosures inthefinancialstatements.
Theproceduresselecteddependontheauditor’sjudgement,includingtheassessmentoftherisksofmaterialmisstatementofthe
financialstatements,whetherduetofraudorerror. Inmakingthoseriskassessments,weconsider internalcontrol relevanttothe
entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in
thecircumstances,butnot for thepurposeofexpressinganopinionontheeffectivenessof theentity’s internalcontrol.Anaudit
alsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadeby
management,aswellasevaluatingtheoverallpresentationofthefinancialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
Opinion
Inouropinion,thefinancialstatementspresentatrueandfairviewoftheconsolidatedandseparatefinancialpositionofBotswana
StockExchangeat31December2013anditsconsolidatedandseparatefinancialperformanceandconsolidatedandseparatecash
flowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandards.
KPMG
CertifiedAuditors
Gaborone
29April2014
Per:AGDevlin
Practisingmember:19960060.23
totheMembersoftheMainCommitteeoftheBotswanaStockExchange
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GROUP EXCHANGE Notes 2013 2012 2013 2012 P P P P
Revenue 1 24458305 21594964 19256442 19300420
Governmentsubvention 15(c) 9287768 7287770 5024868 3144970
Otherincome 31225 60277 31225 60164Income 33777298 28943011 24312535 22505554
Administrativeexpenses 2 (20364412) (15973014) (15239352) (11769185)
Operating profit 13412886 12969997 9073183 10736639
Financeincome 4 1451980 482158 1338901 452152Profit before income tax 14864866 13452155 10412084 11188521
Incometaxexpense 5 - - - -
Profitfortheyear 14864866 13452155 10412084 11188521
Othercomprehensiveincome - - - -
Total comprehensive incomefor the year 14864866 13452155 10412084 11188521
BOTSWANA STOCK EXCHANGE Annual Report 2013
STATEMENT OF PROFIT OR LOSS AND OTHER COMPRENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2013
BOTSWANA STOCK EXCHANGE AND ITS SUBSIDIARY COMPANY
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GROUP EXCHANGE Notes 2013 2012 2013 2012 P P P P
ASSETSNon-current assets
Plantandequipment 7 3215467 3294275 1464808 1453378 Investmentinsubsidiary 6 - - 100 100 3215467 3294275 1464908 1453478
Current assets Tradeandotherreceivables 8 3205173 3430302 2382052 7278726Taxrefundable 276603 276603 - -Moneymarketinvestments 9 30778128 17293236 27122895 17293236Cashandbankbalances 9 4250333 7297131 3536947 4904307 38510237 28297272 33041894 29476269
Total assets 41725704 31591547 34506802 30929747
EQUITY Capital and reserves Proprietaryrightscapital 10 5200 5200 5200 5200Rightspremium 777476 777476 777476 777476Retainedearnings 35567848 23396590 28505394 20786918
36350524 24179266 29288070 21569594
Non-current liabilities Deferredleaseliability 13 147838 70529 147838 70529
Current liabilities Tradeandotherpayables 11 2533734 3208737 2377286 5156609AmountsduetotheBotswanaStock ExchangeSecurityFund 12 2693608 4021776 2693608 4021776Bankoverdraft 9 - 111239 - 111239 5227342 7341752 5070894 9289624
Total equity and liabilities 41725704 31591547 34506802 30929747
BOTSWANA STOCK EXCHANGE REACHING NEW HEIGHTS
STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2013
BOTSWANA STOCK EXCHANGE AND ITS SUBSIDIARY COMPANY
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Proprietary Rights Retained Total Rights Premium Income Capital P P P P
Year ended 31 December 2012Balanceat1January2012 5200 777476 13966211 14748887Previouslyreportedprofitfortheyear - - 13452155 13452155TransfertotheBotswanaStockExchangeSecurityFund(note12) - - (4021776) (4021776)
Balance at 31 December 2012 5200 777476 23396590 24179266
Year ended 31 December 2013Balanceat1January2013 5200 777476 23396590 24179266Profitfortheyear - - 14864866 14864866TransfertotheBotswanaStockExchangeSecurityFund(note12) - - (2693608) (2693608)
Balance at 31 December 2013 5200 777476 35567848 36350524
EXCHANGE
Year ended 31 December 2012 Balanceat1January2012 5200 777476 13620173 14402849Profitfortheyear - - 11188521 11188521TransfertotheBotswanaStockExchangeSecurityFund(note12) - - (4021776) (4021776)
Balance at 31 December 2012 5200 777476 20786918 21569594
Year ended 31 December 2013Balanceat1January2013 5200 777476 20786918 21569594Profitfortheyear - - 10412084 10412084TransfertotheBotswanaStockExchangeSecurityFund(note12) - - (2693608) (2693608)
Balance at 31 December 2013 5200 777476 28505394 29288070
IntermsoftheBotswanaStockExchangeAct,1994,section72(3),theExchangeisrequiredtotransferannually,thegreaterofP5000orhalfofitsannualprofittotheBotswanaStockExchangeSecurityFund(note12).
STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2013
BOTSWANA STOCK EXCHANGE AND ITS SUBSIDIARY COMPANY
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GROUP EXCHANGE Notes 2013 2012 2013 2012 P P P P
Cash flows from operating activitiesCashgeneratedfromoperations 14 14076821 12649974 11724114 10614986
Provisionaltaxpayments - (276603) - -
Cash generated from operating activities 14076821 12373371 11724114 10614986
Cash flows from investing activitiesPurchaseofproperty,plantandequipment 7 (957692) (2474852) (467701) (470930)Interestreceived 4 1451980 482158 1338901 452152
Net cash used investing activities 494288 (1992694) 871200 (18778)
CashflowsfromfinancingactivitiesAmountspaidtoBotswanaStockExchangeSecurityFund 12 (4021776) (1762563) (4021776) (1762563)
Net cash used in financing activities (4021776) (1762563) (4021776) (1762563)
Increase in cash and cash equivalents 10549333 8618114 8573538 8833645Cashandcashequivalentsatbeginningofyear 24479128 15861014 22086304 13252659
Cash and cash equivalents at the end of year 9 35028461 24479128 30659842 22086304
Cash and cash equivalents comprise:-Cashonhandandcashatbank 4250333 7297131 3536947 4904307-Moneymarketinvestments 30778128 17293236 27122895 17293236-Bankoverdraft - (111239) - (111239)
35028461 24479128 30659842 22086304
STATEMENTS OF CASHFLOWSFOR THE YEAR ENDED 31 DECEMBER 2013
BOTSWANA STOCK EXCHANGE AND ITS SUBSIDIARY COMPANY
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Reporting entity
BotswanaStockExchangeisinvolvedintheregulationandpromotionoflistinganddealingofsharesandothersecuritieslistedontheStockExchange.Theprincipalaccountingpoliciesappliedinthepreparationofthesegroupfinancialstatementsaresetoutbelow.Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated.
Basis of preparation
StatementofcomplianceThe financial statements have been prepared in accordancewith IFRS and its interpretations adopted by the InternationalAccountingStandardsBoard(“IASB”).
Basisofmeasurement
Thefinancialstatementsarepreparedonahistoricalcostsbasis.
Functionalandpresentationcurrency
Thegroup’sfinancialstatementsarepresentedinPula,whichisthegroup’sfunctionalcurrency.
Useofestimatesandjudgements
ThepreparationoffinancialstatementsinconformitywithIFRSrequirestheuseofcertaincriticalaccountingestimates.Italsorequiresmanagementtoexerciseitsjudgementintheprocessofapplyingthegroup’saccountingpolicies.Theareasinvolvingahigherdegreeofjudgementorcomplexity,orareaswhereassumptionsandestimatesaresignificanttothegroup’sfinancialstatementaredisclosedinthe“Criticalaccountingestimatesandassumptions”sectionofthesefinancialstatements.
Estimatesandjudgmentsarecontinuallyevaluatedbasedonhistoricalexperienceandotherfactors,includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.
New standards and interpretations not yet effective
Thefollowingnewstandards,amendmentstostandardsandinterpretationsarenotyeteffectivefortheyearended31December2013,andhavenotbeenappliedinpreparingthesefinancialstatements.
Amendments to IAS 32 Financial Instrument, Presentation: Offsetting financial assets and financial liabilitiesTheseamendmentsclarifywhenanentitycanoffsetfinancialassetsandfinancialliabilities.Theseamendments,whichbecomeeffectivefortheentity’s2014financialstatements,withearlyadoptionpermitted,arenotexpectedtohaveanyimpactonitsfinancialstatements.Amendments to IFRS 10, IFRS 12 and IAS 27: Investment entitiesTheseamendmentsclarifythataqualifyinginvestmententityisrequiredtoaccountforinvestmentsincontrolledentities,aswellasinvestmentsinassociatesandjointventures,atfairvaluethroughprofitorloss.Theonlyexceptionwouldbesubsidiariesthatareconsideredanextensionoftheinvestmententity’sinvestmentactivities.Theconsolidationexemptionismandatoryandnotoptional.
Theseamendments,whichbecomeeffectivefortheentity’s2014financialstatements,withearlyadoptionpermitted,arenotexpectedtohaveanyimpactonitsfinancialstatements.
AmendmentstoIAS36:Recoverableamountdisclosuresfornon-financialassetsTheseamendmentsreversetheunintendedrequirementinIFRS13FairValueMeasurementtodisclosetherecoverableamountofeverycash-generatingunittowhichsignificantgoodwillorindefinite-livedintangibleassetshavebeenallocated.Undertheseamendments,therecoverableamountisrequiredtobedisclosedonlywhenanimpairmentlosshasbeenrecognisedorreversed.
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Theseamendments,whichbecomeeffectivefortheentity’s2014financialstatements,withretrospectiveadjustmentsforperiodscommencing1January2014andearlyadoptionpermitted,arenotexpectedtohaveanyimpactonitsfinancialstatements.
IFRIC 21 LeviesLevieshavebecomemorecommoninrecentyears,withgovernmentsinanumberofjurisdictionsintroducingleviestoraiseadditionalincome.Currentpracticeonhowtoaccountfortheseleviesismixed.IFRIC21providesguidanceonaccountingforleviesinaccordancewithIAS37Provisions,ContingentLiabilitiesandAssets.Thisinterpretation,whichbecomeseffectivefortheentity’s2014financialstatements,withretrospectiveadjustmentsforperiodscommencing1January2014,isnotexpectedtohaveanyimpactonitsfinancialstatements.
Amendments to IAS 39: Novation of derivatives and continuation of hedge accountingIAS39FinancialInstruments:RecognitionandMeasurementrequiresanentitytodiscontinuehedgeaccountingifthederivativehedginginstrumentisnovatedtoaclearingcounterparty,unlessthehedginginstrumentisbeingreplacedaspartoftheentity’soriginaldocumentedhedgingstrategy.
TheseamendmentsaddalimitedexceptiontoIAS39,toproviderelieffromdiscountinganexistinghedgingrelationship,whenanovationwasnot contemplated in theoriginalhedgingdocumentationmeets specific criteria.Theseamendments,whichbecomeeffectivefortheentity’s2014financialstatements,withretrospectiveadjustmentsforperiodscommencing1January2014andearlyadoptionpermitted,arenotexpectedtohaveanyimpactonitsfinancialstatements.
Amendments to IAS 19: Defined benefit plans: Employee contributionsTheseamendments introducerelief thatwill reducethecomplexityandburdenofaccountingforcertaincontributions fromemployeesorthirdparties.Suchcontributionsareeligibleforpracticalexpedientiftheyare:
• setoutintheformaltermsoftheplan;
• linkedtoservice;and
• independentofthenumberofyearsofservice.
Whencontributionsareeligible for thepracticalexpedient, anentity ispermitted (butnot required) to recognise themasareductionoftheservicecostintheperiodinwhichtherelatedserviceisrendered.Ifanentitywithadefinedbenefitplanthatrequiresemployeestocontributetotheplanchoosestoapplythisamendment,theentitywillrecognisethecontributionsasreductionoftheservicecostsintheperiodinwhichtherelatedserviceisrendered.Thisamendmentwhichbecomeseffectivefor theentity’s2015financial statements,with retrospectiveadjustments forperiodscommencing1 January2015andearlyadoptionpermitted,isnotexpectedtohaveanyimpactonitsfinancialstatements.
IFRS 9: Financial instrumentsIFRS 9 (2009) introduces new requirements for the classification andmeasurement of financial assets. Under IFRS 9 (2009),financialassetsareclassifiedandmeasuredbasedonthebusinessmodelinwhichtheyareheldandthecharacteristicsoftheircontractualcashflows.IFRS9(2010)introducesadditionsrelatingtofinancialliabilities.TheIASBcurrentlyhasanactiveprojecttomakelimitedamendmentstotheclassificationandmeasurementrequirementsofIFRS9andaddnewrequirementstoaddresstheimpairmentoffinancialassetsandhedgeaccounting.
TheeffectivedateofIFRS9was1January2015.Theeffectivedatehasbeenpostponedandanewdateisyettobespecified.Theentitywilladoptthestandardinthefirstannualperiodbeginningonorafterthemandatoryeffectivedate(oncespecified).TheimpactoftheadoptionofIFRS9hasnotyetbeenestimatedasthestandardisstillbeingrevisedandimpairmentandmacro-hedgeaccountingguidanceisstilloutstanding.
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Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Exchange and entities controlled by theExchange(itssubsidiaries)(collectivelyreferredtoasthe“Group”).
TheGroupcontrolsasentitywhenitisexposedto,orhasrightsto,variablereturnsfromitsinvolvementwiththeentityandhastheabilitytoaffectthesereturnsthroughitspowerovertheentity.Subsidiariesarefullyconsolidatedfromthedateonwhichcontrolistransferredtothegroup.Theyarede-consolidatedfromthedatethatcontrolceases.
Thegroupappliestheacquisitionmethodtoaccountforbusinesscombinations.Theconsiderationtransferredfortheacquisitionofasubsidiaryisthefairvaluesoftheassetstransferred,theliabilitiesincurredtotheformerownersoftheacquireeandtheequityinterestsissuedbythegroup.Theconsiderationtransferredincludesthefairvalueofanyassetorliabilityresultingfromacontingentconsiderationarrangement.Identifiableassetsacquiredandliabilitiesandcontingentliabilitiesassumedinabusinesscombinationaremeasuredinitiallyattheirfairvaluesattheacquisitiondate.
Thegrouprecognisesanynon-controllinginterestintheacquireeonanacquisition-by-acquisitionbasis,eitheratfairvalueoratthenon-controllinginterest’sproportionateshareoftherecognisedamountsofacquiree’sidentifiablenetassets.
TheExchangecontrolstheCentralSecuritiesDepositoryCompanyofBotswanaLimited,whichisacompanyregisteredintheRepublicofBotswana.
Plant and equipment
Itemsofplantandequipmentaremeasuredathistoricalcostlessaccumulateddepreciationandimpairmentslosses.Historicalcostincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheassets.
SubsequentexpenditurerelatingtoanitemofplantandequipmentiscapitalizedonlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeuseoftheassetwillflowtotheCompanyanditscostcanbemeasuredreliably.AllothersubsequentexpenditureisrecognisedasanexpenseintheStatementofprofitorlossandothercomprehensiveincomeasincurred.
Depreciationisbasedoncostofanassetlessitsresidualvalue.Depreciationonassetsiscalculatedusingthestraight-linemethodovertheirestimatedusefullivesasfollows:
Leaseholdimprovements thelowerofperiodofleaseandtenyearsOfficeequipment 4-10yearsMotorvehicles 3-5yearsFurnitureandfittings 8-10years
Theassets’residualvaluesandusefullivesarereviewed,andadjustedifappropriate,ateachstatementoffinancialpositiondate.When the carrying amount of the assets exceeds its recoverable amount, the carrying value of the asset is adjusted to itsrecoverableamountthroughtheStatementofprofitorlossandothercomprehensiveincome.
GainsandlossesondisposalsaredeterminedbycomparingthedisposalproceedswiththecarryingamountandarerecognisedintheStatementofprofitorlossandothercomprehensiveincome.
Foreign currency translation
Transactionsincurrenciesotherthanthegroup’sfunctionalcurrency(Pula)arerecordedattherateofexchangeprevailingatthetimeofthetransaction.Monetaryassetsandliabilitiesinothercurrenciesaretranslatedatratesofexchangerulingattheendofthefinancialyear.ExchangegainsorlossesarisingontranslationarerecognisedintheStatementofprofitorlossandothercomprehensiveincomeexceptinthecaseofexchangegainsorlossesinrespectofforeignfinancingspecificallyarrangedforcapitalprojectswheredifferencesareincludedinthecostsoftheassetsconcerneduntilthecommissioningofsuchassets.
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Cash and cash equivalents
Cashandcashequivalentsincludescashinhand,depositsheldatcallwithbanks,othershort-termhighlyliquidinvestmentswithoriginalmaturitiesofthreemonthsorlessandbankoverdrafts.Bankoverdraftsareshownwithinthecurrentliabilitiesonthestatementoffinancialposition.
Trade and other receivables
Tradereceivablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,lessprovisionforimpairment.
Aprovisionforimpairmentoftradereceivablesisestablishedwhenthereisobjectiveevidencethatthegroupwillnotbeableto collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor,probabilitythatthedebtorwillenterbankruptcyorfinancialreorganisation,anddefaultordelinquencyinpayments(morethan30daysoverdue)areconsideredindicatorsthatthetradereceivableis impaired.Thecarryingamountoftheassetisreducedthroughtheuseofanallowanceaccount,andtheamountofthelossisrecognisedintheStatementofprofitorlossandothercomprehensive incomewithin‘administrativeexpenses’.Whena trade receivable isuncollectible, it iswrittenoffagainst theadministrative account for trade receivables. Subsequent recoveries of amounts previously written off are credited against‘administrativeexpenses’intheStatementofprofitorlossandothercomprehensiveincome.
Trade and other payables
Tradepayablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffective interestmethod.
Provisions
Provisionsarerecognisedwhenthegrouphasapresentobligation(legalorconstructive)asaresultofapastevent,itisprobablethatanoutflowofresourceswillberequiredtosettletheobligation,andareliableestimateoftheamountoftheobligationcanbemade.
Employee benefits
Adefinedcontributionplanisapensionplanunderwhichthegrouppaysfixedcontributionsintoaseparateentity(afund)andwillhavenolegalorconstructiveobligationstopayfurthercontributionsifthefunddoesnotholdsufficientassetstopayallemployeesbenefitsrelatingtoemployeeserviceinthecurrentandpriorperiods.
ThegrouppayscontributionstoGlenrandMIB(Botswana)(Proprietary)Limited,whoadministersapensioninsuranceplanforthegroup.TheregularcontributionsarerecognisedintheStatementofprofitorlossandothercomprehensiveincomeorlossasincurred.
Employeeentitlementstoannualleaveandgratuityarerecognisedwhentheyaccruetoemployeesandaprovisionismadefortheestimatedliabilityasaresultofservicesrenderedbyemployeesuptothestatementoffinancialpositiondate.Contractstaffarepaidterminalgratuitiesinaccordancewiththeirrespectiveemploymentcontract.
Taxation
ThegroupisexemptfromincometaxationinaccordancewithparagraphXVofpart1ofthesecondscheduletotheIncomeTaxAct(Chapter52.01).CentralSecuritiesDepositoryCompanyofBotswanaLimitedreceiveditstaxexemptioncertificatein2013fromBotswanaUnifiedRevenueServices(“BURS”).BURShasconcurredtocancelallincometaxassessmentspreviouslyissuedtotheCompanyandrefundtaxpaidtodate.Consequenttotheprecedingexplanation,noprovisionforcurrentanddeferredtaxationhavebeenrecognisedinthefinancialstatements.
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Proprietary rights
Proprietaryrightscapitalisrecognisedatthefairvalueoftheconsiderationreceivedbythegroup
Botswana Stock Exchange Security Fund
IntermsoftheBotswanaStockExchangeAct,1994(Section77(3)),theExchangeisrequiredtotransferincashorsecuritiestotheBotswanaStockExchangeSecurityFund,thegreaterofhalfoftheExchange’sprofitsandP5000onanannualbasis.
Forthepurposeofthistransfer,profitsexcludeanydonations,grantorotherfinancialsupportreceivedfromtheGovernmentofBotswana.
Leases
Leases of assetswhere the lessor retains all the risks and rewards of ownership are classified as operating leases. Paymentsmadeunderoperatingleasesarechargedtotheincomestatementonastraight-linebasisovertheperiodofthelease.Whenanoperatingleaseisterminatedbeforetheleaseperiodhasexpired,anypaymentrequiredtobemadetothelessorbywayofpenaltyisrecognisedasanexpenseintheperiodwhichterminationtakesplace.
Leasesofproperty,plantandequipmentwherethegroupassumessubstantiallyallrisksandrewardsofownershipareclassifiedasfinanceleases.Financeleasesarecapitalisedatvaluesunderlyingestimatedpresentvalueoftheleasepayments.Eachleasepaymentisallocatedbetweentheliabilityandfinancechargestoachieveaconstantrateonthefinancebalanceoutstanding.Theinterestischargedtotheincomestatementovertheperiodofthelease.Theassetisdepreciatedoveritsusefullife.
Revenue recognition
Revenuecomprisestheinvoicedvalueforservicesrendered,netofvalueaddedtax.Thefollowingspecificrecognitioncriteriaisadoptedforthespecificrevenuestream:
Botswana Stock exchange feesIn termsof theBotswanaStockExchangeMembersRules,0.12%-0.15%of the transactionvalue for tradeson theStockExchangeisduetotheExchange.Revenueisrecognisedontradingdateunlesscollectabilityisindoubt.
InterestInterestrevenueisaccruedbyreferencetotheprincipaloutstandingandattheeffectiveinterestrateapplicable,whichistheratethatexactlydiscountsestimatedfuturecashreceiptsthroughtheexpectedlifeofthefinancialassettothatasset’snetcarryingamountoninitialrecognition.
Listing feesListingfeesanddocumentationfeesarebilledasandwhentheservicesareprovided.Revenueisrecognisedoninvoicingoronlistingoftherelevantsecurity.
Annual sustaining feesAnnualsustainingfeeisrecognisedonatimeproportionbasisunlesscollectionisindoubt.
Member feesAnnualmember/dealerfeesareinvoicedinadvancefortheyearunlesscollectionisindoubt.
Central Securities Depository (CSD) feesCSDfeeischargedonthetransactionvalue(forboththebuyerandtheseller)whichischargedat0.1%onthetransactionvalue.Revenueisrecognisedonthetradingdateunlesscollectabilityisindoubt.
Other incomeRevenueisrecognisedonanaccrualbasisinaccordancewiththesubstanceoftheunderlyingtransaction.
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17.
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Government subvention
MonetaryGovernmentsubventionsarerecognisedattheirfairvaluewherethereisreasonableassurancethatthecompanywillcomplywithallattachedconditions.GrantsrelatingtocostsaredeferredandrecognisedintheStatementofprofitorlossandothercomprehensiveincomeovertheperiodnecessarytomatchthemwiththecoststheyareintendedtocompensate.
Non-monetarysubventionsarerecognisedatnominalamounts incurredtoobtainsuchsubventions.Thegroupdoesnotowntheautomatedtradingsystemusedinitsoperations.ThesoftwarehasbeenprovidedbythegovernmentofBotswanaatnocost.Financial instrumentsFinancialassetsandliabilitiesarerecognisedonthegroup’sstatementoffinancialpositionwhenthegroupbecomespartytothecontractualprovisionsofinstrumentsasfollows:
Financial assetsFinancialassetsareclassifiedintothefollowingspecifiedcategories:financialassetsas‘atfairvaluethroughprofitorloss’,‘held-to-maturityinvestments’,‘available-for-sale’financialassetsand‘loansandreceivables’.Theclassificationdependsonthenatureandpurposeofthefinancialassetsanddeterminedatthetimeofinitialrecognition.
-Financialassetsatfairvaluethroughprofitorlossarestatedatfairvalue,withanyresultantgainorlossrecognisedinprofitorloss.Thenetgainorlossrecognisedinprofitorlossincorporatesanydividendorinterestearnedonthefinancialassets.-Held-to-maturity investments are recorded at amortised cost using the effective interestmethod less impairment,withrevenuerecognisedonaneffectiveyieldbasis.-Available-for-salefinancialassetsarenon-derivativesthatareeitherdesignatedinthiscategoryornotclassifiedinanyoftheothercategories.Theyareincludedinnon-currentassetsunlessmanagementintendstodisposeoftheinvestmentwithin12monthsofthestatementoffinancialposition.-Loansandreceivablesareinitiallyrecognisedatfairvalueandsubsequentlymeasuredatamortizedcost.Provisionismade,whereintheopinionofthedirectors,animpairmentinvaluehasoccurred.
Financial liabilitiesFinancialliabilitiesareclassifiedaseitherfinancialliabilitiesatfairvaluethroughprofitorlossorotherfinancialliabilities.
Financialliabilitiesatfairvaluethroughprofitorlossarestatedatfairvalue,withanyresultantgainorlossrecognisedinprofitorloss.Thenetgainorlossrecognisedinthestatementofprofitorlossandothercomprehensiveincomeincorporatesanyinterestpaidonthefinancialliability.
Otherfinancialliabilities,includingborrowings,areinitiallymeasuredatfairvalue,netoftransactioncosts.Otherfinancialliabilities are subsequently measured at amortized cost using the effective interest method, with the interest expenserecognisedonaneffectiveyieldbasis.
Fair value hierarchyThegroupmeasuresfairvaluesusingthefollowingfairvaluehierarchywhichreflectsthesignificanceoftheinputsinmakingthemeasurements:
Level1:Quotedmarketpriceinanactivemarketforanidenticalinstrument.
Level2:Valuationtechniquesbasedonobservableinputs,eitherdirectly(i.e.asprices)orindirectly(i.e.derivedfromprices).Thiscategoryincludesinstrumentsvaluedusingquotedmarketpricesinactivemarketsforsimilarinstruments;quotedpricesforidenticalorsimilarinstrumentsinmarketsthatareconsideredlessthanactive;orothervaluationtechniqueswhereallsignificantinputsaredirectlyorindirectlyobservablefrommarketdata.
Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where thevaluationtechniqueincludesinputsnotbasedonobservabledataandtheunobservableinputshaveasignificanteffectontheinstrument’svaluation.Thiscategoryincludesinstrumentsthatarevaluedbasedonquotedpricesforsimilarinstrumentswheresignificantunobservableadjustmentsorassumptionsarerequiredtoreflectdifferencesbetweentheinstruments.
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GROUP 2012
2012 Total Amortised cost Current Non-current
ASSETS
Property,plantandequipment 3294275 - - - 3294275 - 3294275Taxationrefundable 276603 - 276603 - - 276603 -Tradeandotherreceivables 3430302 - 3430302 - - 3430302 -Moneymarketinvestment 17293236 - 17293236 - - 17293236 -Cashandbankbalances 7297131 - 7297131 - - 7297131 - 31591547 - 28297272 - 3294275 28297272 3294275
LIABILITIESAmountduetoBSESecurityFund 4021776 - - 4021776 - 4021776 -Tradeandotherpayables 3208737 - - 3208737 - 3208737 -Deferredleaseliability 70529 - - - 70529 - 70529Bankoverdraft 111239 - 111239 - - 111239 - 7412281 - 111239 7230513 70529 7341752 70529
At fair value through
profit andloss
Loans and receivables
Financial assets and liabilities Current/non-current
Non-financial
instruments
GROUP 2013
2013 Total Amortised cost Current Non-current
ASSETS
Property,plantandequipment 3215467 - - - 3215467 - 3215467Taxationrefundable 276603 - 276603 - - 276603 -Tradeandotherreceivables 3205173 - 3205173 - - 3205173 -Moneymarketinvestment 30778128 - 30778128 - - 30778128 -Cashandbankbalances 4250333 - 4250333 - - 4250333 - 41725704 - 38510237 - 3215467 38510237 3215467
LIABILITIESAmountduetoBSESecurityFund 2693608 - - 2693608 - 2693608 -Tradeandotherpayables 2533734 - - 2533734 - 2533734 -Deferredleaseliability 147838 - - - 147838 - 147838 5375180 - - 5227342 147838 5227342 147838
Financial assets and liabilities Current/non-current
Non-financial
instruments
At fair value through
profit andloss
Loans and receivables
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EXCHANGE 2013
2013 Total Amortised cost Current Non-current
ASSETS
Property,plantandequipment 1464808 - - - 1464808 - 1464808Investmentinsubsidiaries 100 - - - 100 - 100Tradeandotherreceivables 2382052 - 2382052 - - 2382052 -Moneymarketinvestment 27122895 - 27122895 - - 27122895 -Cashandbankbalances 3536947 - 3536947 - - 3536947 - 34506802 - 33041894 - 1464908 33041894 1464908
LIABILITIES Tradeandotherpayables 2377286 - - 2377286 - 2377286 -AmountduetoBSESecurityFund 2693608 - - 2693608 - - 2693608Deferredleaseliability 147838 - - - 147838 - 147838
5218732 - - 5070894 147838 2377286 2841446
At fair value through
profit andloss
Loans and receivables
Financial assets and liabilities Current/non-current
Non-financial
instruments
EXCHANGE 2012
2012 Total Amortised cost Current Non-current
ASSETS
Property,plantandequipment 1453378 - - - 1453378 - 1453378Investmentinsubsidiary 100 - - - 100 - 100Tradeandotherreceivables 7278726 - 7278726 - - 7278726 -Moneymarketinvestment 17293236 - 17293236 - - 17293236 -Cashandbankbalances 4904307 - 4904307 - - 4904307 - 30929747 - 29476269 - 1453478 29476269 1453478
LIABILITIES Tradeandotherpayables 5156609 - - 5156609 - 5156609 -AmountduetoBSESecurityFund 4021776 - - 4021776 - - 4021776Bankoverdraft 111239 - 111239 - - - -Deferredleaseliability 70529 - - - 70529 70529 -
9360153 - 111239 9187385 70529 5227138 4021776
At fair value through
profit andloss
Loans and receivables
Financial assets and liabilities Current/non-current
Non-financial
instruments
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OverviewThegrouphasexposure tocredit risk, liquidity risk, interest rate riskandmarket risk thatarises in thenormalcourseof thegroup’sbusiness.Thisnotepresentsinformationaboutthegroup’sexposuretoeachoftheserisks,thegroup’sobjectives,policiesandprocessesformeasuringandmanagingtheserisks,andthegroup’smanagementofcapital.Furtherquantitativedisclosuresareincluded.
TheMainCommitteehaveoverallresponsibilityfortheestablishmentandoversightofthegroup’sriskmanagementframework.
Thegroup’sriskmanagementpoliciesareestablishedtoidentifyandanalysetherisksfacedbythegroup,tosetappropriaterisklimitsandcontrols, and tomonitor risksandadherence to limits.Riskmanagementpoliciesandsystemsare reviewed regularly to reflectchangesinmarketconditionsandthegroup’sactivities.
TheMainCommitteeoverseehowmanagementmonitorscompliancewiththegroup’sriskmanagementpoliciesandproceduresandreviewstheadequacyoftheriskmanagementframeworkinrelationtotherisksfacedbythegroup.
Thefollowingtableindicatesthecarryingandfairvaluesoffinancialinstrumentsatthereportingdate:
GROUP EXCHANGE 2013 2012 2013 2012 P P P P
Financial assets
Tradereceivables 537574 1323610 512810 1249482Otherreceivables 84127 81774 84127 81774Receivablesfromrelatedparty 2322391 1821943 1583745 5762870Cashandcashequivalents 35028461 24479128 30659842 22086304 37972553 27706455 32840524 29180430
Financial liabilities
Tradeandotherpayables 2533734 3208737 2377286 5156609
Credit riskThegrouphasexposuretocreditrisk,whichistheriskthatacounterpartywillbeunabletopayamountsinfullwhendue.Keyareaswherethegroupisexposedtocreditriskare:-amountsduefromgroupcompanies,-amountsduefromtradeandotherreceivables,and-investmentsincashandcashequivalents.
Exposuretothirdpartiesismonitoredaspartofthecreditcontrolprocess.Themaximumexposuretocreditriskispresentedbythecarryingamountofeachfinancialassetinthestatementoffinancialposition.Reputablefinancialinstitutionsareusedforinvestingandcashhandlingpurposes.Allmoneymarketinstrumentsandcashequivalentsareplacedwithfinancial institutions registered inBotswana.Banks inBotswanaarenot ratedbuteachof thebanksconcernedaresubsidiariesofmajorSouthAfricanregisteredinstitutionsandareregulatedbyBankofBotswana.
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Exposure to credit riskThecarryingamountoffinancialassetsrepresentsthemaximumcreditexposure.Themaximumexposuretocreditriskatthereportingdateisanalysedasfollows:
GROUP EXCHANGE 2013 2012 2013 2012 P P P PReceivablefromrelatedparty 2322391 1821943 1583745 5762870Tradeandotherreceivables 621701 1405384 596937 1331256Cashandcashequivalents 35028461 24479128 3065984222086304
37972553 27706455 32840524 29180430
Noimpairmentwasrecognisedasthetradeandrelatedpartyreceivablesbalancewerereceivedinfullsubsequenttothereportingdate.Thisisconsistentwiththepriorperiod.
GROUP 31-Dec-13 31-Dec-12 Credit Credit Counterparty Rating limit Balance limit Balance P P
BarclaysBankofBotswana N/A N/A 2362595 N/A 1232166StandardCharteredBank N/A N/A 1816342 N/A 6062465StanlibInvestmentManagementServices N/A N/A 12125147 N/A 17293236AfricanAllianceAssetManagement N/A N/A 18652981 N/A -
EXCHANGE Counterparty
BarclaysBankofBotswana N/A N/A 2362595 N/A 1232166StandardCharteredBank N/A N/A 1102956 N/A 3669641StanlibInvestmentManagementServices N/A N/A 12125147 N/A 17293236AfricanAllianceAssetManagement N/A N/A 14997748 N/A -
Nocreditlimitswereexceededduringthereportingperiod,andmanagementdoesnotexpectanylossesfromnon-performancebythesecounterparties.TherearenocreditratingsavailableinBotswana.Thefairvalueapproximatestheircarryingamounts.
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Carrying amountdue within 6
months
Carrying amountdue within 6
months
Contractualcash-flows
Contractualcash-flows
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Liquidityrisk
Liquidityriskistheriskthatthegroupwillnotbeabletomeetitsfinancialobligationsastheyfalldue.Thegroup’sapproachtomanagingitsliquidityistoensure,asfaraspossible,thatithassufficientliquidfundsavailabletomeetitsliabilitieswhendue,bothundernormalandadverseeconomicconditions,withoutincurringunacceptablelossesorriskingdamagetoitsreputation.
Thegroupensuresthatithassufficientcashondemandtomeetitsexpectedoperationalexpensesforaperiodof30days,includingthe servicingofanyfinancialobligations.Thisexcludes thepotential impactofextremecircumstanceswhichcannotbe reasonablypredicted,forexamplenaturaldisasters.
Thematurityprofileofthegroup’sfinancialliabilitiesbasedoncontractualcashflowissummarisedasfollows:
GROUP EXCHANGE 2013
Tradeandotherpayables 2533734 2533734 2377286 2377286
2012
Tradeandotherpayables 3208737 3208737 5156609 5156609
Interest rate risk
Financialinstrumentssubjecttovariableinterestratesconsistsofpositivecashbalancesheldwithfinancialinstitutions.InterestratesapplicabletothesebalancesfluctuatewithmovementsintheBotswanaprimelendingrates,andarecomparablewithratescurrentlyavailableinthemarket.Thegroup’svariableinterestratesinstrumentsareanalysedasfollows:
GROUP EXCHANGE 2013 2012 2013 2012Variablerateinstruments
Moneymarketinvestment 30778128 17293236 27122895 17293236
Theaverageinterestratesperannumapplicabletothesefinancialinstruments
5.17% 5.61% 5.17% 5.61%
Achangeof50basispointsininterestratesduringthereportingperiodwouldhaveincreased/(decreased)therespectivegroup’sandexchange’sprofitbeforetaxationasfollows:
Increaseof50basispointsMoneymarketinvestment 153891 86466 135614 86466
Decreaseof50basispointsMoneymarketinvestment (153891) (86466) (135614) (86466)
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BOTSWANA STOCK EXCHANGE REACHING NEW HEIGHTS
FINANCIAL RISK MANAGEMENTFOR THE YEAR ENDED 31 DECEMBER 2013
BOTSWANA STOCK EXCHANGE AND ITS SUBSIDIARY COMPANY
Market risk
TheGroupprimaryrevenueisfixedintermsoftheBotswanaStockExchangeAct,1994andthelistingandtradingrulesandisthereforenotsignificantlysusceptibletomarketrisk.
Capital risk management
Thegroup’sobjectiveswhenmanagingcapitalaretosafeguarditsabilitytocontinueasagoingconcerninordertoperformthemandateforwhichitwascreatedandbenefitsforotherstakeholdersandtomaintainanenvironmentoftransparencyforlistedcompanies,thepublicanditsstakeholders.Thegrouphadnoborrowingsduringtheyearsended31December2012and31December2013.ThegroupisownedandsupportedbyGovernmentofBotswanawhoprovidesthenecessarysupporttosustaintheoperationsofthegroup.
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Estimatesandjudgmentsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactors,includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.
Thegroupmakesestimatesandassumptionsconcerningthefuture.Theresultingaccountingestimateswill,bydefinition,rarelyequaltherelatedactualresults.Theestimatesandassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyearareoutlinedbelow:
Useful lives and residual values for plant and equipment
Thegrouptestsannuallywhether,theusefullifeandresidualvalueestimateswereappropriateandinaccordancewithitsaccountingpolicy.Residualvaluesofcomputers,plantandequipmentandmotorvehiclesarebasedoncurrentestimatesofthevalueoftheseassetsattheendoftheirusefullives.Theestimateresidualvaluesofmotorvehicleshavebeendeterminedbymanagementbasedontheirknowledgeoftheindustry.
Impairment of receivables
ThegroupfollowstheguidanceofIAS39todeterminewhenareceivableisimpaired.Thisdeterminationrequiressignificantjudgement.Inmaking this judgement, thegroupevaluates, amongother factors, significant financial difficultiesof thedebtor, probability thatthedebtorwillenterbankruptcyanddefaultordelinquencyinpayments,includingfactorssuchasindustryandsectorperformance,changesintechnologyandoperationalandfinancingcashflow.
BOTSWANA STOCK EXCHANGE Annual Report 2013
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
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GROUP EXCHANGE 2013 2012 2013 2012 P P P PRevenue Listingandannualsustainingfees 13047961 16777350 1304796116777350Commissionincome 10858799 4290199 6192231 2507320Members’fees 16250 15750 16250 15750Miscellaneousfees 535295 511665 - -
24458305 21594964 1925644219300420
Administrative expenses Auditfees-currentyear 130000 130000 85000 85000-prioryear(over)/underprovision 7004 (16482) 7004 (19389)Employeebenefitexpenses(note3) 12152401 12128200 9328118 9522618Advertisingcosts 1017807 949152 1017807 934850Depreciation(note7) 1036500 718910 456271 547337Operatingleasecosts 930939 552941 797819 470137Reversalofimpairmentprovisionofdebtors - (2598750) -(2598750)Baddebtimpairment 46 - - -Computerexpenses 1601407 1284117 625600 557430Consultingfees 543395 237852 543395 237852Seminarsandconferences 431960 216993 431960 216993Travellingandaccommodationexpenses 562524 572247 562524 572247Members’sittingallowances 142380 147420 86940 95340Otherexpenses 1808049 1650414 12969141147520
20364412 15973014 1523935211769185Employee benefit expenses Salariesandotherterminationbenefits 9905609 9908187 7466742 7611056Pensioncostsandgratuity 1981997 2018419 1596581 1709968Otherbenefits 264795 201594 264795 201594 12152401 12128200 9328118 9522618
Averagenumberofpersons employedduringtheyear 19 22 14 17
Finance income Interestincomeonshortterminvestments 1451980 482158 1338901 452152
Income tax expenseTheBotswanaStockExchangeisexemptfromincometaxinaccordancewiththeIncomeTaxAct.
Investment in subsidiaryCostofshares - - 100 100 The investment in subsidiary comprises of 100% share investment in theCentral SecuritiesDepositoryCompanyof BotswanaLimited,acompanyincorporatedintheRepublicofBotswana.
1.
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2013
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Plant and equipment Leasehold Office Furniture Motor Improvements Equipment & Fittings Vehicles Total GROUP P P P P P
Year ended 31 December 2012Openingnetbookamount 167306 425898 372134 572995 1538333Additions 178375 2253537 42940 - 2474852Depreciation(note2) (35124) (416431) (63534) (203821)(718910)
Closingnetbookamount 310557 2263004 351540 369174 3294275
At 31 December 2012Cost 583817 3974333 638861 912955 6109966Accumulateddepreciation (273260) (1711329) (287321) (543781)(2815691)
Netbookamount 310557 2263004 351540 369174 3294275
Year ended 31 December 2013Openingnetbookamount 310557 2263004 351540 369174 3294275Additions 31250 863231 63211 - 957692Depreciation(note2) (47538) (821078) (64413) (103471)(1036500)
Closingnetbookamount 294269 2305157 350338 265703 3215467
At 31 December 2013Cost 615067 4837564 702072 912955 7067658Accumulateddepreciation (320798) (2532407) (351734) (647252) (3852191)
Netbookamount 294269 2305157 350338 2657033215467
EXCHANGE
Year ended 31 December 2012Openingnetbookamount 167306 417350 372134 572995 1529785Additions 178375 263827 28728 - 470930Depreciation(note2) (35124) (246161) (62231) (203821) (547337)Closing net book amount 310 557 435 016 338 631 369 174 1 453 378
At 31 December 2012Cost 583817 1962785 624649 912955 4084206Accumulateddepreciation (273260) (1527769) (286018) (543781)(2630828)Net book amount 310 557 435 016 338 631 369 174 1 453 378Year ended 31 December 2013Openingnetbookamount 310557 435016 338631 369174 1453378Additions 31250 399471 36980 - 467701Depreciation(note2) (47538) (242270) (62992) (103471) (456271)Closing net book amount 294 269 592 217 312 619 265 703 1 464 808
At 31 December 2013Cost 615067 2362256 661629 912955 4551907Accumulateddepreciation (320798) (1770039) (349010) (647252)(3087099)Net book amount 294 269 592 217 312 619 265 703 1 464 808
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2013
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GROUP EXCHANGE 2013 2012 2013 2012 P P P PTradeandotherreceivablesReceivablesfromrelatedparty 2322391 1821943 1583745 5762870Feereceivables 537574 1323610 512810 1249482Prepaymentsanddeposits 261081 202975 201370 184600Otherreceivables 84127 81774 8412781774
3205173 3430302 2382052 7278726
Prepaymentsanddepositsareexcludedfromthetradeandotherreceivablesbalancefor fairvaluepurposes,asthisanalysis isrequiredonlyforfinancialinstruments.
At31December2013,feereceivablesandotherreceivablesofP526799(2012:P1188796)andP512395(2012:P1128767)werefullyperformingforthegroupandexchangerespectively.
At31December2013,feereceivablesofP10775(2012:P134814)andP415(2012:P120715)werepastduebutnotimpairedforthegroupandexchangerespectively.Theserelatetoanumberofindependentcustomersforwhomthereisnohistoryofdefault.
GROUP EXCHANGE 2013 2012 2013 2012 P P P P
Upto3months 10360 42803 - 34509>3to6months 415 92011 41586206
10775 134814 415 120715
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2013
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GROUP EXCHANGE 2013 2012 2013 2012 P P P PProprietary rights capitalIssuedproprietaryrightscapital 5200 5200 5200 5200
TheholdersofproprietaryrightsareentitledtoreceiveinterestataratefixedbytheExchangeintheannualgeneralmeeting.Suchinterestmaynotexceedthebalanceavailablefrominterestordividendsoninvestedfunds.
Trade and other payablesTradepayables 285028 1317899 227049 3330747VATpayable 129089 44455 30619 (20520)Otherpayables 2119617 1846383 2119618 1846382
2533734 3208737 2377286 5156609
Amounts due to the Botswana Stock Exchange Security Fund
Balanceat1January 4021776 1762563 4021776 1762563Statutorytransferfortheyear 2693608 4021776 2693608 4021776Settledduringtheyear (4021776) (1762563) (4021776) (1762563)Balanceat31December 2693608 4021776 2693608 4021776 Deferred lease liability Non-current 147838 70529 147838 70529 Current - - - -Balanceat31December 147838 70529 147838 70529
GROUP EXCHANGE 2013 2012 2013 2012 P P P P
Lessthanoneyear 879,629 659191 879,629 659191Betweenoneandfiveyears 2201841 2305282 2201841 2305282
Total 3081470 2964473 3081470 2964473
10.
11.
12.
13.
Thegroupleasesitsofficepremisesunder2operatingleasefacilities.TheleasesrunfromFebruary2013andApril2012respectivelyandbothexpireinMarch2017.Bothleaseshavearenewaloptionuponexpiry.Amountsrecognisedasanexpenseinprofitorlossinrespectofoperatingleasesarediscloseinnote1tothefinancialstatements.Leasepaymentsareescalatedeveryyearbythelowerof7%andtheconsumerpriceindex.
Attheendofthereportingperiod,thefutureminimumleasepaymentsundernon-cancellableoperatingleasesarepayableasfollows:
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2013
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GROUP EXCHANGE 2013 2012 2013 2012 P P P PCash and cash equivalentsMoney market investments StanlibInvestmentManagementServices 12125147 17293236 12125147 17293236AfricanAllianceAssetManagement 18652981 - 14997748 - 30778128 17293236 2712289517293236
TheStanlibInvestmentManagementServicesinvestmentisunsecured,earnsinterestof5.61%(2012:5.61%)perannumandhasnofixedmaturitydate.Theinvestmentcanbeliquidatedsubjecttoanoticeperiodof48hourstotheinvesteecompany.
TheAfricanAllianceAssetManagementinvestmentisunsecured,earnsinterestof4.73%(2012:nil%)perannumandhasnofixedmaturitydate.Theinvestmentcanbeliquidatedsubjecttoanoticeperiodof48hourstotheinvesteecompany.
Cash and bank balances
Cashonhandandatbank 784782 2395324 71396 2500Short-termbankdeposits 3465551 4901807 34655514904307
Totalcashonhandandatbank 4250333 7297131 3536947 4904307
Bankoverdraft - (111239) -(111239)
4250333 7185892 3536947 4793068
Forthepurposeofthestatementofcashflows,cashandcashequivalentsattheendoftheyearcomprisethefollowing:
Moneymarketinvestment 30778128 17293236 27122895 17293236Cashandbankbalances 4250333 7185892 3536947 4793068
35028461 24479128 30659842 22086304
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2013
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GROUP EXCHANGE 2013 2012 2013 2012 P P P PCash generated from operations
Profitfortheyear 14864866 13452155 10412084 11188521Adjustmentfor:-Depreciation(note7) 1036500 718910 456271 547337-Financeincome(note4) (1451980) (482158) (1338901) (452152)Changesinworkingcapital-Tradeandotherreceivables 225129 (2834200) 4896674 (4547422)-Deferredleaseliability 77309 (84947) 77309 (84947)-Tradeandotherpayables (675003) 1880214 (2779323) 3963649Cashgeneratedfromoperations 14076821 12649974 11724114 10614986
Related party transactions
Thefollowingtransactionswerecarriedoutwithrelatedparties.
a)Membershipfees
-StockbrokersBotswana(Pty)Ltd 3750 3750 3750 3750-ImaraCapitalSecurities(Pty)Ltd 4500 4000 4000 3750-AfricanAllianceSecuritiesBotswanaLimited 4500 4000 4000 3750-MotswediSecurities(Pty)Ltd 4000 4250 4000 4250
16250 15750 16250 15750
14..
15.
Relatedpartiesareentitiesundercommoncontrolorownership.TheExchangewassetupbytheBotswanaStockExchangeAct,1994,andisthereforerelatedtotheGovernmentofBotswana.AllstockbrokerswhoaremembersoftheBotswanaStockExchangearealsorelatedparties.
BOTSWANA STOCK EXCHANGE Annual Report 2013
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2013
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GROUP EXCHANGE 2013 2012 2013 2012 P P P PRelated party transactions (continued) Listing and annual sustaining fees on Government bonds (at .125% on nominalvalue of Government bonds 7000000 7000000 70000007000000
c) Government Subvention
GovernmentoftheRepublicofBotswana 9287768 7287770 5024868 3144970
d) Transfer to the Botswana Stock Exchange Security Fund 2693608 4021776 2693608 4021776
e) Sitting allowances by the Committee members 142380 147420 86940 95340
f ) Remuneration for senior managers 6558783 8068894 5192043 6681723
g) Year end balances
Receivables -GovernmentoftheRepublicofBotswana 2322391 1821943 1256666 786243-CentralSecuritiesDepositoryCompany ofBotswanaLimited - - 327079 4976627
2322391 1821943 1583744 5762870
Payables-CentralSecuritiesDepositoryCompany ofBotswanaLimited - - - 2071700-BotswanaStockExchangeSecurityFund 2693608 4021776 2693608 4021776
2693608 4021776 2693608 6093476
15.
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2013
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Commitments
Thegrouphadnosignificantcapitalcommitmentsasat31December2013.
Contingent liabilities
Nosignificantcontingentliabilitiesexistedasat31December2013.
Events after the reporting date
Maincommitteemembersconfirmthattherearenoeventsoccurredafterthereportingdatethatrequiresadjustmentstoordisclosuresinthesefinancialstatements.
Fiduciary accounts
Thegroup,throughitssubsidiary,isacustodianofbrokers’liquiditybankaccounts.Brokers’liquiditybankaccountsareusedtotemporarilyholdbuyerdepositsbetweentransactiontradeandsettlementdatespendingclearanceoftransactionscarriedoutontheBotswanaStockExchange.Thecompany,throughitsauthorisedsignatories,instructsthebanktoreleasethecashinthebroker’sliquidityaccountforsettlementofrelevantExchangetransactionengagedwiththeseller.Thefollowingwerethebrokers’liquiditybankbalancesasattheendoftheyear:
2013 2012 P P
Favourablebankbalances 1999480 1325340Bankoverdrafts - (1541637)
1999480 (216 297)
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BOTSWANA STOCK EXCHANGE Annual Report 2013
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2013
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2013 2012 P P RevenueCommissionincome 6192231 2507320Listingandannualsustainingfees 13047961 16777350Members’fees 16250 15750Governmentsubvention 5024868 3144970Otherincome 31225 60164Total income 24312535 22505554
Administrative expensesAdvertising 1017807 934850Auditfees 92004 65611Reversalofimpairmentprovisionofdebtors - (2598750)Bankcharges 29330 30925Cleaning 65420 49698Communicationexpenses 304455 371140Computerexpenses 625600 557430Consultingfees 543395 237852Recruitmentexpenses 88088 42885Donations - 1500Depreciation 456271 547337Electricity 80994 92831Entertainment 42489 74290Insurance 125105 107144Internshipallowances 87364 20000Legalfees 31206 -Libraryexpenses 15221 14084Members’sittingallowances 86940 95340Motorvehicleexpenses 58817 54216Officeexpenses 47773 38601Printingandstationery 44576 30848Rent 797819 470137Repairsandmaintenance 76738 31975Salariesandwages 9063323 9321024Securitycosts 42521 32168TrainingLevy 24130 24009Seminarsandconferences 431960 216993Staffwelfare 264795 201594Subscriptions 122754 120896Travellingandaccommodationexpenses 562524 572247Water 9933 10310 15239352 11769185
Operatingprofit 9073183 10736369Finance incomeInterestincome 1338901 452152
Profit for the year 10412084 11188521
Thedetailedstatementofprofitorlossandothercomprehensiveincomedoesnotformpartofthefinancialstatementscoveredbytheauditopiniononpage5.
BOTSWANA STOCK EXCHANGE REACHING NEW HEIGHTS
DETAILED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2013
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Principal activities
RegulatingandpromotingthelistinganddealinginsharesandothersecuritieslistedontheBotswanaStockExchange(BSE).
Committees of the Botswana Stock Exchange
MainCommittee
Ministerial appointees:
ElainaGonsalvesIponengSennanyanaProfessorJohnKiggundu(appointedJune2013)
Elected Members:
PatrickO’Flaherty(Chairperson)MartinMakgatlhe(resignedJune2013)GregoryMatsakeSelekaMokama(resignedJune2013)GoitseoneKgaodiKabeloMohohloReginaVaka(appointedJune2013)
MembershipofSubCommittees:
(1) Listings and trading
PatrickO’Flaherty(Chairperson)MartinMakgatlhe(resignedJune2013)KabeloMohohloSelekaMokama(resignedJune2013)GregoryMatsake(appointedJune2013)ReginaVaka(appointedJune2013)
(2) Audit
IponengSennanyana(Chairperson)ElainaGonsalvesSelekaMokama(resignedJune2013)GregoryMatsakeGoitseoneKgaodi(appointedJune2013)
(3) Investigations and disciplinary
ElainaGonsalvesIponengSennanyanaProfessorJohnKiggundu(appointedJune2013)
(4) Governance & Remuneration
ElainaGonsalves(Chairperson)IponengSennanyanaProfessorJohnKiggundu(appointedJune2013)
GENERAL INFORMATION
BOTSWANA STOCK EXCHANGE AND ITS SUBSIDIARY COMPANY
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Chief Executive Officer
HiranMendis
Secretary to the Board of Directors
LatelangChakalisa
Regulator
Non-BankFinancialInstitutionRegulatoryAuthority(NBFIRA)FirstFloorMVAHousePlot50367ShowgroundPrivateBag00314Gaborone
Postal address
PrivateBag00417Gaborone
Independent auditors
KPMG
Bankers
StandardCharteredBankofBotswanaLimitedBarclaysBankofBotswanaLimited
(ThefinancialstatementsareexpressedinPula,thecurrencyofBotswana)
Compiled and edited by
ThapeloTsheoleandKopanoBolokwe
Design and Layout by
RedPepperPRC
Printed by
ImpressionHouse
BOTSWANA STOCK EXCHANGE REACHING NEW HEIGHTS
GENERAL INFORMATION
BOTSWANA STOCK EXCHANGE AND ITS SUBSIDIARY COMPANY