Sechaba Holdings Limited, the parent company to Kgalagadi Breweries Limited (KBL) says its recent decision to change the frequency of dividend pay out to shareholders should not be mistaken for a change in the overall dividend payment policy. Shareholders of Sechaba now receive their dividends only twice a year rather than four times as it has been tradition.
The brewer’s directors confirmed Thursday that due to administrative and cost efficiency challenges that the company continues to face, a decision was made since 1st April 2015 to make a bi-annual payout of dividends. The Botswana Stock Exchange (BSE) listed entity has historically paid dividends on a quarterly basis. However, Sechaba recently advised shareholders that its current dividend policy remains unchanged.
“Therefore the reduction in frequency of payment, from quarterly to bi-annually, is not in itself an indication of reduction in the total value of dividends to be paid,” the company’s directors said in a statement released to the capital markets on Thursday.
In today’s tough operating environment of stringent and incontestable trading regulations, retaining cash to reinvest into the business operations comes as a viable alternative option. The brewer however opted to make dividend payments. When releasing its full year financial results mid last month, the company said despite its lacklustre financial performance it will maintain a dividend payout to its shareholders. Sechaba’s KBL operates under tough environment in which the alcohol levy has affected sales as elbow benders buy cheap imported fixes. The company said on 19 December 2014, the Levy on Alcoholic Beverages was increased by five percent, bringing the total levy to 55 percent.
Still in June, the company advised shareholders that there remain significant amounts of unclaimed dividends in the company’s financial records. However, the directors did not state the amount or the number of shareholders who have not claimed their dividends.
“Shareholders are reminded to contact the Company Secretary to claim their outstanding dividends,” read part of the statement accompanying the Group’s interim financial results published last week. Available figures show that the brewery group, which is partly owned by government through its investment arm, Botswana Development Corporation (BDC), paid the highest interim dividend in 2013. According to figures from the Botswana Stock Exchange (BSE) quoted company, total dividend that were paid to shareholders for the financial year amount to 100 thebe per share, after the fourth and final dividend of 16 thebe per share was paid on 20 April 2015.
“The shareholders whose dividends are outstanding are therefore advised to contact the Transfer Secretaries so as to make a claim,” said the company directors.
In its full year results for the year ended 31 March 2015, Sechaba’s operating profit or (EBITDA) declined by 3.6 percent to P201.7 million from P209.1 million on the prior year.
Equally, profit after tax (PAT) went down by 2.9 percent to P186.1 million from P191.8 million in full year 2014. Sechaba’s Kalahari Breweries Limited (KBL) operates under a tough environment in which the alcohol levy has affected sales as elbow benders buy cheap imported fixes. The government alcohol levy, which devours a huge chunk of Sechaba’s profit pie, stood at a total of 55 percent in December 2014, following an increase of five percent. The brewery also has to contend with traditional beer regulations, which have forced it to manoeuvre creatively around alternative ways of making sound sales from traditional beer.