Sechaba Holdings, investment company with holdings in Kgalagadi Breweries Limited (KBL) and a traditional beer unit has reported growth in its profit for the year ending 31 March 2016.
The Botswana Stock Exchange quoted company recorded a P202 million profit for the year, which is a 7.8 percent increase from the P187 million registered in the prior year.
However, total volumes for the year were worse than the prior period recording a 0.2 percent decline. The BSE quoted brewer blamed the decline in volumes on regulatory environment that has pushed swiggers away from accessing the alcoholic beverages.
“Clear beer, alcoholic fruit beverages and sparkling soft drinks showed growth, while the traditional beer and non alcoholic beverages category declined due to water and power shortages and continuing impact of the traditional beer regulations”, reads part of the financial results commentary.
In 2014, KBL’s traditional beer sales declined by 4.3 percent against prior year due to the continuing impact of the Traditional Beer Regulations and the discontinuance of exports to South Africa.
“The challenges faced by the associate as a result of the Traditional Beer Regulations have sustained over the year. The company continues to find the appropriate routes to market within the Regulations.” The company said in mid 2015.
KBL has been operating under tough environment in which the alcohol tax 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 5 percent, bringing the total levy to 55 percent.
Despite its lackluster financial performance over the years the company maintained a dividend payout to its shareholders. Meanwhile a dividend of 69 Thebe per share was declared by the board on 12April 2016 and paid on 13 May 2016. The company however says no provision has been raised in the results of the year ended 31 March 2016 for this amount.
The local brewery group announced to its shareholders in July 2015 that they should expect changes on the dividend payment frequency from quarterly to bi-annually (half year and full year). The company advised then that however the dividend policy will stay the same and will therefore not be affected by the reduction in frequency of payment. It asserted that the change will not reduce the total value of dividends to be paid.
Before the change, Sechaba had been the only company registered on the local bourse that paid dividends on a quarterly basis but it revealed in its statement that the short paced frequency has presented a number of administrative and cost efficiency challenges to the Company.