Monday, May 27, 2024

Sechaba Holdings defies odds, declares interim dividend

Shareholders of Sechaba Brewery Holdings Limited will be paid a net dividend of 47 thebe per share, in respect of the half year ended 30 September 2014, company secretary Gorata Hlope has said.

In a statement released to the markets this week, the brewer says the dividend is payable to shareholders registered at the close of business on 28 November 2014. It is expected that dividend cheques will be posted at the beginning of December this year.

Despite the hostile operating environment, the Botswana Stock Exchange quoted company continue to record profits. The hostile operating environment which has been occasioned by the ever increasing alcohol levy and traditional beer regulations has practically crippled the brewer’s opaque beer business.

The company maintains that access to land still remains a major challenge to comply with traditional beer regulations that were implemented in 2012 to discourage the sale of opaque drinks in the household.

The company’s 2014 annual report state that the regulatory environment continues to present very real challenges including the Alcohol Levy, which was increased to 50 percent in December 2013, forcing KBL to raise prices of all alcoholic products.

On Thursday, President Ian Khama announced that so far, the government has collected a cumulative P1.4 billion through the controversial alcohol levy which started in 2008.

On the other hand, the Traditional Beer Regulations (TBR) which was implemented by the former Trade Minister, Dorcus Malesu, necessitated a major revision of the opaque beer business model, as some 86 percent of the traditional retail space was lost.

“The main challenge in complying with the TBR continues to be unavailability of suitable land,” Group Managing Director Johan de Kok said in the annual report.

“This has hindered the smooth rollout of the outlet development programme. Although there has been some recent improvement in this regard, there are still a number of misinterpretations by local authorities of the provisions of the Liquor Act and the TBR regarding applications for both change of land use and licences,” he added.

KBL pledged a P10 million bailout package to BBL, its traditional beer arm, to help displaced retailers put up structures.

According to the MD, KBL continued its involvement in the Botswana Alcohol Industry Association (BAIA), which made strides towards engaging with Government on issues of policy formulation and strategies to curb alcohol related harm. The association gained support from Vice President, for the BAIA Adolescent Programme in Tswapong. This programme has also assembled a group of volunteer teachers for the “Training the Teachers” program.

“BAIA remains an important body in shaping government and public perception of the alcohol industry as a whole. It therefore remains an organ that may be effectively harnessed for collective lobbying of government on policy matters.”

Equally, the MD said his company has taken proactive steps towards assisting Beer gardens meet regulation requirements and assist in license renewal by engaging with local authorities on their behalf. He said KBL welcomes the efforts of local law enforcement agencies in policing the depots and traders that do not meet the licensing criteria.

“The onus is on us to make sure that these incidents are not repeated and that 100% compliance is achieved by all our outlets. Illegal home brews continue to compete directly with opaque products, in many cases now the only beverages available to former Chibuku consumers, many of whom find themselves out of reach of formal channel outlets.”

Johan de Kok said he expects the trading environment for alcohol related products to remain challenging in the future, but he said this does not make the task of producing world class beverages for local consumers impossible.

“We are adamant that the only way forward is to work hand in hand with Government in ensuring that the beverages produced by KBL have positive, lasting effects on consumers and society as a whole.”

Sechaba Brewery Holdings Limited is an investment company with interests in KBL and BBL and it holds 60 percent of the shares of this company, an affiliate of SABMiller plc, who through SABMiller B.V. holds a 40 percent share. KBL (Pty) Ltd is the sole brewer for its respective product categories in Botswana.


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