Sunday, December 3, 2023

Sechaba shareholders cautioned over possible BSE delisting

The board of Directors of Sechaba Holdings is reported to be seriously considering pulling out of the local capital market, a strategic move that some financial commentators link to the tough regulatory environment that the government has subjected the company to over the years.

Group Managing Director, Johan De Kok, this week cautioned Sechaba’s existing shareholders and its prospective investors at the Botswana Stock Exchange that the company board, “Is assessing the full impact of certain corporate change proposals that if embarked upon and successfully implemented, may have an effect on the price at which the Company’s securities trade.”

Speculation is rife in the local market that De Kok and his team might make a bombshell announcement in the near future concerning the future of Sechaba Holdings at the Botswana Stock Exchange (BSE).
Sechaba Brewery Holdings Limited has a 60 percent shareholding in the two brewing companies, Kgalagadi Breweries Limited and Botswana Breweries Limited while SABMiller Botswana B.V. holds 40 percent.

One of the world’s largest brewers, SABMiller Plc, has management control in both operating companies which have over the years benefited considerably from SABMiller’s insight and experience with regard to management, technical, brand building and distribution expertise.

The two operating companies employ about 1000 people throughout the country and operate four traditional beer breweries, a clear beer brewery, a sparkling soft drinks production plant and six sales and distribution depots.

The hostile environment that Sechaba’s subsidiaries operate under include the alcohol levy that government reviews from time to time, new Traditional Beer Regulations that were effected in July 2013 and rising costs that come with high oil prices.

President Ian Khama’s administration introduced the levy in 2008 in what he said is an attempt to curb excessive drinking in the country. The levy currently stands at 50 percent after another hike late last year and as of July 2013 the government has collected a cumulative total of P 1.16 billion.

Sechaba Holdings, which government has a stake on through Botswana Development Corporation (BDC), has over the years raised concerns that the levy is negatively hitting hard on their bottom line profits.

The group’s annual reports for the past few years show that since the introduction of the levy in 2008, it has had a significant knock on financial performance as a result of unfavourable trading environment.

When presenting the unaudited financial results for the period that ended 30 September, 2013, to the media late last year, De Kok said that despite the fact that group turnover grew by 7 percent, sales volume went down due to excise tax, the levy on alcoholic beverages and periodic price increases.

Sources close to the company said this week that it is just a matter of time before the company make an announcement regarding the participation of Sechaba at the local bourse. By close of business at BSE on Friday Sechaba shares traded at 1903 thebe per share. The company which manufactures popular brands such as Chibuku and St. Louis lager have a market cap of 2,529,942,923.


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