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Republic Of Botswana: Sechaba Brewery Holdings Ltd unaudited Results for the 6 months ended 30th September 2008

14 November 2008

Financial Highlights (on consolidated basis)

 6 months to
30/09/2008
(P '000s)
6 months to
30/09/2007
(P '000s)
Growth
Sales734 907551 67033%
Gross profit260 124230 41713%
Operating profit165 861142 34417%
Profit before tax158 003135 70616%
Profit after tax143 887117 52322%
Total Dividend for 6 months (thebe)51.043.019%
  • Turnover increased by 33%
  • Operating profit up 17%
  • Profit before tax up 16% to P158 million
  • Profit after tax attributable to shareholders increases by 22%
  • Strong cash flows support dividend increase from 43 to 51 thebe per share

Comments

Financial Performance

The Group delivered satisfactory interim results for the year through good performance of the associate companies, Kgalagadi Breweries (Pty) Ltd (KBL) and Botswana Breweries (Pty) Ltd (BBL).

KBL recorded a year-on-year growth for the 6 months of 13.8% in attributable profits on the back of good volume performance. The growth in beer volumes of 17% was mainly driven by increased purchasing by customers ahead of the implementation of the alcohol levy announced by the Government. Sparkling Soft Drinks (SSD) volume grew at 11.4%. The variable costs increased ahead of revenue growth on account of substantial worldwide increases in commodity prices, especially the prices of food grains and fuel. Continued depreciation of the Pula against its major trading currencies also contributed to higher variable costs.

BBL delivered an attributable profit growth of 21.2% over the comparable 6 months period last year. Traditional beer sales were 15.5% up on the prior year while Mageu recorded a growth at 13.8%. Similar to KBL, the impact of higher commodity prices and depreciation of the Pula, especially against the Euro which represents a large component of input costs for BBL had a negative impact on the variable costs and margins during the period.

Overall, Sechaba recorded an impressive 24% growth in profit after tax that resulted in an increase in the total dividend declared during the period from 43 thebe to 51 thebe per share.

Prospects

Trading conditions are expected to be difficult during the second half of the financial year following the announcement of a 30% levy on alcoholic beverages, which became effective 1st November 2008. This levy will increase the factory and import prices of beer and other alcoholic beverages by 30%. A significant reduction in after tax profits is anticipated as a result of the expected decrease in sales volumes which will result from the consequent pricing adjustment.

Although inflation has dropped from 15.1% in August to 14.0% in September 2008, it is still outside the Bank of Botswana's medium target range of 3-6%. Annual inflation rates are expected to increase to between 16% and 17% once the impact of the alcohol levy is factored in.

Even though there were signs of worldwide reduction in commodity prices towards the latter part of the 6 month reporting period, pressure is expected to prevail in Botswana during the second half of the year on account of the substantial depreciation of the Pula (and SA Rand) against all major trading currencies during October 2008. The operating associates will continue to explore ways to minimize the impact of the inflationary pressures and adverse exchange rates on the business.

Financial Information

The unaudited financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the Botswana Companies Act, 2003 and accordingly include the results of KBL and BBL on an equity accounted basis.  The accounting policies have remained unchanged from those disclosed in the annual financial statements for the year ended 31 March 2008.

The financial highlights reported in the table above are prepared on a consolidated basis, and are not in line with IFRS reporting.  This information is presented in order to allow shareholders a clearer understanding of the results of the underlying operating associates.

Dividend Declaration

The directors are pleased to announce the declaration of a net second interim dividend for the year to 31 March 2009 amounting to 29 thebe per share, an increase of 20.8% over last year.

This dividend, in respect of the quarter ended 30th September 2008, has been declared payable to shareholders registered at the close of business on 5th December 2008. Dividend cheques will be posted on or about 15th December 2008.

Unclaimed Dividends

The directors wish to bring to the notice of shareholders that there are certain amounts of unclaimed dividends in the Company's records. Shareholders are reminded to contact the Transfer Secretaries to claim their outstanding dividends.

Download the full unaudited Results announcement PDF 0.37Mb

Shareholders' Diary
Last date of registration for dividend5th December 2008
Dividend cheques mailed15th December 2008

By order of the board

E.W. Komanyane 
Chairman
6th November 2008

Corporate Information

Board of DirectorsAuditorsTransfer Secretaries
E W Komanyane (Chairman)
J N Kamyuka
R Goetzsche
M M Nthebolan
R Vaka (Alt)
T Kobedi
PricewaterhouseCoopers
PO Box 294
Gabarone
DPS Consulting Services (Pty) Ltd
PO Box 294
Gabarone

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