Sechaba on disclosure 

SHARE   |   Sunday, 30 November 2014   |   By Kabelo Adamson
de Kok de Kok

Sechaba Holdings Limited has revealed that it is in discussions with the Botswana Stock Exchange (BSE) pertaining to disclosure of Kgalagadi Brewery Limited (KBL) going forward.

This follows the merger of the holding company’s two subsidiaries, KBL and Botswana Brewery Limited (BBL) resulting in one subsidiary being KBL. The two subsidiaries were combined as per section 224 of Botswana Companies Act on 9 April 2013.

Due to the merging of the two, the company has said this week in its segmental information of KBL that the traditional way of disclosing information will not be possible going forward. 

The merging - announced in 2013 by Managing Director, Johan de Kok - was done to do away with unnecessary costs and deliver strategic opportunities arising from thinner supply chain.

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Previously BBL was responsible for producing opaque beer and Mageu while KBL oversaw the production and distribution of clear beer, soft drinks and water.

KBL maintains that as a result of the merged and integrated business, arbitrary allocation of costs and values will not provide meaningful data. This is because assets and liabilities cannot be split and therefore Earnings before Interest and Tax (EBIT) are consolidated.

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Assets and liabilities of the two have been amalgamated to have one asset register, shared bank accounts as well as same suppliers and one general book.

Business integration resulted in functional integration with phase one carried out in 2013 to bring finance, marketing, corporate affairs planning and human resource under one umbrella. The integration process also included creating one supply chain and procurement departments.

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The company, however, says there are some areas where segmental analysis will be possible going forward which will include beer, all soft drinks and opaque with Mageu included under the soft drinks.

Sechaba Holdings has noted that in the next financial year, it will under the KBL subsidiary disclose annual financial statements categorised by sales volumes, turnover, excise, alcohol levy, net producer’s revenue, costs of production; gross margin and contribution after specific marketing.

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Sechaba Holdings, which now owns 60 percent stake in the KBL subsidiary while the rest is owned SAB Miller, started facing challenges mainly in sales after the introduction of the Alcohol levy in 2008 and later Traditional Beer Regulations (TBR) in 2012. 

This required the company to pass the costs to customers by way of increasing the price of alcoholic beverages. Due to the hostile trading environment, the company closed the Palapye opaque plant to deal with declining volumes.

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Lately the brewer embraced the challenges as de Kok said in 2014 annual report that they have now resolved to work hand in hand with the government as the regulatory environment continues to present real challenges.

Despite being faced with all these challenges, Sechaba financial highlights for 2014 includes an increase of six percent profit after tax with an increase of 2.3 percent earning per share to investors.