Sechaba Brewery Holdings Limited (Botswana) releases its 2021 Annual Report

By Published On: June 8th, 2022Categories: Corporate announcement, Earnings

Sechaba Brewery Holdings Limited (SECHAB.bw) 2021 Annual Report

CHAIRMAN’S STATEMENT

Dear esteemed shareholders, 2021 marked the Sechaba Brewery Holdings Ltd’s (SBHL) 51st anniversary. Founded in 1970, SBHL is four years younger than Botswana as a country, something we take great pride in because we believe that great organizations are those that are sustainable for the long haul. SBHL however is not just successful because of its age and longevity but because the company’s Associates have successfully adapted to various changing business environments, investment climates, volatile market conditions and of recent, the unprecedented COVID – 19 pandemic. As a board and management our purpose remains unchanged in so far as ensuring and maximizing shareholder return . With and through our Associates, our resolve is to purposefully move us forward in delivering greater value whilst having more positive, impactful results in the communities we serve and beyond.

In 2021, SBHL continued to demonstrate the benefits of its Associates’ aggressive and focused strategies with strong earnings contributions from each of the businesses.

While the economic recovery is progressing at uneven rates across our footprint, we have demonstrated remarkable operating resiliency throughout the pandemic. Our present strength has been earned by our Associates Kgalagadi Breweries Proprietary Ltd (KBL) and Coca Cola Beverages Botswana (CCBB) working tirelessly to deliver value to shareholders, customers and employees, through good and challenging times. Our Associates have dedicated themselves to creating resilient businesses and for nearly two years, navigating through an unprecedented global health crisis that has continued to challenge all of us, both personally and professionally. They have strengthened their company foundations through significant investments in people, processes, technology, and products. As the stewards of this tremendous institution, we are pleased to see how efficiently and effectively our Associates worked to ensure that Sechaba Brewery Holdings Ltd continues to prosper. Our Associate teams are as strong and diverse as has ever been. While it is impossible to predict events like a global pandemic, geopolitical instability, or intense market volatility, the steps we took over the past year independent of any crisis were to support and guide our Associates to adopt stronger and more resilient strategies which enabled us to weather the COVID-19 storm, operationally and financially. As we reflect on the past year, we are exceedingly proud of the ways in which they supported their employees, customers, and communities. Their participation in Botswana’s broader response to COVID-19, which has demonstrated the power of corporate, public, and not always -for-profit collaboration, and the unwavering determination of the human spirit in the face of adversity did not go unnoticed. We are grateful for the confidence that customers of our Associates have shown in them and looking forward, we are emerging from the pandemic even more resilient, aligned, and stronger than before.

This year, Sechaba Brewery Holdings Ltd’s earnings demonstrated the power of our Associates’ repositioned, well-adapted business strategies. Our performance validates the benefits of the significant investments we have made in our Associates over the last few years.

As they continued to grow their market share, business has rebounded quickly to exceed pre-pandemic earnings. SBHL achieved a profit before tax of P219 million, a 30% increase from P168 million in 2020, the comparative period. The main driver for this performance is the results of the Associates during the period as the SBHL income line comprises mainly of share of results of the Associate entities. The Associates experienced improved performance relative to 2020 with total combined volumes increasing by 11% for the year 2021. The improved performance was due to the eased Covid 19 related controls and restrictions, which included the lifting of the alcohol ban.

The cost of compliance of SBHL as a listed company and one that is audited for effective governance continues to rise. Administration expenses were up 37% in comparison to the prior period in order to ensure compliance with various regulations. To attend to the unexpected exigencies of the time, the Board and its committees held more meetings than was initially planned. Professional fees increased to bring governance policies up to date. During the year, the company updated its Board Charter, its Finance & Risk Charter as well approved the Risk Management Policy.
Taxation for the year is in line with the results and dividend declarations. This is due to the movement in the deferred tax position and the tax withheld on dividends received. There was a change on the Tax rate on dividends from 7.5% to 10% effective July 2021.

From a financial position perspective, the value of the investment in associates grew due to the positive performance of the underlying entities during the period. Dividends payable decreased due to the campaign, which commenced in the previous year in an effort to identify and close out on unpaid dividends.

This campaign also saw an update of shareholders’ details allowing for better remittances during the period.

The company overall is in a good position from a liquidity perspective with adequate cash to cover operations in the year ahead. There was a 21% increase in total assets from P764 million to P928 million that was attributed to the 17% increase in investment in associates and the increase in cash and cash equivalents. Cash and cash equivalents grew by 122% at P68 million compared to prior year due to dividends received in 2021. It was noted that the increase in net revenue for associates resulted in higher dividends being declared in 2021. Post reporting period, the company received P57 million dividends from its associates. The Board declared and approved dividends amounting to 98 thebe per share at its meeting in March 2022.

One of our key areas of continued focus for our associates in 2022 and beyond will be on environmental, social, and governance matters. Ethics and Governance are integral to our organisation’s success and its ability to generate value over the longer term.

I would like to recognize and thank SBHL’s outgoing Chairman Mr Bafana Molomo and Ms Myra Sekgororoane who retired in 2021 as well as the previous Managing Director Mr Thabo Matthews. I would also like to extend my heartfelt gratitude to the current SBHL Board of Directors for their ongoing engagement, counsel, and support over the past year. SBHL benefits immensely from the wealth of knowledge and experience that they bring in good and