- Dividends hiked by P11 million
- Profit jumps 97 percent
- ABInBev to rake in most money from KBL
Dividend payouts for the Sechaba Breweries Holdings Limited were increased by P11 million during the financial year ending 31st December 2018, owing to growth in profits. The biggest beneficiary will be the world leading beer maker Anheuser-Busch InBev (ABInBev), to the detriment of local shareholders.
For the year under review, P78 million was distributed amongst shareholders of the beer brewing firm, as compared to P67 million which the shareholders were paid during the 2017 reporting period.
Sechaba, which operates Kgalagadi Breweries Limited (KBL) saw profit leapfrogging 97 percent to settle at P220 million. According to Sechaba Chairman Thabo Mathews profit after tax grew significantly as a result of a one off refund of the alcohol levy that was charged excise for the years 2016 and 2017. On a normalised basis however, profit after tax excluding the refund was approximately 39 percent above the prior year. In the 2017 reporting period, Sechaba made P111 million as post tax profit.
Anheuser-Busch InBev, the world’s largest beer brewer will benefit the most from Sechaba dividends since it is determined to cement its control of the local beer maker and its value chain. Since the emergence of ABInbev, Sechaba as well as Kgalagadi Breweries Limited (KBL) have been engaged in a series of complex transaction, with ABInbev jostling to tighten its control over the Botswana beer brewing firm.
November last year a huge deal reverberated through the exchange in which 22.3 million Sechaba shares worth P423.7 million traded on the Botswana Stock Exchange Limited (BSEL). In the deal, Sechaba simply bought its own shares from itself, shares which are worth 16.8 percent of Sechaba which will be delisted soon. Since Sechaba bought shares from itself, it emerges it was a non-monetary transaction.
It emerges further that shareholders of Sechaba held an Extraordinary General Meeting (EGM) on the 27th September 2018 where a decision to approve such a transaction took place. However, the decisions were taken after ABInBev made a proposal to the shareholders to approve said transaction. The EGM took place after the approval of the Botswana Competition Authority as detailed in the Circular to Shareholders dated 3rd August 2018.
After the Competition Authority approval, ABInBev made an acquisition from Sechaba of 10.1 percent of the issued shares in KBL and Beverage Manufacturers (Botswana) (Pty) Ltd and the receipt as consideration therefore by Sechaba, by way of a share repurchase, of 22 398 016 shares representing 16.839 percent of the issued shares of the Company.
This simply means that ABInBev proposed to Sechaba shareholders that it be given 10.1 percent shares in KBL and Beverage Manufacturers Botswana (which bottles and distributes KBL’s non-alcoholic drinks division) and in return, Sechaba be allowed to buy back 16.8 percent of its own shares, and consequently delist them.
ABInBev has a majority stake in Sechaba and all its associated companies. ABInbev has 40 percent in Sechaba plus another direct 16.84 percent, making ABInBev the single largest shareholder at 56.8 percent.
This means that 56.8 percent of all dividends will be enjoyed by ABInBev.
The Government, through its investment arm, Botswana Development Corporation (BDC) has 24 percent while most of the remaining shares are held by pension funds, specifically the Botswana Public Officers Pension Fund (BPOPF).
ABInBev has also appointed its own executive management who are in charge of the day to day operations.