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Sechaba Brewery Holdings Limited FY 2014 financial results

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Sechaba Brewery Holdings Limited listed on the Botswana Stock Exchange has released its Full Year Results. Check out
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Sechaba Brewery Holdings Limited FY 2014 financial results

  1. 1.     Year ended Year ended Highlights on consolidated basis 31/03/2014 31/03/2013     (P’000) (P’000) % Change Turnover 1,861,571 1,747,379 6.5% Gross profit 855,960 754,331 13.5% Operating profit 440,859 410,936 7.3% Profit before tax 435,597 405,723 7.4% Profit after tax 350,551 329,422 6.0% UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013             HIGHLIGHTS ON COMBINED BASIS 30/09/2013 30/09/2012           (P’000) (P’000) Change Turnover 865,519 808,288 7% Gross profit 391,596 342,896 14% Operating profit 186,167 159,846 16% Profit before tax 183,424 157,077 17% FINANCIAL REVIEW Volume Performance: Totalbeveragevolumesfell5%belowprioryear’slevelsforthehalf-yearperiod.Alcoholvolumesended 8% belowprioryear,predominantlyduetothe continued significant decline of traditional beer volumes since the introduction of the Traditional Beer Regulations. Sparkling Soft Drinks volumes grew marginally.Non-alcoholic beverages grew by 6% with Mageu and Source Still Water leading by a growth of 17% and 9% respectively. Financial Performance: Group turnover grew by 7%, ahead of volume decline due to excise tax, the levy on alcoholic beverages, and periodic price increases. Gross profit for the period ended 14% up due to ncreased production cost savings and the increased the popularity and sale of bulk packs. Administration and operating costs increased due to the increased maintenance on the ageing operating plants and increased depreciation that laid pressure on the F13 capital expenditure. Nevertheless, net operating profit increased by 16% as a result of overall cost savings and Sechaba’s operating profit margin grew from 19.8% in the comparable period last year to 21.5%. Tax during the period decreased despite the increase in profit related to the timing of the ‘pre-close period’ of the Botswana Breweries (Pty) Ltd dividend at the end of F13. STRATEGIC REVIEW Brand, Portfolio & Marketing Initiatives: Mainstream Beer The first-half of the year saw the launch of the limited edition St. Louis Lager 440ml Can to mark he celebration of KBL’s 40 years of brewing excellence. This campaign was supported by hrough-the-line initiatives with main activities focused on music, entertainment and rewarding our loyal consumers with exclusive branded merchandise. Another significant milestone over the period was the announcement of the landmark partnership between Castle Lager and Barcelona Football Club which exclusively positioned Castle Lager as the Official Beer Partner to FC Barcelona in Africa. The partnership announcement was leveraged using the “Perfect Partnership Campaign”. Premium Beer Botswana’s sole locally produced premium beer, St. Louis Export was awarded a Gold Quality Award at the coveted Monde Selection Awards 2013. Monde Selection is a world renowned nternational Institute for Quality Selections developed over nearly 50 years, as an Excellence Standard, Monde expertly analyzes and scrutinizes select consumer goods from around he world to measures their performance attributes on an internationally acclaimed quality benchmark - ranging from a Bronze, Silver, Gold, and culminating in the Grand Gold Quality Award. St Louis Export’s achievement of the Gold Quality Standard truly endorses Botswana’s only local premium brand with heritable international credentials. Sparkling Soft Drinks KBL launched the thematic campaign - “Crazy for Good” led by the brand Coca-Cola with he key messages that ‘celebrate the people who live in an optimistic way and spread their optimism’. The campaign was supported through billboards, packaging and in-store point of sale communication. As part of a wider and more versatile beverage portfolio, new 2000ml flavours were introduced to optimize growing opportunities in the market place. Non-Carbonated Soft Drinks Over the period, Source Still Water achieved the Botswana Bureau of Standards [BOBS] Accreditation, making Source the only Botswana water brand to be BOBS Accredited; further reaffirming KBL’s commitment to producing safe, high quality products that consumers enjoy. In the Maize Category, KBL introduced the ‘Nutritional Campaign’ highlighting the nutritional benefits of Mooka Mageu. The campaign was executed with its focus based on consumer sampling techniques to ensure that the brand achieves nothing less than delighting consumers. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES Over the half year, KBL’s leading alcohol responsibility and stakeholder engagement programme Ikgalemele increased its footprint across the country. The Ikgalemele Responsible Trader engagements were held at various rural and remote areas including the catchment areas of Gumare, Shakawe, Kang, Tshabong, Hukuntsi, Phikwe, Mahalapye, Serowe and Palapye. These structured engagements were hugely well- received and attended by alcohol retailers and local authorities such as Traditional Rulers, the Botswana Police Service, Bye-law officers and other interested stakeholders from communities. Over the period a concerted press and radio media campaign was mobilised to further educate consumers on the desired alcohol consumption patterns and behaviours – providing for a three-prong intervention targeting retailers, consumers and sensitizing communities on ways to work together to reduce any incidences alcohol abuse with communities in in Botswana. Future Outlook Looking ahead, the trading environment for alcohol related products is expected to remain challenging as the impact of the traditional beer regulations and the levy on alcoholic beverages continues to be felt by consumers. Financial Information The accounting policies adopted for the period comply, in all material respects, with International Financial Reporting Standards (IFRS) as well as the Botswana Companies Act 2003. These policies are consistent with those applied in prior periods. The unaudited financial statements of the Company includes the results of operations of the associate on the equity accounting basis as the Company does not exercise control over these investee company. However, in order to foster greater transparency and disclosure in financial reporting, supplementary information has been prepared to reflect the results of operations of the Company and associate as a consolidated group. The Financial highlights and business review above are prepared on the basis of these consolidated group financial statements which are unaudited and do not comply with IFRS rules. UNCLAIMED DIVIDENDS The Directors wish to bring to the attention of Shareholders that there remain significant amounts of unclaimed dividends in the Company’s records. Shareholders are reminded to contact the Company Secretary to claim their outstanding dividends. By Order Of The Board B G Mmualefe J de Kok Chairman Group Managing Director 7 November 2013 CORPORATE INFORMATION Board of Directors Auditors B G Mmualefe PricewaterhouseCoopers J de Kok P O Box 294, Gaborone B Hirsch S Smuts M Phuthego K Maphage M Sekgororoane Transfer Secretaries Company Secretary DPS Consulting Services (Pty) Ltd Brian Mphotho P O Box 294, Gaborone P O Box 294, Gaborone AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2014 FINANCIAL REVIEW Volume Performance: Total volumes for the year were in line with the prior year. This was driven by an increase in export sales as local sales were 2.4% below prior year. Alcoholic beverages declined by 3% against prior year due to the continued impact of the Traditional Beer Regulations and the Levy on Alcoholic Beverages being increased by 5%, taking the overall alcohol levy total to 50% on 1 December 2013. Over the year, Sparkling Soft Drinks declined by 1% as competition in this category increased with competitors selling lower quality brands at prices well below KBL prices. Financial Performance: Turnover increased by 6.5% due to excise tax, levy and price increases. Gross profit was 13.5% ahead of the prior year due to savings on production costs as consumers moved to bulk packs. Operating profit however was 7.3% ahead of prior year due mainly to: i) Increase in depreciation charges,related to further capital expenditure during the year ii) Distribution costs increased by 13% due to fuel price increases and the traditional beer market reorganizing its route-to-market Net finance costs reduced as the long term debt continued to decline. Income tax charge increased due to the deferred tax arising on the increase of returnable containers in the business. Levy on Alcoholic Beverages The Levy on Alcoholic Beverages was increased by 5%, effective 1 December 2013, from 45% to 50% resulting in the group increasing prices of alcoholic products. Traditional Beer Regulations The challenges faced by KBL as a result of theTraditional Beer Regulations have continued. The company has intensified efforts to engage local authorities in attempts to formalize and establish its distribution network in the spirit of the regulations. Outlook Looking ahead, the trading environment for alcohol related products is expected to remain challenging as the impact of the latest levy increase continues to be felt by consumers.The tough trading environment in the Sparkling Soft Drink category is also expected to continue. Financial Information The accounting policies adopted for the year comply, in all material respects, with International Financial Reporting Standards (IFRS) as well as the Botswana Companies Act 2003.These policies are consistent with those applied in prior periods. In order to foster greater transparency and disclosure in financial reporting, the highlights have been prepared to reflect the results of operations of the company and its associate Kgalagadi Breweries (Pty) Ltd as a consolidated group.The Financial highlights and commentary are prepared on the basis of these consolidated group financial statements which are unaudited and do not comply with IFRS rules. By order of the board B G Mmualefe J De Kok Chairman Group Managing Director 22 June 2014 STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 MARCH 2014 STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2014 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2014 Profit after income tax 191,778 190,932 Other comprehensive income (627) (4,010) Total comprehensive income 191,152 186,922 Number of shares in issue (‘000) 133,015 133,015 Basic and diluted Earnings per share (thebe) 143.7 140.5 Net Dividend per share (thebe) - first interim dividend - paid 22 21 - second interim dividend - paid 24 23 - third interim dividend - paid 37 37 - fourth and final interim dividend - declared 18 18 101 99 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2014 Attributable to equity holders of the company Stated capital Other reserves Retained earnings/ (Accumulated losses) Total P’000 P’000 P’000 P’000 Year ended 31 March 2013 Balance at 1 April 2012 233,941 - (6,437) 227,504 Total Comprehensive income for the year - - 190,932 190,932 Fair value loss on derivative financial instruments - ( 4 010) - (4,010) Dividends declared -2013 financial year- first interim - - (27,933) (27,933) -2013 financial year- second interim - - ( 30 593) (30,593) -2013 financial year- third interim - - ( 49 216) (49,216) -2013 financial year- fourth and final - - ( 23 943) (23,943) Balance at 31 March 2013 233 941 ( 4 010) 52 810 282 741 Year ended 31 March 2014 Balance at 1 April 2013 233 941 ( 4 010) 52 810 282,741 Profit after income tax - - 191 778 191,778 Fair value loss on derivative financial instruments - ( 627) - (627) Dividends declared -2014 financial year- first interim - - ( 29 263) (29,263) -2014 financial year- second interim - - ( 31 924) (31,924) -2014 financial year- third interim - - ( 49 216) (49,216) -2014 financial year- fourth and final - - ( 23 943) (23,943) Balance at 31 March 2014 233,941 (4,637) 110,244 339,548 2014 2013 P’000 P’000 Cash flows from operating activities Net cash utilised in operations (2,787) (2,908) Income tax paid (9,664) (14,261)     Net cash utilised in operating activities (12,451) (17,169) Cash flows from investing activities Dividends received 120,668 172,440 Interest received 64 69 Net cash from investing activities 120,732 172,509 Cash flows from financing activities Dividends paid to shareholders (127,758) (128,783) Net cash used in financing activities (127,758) (128,783) Changes in cash and cash equivalents (19,477) 26,557 Movement in cash and cash equivalents At beginning of the year 27,705 1,148 Changes in cash and cash equivalents (19,477) 26,557 At end of the year 8,228 27,705 2014 2013 P’000 P’000 ASSETS Non-current assets Investments in associates 344,859 262,328 Current assets Tax receivable - 18 Dividend receivable 25,995 17,760 Other receivables 307 445 Cash and cash equivalents 8,228 27,705 34,530 45,928 Total assets 379,389 308,256 EQUITY AND LIABILITIES Capital and reserves Stated capital 233,941 233,941 Retained earnings 110,244 52,810 Other reserves (4,637) (4,010) 339,548 282,741 Non-current liabilities Deferred tax liabilities 7,731 - 7,731 - Current liabilities Dividends payable 32,102 25,515 Tax Payable 9 - 32,111 25,515 Total equity and liabilities 379,389 308,256 CORPORATE INFORMATION Board of Directors B G Mmualefe (Chairman) *J R de Kok M Sekgororoane *B Hirsch *S Smuts K Maphage M Phuthego Auditors PricewaterhouseCoopers P O Box 294 Gaborone Transfer Secretaries DPS Consulting Services (Pty) Ltd P O Box 294 Gaborone Company Secretary Brian Mphotho P O Box 294 Gaborone UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013             HIGHLIGHTS ON COMBINED BASIS 30/09/2013 30/09/2012           (P’000) (P’000) Change Turnover 865,519 808,288 7% Gross profit 391,596 342,896 14% Operating profit 186,167 159,846 16% Profit before tax 183,424 157,077 17% FINANCIAL REVIEW Volume Performance: Totalbeveragevolumesfell5%belowprioryear’slevelsforthehalf-yearperiod.Alcoholvolumesended 8% belowprioryear,predominantlyduetothe continued significant decline of traditional beer volumes since the introduction of the Traditional Beer Regulations. Sparkling Soft Drinks volumes grew marginally.Non-alcoholic beverages grew by 6% with Mageu and Source Still Water leading by a growth of 17% and 9% respectively. Financial Performance: Group turnover grew by 7%, ahead of volume decline due to excise tax, the levy on alcoholic beverages, and periodic price increases. Gross profit for the period ended 14% up due to increased production cost savings and the increased the popularity and sale of bulk packs. Administration and operating costs increased due to the increased maintenance on the ageing operating plants and increased depreciation that laid pressure on the F13 capital expenditure. Nevertheless, net operating profit increased by 16% as a result of overall cost savings and Sechaba’s operating profit margin grew from 19.8% in the comparable period last year to 21.5%. Tax during the period decreased despite the increase in profit related to the timing of the ‘pre-close period’ of the Botswana Breweries (Pty) Ltd dividend at the end of F13. STRATEGIC REVIEW Brand, Portfolio & Marketing Initiatives: Mainstream Beer The first-half of the year saw the launch of the limited edition St. Louis Lager 440ml Can to mark the celebration of KBL’s 40 years of brewing excellence. This campaign was supported by through-the-line initiatives with main activities focused on music, entertainment and rewarding our loyal consumers with exclusive branded merchandise. Another significant milestone over the period was the announcement of the landmark partnership between Castle Lager and Barcelona Football Club which exclusively positioned Castle Lager as the Official Beer Partner to FC Barcelona in Africa. The partnership announcement was leveraged using the “Perfect Partnership Campaign”. Premium Beer Botswana’s sole locally produced premium beer, St. Louis Export was awarded a Gold Quality Award at the coveted Monde Selection Awards 2013. Monde Selection is a world renowned International Institute for Quality Selections developed over nearly 50 years, as an Excellence Standard, Monde expertly analyzes and scrutinizes select consumer goods from around the world to measures their performance attributes on an internationally acclaimed quality benchmark - ranging from a Bronze, Silver, Gold, and culminating in the Grand Gold Quality Award. St Louis Export’s achievement of the Gold Quality Standard truly endorses Botswana’s only local premium brand with heritable international credentials. Sparkling Soft Drinks KBL launched the thematic campaign - “Crazy for Good” led by the brand Coca-Cola with the key messages that ‘celebrate the people who live in an optimistic way and spread their optimism’. The campaign was supported through billboards, packaging and in-store point of sale communication. As part of a wider and more versatile beverage portfolio, new 2000ml flavours were introduced to optimize growing opportunities in the market place. Non-Carbonated Soft Drinks Over the period, Source Still Water achieved the Botswana Bureau of Standards [BOBS] Accreditation, making Source the only Botswana water brand to be BOBS Accredited; further reaffirming KBL’s commitment to producing safe, high quality products that consumers enjoy. In the Maize Category, KBL introduced the ‘Nutritional Campaign’ highlighting the nutritional benefits of Mooka Mageu. The campaign was executed with its focus based on consumer sampling techniques to ensure that the brand achieves nothing less than delighting consumers. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES Over the half year, KBL’s leading alcohol responsibility and stakeholder engagement programme Ikgalemele increased its footprint across the country. The Ikgalemele Responsible Trader engagements were held at various rural and remote areas including the catchment areas of Gumare, Shakawe, Kang, Tshabong, Hukuntsi, Phikwe, Mahalapye, Serowe and Palapye. These structured engagements were hugely well- received and attended by alcohol retailers and local authorities such as Traditional Rulers, the Botswana Police Service, Bye-law officers and other interested stakeholders from communities. Over the period a concerted press and radio media campaign was mobilised to further educate consumers on the desired alcohol consumption patterns and behaviours – providing for a three-prong intervention targeting retailers, consumers and sensitizing communities on ways to work together to reduce any incidences alcohol abuse with communities in in Botswana. Future Outlook Looking ahead, the trading environment for alcohol related products is expected to remain challenging as the impact of the traditional beer regulations and the levy on alcoholic beverages continues to be felt by consumers. Financial Information The accounting policies adopted for the period comply, in all material respects, with International Financial Reporting Standards (IFRS) as well as the Botswana Companies Act 2003. These policies are consistent with those applied in prior periods. The unaudited financial statements of the Company includes the results of operations of the associate on the equity accounting basis as the Company does not exercise control over these investee company. However, in order to foster greater transparency and disclosure in financial reporting, supplementary information has been prepared to reflect the results of operations of the Company and associate as a consolidated group. The Financial highlights and business review above are prepared on the basis of these consolidated group financial statements which are unaudited and do not comply with IFRS rules. UNCLAIMED DIVIDENDS The Directors wish to bring to the attention of Shareholders that there remain significant amounts of unclaimed dividends in the Company’s records. Shareholders are reminded to contact the Company Secretary to claim their outstanding dividends. By Order Of The Board B G Mmualefe J de Kok Chairman Group Managing Director 7 November 2013 CORPORATE INFORMATION Board of Directors Auditors B G Mmualefe PricewaterhouseCoopers J de Kok P O Box 294, Gaborone B Hirsch S Smuts M Phuthego K Maphage M Sekgororoane Transfer Secretaries Company Secretary DPS Consulting Services (Pty) Ltd Brian Mphotho P O Box 294, Gaborone P O Box 294, Gaborone STATEMENT OF COMPREHENSIVE INCOME 30 September 2013 30 September 2012 31 March 2013 P’000 P’000 P’000 (Unaudited) (Unaudited) (Audited) Share of results of associates 93,508 78,152 207,736 Administrative expenses (1,396) (1,536) (2,593) Operating profit 92,112 76,616 205,143 Finance income 30 29 69 Profit before income tax 92,142 76,645 205,212 Income tax expense (3,519) (6,866) (14,280) Profit for the period 88,623 69,779 190,932 Other comprehensive income (3,556) - (4,010) Total comprehensive income 85,067 69,779 186,922 Number of shares in issue (‘000) 133,015 133,015 133,015 Basic and diluted Earnings per share (thebe) 64.0 52.5 140.5 Net Dividend per share (thebe) - first interim dividend - paid 22 21 21 - second interim dividend - paid 24 23 23 - third interim dividend - paid - - 37 - fourth and final interim dividend - declared - - 18 46 44 99 STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2013 30 September 2013 30 September 2012 31 March 2013 P’000 P’000 P’000 (Unaudited) (Unaudited) (Audited) ASSETS Non-current assets Investments in associates 305,480 236,354 262,328 Current assets Tax recoverable 3 - 18 Dividend receivable 32,190 32,745 17,760 Other receivables 314 42 445 Cash and cash equivalents 3,210 209 27,705 35,717 32,996 45,928 Total assets 341,197 269,350 308,256 EQUITY AND LIABILITIES Capital and reserves Stated capital 233,941 233,941 233,941 Other reserves (7,566) - (4,010) Retained earnings 80,246 4,815 52,810 306,621 238,756 282,741 Current liabilities Other payable 606 - - Dividends payable 33,970 30,593 25,515 Tax payable - 1 - 34,576 30,594 25,515 Total equity and liabilities 341,197 269,350 308,256 STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS 30 september 2013 30 September 2012 31 March 2013 P’000 P’000 P’000 (Unaudited) (Unaudited) Audited Cash flows from operating activities Net cash utilised in operations (644) (1,448) (2,908) Income tax paid (3,519) (6,828) (14,261) Net cash utilised in operating activities (4,163) (8,276) (17,169) Cash flows from investing activities Dividends received 32,370 57,855 172,440 Interest received 30 29 69 Net cash used in investing activities 32,400 57,884 172,509 Cash flows from financing activities Dividends paid to shareholders (52,732) (50,547) (128,783) Net cash used in financing activities (52,732) (50,547) (128,783) Changes in cash and cash equivalents (24,495) (939) 26,557 Movement in cash and cash equivalents At beginning of the period 27,705 1,148 1,148 Changes in cash and cash equivalents (24,495) (939) 26,557 At end of the period 3,210 209 27,705 SPECIAL PURPORSE COMBINED STATEMENTS OF COMPREHENSIVE INCOME Combined Company 30 September 2013 30 September 2012 31 March 2013 30 September 2013 30 September 2012 31 March 2013 P’000 P’000 P’000 P’000 P’000 P’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudted) (Unaudited) Sales 865,519 808,288 1,747,379 - - - Cost of sales (473,923) (465,392) (993,048) - - Gross profit 391,596 342,896 754,331 - - - Dividends income - - - 46,800 66,600 166,200 Sales and distribution costs (43,381) (40,183) (86,538) - - - Administrative expenses and operating expenses (165,300) (144,763) (264,917) (1,396) (1,536) (2,593) Other income 3,252 1,896 8,060 - - - Operating profit 186,167 159,846 410,936 45,404 65,064 163,607 Finance income 364 485 1,024 30 29 69 Finance costs (3,107) (3,254) (6,237) - - - Profit before income tax 183,424 157,077 405,723 45,434 65,093 163,676 Income tax expense (32,462) (35,197) (76,301) (3,519) (6,866) (14,280) Net profit after income tax 150,962 121,880 329,422 41,915 58,227 149,396 Other Comprehensive Income (5,926) - (6,684) - - - Profit for the Year 145,036 121,880 322,738 41,915 58,227 149,396 Attributable to: Equity holders of the Company 85,067 69,779 186,922 41,915 58,227 149,396 Minority interest 59,969 52,101 135,816 - - - 145,036 121,880 322,738 41,915 58,227 149,396 Earnings per share for profit attributable to the equity holders of the company during the period (expressed in thebe per share) - Basic 64 52 141 32 44 112 Dividends declared Attributable to equity holders of the company Stated Capital Other Reserve (Return earnings) Total P’000 P’000 P’000 P’000 Balance at 1 April 2012 ( Audited) 233,941 - (6,437) 227,504 Net Profit for 6 months - - 69,779 69,779 Dividends declared for 6 months - - ( 58,527) (58,527) Balance at 30 September 2012 (Unaudited) 233,941 - 4,815 238,756 Balance at 1 October 2012 (Unaudited) 233,941 - 4,815 238,756 Net profit for 6 months - - 121,153 121,153 Fair Value Loss on Derivative - ( 4,010) - (4,010) Dividends declared for 6 months - - (73,158) (73,158) Balance at 31 March 2013 (Audited) 233,941 (4,010) 52,810 282,741 Balance at 1 April 2013 (Audited) 233,941 (4,010) 52,810 282,741 Net profit for 6 months - - 88,623 88,623 Fair Value Loss on Derivative - (3,556) - (3,556) Dividends declared for 6 months - - (61,187) (61,187) Balanced at 30 September 2013 (Unaudited) 233,941 (7,566) 80,246 306,621 MONTHS   012 000) Change 288 7% 896 14% 846 16% 077 17% olvolumesended 8% tional beer volumes Drinks volumes grew e Still Water leading he levy on alcoholic ded 14% up due to ale of bulk packs. maintenance on the on the F13 capital a result of overall in the comparable ming of the ‘pre-close r 440ml Can to mark n was supported by ment and rewarding ignificant milestone tween Castle Lager as the Official Beer everaged using the rded a Gold Quality s a world renowned s, as an Excellence goods from around y acclaimed quality Grand Gold Quality ndorses Botswana’s and Coca-Cola with ay and spread their Non-Carbonated Soft Drinks Over the period, Source Still Water achieved the Botswana Bureau of Standards [BOBS] Accreditation, making Source the only Botswana water brand to be BOBS Accredited; further reaffirming KBL’s commitment to producing safe, high quality products that consumers enjoy. In the Maize Category, KBL introduced the ‘Nutritional Campaign’ highlighting the nutritional benefits of Mooka Mageu. The campaign was executed with its focus based on consumer sampling techniques to ensure that the brand achieves nothing less than delighting consumers. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES Over the half year, KBL’s leading alcohol responsibility and stakeholder engagement programme Ikgalemele increased its footprint across the country. The Ikgalemele Responsible Trader engagements were held at various rural and remote areas including the catchment areas of Gumare, Shakawe, Kang, Tshabong, Hukuntsi, Phikwe, Mahalapye, Serowe and Palapye. These structured engagements were hugely well- received and attended by alcohol retailers and local authorities such as Traditional Rulers, the Botswana Police Service, Bye-law officers and other interested stakeholders from communities. Over the period a concerted press and radio media campaign was mobilised to further educate consumers on the desired alcohol consumption patterns and behaviours – providing for a three-prong intervention targeting retailers, consumers and sensitizing communities on ways to work together to reduce any incidences alcohol abuse with communities in in Botswana. Future Outlook Looking ahead, the trading environment for alcohol related products is expected to remain challenging as the impact of the traditional beer regulations and the levy on alcoholic beverages continues to be felt by consumers. Financial Information The accounting policies adopted for the period comply, in all material respects, with International Financial Reporting Standards (IFRS) as well as the Botswana Companies Act 2003. These policies are consistent with those applied in prior periods. The unaudited financial statements of the Company includes the results of operations of the associate on the equity accounting basis as the Company does not exercise control over these investee company. However, in order to foster greater transparency and disclosure in financial reporting, supplementary information has been prepared to reflect the results of operations of the Company and associate as a consolidated group. The Financial highlights and business review above are prepared on the basis of these consolidated group financial statements which are unaudited and do not comply with IFRS rules. UNCLAIMED DIVIDENDS The Directors wish to bring to the attention of Shareholders that there remain significant amounts of unclaimed dividends in the Company’s records. Shareholders are reminded to contact the Company Secretary to claim their outstanding dividends. By Order Of The Board B G Mmualefe J de Kok Chairman Group Managing Director 7 November 2013 CORPORATE INFORMATION Board of Directors Auditors B G Mmualefe PricewaterhouseCoopers J de Kok P O Box 294, Gaborone B Hirsch S Smuts M Phuthego K Maphage STATEMENT OF COMPREHENSIVE INCOME 30 September 2013 30 September 2012 31 March 2013 P’000 P’000 P’000 (Unaudited) (Unaudited) (Audited) Share of results of associates 93,508 78,152 207,736 Administrative expenses (1,396) (1,536) (2,593) Operating profit 92,112 76,616 205,143 Finance income 30 29 69 Profit before income tax 92,142 76,645 205,212 Income tax expense (3,519) (6,866) (14,280) Profit for the period 88,623 69,779 190,932 Other comprehensive income (3,556) - (4,010) Total comprehensive income 85,067 69,779 186,922 Number of shares in issue (‘000) 133,015 133,015 133,015 Basic and diluted Earnings per share (thebe) 64.0 52.5 140.5 Net Dividend per share (thebe) - first interim dividend - paid 22 21 21 - second interim dividend - paid 24 23 23 - third interim dividend - paid - - 37 - fourth and final interim dividend - declared - - 18 46 44 99 STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2013 30 September 2013 30 September 2012 31 March 2013 P’000 P’000 P’000 (Unaudited) (Unaudited) (Audited) ASSETS Non-current assets Investments in associates 305,480 236,354 262,328 Current assets Tax recoverable 3 - 18 Dividend receivable 32,190 32,745 17,760 Other receivables 314 42 445 Cash and cash equivalents 3,210 209 27,705 35,717 32,996 45,928 Total assets 341,197 269,350 308,256 EQUITY AND LIABILITIES Capital and reserves Stated capital 233,941 233,941 233,941 Other reserves (7,566) - (4,010) Retained earnings 80,246 4,815 52,810 306,621 238,756 282,741 Current liabilities Other payable 606 - - Dividends payable 33,970 30,593 25,515 Tax payable - 1 - 34,576 30,594 25,515 Total equity and liabilities 341,197 269,350 308,256 STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS 30 september 2013 30 September 2012 31 March 2013 P’000 P’000 P’000 (Unaudited) (Unaudited) Audited Cash flows from operating activities Net cash utilised in operations (644) (1,448) (2,908) Income tax paid (3,519) (6,828) (14,261) Net cash utilised in operating activities (4,163) (8,276) (17,169) Cash flows from investing activities Dividends received 32,370 57,855 172,440 Interest received 30 29 69 Net cash used in investing activities 32,400 57,884 172,509 Cash flows from financing activities Dividends paid to shareholders (52,732) (50,547) (128,783) Net cash used in financing activities (52,732) (50,547) (128,783) Changes in cash and cash equivalents (24,495) (939) 26,557 Movement in cash and cash equivalents At beginning of the period 27,705 1,148 1,148 Changes in cash and cash equivalents (24,495) (939) 26,557 At end of the period 3,210 209 27,705 SPECIAL PURPORSE COMBINED STATEMENTS OF COMPREHENSIVE INCOME Combined Company 30 September 2013 30 September 2012 31 March 2013 30 September 2013 30 September 2012 31 March 2013 P’000 P’000 P’000 P’000 P’000 P’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudted) (Unaudited) Sales 865,519 808,288 1,747,379 - - - Cost of sales (473,923) (465,392) (993,048) - - Gross profit 391,596 342,896 754,331 - - - Dividends income - - - 46,800 66,600 166,200 Sales and distribution costs (43,381) (40,183) (86,538) - - - Administrative expenses and operating expenses (165,300) (144,763) (264,917) (1,396) (1,536) (2,593) Other income 3,252 1,896 8,060 - - - Operating profit 186,167 159,846 410,936 45,404 65,064 163,607 Finance income 364 485 1,024 30 29 69 Finance costs (3,107) (3,254) (6,237) - - - Profit before income tax 183,424 157,077 405,723 45,434 65,093 163,676 Income tax expense (32,462) (35,197) (76,301) (3,519) (6,866) (14,280) Net profit after income tax 150,962 121,880 329,422 41,915 58,227 149,396 Other Comprehensive Income (5,926) - (6,684) - - - Profit for the Year 145,036 121,880 322,738 41,915 58,227 149,396 Attributable to: Equity holders of the Company 85,067 69,779 186,922 41,915 58,227 149,396 Minority interest 59,969 52,101 135,816 - - - 145,036 121,880 322,738 41,915 58,227 149,396 Earnings per share for profit attributable to the equity holders of the company during the period (expressed in thebe per share) - Basic 64 52 141 32 44 112 Attributable to equity holders of the company Stated Capital Other Reserve (Return earnings) Total P’000 P’000 P’000 P’000 Balance at 1 April 2012 ( Audited) 233,941 - (6,437) 227,504 Net Profit for 6 months - - 69,779 69,779 Dividends declared for 6 months - - ( 58,527) (58,527) Balance at 30 September 2012 (Unaudited) 233,941 - 4,815 238,756 Balance at 1 October 2012 (Unaudited) 233,941 - 4,815 238,756 Net profit for 6 months - - 121,153 121,153 Fair Value Loss on Derivative - ( 4,010) - (4,010) Dividends declared for 6 months - - (73,158) (73,158) Balance at 31 March 2013 (Audited) 233,941 (4,010) 52,810 282,741 Balance at 1 April 2013 (Audited) 233,941 (4,010) 52,810 282,741 Net profit for 6 months - - 88,623 88,623 Fair Value Loss on Derivative - (3,556) - (3,556) Dividends declared for 6 months - - (61,187) (61,187) Balanced at 30 September 2013 (Unaudited) 233,941 (7,566) 80,246 306,621 % s w g c o e al ll e e k y g e r r e y d e d y y s h Non-Carbonated Soft Drinks Over the period, Source Still Water achieved the Botswana Bureau of Standards [BOBS] Accreditation, making Source the only Botswana water brand to be BOBS Accredited; further reaffirming KBL’s commitment to producing safe, high quality products that consumers enjoy. In the Maize Category, KBL introduced the ‘Nutritional Campaign’ highlighting the nutritional benefits of Mooka Mageu. The campaign was executed with its focus based on consumer sampling techniques to ensure that the brand achieves nothing less than delighting consumers. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES Over the half year, KBL’s leading alcohol responsibility and stakeholder engagement programme Ikgalemele increased its footprint across the country. The Ikgalemele Responsible Trader engagements were held at various rural and remote areas including the catchment areas of Gumare, Shakawe, Kang, Tshabong, Hukuntsi, Phikwe, Mahalapye, Serowe and Palapye. These structured engagements were hugely well- received and attended by alcohol retailers and local authorities such as Traditional Rulers, the Botswana Police Service, Bye-law officers and other interested stakeholders from communities. Over the period a concerted press and radio media campaign was mobilised to further educate consumers on the desired alcohol consumption patterns and behaviours – providing for a three-prong intervention targeting retailers, consumers and sensitizing communities on ways to work together to reduce any incidences alcohol abuse with communities in in Botswana. Future Outlook Looking ahead, the trading environment for alcohol related products is expected to remain challenging as the impact of the traditional beer regulations and the levy on alcoholic beverages continues to be felt by consumers. Financial Information The accounting policies adopted for the period comply, in all material respects, with International Financial Reporting Standards (IFRS) as well as the Botswana Companies Act 2003. These policies are consistent with those applied in prior periods. The unaudited financial statements of the Company includes the results of operations of the associate on the equity accounting basis as the Company does not exercise control over these investee company. However, in order to foster greater transparency and disclosure in financial reporting, supplementary information has been prepared to reflect the results of operations of the Company and associate as a consolidated group. The Financial highlights and business review above are prepared on the basis of these consolidated group financial statements which are unaudited and do not comply with IFRS rules. UNCLAIMED DIVIDENDS The Directors wish to bring to the attention of Shareholders that there remain significant amounts of unclaimed dividends in the Company’s records. Shareholders are reminded to contact the Company Secretary to claim their outstanding dividends. By Order Of The Board B G Mmualefe J de Kok Chairman Group Managing Director 7 November 2013 CORPORATE INFORMATION Board of Directors Auditors B G Mmualefe PricewaterhouseCoopers J de Kok P O Box 294, Gaborone B Hirsch S Smuts M Phuthego

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