Namibia: Namibia Breweries offered to sell off its investment in Heineken South Africa
Listed Namibia Breweries Limited (NBL) has received an offer to sell off its loss-making investment in Heineken South Africa for an undisclosed amount, The Namibian reported on October 1.
This was announced by the company on September 29, and if approved would see the company ridding itself one of its pains over the last few years.
The 25% investment has been making losses over the years, but has always returned solid inflow on royalties.
Reviewed financial statements released by NBL on September 30 shows that for the year ending 30 June 2021, the brewer earned over N$109 million in royalties from the same investment despite it pushing through an associate loss of N$73 million.
In the last five years, the income from royalties recognised by NBL from the 25% investment was over N$496 million.
Losses reported for the same five years amount to just over N$339 million, and only in 2019 a N$450 million profit was realised.
This brings the net to a positive N$111 million over the five years, and shows the investment at least returned some benefit to the company despite the yearly losses in the past five years.
According to this week’s update, and the financial statements, Heineken NV made an offer to acquire NBL's 25% shareholding in Heineken South Africa Proprietary Limited.
Discussions are still ongoing and several aspects still need to be considered.
The company said it has appointed former Standard Bank chief executive officer Vetumbiavi Mungunda and financial planner Afra Schimming-Chase to a standing committee to consider the the offer, evaluate it and advise shareholders.
NBL is majority owned by the O&L group, and other notable shareholders include the Government Institutions Pension Fund.
The offer, however, comes with the condition that the company would not be declaring any final dividend for the 2021 financial year.
“The transaction (offer), should it proceed, is subject to several conditions, one of which relates to NBL not making any distributions, including a dividend declaration to its shareholders in respect of the financial year ended 30 June 2021. The board has taken a decision not to declare a final dividend for the financial year ended 30 June 2021,” reads the brewer's financial statements commentary.
Should the deal not go through, the company said it would declare a dividend afterwards.
A 56 cents per share dividend was declared at interim.
Profit after tax for the year stood at N$373 million, better than the N$261 million reported for 2020.
Revenue was at N$3,4 billion, of which Namibia was the largest contributor at N$1,9 billion.
Tanzania remains the company's strongest market apart from South Africa, bringing in N$71 million.
In 2019, exports to Tanzania were at N$92 million.
Total assets for the company were standing at N$3,1 billion.
Most of the indicators for the company show improvements which are largely attributed to weaker restricted Covid-19 alcohol trade conditions this year.
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