Mr Charles Ireland, EABL’s managing director. PHOTO | FILE
What you need to know:
EABL's latest annual report indicates that after about 10 years of minority ownership in Sen Tech Limited, the company divested in a move that earned it Sh50 million.
The brewer says it gained Sh49.6 million in the divesture, booking the amount in its “other income” which tripled to Sh422.4 million in the year ended June.
East African Breweries Limited (EABL) has sold off its 20 per cent stake in a Ruaraka-based engineering firm from which it sources spare parts for its factories.
Its latest annual report indicates that after about 10 years of minority ownership in Sen Tech Limited, the company divested in a move that earned it Sh50 million.
Sen Tech supplies EABL’s subsidiaries Kenya Breweries Limited and East African Maltings Limited with spare parts for their equipment.
It also offers maintenance services to the general beverage and packaging industry in the region, covering glass bottling, canning, and plastic manufacturing equipment.
“The management 10 years ago thought it was a good thing to have a stake in a company which was an important supplier for EABL,” said Mr Charles Ireland, EABL’s managing director.
“We now think this is no longer necessary and that is why we sold the shares. However, EABL shall still continue to source equipment spares from Sen Tech and other suppliers as is the case now.”
“The proceeds on disposal amounted to Sh50 million and the gain on disposal recorded in other income Sh49.6 million. This entity is not listed and the amounts are not material to warrant investment in complex valuation models.”
The brewer says it gained Sh49.6 million in the divesture, booking the amount in its “other income” which tripled to Sh422.4 million in the year ended June. This helped raise its net profit five per cent to Sh6.8 billion in the period.
EABL noted that Sen Tech is a private firm and that disposing of the 20 per cent stake did not warrant complex valuation models since the amounts are not material.
The divestiture from Sen Tech is part of the changes that the brewer has made to its operations in the past year as it seeks to improve efficiency and cut costs.
EABL has also adopted a leaner management structure, reduced production of the low-cost beer brand Senator, and deepened the use of Aluminium cans for packaging exports.
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