Conglomerate Press Corporation plc says it plans to divest a 20 percent stake in Castel Brewery Malawi Limited after assessing various operational and regulatory issues that continue to negatively affect the beverage manufacturer.
In a statement accompanying the financial results for the year ended December 31 2020, Malawi Stock Exchange-listed PCL said directors concluded that it would be in the best interest of the group to divest the remaining 20 percent stake in its subsidiary.
Reads the statement in part: “Negotiations to that effect have now been concluded at a price of $12 million [about K9.4 billion], and the proceeds will be realised in 2021.
“The investment has been disclosed as held for sale in the financial statements.”
In the year under review, PCL has posted an after-tax profit of K19.9 billion in the year ended December 31 2020, which is 13 percent lower than the prior year.
The firm has attributed the drop in profit to exchange rate losses amounting to K6.36 billion incurred by Castel Malawi.
In a financial statement co-signed by board chairperson Randson Mwadiwa and group chief executive officer George Partridge, PCL said despite the difficult operating environment, it registered profit before tax of K38.22 billion, five percent lower than the previous year’s K40.31 billion.
Reads the statement in part: “Most group companies could not meet planned turnover levels and group revenues were just level with prior year.”
The statement further said results were negatively impacted by a 90 percent decline in profit from equity accounted investments largely due to losses incurred in the Beverage and Bottling Company occasioned by exchange rate losses.
PCL also said in addition, directors found it prudent to make a provision, pending resolution, in respect of value added tax claims in the mobile phone company by the Malawi Revenue Authority amounting to K2.3 billion up from the previous year’s K1.9 billion following a tax audit.
“The year was defined by the global Covid-19 pandemic and the attendant preventative measures that severely restricted business and commerce affecting all areas of the economy.
“Locally, the situation was further exacerbated by the unsettling effects of the pre and post-fresh presidential election activities which led to a highly unpredictable economic landscape,” reads part of the statement.
In segmental performance, PCL said in the financial services segment, National Bank of Malawi plc delivered strong results with a 31 percent growth in its profit after tax, but the telecommunications segment—TNM plc and Malawi Telecommunications Limited registered 46 percent decline in its profit after-tax.