Commonwealth Brewery has told shareholders that it hopes oncoming tax reform will result in all players in their industry operating on a "level playing field" in terms of taxes and duties paid, and with offenders being "appropriately penalized".
At its annual general meeting, Julian Francis, chairman of the publicly-listed beer, wine and spirits company, said he expects such reforms to "clearly" impact the firm's financial results going forward.
Francis made these comments after he shared positive news with shareholders, reporting steady, if modest, growth for Commonwealth Brewery/Burns House that enabled some $19.2 million in dividend pay-outs in fiscal 2013.
"I'm happy to report that, despite industry challenges resulting from a reduction in stay-over visitors and an increase in parallel products in the market, our company held its ground," said Julian Francis, chairman. "Revenue exceeded $119 million, an increase of $0.7 million over 2012, despite a slight decrease in sales volume with other income and expenses remaining more or less at the same levels as the previous fiscal year. With operating expenses increasing $0.8 million over 2012, the result was a $19.1 million net income, $0.2 million below 2012."
That revenue allowed a final dividend pay-out of $0.39 with total dividends for the year amounting to $0.64 per share, among the highest in the local securities market.
"For CBL 2013 was an exciting year. Not only did we celebrate 40 years of independence of The Commonwealth of The Bahamas, we also celebrated the 140th anniversary of the Heineken brand and the 25th anniversary of our own Kalik," said Francis.
It was the third time shareholders had come together for an annual general meeting. The company went public in 2010, for the first time offering Bahamians the right to own a piece of the country's most popular beer, Kalik, in addition to the broad range of beverage products the company handles in its distribution and retail operations.
"Our company is proud of the fact that we are the only Bahamian entity in our industry which is publicly traded, with 25 percent of our share capital owned together between The Bahamas government through the National Insurance Board and more than 3,000 Bahamian individual and institutional shareholders," said Francis. The remaining 75 percent is owned by Heineken N.V.
In addition to financial results showing steady, modest growth, the company reported several initiatives it tagged as having long-term, lasting impact. Among the most valuable, it said, are an improvement in health and stringent safety measures and an uptick in environmental management. Some 60 percent of the brewery's beer product output is now sold in recycled bottles, making it the largest recycling operation in The Bahamas in quantity.
CBL-Burns House also pledged $250,000 over five years to create a Commonwealth Brewery Education Fund with $50,000 a year awarded to deserving students pursuing a higher education. The fund will be managed by a separate board of directors.
The company with 385 employees and some $70 million in assets remained debt-free, but the chairman couched positive results for this year with cautious optimism going forward, particularly with regard to across the board application of taxes, a hot-button topic for the industry.
"The near term outlook will much depend on what we can expect from the financial reforms as we await the details following the introduction of the budget and the recent announcement that value-added tax would be implemented in January of 2015," said Francis. "We anticipate the possibility of operating on a level playing field after these reforms are introduced, where all in the industry pay taxes, duties and fees at comparable rates, with offenders being appropriately penalized. The outcome of these reforms ultimately will clearly impact the future financial results of our business."
According to Managing Director Nico Pinotsis, while the government's treatment of the industry is "of paramount importance", the company will continue to find ways to set itself apart from the competition.
"Irrespective of fiscal reform, we will continue to defend our position in the market as supplier of choice," said Pinotsis. "We will need to continue to earn brand preference among consumers and win new customers."
The company's annual report under the theme "Evolve" reflected its position of commitment to corporate responsibility, environmental
sustainability and employee empowerment.
In other community outreach, CBL-Burns House partnered in a drive responsibly program with the Ministry of Transport to launch a nationwide 'Drive Responsibly' communication campaign and continued the support of non-profit organizations, including the Cancer Society of The Bahamas, The Bahamas Red Cross, the AIDS Foundation and The Bahamas Heart Foundation among others.
Pinotsis also commented that the company's commitment to innovation in 2014 was reflected in the launch of a new Heineken 25cl bottle, which is enjoyed "cold to the last drop", the launch of Kalik Radler "the perfect combination of Kalik beer and natural lemon juice" and the re-launch of a unique and innovative five liter Heineken draught keg.
Shareholders re-elected board members Julian Francis, Nico Pinotsis, Eugene Ubalijoro, Ed Fields, Dennis Hanna, Radovan Sikorsky and Cecile Williams-Bethel. KPMG was re-appointed the company's auditors.
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