CIGARATTE manufacturer British American Tobacco (BATZ) is almost indigenised, with 26 percent of its shareholding now in the hands of indigenous Zimbabweans. Five percent of those shares are held by an Employee Share Ownership Trust (ESOT).
A total of 10,76 percent was allocated to BAT Tobacco Empowerment Trust while the remaining 5,24 percent was retained by existing indigenous shareholders, the company announced.
The exercise cost BATZ US$10,6 million, resulting in a 128,4 percent decline in the bottom-line during the six months to June, 2013.
Managing director, Lovemore Manatsa said the company was engaging the Ministry of Youth, Indigenisation and Economic Empowerment to ensure it meets agreed deadlines.
“It is currently work in progress to meet the deadline but a lot of ground work has been done in that regard to fully comply,” he said.
Revenue during the period was at US$23,1 million from US$23,0 million the previous comparative period after the group suffered a 16 percent decline in volumes to 636 million cigarette sticks following the introduction of a 50 percent excise duty.
Market analysts this week said the rise in excise duty on cigarettes may not be sensible in view of the expected increase in the illicit tobacco market because of the alleged growing gap between duty-paid and duty-evaded cigarettes.
An optimal duty structure has proven to be a key success for reducing illicit trade and enhancing government revenue as high taxes provide more leeway for evasion, especially where enforcement apparatus is less than effective.
“BATZ would continue to focus on recovering its volume to improve earnings,” Manatsa said.
During the current reporting season the company said it would ensure that its brand portfolio were relevant and that the excellent quality of our people and processed will deliver the sustainable competitive advantage for future success and to the benefit of shareholders”.
On a non-adjusted basis, operating profit reduced to US$2,4 million primarily as a result of an International Financial Reporting Standards (IFRS) 2 share-based payment expense of the US$10,6 million.
This expense represents the fair value of share awards made to employees by the company.
Cash flow from financing activities was a negative US$9,7 million made up of US$6,9 million in dividends paid out and loan repayments of US$2,9 million.
BATZ discontinued cut rag exports to Mozambique in June to focus on manufactured cigarettes and this had contributed to the welcome reduction in the cost of sales to US$7,16 million from US$9,59 million.
“We are expecting a good turnover by year end,” Manatsa said.