Shareholders of British American Tobacco Uganda (BAT Uganda) are set to earn a total of Ushs 7.8 billion as dividends for the year ended 31st December 2016. Following the 2016 financial performance, the Board of Directors recommended a final dividend of Ushs 159 per share which was approved by the Company’s shareholders at its 17th Annual General Meeting (AGM) held in Kampala today.
In his remarks, the Managing Director of BAT Uganda, Mr. Dadson Mwaura, said the company will pay the dividends in line with its policy of 100% dividend pay-out. The dividends will be paid on or before 21st June 2017 to shareholders on the company’s share register as at the close of business on 31st May 2017.
Commenting on business performance, Mr Mwaura said, “in 2016, BAT Uganda overcame a general decline in cigarette volumes and revenues by 7% and 13%, respectively. The Company also maintained a strong market position coupled with 32% volume growth for its flagship brand – Sportsman and 1% volume growth for its global drive brand – Dunhill while delivering a profit after tax of Ushs 7.8 billion. On revenue performance, he said “the Company did not record any revenues from its Leaf operations following the closure of the Leaf arm of the business in 2014. This was mainly due to a less that optimal return on investment from this aspect of the business. This move consequently improved our financing leverage and registered reduced debt financing costs by 90%.”
Mr Mwaura further highlighted that a major contributor to declined volumes is the prevalence of smuggling in the tobacco industry. He reiterated BAT Uganda’s commitment to working with Government of Uganda and key government agencies such as the Uganda Revenue Authority, to curb the problem of illicit trade in the tobacco industry.
Commenting on the new industry regulations under the Tobacco Control Act 2015, Mr Mwaura said, “We are not opposed to regulation. We support regulation of the sector but maintain that it should be fair, balanced, evidence based, enforceable and able to deliver its intended public health objectives. We have a proud track record of complying with all laws and regulations, however, we are concerned that certain provisions of the tobacco control act 2015 are disproportionate, oppressive, contrary to the uganda constitution and impractical in terms of effective enforcement which is why we have petitioned against them in the constitutional court.
In his remarks on the external environment, the nominated Chairman for this AGM, Mr. Fred Tumwesigye, said, “Our business performance was affected by the economic downturn which is evidenced by an indicative 30 basis point drop in the GDP growth rates from 2015 to 2016. A slowdown in agriculture due to drought, cutbacks in fiscal expenditure, reduction in cross border commerce due to instability in Southern Sudan and a 7% depreciation of the Uganda Shilling against the US Dollar in 2016 were key challenges. This notwithstanding, BAT Uganda has managed to report commendable results. “
Our share performance has remained consistently competitive on the Uganda Securities Exchange (USE), posting a share price of Ushs 30,000 per share on the Uganda as at 31st Dec 2016, compared to Ushs 22,980 as at 31st December 2015.
BAT Uganda continues to be a significant contributor to Government tax revenues with a 4% increase in tax remittances from Ugshs 71 billion in 2015 to Ug shs 74 billion in 2016. Mr. Tumwesigye noted that despite the 4% increase in tax remittances, illicit cigarettes which are estimated at 20% remained a key concern in addressing loss of legal cigarette volumes which contributes to declined Government revenue which we estimate is in the region of Ushs 29 billion per year.
In closing, Mr. Tumwesigye said, “Despite the challenges faced in 2016, the business managed to reduce operating costs and grow its cigarette revenues while sustaining its market position. “Going forward, we are confident in our business strategy and our talented staff to continue securing the future of our company and to create shared value for our consumers, our shareholders and our stakeholders.”