By Our Reporter
Shareholders of British American Tobacco Uganda (BATU) 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 BATU 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.
“In 2016 we 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. We did not record any revenues from our leaf operations following the closure of the Leaf arm of the business in 2014. This was mainly due to a less than 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%,” he said.
Mwaura further highlighted that a major contributor to declined volumes is the prevalence of smuggling in the tobacco industry. He reiterated BATU’s commitment to working with government and agencies such as the Uganda Revenue Authority, to curb the problem of illicit trade in the tobacco industry.
“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 constitution and impractical in terms of effective enforcement which is why we have petitioned against them in the constitutional court,” he added.
Nominated Chairman for the AGM, 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, we managed to report commendable results. “
BATU’s share performance has remained consistently competitive on the Uganda Securities Exchange (USE), posting a share price of Ushs 30,000 per share as at 31st Dec 2016, compared to Ushs 22,980 as at 31st December 2015.
“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,” Tumwesigye concluded.
Nyambura is a senior journalist based in Kampala