BAT Zim­babwe holds on to $8m for­eign div­i­dends

The Star Early Edition - - COMPANIES - Tawanda Karombo

BAT ZIM­BABWE, which is hold­ing on to $8 mil­lion (R104.06m) in ac­crued for­eign share­hold­ers div­i­dends, said yes­ter­day that con­sumers in Zim­babwe had down­graded to cheaper prod­ucts, al­though the cig­a­rette com­pany lifted in­terim div­i­dends to 22 cents per share.

Against the back­drop of a dif­fi­cult op­er­at­ing en­vi­ron­ment, which the com­pany’s man­ag­ing di­rec­tor said would worsen in the 2017 sec­ond half pe­riod, BAT Zim­babwe had lifted prof­its for the June 2017 half-year pe­riod to $4.6m com­pared with $3.6m in the pre­vi­ous con­trast­ing pe­riod.

Earn­ings per share for the pe­riod in­creased from 18c to 22c in line with head­line earn­ings per share that surged with a sim­i­lar mar­gin to the same amount.

Clara Mlambo, BAT Zim­babwe’s man­ag­ing di­rec­tor, told an an­a­lysts brief­ing yes­ter­day: “We be­lieve the re­sults are up­lift­ing, but trad­ing con­di­tions re­main chal­leng­ing and we don’t ex­pect the trad­ing con­di­tions to change par­tic­u­larly on for­eign cur­rency short­ages.

“We have seen the bond notes dry­ing up and this has an im­pact on con­sumers abil­ity to pur­chase,” Mlambo said.

Zim­babwe is bat­tling a liq­uid­ity cri­sis that has seen com­pa­nies de­lay debt pay­ments, fail to pay for­eign share­hold­ers and de­lay pay­ments to for­eign sup­pli­ers.

BAT Zim­babwe has been hit on for­eign share­hold­ers and for­eign sup­pli­ers pay­ments fronts. Ac­cord­ing to fi­nance di­rec­tor, Lu­cas Fran­cisco, the group had ac­crued $8m in de­layed div­i­dend pay­ments to for­eign share­hold­ers. This has seen the com­pany’s cash and cash equiv­a­lents for the pe­riod mount by as much as $7m in the half year pe­riod un­der re­view to about $19.3m.

Other com­pa­nies that have been un­able to pay for­eign share­hold­ers on time in­clude Delta Cor­po­ra­tion, the as­so­ciate unit of An­heuser-Busch InBev.

Econet Wire­less had to carry out an off­shore rights is­sue to raise funds to set­tle a ma­tur­ing debt fa­cil­ity.

BAT said, how­ever, that it con­tin­ued to en­gage sup­pli­ers and banks in Zim­babwe to ad­dress the cur­rent liq­uid­ity cri­sis in the coun­try. Bond notes in­tro­duced in Novem­ber last year have failed to stem the tide of liq­uid­ity short­ages on the mar­ket.

“For­eign cur­rency is a chal­lenge and the fi­nance team has been ne­go­ti­at­ing with for­eign sup­pli­ers. We are also ne­go­ti­at­ing with the banks and in H1 we have been suc­cess­ful in terms of en­gag­ing the banks, but we have not been able to remit div­i­dends to our for­eign share­hold­ers,” Fran­cisco said.

Rev­enue gen­er­a­tion for the in­terim pe­riod to June 2017 grew by a mar­ginal 0.5 per­cent.

Vol­umes for the pre­mium cat­e­gory brands such as Dun­hill “de­clined mod­er­ately” com­pounded by “af­ford­abil­ity chal­lenges” faced by con­sumers.

“Cash gen­er­ated from op­er­a­tions in­creased by 23 per­cent to $9.9m com­pared to $8m achieved in the same pe­riod last year. The in­crease was mainly driven by in­creased prof­itabil­ity, im­proved col­lec­tions, de­lays in pay­ments to for­eign sup­pli­ers and a de­crease on stock hold­ings,” chair­per­son of BAT Zim­babwe, Love­more Manatsa, said.

Al­though it has been fac­ing dif­fi­cul­ties in Zim­babwe, BAT has paid as much as $14.1m in taxes and statu­tory pay­ments to the gov­ern­ment dur­ing the first half of the cur­rent year.

PHOTO: SIM­PHIWE MBOKAZI

BAT Zim­babwe has paid as much as $14.1m in taxes and statu­tory pay­ments to the gov­ern­ment.

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