ZIMBABWE Stock Exchange-listed manufacturing concern British American Tobacco Zimbabwe (BAT) posted a loss of $1,4 million for the six months to June compared with a profit of $5 million recorded during the same period last year due to rising operating costs.
Victoria Mtomba
BAT chairman Kennedy Mandevhani said cigarette volumes decreased due to economic slowdown during the first six months of the year.
During the period under review, the company incurred a $10,6 million cost relating to share-based payment expenses following the partial compliance in indigenisation and empowerment regulations.
Selling and marketing costs rose to $2,2 million from $1,8 million, while share-based payment expenses stood at $10,6 million.
“This expense represents the fair value of share awards made to employees by our employee share ownership trust as part of the company’s compliance with the indigenisation and economic legislation plus the associated payment of dividends to employees participating the trust of $400 000,” he said.
Mandevhani said domestic cigarettes volumes declined by 16% compared to the same period last year due to a decrease in sales volume.
He said during the period under review Madison was resilient while the Dunhill brand grew by 44% compared to last year.
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Total revenue went up to $23,1 million in the half-year from $23 million last year during the same period.
“Cash flows benefited from a reduction in inventories of tobacco leaf of $4,6 million following the discontinuation of cut rag exports to Mozambique. Cash flows associated with employee share ownership trust are weighted towards future years as the awards are cash settled upon employees retiring or leaving employment with the company,” he said.
Mandevhani said operating profit was down to $2,4 million from $7 million the same period last year.
BAT gave 10% of its stake to its share trust and 10,74% was given to local farmers.
Official figures show that before surrendering the stake to the Employee Share Ownership Trust, local investors held 6,22% of the BAT’s issued share capital. The cigarette maker was projecting 700 000 million sticks during the first six months of the year.
The tobacco industry is among the major contributors to the economy having contributed over $600 million this year.
