BAT fails to remit $15m to its offshore shareholder

Published: 01 March 2018

ZIMBABWE’S largest cigarette manufacturer, British American Tobacco (BAT), is failing to remit over $15 million in dividends to its offshore shareholder and for payment of raw materials due to foreign currency shortages.

BAT finance director Leslie Malunga last week told The Financial Gazette that the figure was rising.

The Reserve Bank of Zimbabwe (RBZ) last year established a dividend repatriation special purpose vehicle, the Portfolio Investment Fund (PIF), to facilitate payment of dividends to foreign investors.

The cigarette maker’s major shareholder is British American Tobacco International Holdings (United Kingdom) Limited, which holds a 42,98 percent shareholding and over 8,8 million shares in the Zimbabwe Stock Exchange-listed counter.

"For the main shareholder, we are looking at around $10 million from 2016 into 2017 and as at end of last year we owed about $5,5 million to international suppliers," Malunga said on the side-lines of the firm’s financial results briefing for the year to December 31, 2017.

The RBZ last year set up the PIF to support shareholders and foreign investors seeking to repatriate dividends and proceeds from equity trades on the Zimbabwe Stock Exchange (ZSE).

As at October 31, 2017, at least $75 million in dividends, sales and income was locked in local banks.

While there have been fears that the main shareholder was getting agitated over the firm’s failure to repatriate dividends, BAT managing director, Clara Mlambo, said the parent company understood the situation and was in Zimbabwe "to stay".

In the year ended December 31, 2016, BAT declared a final dividend of $0,33 per share. This, together with an interim dividend of $0,18 per share, brought the total dividend for 2016 to $0,51, a decrease of 44 percent from 2015.

The total dividend for 2017 was $0,51 per share after the board declared a final dividend of $0,29 per share together with an interim dividend of $0,22 per share.

Zimbabwe has been battling an acute cash shortage on the back of a foreign currency crisis, resulting in multinational companies failing to remit dividends to their international shareholders.

Industry estimates indicate that transactions worth over $1 billion are on hold as local banks struggle to meet international payments on behalf of their clients.

Meanwhile, the cigarette company recorded a net profit attributable to shareholders of $10,6 million in 2017, compared to $8,5 million the previous year. Revenue increased by $2,7 million, an eight percent increase on 2016 driven by a strong sales performance.

- fingaz

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