BAT Zimbabwe says its contribution to public finances — by way of taxes — jumped 769 percent from $19,9 million last year to $173 million in the six months period to June 30, 2020.
The listed tobacco manufacturer contributes to Treasury through various taxes, including excise duty, corporate tax, value added tax, customs Duties, pay as you earn and withholding tax.
“The company’s contribution to the Zimbabwe Revenue Authority (ZIMRA) in taxes increased from $19.9 million in 2019 to $173 million for the period ended 30 June 2020,” said chairman Mr Lovemore Manatsa.
“The key contributors of the increase in tax were excise duty and corporate tax driven by the increases in selling prices and profit before tax.”
This was notwithstanding depressed output over the period under review as the company felt the impact of the Covid-19 pandemic.
For the six months under review, BAT Zimbabwe reported a 3 percent decline in total sales volumes from the prior comparable period, largely attributable to “shrinking consumer disposable incomes and the impact of the Covid-19 pandemic lockdown,” said Mr Manatsa.
“This affected the movements of people and their normal way of life such as visiting recreational facilities, where our products are normally consumed.
“The premium Brand, Dunhill, returned to the market as the company was now able to import the brand and consequently it recorded a significant increase of 184 percent versus the same period in prior year.
In the aspirational premium segment, Newbury volumes, declined by 10 percent whilst the value for money segment, (Madison and Everest) and low value for money brand (Ascot), recorded a 1 percent increase and 40 percent decrease respectively.
“These movements were driven by shrinking consumer disposable incomes due to the challenging economic environment and the Covid-19 pandemic’s impact on sales.”
But despite the lower volumes, the group performed better in financial terms.
Group revenues for the period under review rose 20 percent from $341.6 million to $410.5 million, compared to same period in 2019.
“The increase in revenue was driven by price increases taken during the period as well as revenue generated from the export of cut-rag,” said Mr Manatsa.
“These two factors resulted in a gross profit increase of $49.6 million compared to the same period in 2019.”
The group’s selling and marketing costs decreased by $0,2 million compared to same period in prior year, driven by “route to market initiatives aimed at managing the company’s distribution costs.”
Administrative expenses were $17 million (or 35 percent) lower than the same period in prior year, driven by the business’s ongoing cost saving initiatives. Other losses increased by $116.4 million due to foreign exchange losses on liabilities driven by the devaluation in the Zimbabwe dollar against major trading currencies.
Resultantly, operating profit was 498 percent higher compared the same period last year.
Net profit attributable to shareholders for the period under review was $73.7 million compared to a net loss of $18.8 million in the same period in prior year, a 492 percent increase.
Earnings per share increased to $3.58 from $0.91 generated in the same period in 2019.
Cash generated from operations was a negative $13.1 million “as a result of a significant increase in trade and other receivables due to prepayments to purchase leaf and an increased debtors’ book as a result of price increases taken during the period,” said the group.
Meanwhile, the company did not declare an interim dividend for the period under review on the basis of need to re-invest capital.