The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | Shareholders of BAT Uganda will walk away with 209 Shillings for each share they hold, following the approval of a total of 10.3 billion Shilling in dividends for the year 2022.
In his communication to the shareholders after resolutions of the Thursday Annual General Meeting, BAT Uganda Managing Director, Mathu Kiunjuri said the dividend will be paid less withholding tax.
The dividend, which is in line with the Company’s policy of paying out all the period’s profit to shareholders, will be paid net of withholding tax at the beginning of next month. Gross revenue increased by 6 percent to 99.5 billion Shillings driven by higher sales volumes.
However, there was an increase in the cost of operations by 15 percent partly due to higher inflation rates over the year, which also contributed to the 6 percent fall in the profits after tax.
The company’s financial performance remained more or less the same as last year, with the profit for the two consecutive years remaining about half of the pre-Covid 19 2020 performance, when dividends amounted to 406 Shillings per share.
Gross revenue increased by 6 percent to 99.5 billion shillings driven by higher sales volumes.
However, there was an increase in the cost of operations by 15 percent partly due to higher inflation rates over the year, which also contributed to the 6 percent fall in the profits after tax.
The company, which also marked 95 years of operations in Uganda said the sharp drop in profits was mainly due to a slow economic recovery and increased incidences of trade in illicit cigarettes.
“Whilst the fundamentals of our business remain solid as evidenced by our sustained investment in the country for 95 years, the increasing incidence of illicit trade in Uganda remains a major threat to the sustainability of our business going forward,” Kiunjuri said.
According to the industry’s study of the market, during 2022, the incidence of illicit cigarettes saw a spike, from 23.8 percent in December 2021 to 29.4 percent in December 2022.
They said that the consequent shrinkage of the legitimate market significantly impacts the sustainability of government and industry revenues.
“It is estimated that the Government loses up to 30 billion shillings annually to the illicit cigarette trade. Third-party research indicates that most of the illicit cigarettes are being either mis-declared for export but find their way back into the local market, or smuggled in from neighboring countries and beyond,” says Kiunjuri.
Uganda, according to reports, is also increasingly becoming a source of illicit cigarettes in regional markets such as Kenya.
A recent market study revealed several brands of BAT Uganda and BAT Kenya meant for sale in other countries, but ending up in shops in Uganda.
The industry is also facing challenges from other brands on the market, but without meeting the requirements of graphic health warnings on the packages in violation of the Tobacco Control Act, 2015.
“While the illicit trade situation is dire, we believe that the Uganda Revenue Authority (URA) has made significant gains thus far. However, for meaningful and lasting impact, it is critical that Government redoubles its efforts, including ramping up multi-stakeholder and cross-border collaboration to ensure effective enforcement and enhancement of anti-illicit trade regulations.”
According to Uganda Revenue Authority, Cigarette smuggling accounts for up to 27 percent of smuggled goods in Uganda, the most smuggled brand being Supermatch, which accounts for more than 90 percent of the seized cigarettes.
The company’s board chairman Dr. Elly Karuhanga said they will continue engaging the government regarding the tax policies and a level playing field though enforcement of the laws.
“We will continue to contribute transparently to a national dialogue on sustainable fiscal and regulatory frameworks, the most urgent being a need for full enforcement of the tobacco control laws across the industry to address the prevalence of non-compliant and illicit tobacco products in the market,” said Karuhanga.
Shareholders Zaalyembikke Majanja and Bazalaki Robinah Walusimbi were joined by three directors to mark 95 years of BAT in Uganda.
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