Source: BAT fails to remit $8m dividend – DailyNews Live
Ndakaziva Majaka 12 May 2017
HARARE – Zimbabwe’s largest cigarette manufacturer, British American
Tobacco (BAT), is failing to pay over $8 million in dividend to its
offshore major shareholder, due to foreign payment delays.
BAT finance director, Lucas Francisco, yesterday told the businessdaily
that the cigarette manufacturer was presently in discussions with the
shareholder mapping a way forward, while also engaging banks locally for
the transaction to go through.
The cigarette maker’s major shareholder is British American Plc, which
holds a 42,98 percent shareholding and over 8,8 million shares in the
Zimbabwe Stock Exchange-listed counter.
“Basically, the final dividend for 2015 and the 2016 final dividend are
outstanding. To date, I can say we are holding about $8 million that is
yet to go through.
“We have been engaging, but despite the dividends being on the priority
list the fact is there is no money. So, the little cash that the country
is generating is used to prioritise the key inputs that are required for
production,” Francisco said.
He also pointed out that the shareholder was “concerned” with the
remittance situation given the unpredictability of the country’s cash
situation.
Zimbabwe has been battling an acute cash shortage on the back of depleted
nostro balances, leading to multi- national companies with shareholders
outside the country failing to remit dividend to their respective
shareholders.
While the country trades using a multi- currency system dominated by the
United States Dollar, the greenback has disappeared from the market along
with government’s surrogate currency – bond notes – introduced late last
year to assault the cash shortages.
This has prompted fears as some offshore shareholders are now
apprehensive.
Figures recently released by the central bank indicated that the apex bank
had managed to reduce the country’s foreign payments backlog by more than
50 percent to the current level of $185 million that transactions.
However, most of these are just for raw material creditors and not
dividend remittances for companies with offshore shareholders.
BAT managing director, Clara Mlambo, also pointed out that the company was
failing to pay for its raw materials on the back of the foreign payment
delays.
“We import about 90 percent of our packaging raw materials and given the
present situation, payments to suppliers have been difficult,” she said,
pointing out that while the company valued paying dividend to its
shareholder, raw material payments also had priority in terms of how the
group allocated foreign payments.
Meanwhile, Mlambo also pointed out that the group’s performance in the
first quarter had remained flat as consumers battled cash shortages.
“The situation stabilised in December with the bond notes as the liquidity
situation improved. However, the first quarter performance was flat
largely due to the cash shortages, so that affected disposable incomes
leaving performance largely flat,” she said.
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