Shareholders of British American Tobacco Uganda Limited (BAT Uganda) have ratified Ushs 19.9 billion (Ushs 406 per share) as a first and final dividend for the year ended 31st December 2020, during the Company’s 21st Annual General Meeting (AGM) held today by electronic means. The dividend, which will be paid net of withholding tax on 21st June 2021, is in line with the Company’s 100% dividend pay-out policy.
BAT Uganda Managing Director, Kirunda Magoola remarked: “BAT Uganda remained resilient in 2020 despite a challenging business environment, compounded by impacts of the global COVID-19 pandemic. The Company registered a 1% reduction in gross revenue to Ushs. 162 billion, resulting from a 9% reduction in gross sales, reflecting the impact of COVID-19 on the purchasing power of our consumers and their migration to illicit product. Despite this, profit from operations increased by 30% to Ushs. 29.1 billion, attributable to steps taken to optimise pricing strategies, an improved product mix and efficient cost reduction. Profit after tax increased by 27% to Ushs. 20 billion.
He added that this strong performance is however threatened by the current operating environment which has become increasingly difficult on the back of rising illicit trade. There is now widespread distribution of tax-evaded and unregulated product, which typically do not bear the graphic health warning required by Tobacco Control Regulations (TCR) that came into force at the beginning of the year. The lack of enforcement by the authorities on graphic health warnings has created the perfect opportunity for traditional illicit (taxevaded) products to pass as genuine product, impacting the fiscus.
“Worryingly, third party research shows that the illicit trade incidence spiked to a record high of 17.4% at the end of 2020. It is also estimated that about 44% of illicit cigarettes sold in Uganda have been smuggled across the Kenyan border. This is despite restricted cross-border movement by government authorities, as a means to curb the spread of the COVID-19. The impact of illicit trade was reflected in BAT Uganda’s 2020 results where total contribution to Government revenues reduced by 5% to Ushs 91 billion, reflecting a decrease in Excise Duty and Value Added Tax (VAT) as a result of lower sales volumes. It is also estimated that Illicit trade in cigarettes denies the Government approximately Ushs 30 billion in revenue annually.” Adding that Given this dire situation, we call upon the Government to urgently ramp up enforcement of the TCR to ensure a fully compliant operating environment in the tobacco industry, and to facilitate URA’s clamp down on tax evaded product.
“This includes ratification of the Illicit Trade Protocol (ITP) under the World Health Organisation’s Framework Convention on Tobacco Control. Amongst other benefits, the ITP facilitates coordinated and enhanced implementation of track and trace measures to address illicit product and financial flows, including government tax revenue leakages.” He said.
BAT Uganda Chairman, Hon. Dr. Elly Karuhanga said: “We believe that a stable regulatory and fiscal environment is crucial for sustainable business and economic growth. Thus, whilst we acknowledge, applaud and support the Government of Uganda for the various measures taken to address the economic impacts of the pandemic, we reiterate the call by various concerned parties and Ugandan citizens, for the Government to swiftly enforce implementation of the
graphic health warning requirements, as prescribed by the Tobacco Control Act 2019 across the industry. “Failure to enforce the law, has and will further heighten the illicit tobacco trade through proliferation of unregulated product in the market, thereby endangering consumer safety, the livelihoods of thousands of legitimate Ugandan traders, as well industry sustainability and Government revenues.
“Looking ahead, BAT Uganda remains committed to continued contribution to Uganda’s socio-economic development. This includes through partnerships with over 30,000 Ugandans in our value chain and remittance of significant tax revenues to the Government.”
“I am proud of the work that the team has done and commend BAT Uganda for its resilience to deliver strong business results in 2020. Through our diverse strengths – our strong heritage, our strong brands, our new product innovations and our talented people, I believe that we are well poised to deliver our ambition to build A Better Tomorrow for consumers, society, employees and shareholders.”
