CIGARETTE manufacturer, British American Tobacco (BAT) Zimbabwe says its tax contribution to Government increased by 138 percent to ZW$101,3 million during the financial year ended December 31, 2019.
In a statement accompanying financial results for the period under review, the company said it contributes 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 by 138 percent from ZW$42,5 million in 2018 to ZW$101,3 million in 2019,” it said.
The key driver of the increase in the tax contribution was excise duty, spurred by the increase in change from specific to mixed system.
The specific rate moved during the year from ZW$25 per 1000 sticks (specific excise) to ZW$50/1000 sticks plus 20 percent ad valorem (in proportionate to) on the ex-factory price in August and closed the year at ZW$100/1000 sticks plus 20 percent ad valorem on the ex-factory price in December.
“The increased corporate tax paid was driven by the increase in the profit before tax on a historical cost basis,” said BAT.
The company’s revenue decreased by ZW$16 million (five percent) on an inflation adjusted basis when compared to 2018, driven by declining sales offset by numerous price increases.
Gross profit decreased by ZW$16,4 million (seven percent) compared to 2018, driven by an increase in raw material costs and costs associated with the use of generators due to power interruptions during the year in manufacturing activities.
It said selling and marketing costs decreased by ZW$10,5 million (27 percent) compared to 2018 driven by route to market initiatives to manage its distribution costs.
Administrative expenses were ZW$23,3 million (44 percent) lower than the previous year, driven by the business’s ongoing cost saving initiatives.
Other expenses increased by ZW$62,1 million (398 percent) compared to 2018 due to foreign exchange losses on liabilities driven by the devaluation in the Zimbabwe dollar against the United States dollar.
“Due to hyperinflation accounting, there was a ZW$90,8 million (348 percent) increase on net monetary movements mainly driven by the restatement of opening retained earnings.
“As a result of the above, operating profit decreased by ZW$162,1 million (104 percent) versus the same period in prior year, to close at a loss of ZW$5,8 million.”
Net loss attributable to shareholders for the period under review was ZW$27,7 million compared to a profit of ZW$95,3 million in the previous year.
Headline earnings per share were ZW$4,32 per share compared to ZW$5,89 per share the previous period.
Total current assets were ZW$189,4 million representing a ZW$93,7 million decrease (33 percent) compared to ZW$283 million in 2018, driven by a decrease in cash balances.
“Total current liabilities of ZW$142,8 million were ZW$60,8 million lower (29,8 percent) against ZW$203,6 million driven by a reduction in trade payable,” said BAT.
On the outlook, the firm said although the economic environment was likely to remain challenging in 2020 mainly driven by macro-economic movements and the effects of the coronavirus, it is confident that through effective business strategies, the equity of its brands and the quality of people, it will deliver value growth for its shareholders. —chronciel.clz.w