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The Nairobian

It's smoking as British American Tobacco nets Sh4.9 billion profit

News

By Patrick Alushula | Feb 27, 2016

Cigarette maker British American Tobacco Kenya (BAT) has recorded a 17 per cent hike in profit after tax to Sh4.9 billion for the financial year ended December 31, 2015.

The firm benefited from foreign exchange movements arising from export sales, improved performance in domestic market and increased sales from semi-processed tobacco. This pushed its net revenue to Sh22.3 billion, a six per cent improvement from previous financial year.

However, high foreign exchange related losses and interest expenses saw the firm’s finance costs soar by 93 per cent to Sh534 million. In 2014, it had incurred Sh276 million in servicing loans.

During the period under review, the firm paid Sh2.2 billion corporate tax. Added to excise duty, Value Added Tax (VAT) and Pay as You Earn, the government revenue basket got Sh16.3 billion. “Contribution to government revenues increased by Sh900 million to Sh16.3 billion. This was mainly driven by higher excise duty and VAT from domestic businesses as well as high corporation tax,” said the company in a statement.

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Following the gazettement of a single tier excise duty regime which became effective in December last year, the cigarette maker said that this will help mitigate illicit trade and boost the business environment.

The firm’s board of directors recommended a final dividend of Sh46 for every ordinary share held. This will be paid in May after approval by shareholders.

Also, yesterday the firm announced the exit of former Uchumi chief executive Jonathan Ciano from the board. In a notice copied to Nairobi Securities Exchange, the company said Ciano resigned as a non-executive director “for personal reasons...effective February 26, 2016.”

Ciano, who was ousted from retail outlet Uchumi supermarket in June last year, found the ghosts of the former employer haunting him after the Institute of Certified Public Accountants pushed him to resign as the chairman of its disciplinary committee.

Towards the close of 2015, BAT was also a subject of controversy after British Broadcasting Corporation’s (BBC) Panorama expose alleged that the firm had used underhand tactics to stifle Mastermind Limited, a competitor.

The board said it takes the allegations “extremely seriously” and is still carrying out investigations.