BAT ZIMBABWE BUSINESS UPDATE February 2016 AGENDA Key Business - - PowerPoint PPT Presentation

BAT ZIMBABWE BUSINESS UPDATE February 2016

PRIVATE & CONFIDENTIAL, NOT FOR FURTHER DISTRIBUTION

AGENDA

• Key Business Highlights
• Audited Results
• 2016 Outlook
• Questions

Key Business Highlights

• Volume decline across local brand portfolio of 10% versus SPLY
• Volume decline attributed to reduction in market size as a result of the challenging

economic environment

• Dunhill volume growth of 12% versus 2014 off a niche consumer base, boosted by

“Switch” variant

• Marketing activities have focussed in supporting local brands Everest and Madison
• Market share increase despite the industry volume contraction
• Full compliance to the indigenization Policy as certified by NIEEB
• Kick off of the TET activities

2015 Audited Results Income Statement (USD 000’s)

• Revenue grew by 2%

driven by marginal gains from pricing net of the impact of the excise increase in November 2014, inspite of sales volume drop

• Gross Profit grew by 12%

mainly from reduced raw materials prices, productivity initiatives and cost containment measures in our manufacturing operations

• Selling and Marketing

Costs reduced by 7%due to distribution efficiencies and cost containment initiatives

US$ 000 2015 2015 2014 2014 Actual ual Actual ual Revenue enue 45 265 44 562 Cost of sales (12 892) (15 777) Gross Profit 32 373 28 784 Selling and marketing costs (3 734) (3 998) Administrative expenses (10 658) (8 033) Indigenous ESOT Expenses 11 (109) Other income – net 2 799 1 180 Operati ting ng profit 20 791 17 824 Finance (cost) / income – net (3) 76 Income tax expense (5 312) (4 447) Profit t for the year ar 15 476 13 454 EPS 0.75 0.65

2015 Audited Results Income Statement (USD 000’s)

• Administrative expenses

grew by 28% due to higher service fees as a result of the implementation of the new Group wide management system which will increase efficiencies and saving opportunities; and one-off costs associated with a staff rationalization exercise

• Other Income includes

proceeds from disposal of a warehouse (USD 1.4mns)

• Operating Profit grew by

17%

• PAT grew by 15%

US$ 000 2015 2015 2014 2014 Actual ual Actual ual Revenue enue 45 265 44 562 Cost of sales (12 892) (15 777) Gross Profit 32 373 28 784 Selling and marketing costs (3 734) (3 998) Administrative expenses (10 658) (8 033) Indigenous ESOT Expenses 11 (109) Other income – net 2 799 1 180 Operati ting ng profit 20 791 17 824 Finance (cost) / income – net (3) 76 Income tax expense (5 312) (4 447) Profit t for the year ar 15 476 13 454 EPS 0.75 0.65

2015 Audited Results Consolidated Balance Sheet (USD 000’s)

31 Dec 2015 31 Dec 2014 Actual ual Actual ual ASSE SETS TS Non Non-cur urrent ent assets ets 9 178 178 9 9 813 813 Current nt assets ets: Inventories 8 670 7 098 Trade and other receivables 7 226 5 211 Cash and cash equivalents 3 869 5 458 19 19 765 765 17 767 Total Assets ets 28 28 943 943 27 27 580 580 EQUITY Y AND LIABILI BILITIES TIES Equi uity ty 14 14 654 654 16 038 Non Non-cur urrent ent liabi biliti ties es 1 352 1 585 Current nt liabilities es: Trade and other payables 10 718 4 804 Provisions 1,926 5127 Current tax liability 293 26 12 12 937 937 9 9 957 957 Total Equity ty and Liabi biliti ties es 28 28 943 943 27 27 580 580

• Inventory increased by US$

1.6mns due to slow down on sales towards the year-end

• Trade and Other receivables

increased by US$2.0mns impacted by the property sales proceeds which were received in 2016

• Trade and Other Payables

increased by US$5.9mns due to delays in obtaining exchange control approvals for payments to foreign suppliers, and the timing of payments for leaf purchases

• Provisions reduced by

US$3.2mns due to ESOT payments

2015 Audited Results Statement of Cash Flows (USD 000’s)

• Net Cash generated from operations increased by US$ 6.8mns mainly due to delays in obtaining

exchange control approvals for payments to foreign suppliers, and the timing of payments for leaf purchases

• Net Cash Utilised in Investment activities reduced by US$ 1.3mns due to lower CAPEX
• Net cash used in financing activities increased by US$ 8.0mns due to higher dividend paid in

2015

2015 2015 2014 2014 Actual ual Actual ual $’000 $’000 Profit before tax 20 788 17 900 Cash generated from operations 20 611 13 533 Net cash h gener nerat ated ed from operati ating ng activities es 15 281 8 8 462 462 Net cash utilised in investing activities (780) (2 011) Net cash used in financing activities (16 090) (8 283) Net increase/(reduction) in cash and cash equivalents (1 589) (1 832)

2016 Outlook

• Trading conditions expected to remain challenging despite the promising macro-

economic indicators

• Excise maintained in the 2015 National Budget, which BAT Zimbabwe supports,

to allow pricing stability and volume recovery

• The business is focussing on its key Strategic Leadership pillars to grow volumes

and deliver value in 2016:

• Great brands
• Distribution excellence
• Manufacturing quality
• Cost efficiencies
• Investing in our People

2016 Outlook

• Continued full compliance with the laws of the land including SI 264/2002 and

Indigenisation legislation

• BAT Zimbabwe will continue to carry out empowerment programmes through:
• ESOT
• Tobacco Empowerment Trust
• Route to Consumer Distribution Model
• Continued investment by BAT in Zimbabwe, both through our commercial

business and through contract purchases of a significant proportion of the national tobacco crop by our local partner on behalf of BAT Group

Questions