British American Tobacco (BAT) Zambia Plc incurred increased losses of over K16 million after tax during its financial year period ending December 31, 2018, mainly triggered by foreign exchange losses, company data reveals.

And BAT Zambia have complained that the Customs and Excise Act, 2018, posed the company challenges.

In a statement outlining the abridged unaudited financial results for the year ended December 31, 2018, BAT Zambia board chairperson Michael Mundashi revealed that the tobacco giant incurred losses attributed to the company’s shareholders was K16.1 million compared to K14.1 million incurred in the corresponding period in 2017, increasing its losses by around K2 million.

This represents a 14.1 per cent year-on-year decline after the company posted losses before tax of K16.6 million in 2018.

“A loss before taxation of K16.6 million was record during the year 2018 and represents a 50 per cent increase over the loss recorded in 2017 of K11.1 million. The loss before taxation was mainly due to high net finance costs driven by foreign exchange losses suffered on the US $15 million loan that the company contracted in 2017 for the construction of the new factory,” Mundashi stated.

He, however, explained that BAT Zambia remained committed to liquidate the outstanding loan in due course.

“The company is committed to ensuring that this liability is liquidated in the short to medium-term in order to arrest the erosion of shareholder value. To this effect, various interventions have been employed and more are still being explored to manage the foreign exchange risk that this necessary liability carries,” he stated.

On dividends, Mundashi announced that no dividends would be paid owing to the poor results.

“The Directors do not recommend the payment of a final dividend for the year ended 31 December, 2018, in view of the financial results recorded as highlighted. Further, no interim dividend was declared or paid for the year ended 2018,” he stated.

And Mundashi explained that Zambia’s regulatory environment remained challenging on the company’s financial performance.

“The regulatory environment in 2018 did pose some challenges for the business. Specifically, changes to the Customs and Excise Act 2018 threatened the viability of our new state-of-the-art manufacturing plant. The uncertainties created by the changes were addressed and it must be noted that the achievements recorded thus far would not have been possible without appropriate legislative amendments,” stated Mundashi.