British American Tobacco South Africa (Batsa) announced on Monday that its first quarterly dividend will be paid to qualifying shareholders in May this year.
The company said in a JSE statement on Monday that the declared dividend will be payable on May 12 to its registered shareholders in the United Kingdom and South Africa.
Earlier this year, the company announced that the board had declared an interim dividend of 215.6 British pence per ordinary share of 25p. This will be paid in 53.9p per ordinary share in May 2021, August 2021, November 2021 and February 2022.
Due to exchange rates between the sterling pound and the rand, South African shareholders can expect to see a dividend of 1117.15835 cents per ordinary share.
Batsa’s dividends come off the back of a year of uncertainty as the company experienced a sales slump during the first half 2020 due to what it called an “unlawful ban” on the sale of cigarettes.
This ban was announced by President Cyril Ramaphosa on March 25, just two days before the start of the first national lockdown after the country entered its coronavirus state of disaster. The decision to ban tobacco sales came from the Minister for Co-operative Governance and Traditional Affairs (CoGTA), Nkosazana Dlamini Zuma.
The government said that all tobacco and vaping products were deemed non-essential and prohibited the sale of those products during the lockdown.
The government’s justification for the ban on cigarette sales was that they were trying to reduce pressure on the public health system, which also saw the sale of alcohol being banned during the hard lockdown levels.
Batsa’s market share fell from 48% prior to the lockdown to 8.7% in June 2020, the company said in a statement last year.
“Prior to the ban, Batsa owned six of the top 10 selling brands in South Africa. Now it has none,” the company said last August.
According to Batsa, the ban fuelled the sale of alternate cigarette brands on the black market in South Africa.
“At 11.6% of the market this one brand saw approximately 10 million cigarettes purchased every day during lockdown at prices that were up to five times higher than prior to lockdown despite no tax being paid,” Batsa said, referring to the brand RG, which is controlled by Gold Leaf Tobacco Corporation.
Batsa then challenged CoGTA in the High Court last year, saying that the ban should be scrapped. Batsa argued that the ban was crippling the country’s tobacco industry, which meant jobs and tax revenue were at risk.
After months in battle, Batsa was awarded a victory in December after the Western Cape High Court ruled that the ban on tobacco sales during the country’s hard lockdown was not necessary or consistent with South Africa’s Constitution.
The three high court judges said that Regulation 45, the bedrock upon which Dlamini Zuma based her argument for the ban, “cannot and does not withstand constitutional scrutiny”.
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