History of BAT

British American Tobacco Bangladesh (BATB) is one of the pioneer cigarette manufacturers in the world. The company was formed at the turn of the 20th century with the objective of establishing a worldwide business. Today British American Tobacco sells the leading brands in over 0 mar!ets covering "02 countries# has more than 200 brands worldwide# employs more than $$#000 people and produces some 2 billion cigarettes every day. British American Tobacco Bangladesh %ompany &imited is one of the largest private sector enterprises in Bangladesh# incorporated under the %ompany's Act "(" on 2nd )ebruary "(*2. BAT has over the decades consistently invested in Bangladesh mar!et through Bangladesh Tobacco %ompany (BT%). Thus BT% has always been on the business of manufacturing and mar!eting different brands that meet the standards found everywhere in the world. British American Tobacco has been in

business for more than 100 years, trading through the turbulence of wars, revolutions and nationalizations as well as all the controversy surrounding smoking. The business was formed in 1 0!, as a "oint venture between the #$%s &m'erial Tobacco (om'any and the American Tobacco (om'any founded by )ames *Buck% +uke. +es'ite its name, derived from the home bases of its two founding com'anies, British American Tobacco was established to trade outside both the #$ and the #,A, and grew from its roots in dozens of countries across Africa, Asia, -atin America and continental .uro'e. BAT was *born international%, and have develo'ed over a century%s e/'ertise in o'erating locally in diverse cultures around the world.

0'erational 'erformance analysis 1Taka *0002

3et income .8, 4 99999999999999999999999999999999999999999999 ,hare outstanding

!00 4 56.67 !007 4 !:.71 !00: 4 15.5! !00; 4 ;.05 !00< 4 5.77

308AT 4 .B&T 119 ta/ rate2 !00 4 1:6<0;:.; !007 4 15:6!7;.! !00: 4 :711 :.; !00; 4 67:1<0.! !00< 4 5<0!:!.7

3et o'erating working ca'ital 4 0'erating current asset = 0'erating current liability !00 4 !,171,15< !007 4 1, ::,;6: !00: 4 <0 ,100 !00; 4 575,:0< !00< 4 971,656

Total o'erating ca'ital 4 net o'erating ca'ital > o'erating long term asset !00 4 < 017;

!007 4 <6606<0 !00: 4 6!0:!;6 !00; 4 667 1!7 !00< 4 6!5;6!5

.?A 4 308AT = (ost of ca'ital !00 4 107;16:.16 !007 4 ::<75;.! !00: 4 5175 7.<; !00; 4 ;;<5.77 !00< 4 11<:56.!

308AT @0&( 4 9999999999999999999999999999999 Total o'erating ca'ital !00 4 ! .15A !007 4 !<.!;A !00: 4 17.<;A !00; 4 10.7<A !00< 4 7.!;A

+ividend decision theory 12 (ash dividend !2 ,tock dividend 52 +ividend in kind com'any. B +ividend 'ay on face value B +ividend 'ay by giving stock B +ividend 'ay not in cash or stock may be 'roduct of the

Three theories of investor 'referenceB 12 The dividend irrelevance theory B The theory that a firm%s dividend 'olicy has no effect on either its value or its cost of ca'ital

!2 The bird in the hand theory. 52 The ta/ 'reference theory.

,ome other theories 12 ,ignaling hy'othesisB The theory that investors regard dividend changes as signals of management%s earning forecasts. !2 (lientele effectB The tendency of a firm to attract the ty'e of investor who like its dividend 'olicy. 52 Cree cash flow hy'othesis

Cactors affecting dividend decision 1. Stability of Earnings. The nature of business has an im'ortant bearing on the dividend 'olicy. &ndustrial units having stability of earnings may formulate a more consistent

dividend 'olicy than those having an uneven flow of incomes because they can 'redict easily their savings and earnings. #sually, enter'rises dealing in necessities suffer less from oscillating earnings than those dealing in lu/uries or fancy goods.

2. Liquidity of Funds. Availability of cash and sound financial 'osition is also an im'ortant factor in dividend decisions. A dividend re'resents a cash outflow, the greater the funds and the liDuidity of the firm the better the ability to 'ay dividend. The liDuidity of a firm de'ends very much on the investment and financial decisions of the firm which in turn determines the rate of e/'ansion and the manner of financing. &f cash 'osition is weak, stock dividend will be distributed and if cash 'osition is good, com'any can distribute the cash dividend.

3. Needs for Additional Capital. Companies retain a 'art of their 'rofits for strengthening their financial 'osition. The income may be conserved for meeting the increased reDuirements of working ca'ital or of future e/'ansion. ,mall com'anies usually find difficulties in raising finance for their needs of increased working ca'ital for e/'ansion 'rogrammes. They having no other alternative, use their 'loughed back 'rofits. Thus, such (om'anies distribute dividend at low rates and retain a big 'art of 'rofits.

4. rade Cy!les. Business cycles also e/ercise influence u'on dividend 8olicy. +ividend 'olicy is ad"usted according to the business oscillations. +uring the boom, 'rudent management creates food reserves for contingencies which follow the inflationary 'eriod. Higher rates of dividend can be used as a tool for marketing the securities in an otherwise de'ressed market. The financial solvency can be 'roved and maintained by the com'anies in dull years if the adeDuate reserves have been built u'. ". #o$ernment %oli!ies. The earnings ca'acity of the enter'rise is widely affected by the change in fiscal, industrial, labour, control and other government 'olicies. ,ometimes

government restricts the distribution of dividend beyond a certain 'ercentage in a 'articular industry or in all s'heres of business activity as was done in emergency. The dividend 'olicy has to be modified or formulated accordingly in those enter'rises.

&.

a'ation %oli!y. High ta/ation reduces the earnings of he com'anies and conseDuently the

rate of dividend is lowered down. ,ometimes government levies dividend9ta/ of distribution of dividend beyond a certain limit. &t also affects the ca'ital formation. 3 &ndia, dividends beyond 10 A of 'aid9u' ca'ital are sub"ect to dividend ta/ at :.< A.

(. Legal )equirements. &n deciding on the dividend, the directors take the legal reDuirements too into consideration. &n order to 'rotect the interests of creditors an outsiders, the com'anies Act 1 <; 'rescribes certain guidelines in res'ect of the distribution and 'ayment of dividend. Eoreover, a com'any is reDuired to 'rovide for de'reciation on its fi/ed and tangible assets before declaring dividend on shares. &t 'ro'oses that +ividend should not be distributed out of ca'ita, in any case. -ikewise, contractual obligation should also be fulfilled, for e/am'le, 'ayment of dividend on 'reference shares in 'riority over ordinary dividend.

*. %ast di$idend )ates. Fhile formulating the +ividend 8olicy, the directors must kee' in mind the dividend 'aid in 'ast years. The current rate should be around the average 'ast rat. &f it has been abnormally increased the shares will be sub"ected to s'eculation. &n a new concern, the com'any should consider the dividend 'olicy of the rival organization. +. Ability to ,orro-. Fell established and large firms have better access to the ca'ital market than the new (om'anies and may borrow funds from the e/ternal sources if there arises any need. ,uch (om'anies may have a better dividend 'ay9out ratio. Fhereas smaller firms have to de'end on their internal sources and therefore they will have to built u' good reserves by reducing the dividend 'ay out ratio for meeting any obligation reDuiring heavy funds.

1.. )epayments of Loan. A com'any having loan indebtedness are vowed to a high rate of retention earnings, unless one other arrangements are made for the redem'tion of debt on maturity. &t will naturally lower down the rate of dividend. ,ometimes, the lenders 1mostly institutional lenders2 'ut restrictions on the dividend distribution still such time their loan is outstanding. Cormal loan contracts generally 'rovide a certain standard of liDuidity and solvency to be maintained. Eanagement is bound to hour such restrictions and to limit the rate of dividend 'ayout.

,teady dividend at higher level

Cinancial Analysis for +ividend ,ales growth !00 <<0:6;<1 !007 6<61617: !00: 5:7; ! 5 56 !00; 616 Taka *000 !00< ! <07;:<

3et income growth !00 !0;7<;; !007 1;;7::7 !00: : 7 :1 !00; 5;1775

Taka *000 !00< !5!77!

Net profit
-et profit 20,+$,,

",,+**+ *(+(*" 2 2++2 200$ 200, ,"++ 200* 200+

200(

(a'ital e/'enditure (a'e/ !00 570 0<1 !007 56;!705 !00: 5; 71;6 !00; 610<6!5

Taka *000 !00< 651:7<:

+8, !00 .< !007 75.: !00: ;;.! !00; <<.

Taka *000

.8, !00 56.67 !007 !:.71 !00: 15.5! !00; ;.05 !00< 5.77

Taka *000

Growth rate by dividend and +ividend 'olicy of the com'any BAT gives cash dividend to their shareholders. !00 9!007 >1 !0079!00: >!; !00:9!00; >17

@ecommendation Actually British American Tobacco is the market leader of tobacco industry in Bangladesh. They are giving higher rate of dividend to their shareholders. Their dividend rate is gradually increased year to year. Their dividend giving style is cash dividend.

,o, their decision is feature their all o'erational 'erformance and financial activities.

(onclusion BATB%s goals are to grow the brands and the value of the business, to im'rove 'roductivity and to
embed the 'rinci'les of cor'orate res'onsibility around the Grou'. BATB%svision is to lead the

tobacco industry through growth, 'roductivity and res'onsibility. BATB%s high Duality brands are chosen by one in eight of the worldHs smokers. (onducting BAT%s business with honesty, integrity and trans'arency is not only the right thing to do, but is also critical to the continuing develo'ment of a business that is res'onsible, successful and sustainable in the long term. BATB%s ,tandards of Business (onduct e/'ress the high standards of business integrity that we reDuire from it%s em'loyees worldwide. As such, they 'lay a key role in the British American Tobacco Grou' strategy. BATB%s recognize that our business starts with our consumers and our brands. &t%s not about encouraging 'eo'le to start smoking or to smoke more, but about meeting the 'references of adults who have chosen to consume tobacco, and differentiating our brands from their com'etitors.

@eference 12 Annual @e'ort !2 htt'BIIwww.freemba.inIarticlesread.'h'Jartcode4677Kstcode410Ksubstcode450 52 htt'BIIwww.bat.comI