AMMAN - The International Tobacco & Cigarettes Company (ITCC) will distribute its highest cash dividends at a rate of 50 per cent next month based on the decision of shareholders at the 16th general assembly meeting.
"We are readying JD10 million for distribution to shareholders," an ITCC staff member told the Jordan Times. "Investors can collect their checks after three weeks."
The dividends were not proposed by the board of directors to the general assembly, but shareholders decided to obtain a return on their investments after discussing the 2007 financial statement which showed a JD5.7 million profit before tax and provisions.
According to the profit and loss statement as of December 31, 2007, sales amounted to JD52.1 million compared to JD51.1 at the end of 2006.
After taking into consideration the cost of goods sold, operating profit stood at JD8.2 million compared to JD8.7 million in 2006.
The operating profit dipped to around JD1.3 million because of administrative, general, selling and distribution expenses (JD5.5 million) as well as bank interest (JD1.4 million), but was brought up to JD5.7 million by JD4.4 million in gains from selling shares.
The net profit after provisions stood at JD5.2 million compared to JD0.4 million in 2006.
The balance sheet of the company showed total assets at JD74.1 million of which JD35.1 million were current assets, mainly stocks and receivables.
Total liabilities amounted to JD34.8 million of which JD28.6 million were current liabilities. Shareholders equity reached JD39.3 million
ITCC's 2007 annual report estimated the company's share of the local market at more than 50 per cent and listed Iraq, Iran, Yemen and Libya as its export market.
Noting that exports fell to JD5.9 million last year from JD9.0 million in 2006, the report said since starting production until now, ITCC's exports reached $179 million.
The report also highlighted the amount paid to the state treasury in the form of taxes and various fees pointing out that $51 million were paid in 2007. Since ITCC was established, the company paid $604 million in such levies.
ITCC relies on two wholly-owned subsidiaries in its operations, the first is the Arab Company for Cigarette Distribution which sells in the local market and in the Aqaba Special Economic Zone.
The second is Al Fakher for Tobacco Trading and Agencies which specialise in the distribution of moassel tobacco in the Jordanian market. A subsidiary of Al Fakher operates in Ajman in the United Arab Emirates where moassel tobacco is produced and sold in the Gulf Arab countries and abroad.
"Many of the loans which appear in the balance sheet were spent on financing the purchase, operation and development of the Al Fakher subsidiary in Ajman," the report indicated.
The company listed three risks facing its industry. The first is the smuggling of cigarettes from neighbouring states as a result of raising the special tax here.
The second is illegitimate production by unknown parties of similar faked products of low quality to mar the reputation of the company and reduce demand on its products.
And third, the change in government laws and regulations that adversely affect the strategy and objectives of ITCC.
After ending the ordinary session, the general assembly of shareholders held an extraordinary meeting during which it was agreed to transfer core functions of the parent company to another subsidiary to be established. Accordingly, the ITCC name will be changed into a new title that will not have the words "cigarettes or tobacco" in it.
By Samir Ghawi
© Jordan Times 2008
