Companies declare dividends despite tough environment

SOME companies that produce consumer  products have declared dividends for the year ended December 31 2013, despite the depressed environment.

Victoria Mtomba

British American Tobacco Company, Old Mutual, Nicoz Diamond, CBZ Holdings,Colcom, Innscor and TSL have declared dividends for 2013.A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits.

CBZ Holdings declared a total annual dividend of $2,3 million for the period under review while Nicoz Diamond declared a final dividend of 0,064 cents per share.

BAT declared a dividend of 0,18 cents, Innscor declared a 0,060 cents dividend for the period under review. The Colcom dividend was 0,40 cents while TSL declared a dividend of 0,3 cents per share.

A local analyst said dividends in such an environment where there is tight liquidity would be dependent on the nature of the business.

“Cash-generative businesses fare relatively well in a tough environment because having cash is so precious compared to predominantly credit-based businesses. Predominantly credit-based business may be profitable, but realising profits may be a mammoth task and this can only be seen in their cashflow statement,” the analyst said.

The analyst, however, said some of the companies declare dividends because they may be forced by major shareholders. Others may declare  dividend as a way of managing perception because the public will rate highly a company that pays dividends in such an environment irrespective of their cashflows.

Despite having declared dividends the companies  indicated that the environment was tough due to liquidity challenges currently facing the economy.

In a statement accompanying Nicoz Diamond financial results, the company’s chairman Albert Nduna said short-term insurance in Zimbabwe was characterised by marginal growth due to widespread under-insurance or non-insurance.

“Collectability of premiums remained a challenge in the absence of insurance premium financing, forcing insurers to extend payment terms to clients. This deflated the savings mobilisation role of insurance companies in the economy affecting their capacity to participate in funding national projects,” Nduna said.

CBZ Holdings  said the period under review was tough as banks had  the Memorandum of Understanding that placed restrictions on financial institutions’ revenue initiatives.

The bank’s chief executive officer John Mangudya said the environment was characterised by an investor wait-and-see attitude over the pre and post-election period.

4 Comments

  1. Akhomana diamond ine mari! This is just Mbada. There are at least 9 other major operations of this magnitude operating in the country. Gvt could be earning at least 7 billion a year from diamonds chete!! We have not accounted the looting of gold,platinum,tin,chrome,yes chrome, of which Zimbabwe has 95% of world reserves, and now gas revenue,yes gas….In the 1990s, agriculture would easily make 3 times the revenue and contribution to gdp that mining.

    Our leaders have failed! Our middle generation has failed! You have left the younger generation with a crappy education system, with poor job prospects, incredible poverty, we dont even use our bloody currency anymore, and due to corruption, we will not. Our country needs the US dollar in order to function, we have no control over these other currencies, and they continue to deceive us with the perception of growth whilst we continue to have a trade deficit. Go into Spar/OK, half the products are South African, its so expensive to farm, so we continue under production….Companies continue closure, and banks dont have cash… Apo people still think importing things for sale is good business, nxa, we dont have real industrialists…smh

    I would like to warn all these old people that our gdp is less than the annual endowment of Stanford University! Marasha eleadership, regardless of political affiliation !!

    Watch this space, you detractors of our forefathers dream of a great african nation

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