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