Firms postpone dividends payment

Enacy Mapakame Business Reporter

Investors have to wait a little longer to get their dividend payments as several companies have postponed or deferred payments due to the Covid-19 induced lockdown.

The delays have been necessitated by the inabilities to effect normal administrative procedures relating to the payment of the dividend as businesses implement the national lockdown.

Following the outbreak of the Covid-19 pandemic, first detected in China last December, countries around are implementing lockdowns as part of measures to reduce the spread of the disease.

Zimbabwe started its 21-day lockdown on March 30, 2020. Although essential service providers were exempt, indications are that economies, not only Zimbabwe’s but the world over are already suffering due to reduced production.

There have been severe disturbances to business operations and some value chains. Resultantly, listed firms that were due to make dividend payments to their shareholders have postponed or deferred to later dates, with approval from the Zimbabwe Stock Exchange (ZSE).

Spirits and wines maker, Afdis, was the latest to make the announcement to its shareholders on the deferment of interim dividend payment.

In a notice to its shareholders, Afdis said: “The board of directors wish to advise shareholders that due to the impact of Covid-19 lockdown on the company and the economy at large, the payment date of the interim dividend has been deferred to the 15th of May 2020.

“The new payment date remains within the timelines of payment of declared interim dividends as set out in the listing rules of the ZSE. The record date, cum-dividend date will remain as announced.”

Simbisa Brands has also indicated to its shareholders that due to the global pandemic and the effects it has on businesses, global and local, the payment date of the interim dividend has been deferred to May 21 2020.

Consistent dividend paying companies are usually a favourite for investors and they have maintained their dividend policies.

There are, however, concerns that delays in payment of dividends in an inflationary environment like Zimbabwe will result in erosion of the funds. But the year 2020 is a unique year on its own.

“It is understood that shareholders will be disappointed in the delay. Consideration will be given to a second interim dividend declaration once the lockdown is over to account for the falling value of money through inflation,” said Meikles company secretary Thabani Mpofu in a notice on deferment of dividend payment.

The hospitality group deferred payment of its interim dividend to April 30, 2020.

Resources group Caledonia Mining Corporation — parent company of Gwanda-based gold producer Blanket Mine — also indicated that its board of directors has decided to defer its approval of the declaration of the second quarterly dividend of 2020.

Said chairman Leigh Wilson:

“The Covid-19 pandemic has elevated global levels of uncertainty. I have full confidence that our business will emerge from this situation substantially unchanged, but, out of an abundance of caution, we have decided to defer the dividend decision until we have greater clarity on the wider implications of this highly fluid situation.

“The resumption of dividends will depend on, inter alia, Blanket maintaining a reasonable level of production; receiving payment in full and on-time for all gold sales; being able to make the necessary local and international payments and being able to replenish its supplies of consumables and other items.”

The situation is not only prevalent in Zimbabwe but a global challenge.

In the United Kingdom, insurers have also scrapped plans to pay dividends to shareholders during the Covid-19 crisis after regulators urged them to pause pay-outs due to uncertainty.

According to BBC, the Bank of England wrote to banks and insurers at the end of March asking them to suspend dividend payments and hold onto the cash, which they may need during the crisis.

Lloyds, Royal Bank of Scotland, Barclays, HSBC and Standard Chartered kept holding on to a total of £15,6 billion which shareholders had been expecting.