Barclays shareholders fire warning shots

Signs of growing impatience and frustrations among Barclays Bank Zimbabwe Limited shareholders over a prolonged dividend drought spilled into public limelight at the listed outfit’s Annual General Meeting (AGM) recently, with investors pressing the board to act.

Dividend payments were among the talking points at the AGM two weeks ago, with at least three shareholders demanding that the Anthony Mandiwanza-led board explains its position on dividends.

“We have gone for four years without a dividend. What plans are there for shareholders in terms of dividends?” one shareholder. But if there is one important skill that Mandiwanza appears to have learnt during his time as a top flight soccer referee, it is providing quick answers and calming nerves in potentially hostile situations.

He said Barclays was building the foundation for sustainable future dividend payments following decades of economic turmoil that ended in 2009.

He said significant progress towards stabilising one of the country’s largest financial institutions had been achieved. During the full-year to December 31, 2013, Barclays reported a 5,3 percent growth in total income to US$38,8 million. Operating profits for the period rose by 75 percent to US$4,9 million. Profit after tax climbed marginally to US$3 million, from US$2,1 million in 2012.

Barclays was not the only listed firm that did not declare dividends during the review period. Forty nine of the 67 firms listed on the Zimbabwe Stock Exchange did not declare dividends last year.

These included ABC Holdings, BAT Zimbabwe, CBZ Holdings, Colcom, Delta Corporation and FBC Holdings. Fidelity Life, Econet Wireless, Afre Corporation, Innscor Africa Limited, National Foods Limited, Old Mutual, Padenga, Pretoria Portland Cement, Seed Co, Tobacco Sales Limited and ZIMRE Property Investment also declared dividends.

Economist, Brains Muchemwa, said the need to preserve cash in a liquidity starved market has forced most firms to suspend dividend payments. “In this environment preserving cash is very important,” he said.

“We hope those declaring dividends will not find themselves looking for cash tomorrow,” Muchemwa told Financial Gazette Companies and Market (C&M).

University of Zimbabwe Graduate School of Management lecturer, Tony Hawkins, told C&M that companies that did not declare dividends were trying to tread with caution.

“Some companies are able to declare dividends as their cash flows are stable,” he said.

“Companies like Delta and Innscor come to mind,” said the academic.

“There are other companies with plans to expand or embark on (other projects). In such a case it is unlikely they would,” said Hawkins. Financial Gazette