Coronavirus Forces Meikles & Simbisa Brands To Defer Dividend Payments

Meikles Limited and Simbisa Brands which have a combined market valuation of ZW$3.48 billion both recently announced they would be deferring dividend payments to shareholders because of the Coronavirus outbreak.

Meikles announced the negative news to shareholders on the 8th of March

The Board of Directors of Meikles Limited would like to advise shareholders that they will be deferring the payment of the Interim Dividend as announced in the Dividend Notice of 10 March 2020. The delay in paying the dividend is due to the current national efforts to contain the spread of Corona Virus, which has led to a national lockdown that has resulted in an inability to effect the normal administrative procedures relating to the payment of the dividend.
Due to the extraordinary circumstances that we find ourselves in and with consultation with other parties in the dividend payment process, a decision to defer the payment was made and the Zimbabwe Stock Exchange granted permission to defer payment to on or about 30 April 2020.
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.
Meikles Announcement on the 8th of April

Simbisa has followed Meikles and announced this morning that they will be deferring the payment from 15 April to 21 May;

Members are advised that there has been a change in the internal and external circumstances of the country and the Company that have caused the Board of Directors to reconsider the payment date of the proposed interim dividend of 15 April 2020.
The Board of Directors wish to advise shareholders that in light of the COVID-19 Lockdown in force in Zimbabwe, and the uncertainties surrounding the global and local economies, the payment date of the interim dividend has been deferred, with the approval of the Zimbabwe Stock Exchange, to 21 May 2020.
The new payment date is still within the timelines for payment of declared interim dividends set out in the Listing Rules of the ZSE.

Whilst these two might be the most popular companies to defer dividends, Caledonia Mining Corporation also deferred its US$900 000 dividend.

For Caledonia Mining’s shareholding, there will be more uncertainty as the company hasn’t even announced when they will issue the dividend. Instead, the board released a statement announcing that the decision will be kept “under review as it monitors market conditions”.

The deferral by Caledonia is probably the most telling since the company has issued out a dividend for every quarter since 2014. Their company statement expresses that the dividend they were supposed to issue was below 7% of their currently available cash.

7% seems like a modest number but when you put into perspective the fact that non of the above companies know when exactly the COVID-19 storm will pass – it is not too surprising that they have chosen to defer paying dividends.

With production on-going albeit at a lower-scale for companies on the ZSE it won’t come as a surprise if other companies on the stock exchange were to follow suit as companies seek to maintain positive cash flow during these uncertain times.