Carbacid tops in dividend payouts to shareholders

By Morris Aron

It is that time again when listed companies announce their financial results for the nine months of this year, ending September 2009.

But even for those companies whose financial year 2009 has already ended, one cannot help but imagine the disappointment on the faces of shareholders as they collect their dividend cheques.

"Companies have been cautious this year while declaring dividends, perhaps to safeguard their capital. This trend is an indication that most companies are not comfortable with the way they have performed," said Fred Mweni, Managing Director Tsavo Securities.

Interestingly, while big investors have seen the value of their holdings at the Nairobi Stock Exchange (NSE) eroded by almost 70 per cent since the beginning of this year, there are some shareholders smiling all the way to the bank.

Having been locked out from the trading floor since 2005, shareholders of Carbacid are set to be compensated handsomely for their predicament.

In addition to an interim dividend of Sh5 per share, the company’s directors have also proposed a final dividend of Sh5 per share, and a further, a special dividend of Sh5 per share for the financial year ended 31st July 2009.

In total, shareholders of Carbacid will be paid a total of Sh15 per share after the company’s directors’ meet for the company’s annual general meeting later on in December 10, 2009.

The dividend

A dividend is a payment to shareholders from the company’s earnings. Dividend payments vary widely, depending on the type of stock and the company’s business strategy.

Very profitable companies that are strongly oriented toward growth, may pay low dividends (or none at all) because profits are being reinvested.

Any dividend payments depend on the company making a profit in the first place.

Generally, special dividends are declared after exceptionally strong company earnings, as a way to distribute the profits directly to shareholders. Directors of Carbacid are proposing this special dividend to pass on the benefits of impressive results and deals made during this financial year to the company’s shareholders

The company had a pre-tax profit of Sh367 million for year ended July 31, 2009, up from Sh241 million made the previous year.

In May, Carbacid sold part of its stake to Centum Investments of Kenya Centum, a private equity firm. Centum bought 2.5 million shares in Carbacid Investment from Alliance Nominees a holding company owned by veteran politician, Kenneth Matiba.

Though there was concern in the market over the speed with which Carbacid Investment Ltd sold part of its stake to Centum Investments, the deal received the greenlight from the regulator. At the time, Carbacid was still locked in a takeover dispute with rival BOC Kenya Ltd.

Shareholders of East African Breweries will be receiving Sh5.55 dividend this week. Already the Board of Directors have approved a final dividend payout of at an AGM held last week bringing the total dividend payout to Sh8.05. The amount offered, is among the highest, offered by the listed companies.

Tough business

tSpeaking at the AGM, board chairman Jeremiah Kiereini said "Our business remains strong and has performed remarkably well given the tough operating environment in the region. " he assured shareholders.

The company, which announced its annual results in August, posted a Kshs 12 Billion profit before taxation for the period ending June 2009.

Centum’s strategy revolves around raising capital cheaply, and investing in undervalued companies in sectors that are significant contributors to the region’s economic growth. Carbacid is expected to provide Centum with a foothold in the tobacco and beer manufacturing, main consumers of its products.

While uncertainty persists over prospects of an economic recovery next year, companies remain cautious in their dividend policy. Directors of KenGen Limited, whose financial year ended on June 30, 2009, declared a final dividend of 50 cents, down from 90 cents in 2008.

In total, shareholders of KenGen were paid Sh1.1 billion in dividends, down from Sh1.9 billion. Kenya Airways declared a final dividend of Sh1.00 per share for the financial year ended 31 March 2009.

The airline made a total dividend payment of Sh462 million, compared to Sh809 million paid out in dividends in 2007 when the company’s board recommended a first and final dividend of Sh1.75 per share.

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