Companies scramble to postpone, cancel dividends

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Other property funds EPP and Hyprop have postponed their distribution payments totalling nearly R2 billion to later in the year. Texton Property Fund cancelled its outright.

Redefine Properties, which will report its interim results on May 4, announced preemptively on March 23 that its board had “resolved to defer its decision on a dividend payment for [that period] until the release of its results for the year ending August 31 2020, which is expected to be on or about November 2 2020″. Redefine has been especially hard hit this year – its share price is down 71% since early January.

Chemicals and explosives group AECI said on March 27 that it had “stress-tested multiple solvency and liquidity scenarios” and that “no loan covenants were breached in any of those scenarios”. Metair Investments made reference to “these abnormal times” in its decision to postpone the dividend declared just two weeks earlier. It has already cautioned the market to expect a decrease in earnings of at least 20% for the six months to end-June, given the impact of Covid-19.

Investors should surely not expect this to be simply “deferred” to October, as the company states. This will certainly be reviewed once the impact from Covid-19 can be quantified. Thus far, the impact of Covid-19 has mostly been seen in share prices across the board, as investors panic and rush to safety . Markets have been badly rattled.

 

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