The Real Estate Investment Zambia (Board) has indicated that it will not be proposing a Dividend at the forthcoming Thirty-eighth Annual General Meeting of that will take place at Southern Sun Hotel, Ridgeway, Lusaka on Wednesday 25th March 2020 at 10:00 Hrs.
Shareholders at the coming AGM will be requested “to approve the Board’s recommendation not to declare a dividend for the year 2019”, according to Agenda item number 9 in the published SENS announcement of 27th February 2020.
Indications that the property company was feeling the heat of oversupply and contracted economic activity in 2019 began when they signed to the market a lower earnings per share forecast at half-year in the 2019 financial year. “In accordance with the Lusaka Securities Exchange Limited Listings Requirements, the Board of Directors advises the Shareholders of Real Estate Investments Zambia PLC that for the half-year ended 30 June 2019, the basic earnings per share is expected to be 186% lower than the basic earnings per share for the half-year ended 30 June 2018”, read a statement issued on SENS on 11th September 2019.
The company’s share price also nose-dived from K5.80 to K4.49 per share in September 2019. It was at this time that the Directors of REIZ notified shareholders that they would review the results for the full year and consider recommendation of a final dividend for approval by Shareholders at the Annual General Meeting (AGM) that will be held before 31 March 2020. However, with full-year results yet to be announced and the Board’s acknowledgment that the “property industry was expected to remain challenging for the remainder of the year with the adverse market forces that characterized the first half of 2019 continuing to prevail in the second half particularly regarding occupancy and market rental rates”, according to the SENS announcement of 12th September 2019, all indications are pointing to a continued financial depression.
At half-year, the reason for the financial depression included:
- Revaluation of foreign currency-denominated liabilities due to depreciation of the ZMW against the USD
- Escalating finance costs associated with the CAPEX loan for the revamp of Arcades, and
- Reduction in fair value of some of their investment property portfolio
With the financial results expected to be released over the coming weeks, investors will be looking at the comparative financial performance of the 2018 against the 2019 performance. Why? With Arcades finally coming ‘online’ and revenue increasing as more shops were not being leased, REIZ will be hoping it will be just enough to turn things around in the near term. But with the signal of no dividend, it is highly unlikely that their performance was outstanding.