eBusiness Weekly
Golden Sibanda
Multi-listed diversified financial services group, Old Mutual Limited, declared a final dividend of 75 cents (rand) per share this week but stockholders on the Zimbabwe register and other secondary markets will be paid their local currency equivalent.
This year’s final dividend of 75 cents per share is virtually unchanged from the 2019’s final (ordinary share) dividend, equal to 1,74 cover for the year, which was in line with Old Mutual Limited’s dividend cover target range of 1,50 times to two times
Old Mutual, which has investments in insurance, banking and property, said this year’s final dividend, payable on May 4, 2020, will be subject to 20 percent dividend tax rate, which will result in a final net dividend of 60 cents for non-exempt shareholders.
“International shareholders who are not exempt or are not subject to a reduced rate in terms of a double taxation agreement, will be subject to a dividend withholding tax at a rate of 20 percent,” OML said in a statement on Monday this week.
Since OML has its primary listing on the Johannesburg Stock Exchange (JSE), shareholders on the group’s secondary exchanges in London, Zimbabwe, Malawi and Namibia, will be paid their countries’ local currency equivalent of the final dividend.
As such, in Zimbabwe shareholders
will get $91,3 calculated at the rate of R0,8208 per every RTGS dollar while UK shareholders will get £3,71 per share at R20,2 per
pound.
In Malawi, they will get 32,34 Kwacha per share at 43,1 Kwacha to the rand and in Namibia 75 Namibian cents per share paid at 1 000 Namibian cents to the rand.
OML said distributions made through the dividend access trusts or similar arrangements in a country will not be subject to SA’s withholding tax but may be subject to withholding tax in the relevant country.
OML is a premium financial services group that offers a broad spectrum of financial solutions to retail and corporate customers across key markets segments in 14 countries. Its primary operations are in South Africa but also transcend the rest of Africa.
The share price of multi-listed entity fell by 19,91 percent on the Zimbabwe Stock Exchange on March 16 in the wake of Government’s decision to suspend the share’s fungibility status for the next 12 months.
In its Exchange Control (Suspension of Fungibility of Certain Shares) Order 2020, Government ordered for the suspension of fungibility of Old Mutual Limited, PPC Limited and Seed Co International Limited
shares.
Fungible shares are those that are listed or can be traded on two or more stock exchanges with investors being able to buy from one and sale on another. Fungibility allowed investors to compare prices across different exchanges and exploit arbitrage opportunities.
Investors could buy on the JSE and sell on the ZSE or vice versa, as millions of shares moved to or from the Zimbabwe register while investors got more by bringing OML shares to the local bourse, than sending foreign currency through banking channels.
With the prevailing foreign currency shortages having taken long to be resolved, a lot more individuals and institutions chose this route to repatriate funds outside the country to the extent that they were willing to pay a premium to get their shares.
This increased demand meant Old Mutual’s share price on the ZSE could trade at a much higher premium to share prices prevailing on the JSE and LSE.
To some market watchers this was a reflection on the local currency. It meant an implied rate of the local currency popularly known as the Old Mutual Implied Rate (OMIR), which some analysts believed influenced and mirrored the parallel market exchange rate.
