RAILWAY, 3 OTHERS FAIL TO REMIT GOVT DIVIDENDS

MBABANE – Despite government being heavily invested in certain companies, some of them have for the past five years not been remitting dividends to it.  

This is according to the Report of the Auditor General (AG) on the Consolidated Government Accounts for the financial year ended March 31, 2020. The AG noted with concern that for a maximum period of five years, government had not received any income (dividends) from its investment in some companies. The AG named four companies, namely the Industrial Development Company of Eswatini (IDCE), Swazican Fruit Canners, Eswatini Railway and Maloma Colliery. He stated that IDCE and Swazican Fruit Canners, had not remitted any dividends from the year ended 2016 to 2020.  “Eswatini Railway, for the three-year period commencing from 2018 to 2020, while Maloma Colliery did not remit dividends for the year ended 2019 to 2020,” according to the report.

Contents

The AG’s report was tabled in the House of Parliament by Finance Minister Neal Rijkenberg last Friday and its contents are yet to be deliberated by the Public Accounts Committee. Matsebula stated that his office could not find any receipts because  there were allegedly no dividends declaration by the companies. These, according to the AG, were companies among others where government had made an investment, with an expectation of getting a return in the form of dividends. He stated that The Dividend Policy under Clause 14, stated that public companies were expected to pay dividends to government except for those that were non-profit making enterprises. “The non-declaration of dividends is contrary to government’s investing objective of generating equity income, and might further pose a possibility of zero growth in the investment value (share value) in these companies,” he said. The companies, according to the AG, cited several reasons for the none declaration of dividends. It was reported that the current status of performance of IDCE and Swazican Fruit Canners was not ascertained, since there was no information received from the management. “The non-declaration of dividends to date might be a clear indication of the company’s strategic interventions (plans) not yielding the desired positive results, hence a possible further decrease on equity and capital structure might have occurred,” reads the report. He further stated that a loss on the investment might be incurred in the event of a shrinking company value (financial position). He proposed that an update on the current status of financial performance of these companies should be pursued by the ministry.

Evaluation

He further stated that an evaluation of the continued holding of the equity in these companies should be conducted and a decision taken, with the aim of eliminating any possible financial loss on government. Meanwhile, the Maloma Colliery through its letter dated December 23, 2020 the management allegedly submitted that in 2018 the company made a marginal profit of E11.8 million and the Board of Directors declared nil dividend based on constrained cash flow, the profit was retained to meet planned investment.

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