Nico shareholders Rue small dividends

Minority shareholders of Nico Holdings plc have lamented small dividends and a share price  drop, accusing the Malawi Stock Exchange (MSE)-listed firm of being inconsiderate to investors.

The concerns were raised on Friday in Blantyre during Nico Holdings plc’s 52nd Annual General Meeting (AGM).

Speaking during the AGM, Minority Shareholders Association of Malawi general secretary Frank Harawa said despite that the company is generally doing well to improve its financial performance, shareholders’ concerns  over the years remain the small dividends and the fall of the company’s share price.

Hassam: We understand that dividends are quite important

He said “As shareholders, we are proud to be part and associated with this company. We are proud that our results are fairly good, but we feel there are some things that need to be addressed.

“Nico is one of the oldest companies in Malawi and the first to list on the [stock] market, but its share price is still trading below K50 and on the other hand, the dividend payment is still in tambalas per share. This is not reflective of the economic situation.”

Harawa claimed that the company, which has subsidiaries that include NBS Bank plc, Nico Asset Managers Limited, Nico General Insurance Company Limited,  Nico Life Insurance Company, Nico Capital Limited, Nico Insurance Zambia and Nico Insurance Uganda Limited, has become unattractive, a situation which is worrying shareholders.

He said: “Our company has since its inception been trading at around K50 per share and paying out dividends in tambalas. This is scaring investors as people now prefer to put their money elsewhere.

“We, thus, need to review some ways of conducting business or maybe think of bringing strategic partnerships.”

But Nico Holdings plc board chairperson Gaffar Hassam said the company continues to ensure that shareholders benefit from their investment, but added that they will address the concerns of the shareholders while repositioning the company to do better.

He said: “We understand that dividends are quite important because that is a reward we give to our shareholders. From our perspective, we have had steady growth in dividends and in fact in 2021, we paid a special dividend to our shareholders as part of our 50 years anniversary.

“However, the point is taken that currently the economic environment is quite tough and giving them what we used to pay in the past is a challenge. In our next dividend payment, we have to take that into account to ensure that the real value of what the shareholders receive is maintained.” 

In its year-end December 2021, Nico Holdings plc posted a profit after-tax of K18.29 billion, a slight drop from the previous year’s K18.59 billion.

The group has since declared a final dividend of K626 million or 60 tambala per share.

In a similar period in 2020, the company declared and paid out a dividend of K521 million.

The company’s share price is currently at K46.73, a decline from K55 recorded during the similar period last year.

Hassam said the group is diversifying and taking advantage of all economic sectors to grow.

He said: “Currently, we play a significant role in the financial services, but we are also looking at the agriculture, tourism, mining and other sectors and partnerships to ensure growth.”

Gaffar said the Nico Group set up Nico Capital to review  investment opportunities in various sectors and growth opportunities that are available.

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