Twice less leading companies distribute dividends
Most major public companies on the Bulgarian Stock Exchange (BSE) listen to recommendations of the investment managers and preferred to retain profits for 2008 as a buffer against the crisis. This analysis of the dividend policy of companies from the broad market index – BG40, which monitors 40 most traded positions. This year, dividends will be distributed only seven out of 40 companies they are involved in the measures, if twice as many companies the previous year.
Abstinence reflects the advice of experts to gain not distributed dividends in order to prevent liquidity problems and to preserve solvency. In terms of global economic crisis, the availability of cash reserves is considered a critical factor in the ability of a company to survive and therefore for immediate liquidity indicator (ratio of cash and cash to current liabilities) was monitored under the magnifying glass of financial analysts.
Within BG40 profits retained key enterprises as the manufacturer of batteries „MONBAT, artificial fertilizers Neochim“ medical supplies „Etropal“ road company „Tracy Group Hold, Sinergon Holding and the Bulgarian-American Credit Bank. Required by law to distributed profits to fund dividends Property BenchMark Fund Estates „ended with negative results and also completed the group of abstention. Surprisingly the shareholders of the pearl of Northern Black Sea – the resort of Albena, decided to go back part of the positive result for 2008, after the preliminary agenda does not provide for such things. Dividends were earmarked for 15% of the profits of the resort.
Highest dividend yield on BG40 consequential company brought by Special Purpose Fund Real Estate Bulgaria. By law, companies with special investment purpose are required to distribute to its shareholders 90 percent of the profits, provided it is not the last revaluation.
At the beginning of the year leading investment advisory firms and management companies called for companies to retain profits as antikrizisen buffer. „Over the past year launched a major appeal to owners and managers of public companies to maintain the cache, which will need in a crisis and will serve as a buffer. Units listen to this our appeal,“ said George, then English, portfolio manager at Beta Corp. English warned that these companies are already experiencing problems with the generation of cash resources to maintain their business. „The current crisis is undoubtedly the focus of companies is the maintenance of solvency and liquidity – cash are extremely valuable asset and should be detained,“ said Nadia and Nedelcheva, portfolio manager in Carol capital management.
Position of institutional investors is that the profits must be reinvested as Bulgaria as a growing market offers many opportunities for the future. Exceptions are companies that are in mature stage of development where the dividends are somewhat justified.
Experience shows that the principles in dividend policy do not meet state-owned enterprises which are obliged by the government to give at least 50 percent of profits to the budget and some monopolies such as BTC, which solved the company’s liquidity problems in the mother country through monetary resource establishment in Bulgaria.