ZB Shareholders Reject THL Dividend Payment

Shareholders of ZB Financial Holdings Limited have blocked further allocation of shares to Transnational Holdings Limited as well as the payment of a $0,6 million dividend saying it was unprocedural.

THL is the controlling shareholder of Intermarket Holdings Limited, founded by businessman Nicholas Vingirai, and has been challenging the acquisition of IHL by ZB group since 2006. An agreement reached with Government last year resulted in THL getting a 19 percent stake, which is expected to rise to 26 percent when ongoing discussions are concluded.

At an explosive annual general meeting, held in the capital last Friday, shareholders argued that the payment of a dividend to THL was a careless move on the part of the board and not proper.

The AGM nearly failed to take off after THL chairman Mr Vingirai threatened to block it arguing ZB had sought legal opinions which had been circulated to selected members and therefore likely to influence the outcome of the AGM.

Government last year brokered a framework in which it ceded 19,9 percent of its shareholding to THL, emerging as one of the significant shareholders of the banking group. An additional 6 percent or 10 million shares were to be given to THL.

THL’s Intermarket Holdings Limited was incorporated into ZB in 2006 after it was allegedly bailed out by Government following allegations of externalisation, back then, levelled against THL’s founding shareholder and other directors.

Mr Vingirai, who was at the centre of the alleged financial impropriety was eventually cleared of the misconduct he was accused of in 2012, and has since that time been contesting the takeover and incorporation of his banking group in ZB.

At the AGM, shareholders questioned the rationale of paying THL over half a million dollars in dividend when the company was not yet a recognised shareholder.

One of the shareholders, the National Social Security Authority’s legal counsel Advocate Thabani Mpofu told AGM that the issue of the dividend “irregularly” paid to THL had to be resolved between it (THL) and the Government, which also received a dividend. “There is no doubt that the payment of the dividend to THL was wrong. It was alright for ZBHL to pay a dividend to Government as it was a shareholder recognised in the company’s books. “But paying an additional dividend to THL was scandalous,” he said.

In line with this, the shareholders voted for the reversal of the dividend payment as well as against allocation of the further 6 percent stake to THL.

Mr Vingirai, who had earlier sought to block the AGM said he would continue to engage the Government for an amicable solution.

He also indicated THL was owed more money in unpaid dividends compared to the contentious $0,6 million. Meanwhile, ZBHL’s profit before tax for the four months to April 2017 was $6,88 million, which was 195 percent above prior year and ahead of budget.

Net interest income from lending and trading activities stood at 66 percent above prior year as a result of earnings from Treasury Bills and loan recoveries during the period.

The group’s total assets for the period amounted to $406,8 million, which was 7 percent below the $439,3 million as at December 31, 2016.

Group chief executive Mr Ron Mutandagayi said this was due to a 15 percent reduction in deposits to $234,3 million from $275 million recorded as at December 31, 2016. This was largely due to reduction in wholesale funding.

Consequently, cash resources reduced by 31 percent from $82,2 million to $56,9 million. Loans and advances fell 4 percent to $92 million during the period under review.

Liquidity ratio was high at 69 percent. Operating expenses remained unchanged at $16,19 million for the four months under review compared to $16,27 million during the same period last year.

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