Namdeb pays N$51 million in dividends

NAMDEB has paid out a bumper N$51 million in dividends to shareholders for the 2008 financial year, despite having lobbied Government for a guarantee for an overdraft at the beginning of this year.

The diamond producer’s 2008 financial results show that the company has upped dividend payments from five per cent of its profits in 2007 to 15 per cent last year.Earlier this year, Namdeb approached Government and De Beers, the two equal shareholders, for ‘letters of comfort’, to back up an overdrafts of N$650 million at the four local commercial banks.As part of its cost-cutting efforts amidst the global financial crisis, the company has also cut nearly 2 000 jobs.The latest in its cost-cutting drive has been a request to Government for a royalties waiver.In the 2008 financial year, the company made a profit of N$1,7 billion of which N$51 million was paid out in dividends to shareholders.Despite ‘significantly slower’ diamond sales in the fourth quarter sending a clear warning of the impact of the global recession, the company nevertheless okayed the dividend payment, which is 325 per cent higher than that of 2007. This increased the chunk of value distribution that equal shareholders De Beers and Government enjoy, from five per cent to 15 per cent.At the same time, Namdeb decided to cut the share of value distribution that they retain to support future business growth from 18 per cent to 12 per cent.News of Namdeb’s glittering 2008 results made business headlines around the world yesterday: ‘Namdeb Profits Triple in 2008’ diamond news site Rapaport said, while Miningweekly.com announced ‘Namdeb profit surges 226% on buoyant demand in early ’08’, and DiamondNews reported ‘Namdeb Production Tops 2 Million Carats’.The diamond miner’s recent request to Government to waive its royalties obligation, as it will be ‘critical to its long-term survival’, could cost the fiscus more than half a billion dollars this year. The company usually pays about 10 per cent of its turnover in royalties. As 2008 saw diamond sales surging by 24 per cent to N$5,651 billion, royalties due to Government this year amount to N$565 million.In a recent interview with The Namibian, De Beers Country Manager Daniel Kali said Namdeb could also do with a tax break this year. Taxes due total N$1,225 billion.Traditionally, Namdeb has been one of Government’s revenue pillars.Plunging production played a major role in Namibia’s recession and expectations that economic growth for 2009 will vary between minus 0,6 per cent and minus 2,2 per cent.
According to the financial report, Namdeb had N$34 million in cash and cash equivalents on December 31 last year, compared to nothing the previous year.Namdeb mined 2,122 million carats, marginally less than the 2,176 million in 2007. However, only 1,813 million carats were sold, nearly 12 per cent less than the previous year.With the help of Government, Namdeb recently took the unusual step of sidestepping the Diamond Trading Centre (DTC) and sold a ‘significant’ batch of diamonds to the consortium, Diamonds India Limited, to relieve the company’s cash crisis.Commenting on prospects for this year, Namdeb said the global economic crisis is having a significant impact on sales of retail jewellery, liquidity and demand for rough diamonds in cutting centres. This, in turn, has resulted in a reduction in sales by Namdeb.’Namdeb expects trading conditions to remain challenging throughout 2009 and has taken steps to reduce production levels, costs and capital expenditure in line with reduced sales.’ jo-mare@namibian.com.na