DIVIDEND POLICY |
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FOR THE BOARD AND SHAREHOLDER OF |
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ONDERSTEPOORT BIOLOGICAL PRODUCTS |
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PARA |
DESCRIPTION |
PAGE |
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1. PURPOSE AND SCOPE *
1.1. Purpose 1.2. Scope *2. APPLICABLE DOCUMENTS *2.1. Internal *2.2. External *3. DEFINITIONS AND ABBREVIATIONS *3.1 Definitions *3.2 Abbreviations *4. PROCEDURE *4.1. Introduction *4.2. Legal requirements *4.3. Policy statement *
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COPY NO.: |
ISSUE DATE: |
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ISSUED BY: TQM |
ISSUED TO: |
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SIGNATURE |
DATE |
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COMPILED BY: Financial Manager |
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UNDERSTANDING AND ACCEPTANCE: - Managing Director |
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- Board of Directors |
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APPROVAL: SHAREHOLDER |
DISTRIBUTION
COPY NUMBER |
POSITION/AREA |
WORK STATION/ADDRESS |
MASTER |
Quality management |
PASSAGE |
FINANCIAL MANAGEMENT |
PASSAGE |
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2 |
COMPANY SECRETARY ( BOARD) |
PASSAGE |
3 |
MANAGING DIRECTOR |
PASSAGE |
4 |
SHAREHOLDER |
PASSAGE |
AMENDMENT RECORD
EDITION NO. |
SECTION AFFECTED/REFERENCE |
DATE |
01 |
NEW DOCUMENT |
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This document applies to the Financial Manager, Managing Director, Audit Committee, Board of Directors and Shareholder of OBP.
This is a new policy-document in OBP.
No reference is made in the PFMA of dividends.
Companies Act.
SARS Act
GAAP
None
MD: Managing Director
SARS: The South African receiver of Revenue Services.
PFMA: Public Finance & Management Act
GAAP: Generally Accepted Accounting Practice
The facilities (buildings, plant and equipment) at OBP have been seriously neglected over the years to the extend that a total upgrade of the facilities is needed. OBP has not embarked on any major capital expenditure for a very long time. The current net book value of all the assets is barely more than R10 million (March 2003). The estimated cost of the upgrade of the facilities is in excess of R90 million, which clearly indicates the age of the assets (many assets have already been fully depreciated). OBP does not have adequate cash reserves to pay for the upgrade and would therefore need all operational profits to be used to contribute towards the upgrade or replacement of the facilities.
There are no requirements by SARS, the Companies Act, GAAP or the PFMA that a company must declare or pay dividends. Where dividends are paid or declared, a secondary tax on companies (STC) becomes payable to SARS.
In the light of the introduction, it is essential for OBP to reinvest all profits to sustain the operations. The upgrading and replacement of assets will continue throughout the next 5 financial years starting towards the end of 2003. Thereafter the policy will be revised in relation to due consideration of Shareholder guidelines. The policy would therefore be not to pay any dividends to the shareholder before the 2008/9 financial year.