NIGERIAN BREWERIES PLC: WISE TO PAY INTERIM DIVIDEND?

The Board of directors of Nigerian Breweries PLC (NB) have decided to pay interim dividend of N1.20 per share based on the fortunes of the company in the nine months to September 2015. This will be paid on November 19 to shareholders in the books by November 11, 2015.
However a minor question mark remains hanging: Should NB PLC have paid interim dividend now?
The profit level says yes it can and should to stay in line with its own tradition. Figures for the nine months indicate N37562.4m as profit before tax and equally hefty N26175.7m as distributable profit from which, of course, dividend can be paid.
Compared to the same time in 2014; both figures represent 11.8 and 12.2 per cent drops respectively but that is not enough to deter dividend payment.
What could have held it back was the fact that NB was bit in the best liquidity position. By September, its working capital had worsened by 6,98 per cent into a higher N86547.8m deficit from N81832.8m previously.
This was as trade payables rose by 28.9 per cent to N108070.8m from N83816.3m and inventory was down by 5.28 % to N2695.2m from N27478.5m.
What did improve was its holding of financial assets at N609.5m, up 61.4% and cash position which stood at N11215m compared to N5599.1m previously.
This was perhaps the main reason the dividend is payable but what happens after the cash outflow?
Well, if the trend to September holds through the last quarter, turnover increase will continue to be accompanied by higher rise in expenses and particularly, the 51.1% jump in finance charges may be outside effective control.
THUS:
* After the dividend payment Nigerian Breweries may still pay more finance charges
* The drop in profit margin to 17.4% from 21.7% can only be checked if turnover grows faster while expense increase slows down

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