QUESTION FOUR Durant Limited is a construction company based in Malawi and has presence in almost seven countries in Sub-Saharan Africa. Because of the aggressive govemment construction programs in the region, the company has seen an increase in its orders and has reached a point where a significant amount of finance is needed to source future growth. The board recently decided to list the business on the Johannesburg Stock Exchange and is currently examining the full implications of this decision on its operations The Board Chairperson has argued that a stock exchange listing may alter the way in which the business views their dividend policy. However, the CEO has insisted that the dividend policy is unimportant as the pattern of dividend has no effect on shareholder wealth Key data on the dividend policy adopted is as follows: Financial Year End 2013 2012 2011 2010 2009 Profits after Tax (K'000) 1,140 990 1,232 2,520 2,800 Ordinary Dividends (K'000) 480 550 1,056 Ordinary Shares in Issue (K'000) 1,500 2,200 2,200 3,200 3,400 384 1,360 Required: A Discuss the dividend policy followed by Durant Limited over the past five years (5 Marks) B. Evaluate the views expressed by the Chairperson of the Board and the CEO and discuss the key points to be taken into account when establishing an appropriate dividend policy for a business. (20 Marks) [TOTAL: 25 MARKS] Page 5 of 13