By Khairie Hisyam
Azman Mokhtar
Sovereign wealth fund Khazanah Nasional declared higher dividends to the government in 2015 despite a 63% plunge year-on-year in pre-tax profit, retaining just 10% of its earnings going into 2016.
Information provided at its 12th annual review this afternoon said the fund had recorded RM1.17 billion in pre-tax profit in 2015 compared to RM3.22 billion in 2014. This is the lowest since 2009 when Khazanah recorded RM791 million in pre-tax profit. In turn, it declared RM1.05 billion in dividends to Putrajaya for 2015, it said, the second-highest figure on record since 2004.
This works out to about 90% of its pre-tax profit going to Putrajaya as dividends. In 2011, it declared RM3 billion in dividends, the highest payment on record since at least 2004, although in that year pre-tax profit hit a record high at RM5.3 billion.
When asked on the high dividend payout ratio, Khazanah managing director Azman Mokhtar said there are technicalities involved in respect of the fund’s dividend policy but stresses it was not an arbitrary decision. “It is good to have a stable dividend policy – not good to yo-yo,” he said to reporters.
The declared dividends are already approved by the federal government, said an official to KINIBIZ on the sidelines. While relatively little in the larger picture, the dividends are helpful as the federal government grapples with lower oil and gas revenue due to plunging oil and gas prices.
On Jan 8, 2016, Prime Minister Najib Abdul Razak – who also chairs Khazanah – announced that Budget 2016 will be revised as global oil prices have fallen far below the US$48 per barrel assumption for Brent crude when the Budget was formulated.
Brent crude futures for Feb 16 settlement were just above US$31 per barrel at mid-afternoon today, according to Bloomberg data.
Despite paying out 90% of its pre-tax profit in 2015 as dividends, Khazanah remains nimble to seize potential opportunities as it navigates choppy waters in 2016, said Azman.
“Financial capacity is not an issue,” said Azman to reporters. “Being nimble is quite key, especially when there is so much volatility.”
Challenging year
Volatility and uncertainty that marked 2015, is expected to continue well into 2016, said Khazanah today, adding it is going into 2016 on “a position of relative strength”.
Khazanah portfolio’s nett worth adjusted (NWA) fell marginally by 1.6% year-on-year in 2015 to RM109 billion despite a 3.2% year-on-year increase in realisable asset value (RAV) to RM150.2 billion. Its RAV cover, essentially the ratio of RAV to liabilities, is at 3.1 compared to 3.7 as at 2014.
The NWA decline slightly underperformed the benchmark FBM KLCI last year, which declined by 1%. However, the 1.6% dip was slightly better than several other benchmark indices across the region, such as the Straits Times index (-11.4%), the Jakarta Composite Index (-10.5%), the Hang Seng Index (-4%), the Sensex Index (-3.7%), and the Philippines Index (-2%).
In some part the NWA decline was due to impact from foreign liabilities, said Azman to reporters today. However, he added Khazanah had been careful to limit foreign liabilities to 30%.
Khazanah invested RM8.7 billion via 23 investments in 2015, compared to a total of RM66 billion across 121 investments between 2004 and 2014. It made 10 divestments for proceeds totalling RM5.3 billion in 2015, with gains on divestments coming in at RM2.9 billion. As a comparison, it made 67 divestment transactions between 2004 and 2014 for RM42.8 billion, of which RM19.4 billion were gains on divestments.
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