LTAT pays higher dividend despite lower net profit

Chairman says fund given waiver of liabilities

PETALING JAYA: Lembaga Tabung Angkatan Tentera (LTAT) or the Armed Forces Fund Board has declared a dividend of 2.5% for the financial year ended Dec 31, 2019 (FY19) which is a higher than the 2% declared in FY18.

This is despite a lower net profit of Rm91.7mil in FY19 compared with Rm221mil for FY18.

LTAT chairman Tan Sri Mohd Zahidi Zainuddin said the company was able to announce improved dividends in FY19 as a result of a waiver of liabilities that were due to the government.

“LTAT was exempted from paying dividends on the government’s contribution to the fund for FY19. This has allowed the fund to also record higher retained earnings of Rm62mil in FY19 after payment of dividends amounting to Rm220.9mil, compared with retained earnings of Rm38.7mil in FY18,” he said.

LTAT’S assets under management stood at Rm9.48bil as at the end of last year.

Zahidi added that FY19 was a difficult year for LTAT as it faced a challenging investment environment.

“LTAT’S performance was affected due to zero dividends from two key subsidiary companies: Boustead Holdings Bhd and Affin Bank Bhd, compared with Rm124.2mil in dividends received in FY18. Investments in the subsidiaries constitute 47% of our total fund size,” he said.

He added that the fund’s results were also affected by the absence of land sales compared with Rm87.2mil in this category that was recorded in FY18.

“LTAT is conscious that there is much more to be done to improve its prospects as part of the transformation journey of the fund. Moreover, LTAT faces a tough investing environment due to the wide-ranging socioeconomic impact of the Covid-19 pandemic,” he said.

The challenges included historically low oil prices as well as lower consumer and corporate spending.

“The fund is undergoing the implementation of the first phase of its transformation journey to fortify its structure by balancing our ability to deliver short-term wins while ensuring long-term sustainability.

“This includes realigning investment strategies with the overall long-term investment objectives and philosophy,” he added.

He said LTAT’S strategic asset allocation framework is almost complete.

The framework would set the long-term direction and targets for the portfolio towards improved diversification.

Accordingly, LTAT said it is looking into a potential rebalancing of its portfolio to introduce allocation in tradeable fixed income instruments.

It is also exploring the potential of having exposure in the global markets.

Efforts to create and optimise value derived from the existing portfolio of investments are continuing, it said.

“In addition, ongoing improvements to LTAT’S investment policies and processes, risk management practices, investment infrastructure and talent would allow the fund to strengthen the investment portfolio and organisation as a whole,” Zahidi said.

“LTAT is conscious that there is much more to be done to improve its prospects as part of the transformation journey of the fund.” Tan Sri Mohd Zahidi Zainuddin