Thursday 28 Mar 2024
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KUALA LUMPUR: The Armed Forces Fund Board (LTAT) has declared a higher dividend of 2.5% for the financial year ended Dec 31 2019 (FY19), compared with 2% for FY18, despite raking in lower earnings.

LTAT chairman General Tan Sri Mohd Zahidi Zainuddin said the fund’s net profit fell 58.5% to RM91.7 million, from RM221 million for FY18, on the back of a challenging investment environment.

"FY19 was a difficult year for LTAT. The fund's performance was impacted primarily as a result of zero dividend received from two key subsidiary companies, Boustead Holdings Bhd and Affin Bank Bhd, compared with RM124.2 million in dividends received for FY18.

"Investments in these two subsidiaries constitute 47% of our total fund size. The fund’s results were also affected by the absence of land sale compared with RM87.2 million recorded in FY18," Mohd Zahidi said in a statement today.

Despite this, he said LTAT was still able to pay out better dividends for FY19, thanks to a waiver of liabilities that were due to the government.

LTAT, he said, was exempted from paying dividends for the government’s contribution to the fund for FY19.

"This allowed the fund to also record higher retained earnings of RM62 million for FY19 after payment of dividends amounting to RM220.9 million, compared with retained earnings of RM38.7 million for FY18," he added.

As at Dec 31, 2019, LTAT’s assets under management (AUM) stood at RM9.48 billion.

In light of the Covid-19 pandemic which had disrupted economic activities globally, Mohd Zahidi said more needs to be done for LTAT to further improve prospects as part of the fund's transformation journey.

"Moreover, LTAT currently faces a tough investing environment due to the wide-ranging socio-economic impact of the Covid-19 pandemic, which brings with it unprecedented challenges.

"These include historically low oil prices as well as lower consumer and corporate spending, with the economic impact reverberating across the globe and not just any particular region," he said.

LTAT is currently carrying out the first phase of its transformation journey to fortify its structure by balancing the fund’s ability to deliver short-term wins while ensuring long-term sustainability.

This, Mohd Zahidi said, includes realigning investment strategies with its overall long-term investment objectives and philosophy.

"To this end, our Strategic Asset Allocation Framework, which would set the long-term direction and targets for the portfolio towards improved diversification, is almost complete," he added.

Elaborating further, Mohd Zahidi said, the fund is looking into a potential rebalancing of its portfolio to introduce allocations for tradeable fixed income instruments. It is also exploring the potential of having exposure to global markets.

Other efforts to strengthen LTAT's investment portfolio and organisation as a whole include ongoing improvements in the fund's investment policies and processes, risk management practices, investment infrastructure and talent.

"LTAT is conscious that it takes time for the implementation and outcome of any transformation plan to be sustainable. The fund is committed to doing things right and is focused on ensuring that the fund is placed on a stronger footing for the long term.

"To do this, LTAT is focused on investments capable of generating steady and sustainable returns for the benefit of its members," said Mohd Zahidi.

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