Khazanah posts higher pre-tax profit for 2016, declares RM650m dividend for govt

Khazanah Nasional managing director Tan Sri Azman Mokhtar

KUALA LUMPUR: Khazanah Nasional Bhd posted a 32% increase in pre-tax profit to RM1.56bil in the financial year ended Dec 31, 2016 despite a volatile year for the equity and currency markets. This was an increase from RM1.18bil in 2015.

The strategic investment fund had on Friday also declared dividend of RM650mil for 2016 to be paid to the government.

“More than RM10.6bil of dividends and taxes paid and payable to the government over the period 2004-2016,” it said in a statement. 

In line with weakness in most benchmark equity markets and currencies, the portfolio Net Worth Adjusted (NWA) declined slightly, posting an unrealised decline of 6.4% to RM101.9bil as at Dec 31, 2016 (2015: RM108.9bil). 

However, Khazanah said nonetheless, the long-run value creation trend remained strong with NWA up by 3.1 times or a compounded annual growth rate (CAGR) of 9.3% per annum for the period May 2004 to 31 December 2016, with a high-quality portfolio with an asset cover of 2.9 times.

On the ringgit, its managing director Tan Sri Azman Mokhtar said the fund viewed that the local unit was undervalued

Below are the financial details:

Khazanah recorded a 32% increase in unaudited profit before tax (PBT) of RM1.56bil (2015: RM1.18bil), with cumulative PBT since May 2004 amounting to RM25.08bil. 

Khazanah also declared dividends of RM650mil for 2016, with total dividends declared since May 2004 amounting to RM9.11bil. Taxes paid for 2016 amounted to RM123mil, with taxes paid since 2004 totaling RM1.55bil.

Portfolio Realisable Asset Value (RAV) stood at RM145.1bil as at Dec 31, 2016, down RM5.1bil or 3.4% from RM150.2bil as at Dec 31, 2015. Net Worth Adjusted (NWA) was RM101.9bil as at Dec 31, 2016, down RM7.0bil or 6.4% from RM108.9bil as at Dec 31, 2015. 

Despite the challenging year, the overall uptrend in Khazanah’s portfolio since May 2004 remained intact. 

Over the period May 2004 to Dec 31, 2016, RAV increased RM94.2bil to RM145.1bil or 2.8 times as at Dec 31, 2016 (May 2004: RM50.9bil). NWA increased RM68.6bil to RM101.9bil or 3.1 times over the same period (May 2004: RM33.3bil). This translated into a RAV Compounded Annual Growth Rate (CAGR) of 8.6% per annum (p.a.) and NWA CAGR of 9.3% p.a.

Meanwhile, the RAV cover (assets/liabilities) remained strong at 2.9 times. This key prudential ratio provides a position of relative strength for Khazanah to move forward into a year which is expected to see continued volatility and uncertainty. 

The resilience was boosted by the positive performance of several key investee companies. In terms of year-on-year NWA movement, portfolio gains were contributed by Tenaga Nasional Bhd (+RM1.5bil), CIMB Group Holdings Bhd (+RM600mil), UEM Group Bhd (+RM400mil), and Alibaba Group Holding Ltd (+RM300mil).

Portfolio decreases were due to the telecommunications sector (-RM5.8bil), aviation sector (-RM900mil) and IHH Healthcare Bhd (-RM800mil). 

In terms of RAV segmentation by sector in 2016, media & communications (17.8%), healthcare (16.2%), power (15.7%), financial services (15.3%) and property (11.0%) sectors were the five largest portfolio components. 

In 2016, Khazanah made investments totaling RM6.9bil, including 17 new investments, and 13 divestments providing proceeds amounting to RM4.7bil, with gains on divestments totaling RM2.6 billion. 

From 2004 to 2016, Khazanah has made a total of 161 investments worth RM81.6bil and 90 divestments providing proceeds amounting RM52.8bil, with overall gains on divestments totaling RM24.9bil.  

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