The biggest single boost comes from the final dividend of 44 sen proposed on Thursday - double that of last year - despite TNB achieving a lower net profit in the fourth quarter (Q4).
The final dividend payout of RM2.49bil, compared with RM1.24bil a year earlier, will be higher than even the company’s earnings for the quarter under review.
In a filing with Bursa Malaysia, the power utility reported unaudited Q4 earnings of RM1.72bil, down 2.4% from a year ago, on the back of 10.9% higher revenue of RM12.46bil.
The latest result brought TNB’s full-year earnings to RM6.90bil, which was 6.3% lower than in the preceding year. Revenue, meanwhile, increased 6.5% to RM47.42bil.
Although growth in operating expenses outpaced slightly that of revenue, its operating profit showed an 11.8% growth to RM2.33bil for the quarter.
What weighed down the net profit for Q4 was a much higher tax and zakat payment - in particular, a deferred taxation expense of RM217.2mil against RM53mil a year earlier.
TNB attributed its lower earnings for FY17 mainly to the increase in finance cost from the new borrowings acquired during the year and the rise in deferred taxation expense due to higher capitalisation of assets.
It noted that the return for regulated business under the incentive based regulation (IBR) framework, which mainly consists of transmission and distribution businesses, was recorded at RM4.5bil for FY17.
TNB board is proposing a 44-sen final dividend, which would raise the total dividend for the financial year to 61 sen (FY16: 32 sen).
With effect from FY17, the company is adopting a new dividend policy whereby it intends to distribute dividends based on 30% to 60% dividend payout ratio of profit after tax and minority interests (Patami), excluding extraordinary, non-recurring items. This is partly to maintain an efficient capital structure.
Previously, TNB’s dividend policy (first announced in April 2007) was to pay out 40%-60% of free cash flow (cash flow from operations minus capital expenditures).
“For FY17, the recommended total dividend payout is 50% of Patami, which is almost double the dividend payout in FY16, marking the highest dividend payout thus far,” said TNB chairman Tan Sri Leo Moggie in a press statement.
“We will continue to maximise shareholders value through consistent and sustainable dividend payout. This RM3.5bil dividend would not just directly benefit TNB shareholders such as the Employees Provident Fund, Permodalan Nasional Bhd, KWSP, PNB, Retirement Fund Inc (KWAP) and Lembaga Tabung Haji; more importantly, it will also enrich the rakyat as the account holders of these institutions.”
TNB reiterated that it would continuously review its dividend policy based on its financial position, regulatory environment and business prospects.
“It is the policy of the board, in recommending dividends, to allow shareholders to participate in the company’s profits, as well as to retain adequate reserves for future growth,” the company added.
On the group’s prospects for FY18, TNB said its board expected the prospects to remain stable.
This is based on the Malaysian Institute of Economic Research’s growth forecast of between 4.7% and 5.3% for next year, with upward revision of its 2017 growth forecast to 5.4%.
“As such, it is expected that the unit electricity demand growth will be stable in line with the above. Continual implementation of IBR also allows better earnings predictability for TNB as fuel costs risks are mitigated,” TNB said.
The counter closed unchanged at RM14.34 on Thursday, with 9.766 million shares changing hands.