Končar’s third largest shareholder, Erste Plavi Mandatory Pension Fund submitted the counterproposal regarding the desicion on the payment of dividend for 2020.
To be specifc, the shareholder proposes a dividend payment in the amout of HRK 5.8 per share, which translates into a dividend yield of 0.8%.
Proposed ex-date is 15 June 2021.
Erste Plavi noted that they believe that the currnet proposal of no dividend payment does not provide value maximisation for the existing shareholders, especially where the structure of the Company’s balance sheet is taken into account.
The shareholder further states that given the size and structure of the Company’s liabilities, in which capital and reserves account for more than 97%, the Company’s level of indebtedness is low. Therefore, future-period capital expenditures may be financed by cash flows generated in such periods or by taking out new loans, especially given the fact that interests on debt securities are at an all-time low, which would also result in reducing the average cost of capital for the Company. Considering the Q1 2021 financial reports, if payment of dividend were to take place, the share of the Company’s own capital and reserves in the Company’s liabilities would still be over 97%, which the shareholder believes to be acceptable.
In accordance with the above, Erste Plavi believes that dividend payment is more justified than allocation of the entire distributable profit to retained earnings, as proposed by the Company’s Management Board.