AFP Capital to reduce distribution of dividends to legal minimum

 AFP Capital to reduce distribution of dividends to legal minimum

• At its Shareholders' meeting, AFP Capital's Board proposed to decrease dividends and pay the 30% legal minimum, which implies a 45% reduction in the annual dividends to be distributed.

At the Ordinary Shareholders' Meeting held today, and given the situation of uncertainty derived from the Covid-19 pandemic, AFP Capital approved to pay shareholders the legal minimum of 30% out of the liquid profits obtained in 2019.

AFP Capital explained that, as an open stock company with 178 minority shareholders; it must distribute a 30% minimum from previous year's liquid profits in compliance with the Sociedades Anónimas Law, which, among other things, seeks to protect minority shareholders, guaranteeing them a minimum dividend payment.

Juan Carlos Chomalí, president of AFP Capital, pointed out that "it is not reasonable to ask an organization to contravene the current legislation, especially when the spirit of the rule is to protect minority shareholders."
This years' legal minimum dividends to be distributed amounts to $ 26,114,696,317. Therefore, an $ 8.36 payment per share would correspond to the shareholders, which implies a 45% reduction in the annual dividends historically paid.

At the shareholders' meeting, the Chairman reviewed the roadmap followed under the Covid-19 pandemic. The executive explained that they have been focused on their 1.6 million clients and pensioners and, of course, on the 1,200 employees. "We have taken all the protection measures for our clients and very specially a series of options has been implemented so that our pensioners, who did not have an e-account, can get their pension safely and do not have to go to branches."

Regarding collaborators, he asserted that all the necessary efforts have been made to keep all the jobs and under same conditions.

Likewise, Q1 results of 2020 were reported. On April 15th, AFP Capital presented a forecast before the Financial Market Commission, which shows that at the end of Q1 this year, the company would record a net loss of approximately $ 9,454 million; forecast which is eventually subject to variability and adjustments as it is not the final one yet.

This negative result, as explained by the Chairman, stems from the drop of profitability that has affected the markets globally, and which also has impacted AFP Capital's equity through the technical reserve requirements, that is, the 1% that by law each AFP must invest its assets in the same pension funds they are investing its affiliates' savings.

Regarding profitability of funds, Chomalí maintained that “today our main task is to take care of the savings of our affiliates, which have been impacted by the volatility of the markets. Our investment team has taken every opportunity that has come to mitigate losses. ”

He also added that as of April 16, the evolution of fund A has been positive, 10% from a drop of 22%. Fund C on the same date has already recovered 60% of its fall. The most conservative funds have also recovered, fund E, although it fell 6%, today it has already recovered to 1% loss.