On the company's AGM on Monday, State Treasury and Nafta Polska, majority shareholders of Lotos rejected a management board proposal not to pay dividend on 2006 earnings. Instead, State Treasury wanted the company to pay out PLN 40.9 mln in dividend, 10% of 2006 audited net profit. The dividend, which represents PLN 0.36 per share, will be paid out not later than on July 31, 2007. CEO Pawel Olechnowicz told Reuters that the unexpected payout would not threaten Lotos' investment plans.
Our view:
Although it is clear for us that Polish budget needs more funds, the unexpected move of the State Treasury indicates that its relationship with Lotos management is not cloudless. While paying out PLN 40m dividend is not big thing for the company in net cash position, it could make the financing of the PLN 7.3bn investment program a bit more difficult.