March 11, 2021 – The Supervisory Board of ALROSA approved a new version of the Company’s Dividend Policy
ALROSA’s Supervisory Board supported the management’s proposal to amend the dividend and financial policies to ensure greater financial stability and resilience of its business.
On 10 March 2021 the Board approved amendments to its Dividend Policy and Financial Policy.
Dividend Policy: the amendments include adjustments to the methodology for determining the amount of dividends based on the free cash flow (FCF), for Net Debt / EBITDA between 0.0x and 1.0x. Depending on the Net Debt / EBITDA ratio, the semi-annual dividend pay-out ratio is determined based on the FCF for the respective half of the reporting year:
1) if the Net Debt / EBITDA ratio as at the end of the respective period is below 0.0x, the semi-annual dividend payout ratio is no less than 100% of the FCF for the respective half of the reporting year;
2) if the Net Debt / EBITDA ratio as at the end of the respective period is within the range of 0.0x to <1.0x, the semi-annual dividend payout ratio is from 70% to 100% of the FCF for the respective half of the reporting year;
3) if the Net Debt / EBITDA ratio as at the end of the respective period is within the range of 1.0x to 1.5x, the semi-annual dividend payout ratio is from 50% to 70% of the FCF for the respective half of the reporting year.
This decision will allow the Company to improve targeting of its net leverage amid fluctuating demand, ensure stability of cash returns to shareholders, and improve flexibility in managing the debt portfolio.
Financial Policy: target minimum liquidity reserves consisting of cash and committed credit facilities are increased from RUB 35 bn to RUB 70 bn to allow the Company:
- to maintain operational resilience and optimal utilisation rates;
- to ensure stable funding of long-term business development projects;
- to have sufficient liquidity reserves to maintain the market balance.
The new Dividend Policy is available on the Company’s official website. For the overview of ALROSA’s Financial Policy, please follow the link.
(1) Free cash flow (FCF) is the operating cash flow calculated in accordance with the International Financial Reporting Standards (IFRS) net of capital expenditure (posted as Purchase of Property, Plant and Equipment in the consolidated IFRS statement of cash flows).
(2) Net debt is calculated on an IFRS basis as the amount of debt less cash and cash equivalents as well as bank deposits at each reporting date.
(3) EBITDA stands for the Group’s earnings or loss for the last 12 months adjusted for income tax expenses, financial income and expenses, share of net profit of associates and joint ventures, depreciation and amortisation, impairment and disposals of property, plant and equipment, gain or loss on disposal of joint ventures, revaluation of investments, and one-off items.