Dividend policy
New dividend policy was approved on 6 August 2018. The aim of the policy is to provide maxim clarity for shareholders and all stakeholders on the Company’s capital allocation strategy.
Semi-annual dividend payments
Dividends are paid twice a year - for the first half and for twelve months of the year, net of dividends for the first six months paid previously.
Based on Free Cash Flow
In line with the new dividend policy, free cash flow (FCF1) representing the operating cash flow net of capex, is used as a new basis for calculating dividend payments.
Depending on the level of Net Debt2 / EBITDA3 ratio, the Supervisory Board recommends the following dividend payout ratio:
• More than 100%: If the Net Debt / EBITDA ratio is below 0x, the recommended amount of annual dividends will be above 100% of free cash flow for the reporting period;
• 70%-100%: If Net Debt / EBITDA ratio is in the range from 0.0x to 1.0x, the recommended amount of annual dividends will amount to 70–100% of free cash flow for the reporting period;
• 50%-70%: If Net Debt / EBITDA ratio is in the range from 1.0x to 1.5x, the recommended amount of annual dividends will amount to 50–70% of free cash flow for the reporting period.
The minimum dividend payout ratio
If the actual and target Net Debt / EBITDA ratio is below 1.5x, minimum dividend level of 50% of IFRS net income is paid for the respective period.
Note:
1 FCF (free cash flow) is the operating cash flow net of investments (capital expenditure) in the core business in accordance with the International Financial Reporting Standards (IFRS).
2 Net debt is defined by IFRS as the amount of debt less cash and cash equivalents at each reporting date.
3 EBITDA stands for earnings before interest, taxes, depreciation and amortization of fixed and intangible assets calculated for the past twelve months in accordance with the International Financial Reporting Standards (IFRS).
Dividends, Dividends per share1 and Payout ratio
| Year | Period | Dividend per share, RUB1 | Declaration date | Amount, RUB m |
As a % of Net Income | As a % of Free Cash Flow (FCF) |
| 2018 | 6M 2018 | 5.93 | 06.08.2018 (Supervisory Board recommendation date) |
43,674 | - | 70% |
| 2017 | Full year | 5.24 | 26.06.2018 | 38,592 | 50% | 52% |
| 2016 | Full year | 8.93 | 30.06.2017 | 65,769 | 50% | 59% |
| 2015 | Full year | 2.09 | 30.06.2016 | 15,392 | 50% | 37% |
| 2014 | Full year | 1.47 | 25.06.2015 | 10,826 | 2 | 26% |
| 2013 | Full year | 1.47 | 28.06.2014 | 10,826 | 35% | 70% |
| 2012 | Full year | 1.11 | 29.06.2013 | 8,175 | 24% | 68% |
| 2011 | Full year | 1.01 | 30.06.2012 | 7,439 | 28% | 27% |
| 2010 | Full year | 0.25 | 30.06.2011 | 1,833 | 16% | 7% |
| 2009 | Full year | 0.03 | 26.06.2010 | 250 | 7% | 0.02% |
Note:
1 Recalculated to account for the share split which occurred in 2011
2 According to the IFRS Consolidated financial statements of OJSC ALROSA for the year ended 31 December 2014, the loss for the year was RUB 16,832 m. The loss occurred due to the revaluation of debt denominated in US dollars.
According to the financial statements of OJSC ALROSA, the Company’s net profit amounted to RUB 23,469 m. At the annual General Shareholder Meeting a decision was made to pay dividends based on the Company’s 2014 results in absolute terms at the level of dividends paid in 2013 which amounted to 46% of net profit calculated in accordance with the Russian accounting standards.
FAQ
Question: Who makes decision about the amount of dividends paid?
Answer: The amount of dividends paid is approved by the Company’s General Meeting of Shareholders based on the Supervisory Board recommendation.
Question: How can I get in touch with shareholder relations department who oversee individual shareholders’ requests?
Answer: E-mail: shareholders@alrosa.ru, Tel.: + 7 495 745 5876
Question: How is record date determined?
Answer: Record date is determined by the Supervisory Board decision. However, in accordance with the Russian Federation legislation, record date cannot be set earlier than 10 days from the date of dividend payment announcement and later than 20 days after the date dividend payment decision was made.
Question: When can I get the dividends?
Answer: Dividend payout period for a nominal holder and a trustee - professional securities market participant, who are registered in the register of shareholders, shall not exceed 10 working days, and for other individuals registered in the register of shareholders - 25 working days from the record date.
Question: Are dividend payments taxed?
Answer: In line with the Russian legislation, dividend payments are taxed. The rate of dividend payments taxation for corporate shareholders who are residents of the Russian Federation is 13%; for corporate shareholders who are non-residents - 15%; for individuals, the rates are 13% and 15% respectively.