Regulations on the dividend policy of PJSC ALROSA

Dividend Policy

Alrosa Dividend Policy seeks to provide maximum transparency for shareholders and all stakeholders on the Company’s capital allocation strategy.

Key parameters of Alrosa Dividend Policy (revised version approved by the Supervisory Board on 10 March 2021).

Semi-annual dividends

Dividends are paid twice a year – for the first six months and for twelve months of the year, net of dividends for the first six months paid previously.

FCF-based dividends

Free cash flow¹ (FCF) representing the operating cash flow net of capex is used as a basis for calculating dividends.

Dividends calculation

Depending on the Net Debt² / EBITDA³ ratio, the recommended by the Supervisory Board semi-annual dividend pay-out ratio is determined based on the FCF for the respective half of the reporting year:

• No less than 100% of the FCF: if the Net Debt / EBITDA ratio as at the end of the respective period is below 0.0;
• 70%–100% of the FCF: if the Net Debt / EBITDA ratio as at the end of the respective period is within the range of 0.0 to <1.0;
• 50%–70% of the FCF: if the Net Debt / EBITDA ratio as at the end of the respective period is within the range of 1.0 to 1.5.

Minimum dividend payout ratio

If the actual and forecasted Net Debt / EBITDA ratio is below 1.5, a minimum dividend of 50% of IFRS net income is paid for the year.

Note:

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.

¹ Restated to account for the share split which occurred in 2011.

² Amount of dividends for the second half of 2020. ALROSA paid no dividends for the first half of 2020 due to a negative free cash flow.

³ Pay-out ratio (% of FCF) for the second half of 2020.

⁴Amount of dividends paid for 2019 excluding dividends paid for the first half of the year. The total 2019 year-end dividend is RUB 47,651 m.

⁵ Amount of dividends paid for 2018 excluding dividends paid for the first half of the year. The total 2018 year-end dividend is RUB 73,944 m.

⁶ According to the IFRS consolidated financial statements of OJSC ALROSA and its subsidiaries for the year ended 31 December 2014, the loss for the year was RUB 16,832 m. The loss was due to the revaluation of debt denominated in US dollars. According to the accounting (financial) statements of OJSC ALROSA, the Company’s net income for the year totalled RUB 23,469 m. The shareholders at the annual General Shareholders’ Meeting resolved to pay dividends based on the Company’s 2014 results in absolute terms at the level of dividends paid for 2013 which amounted to 46% of net income calculated in accordance with the Russian accounting standards.

FAQ

Question: Who decides on the amount of dividend payments?

Answer: The amount of dividends is approved by the General Shareholders’ Meeting based on the recommendation of the Company’s Supervisory Board.

Question: How can I contact the shareholder relations department?

Answer: E-mail: shareholders@alrosa.ru Tel.: +7 495 745 5876

Question: How is the dividend record date determined?

Answer: The record date (“cut-off” date) is determined by a resolution of the Supervisory Board. However, in accordance with Russian laws, it cannot be earlier than 10 days and later than 20 days after the declaration of dividends.

Question: When can I receive the dividends?

Answer: Dividends to a nominee shareholder or a trustee acting as a professional securities market participant listed on the Company's shareholder register shall be paid within 10 business days after the dividend record date, and dividends to other persons listed on the Company's shareholder register shall be paid within 25 business days after the dividend record date.

Question: Are dividends taxed?

Answer: According to Russian laws, dividends are subject to tax. The tax rate is 13% for dividends received by corporate and individual shareholders that are residents of the Russian Federation and 15% for corporate and individual shareholders that are non-residents.