#ALROSA Supervisory Board from the world’s largest diamond producer, approved key parameters of its new dividend policy presented by the management.
The new dividend policy based on these parameters will be submitted for the Supervisory Board approval by the end of 3Q 2018.
New parameters of the dividend policy, proposed by Company’s management, introduce a new basis for dividends’ calculation, set the minimum level of dividends, and change the frequency of dividend payments.
Frequency: In line with the new dividend policy, dividends will be paid twice a year (for the first 6 months and for 12 months of the year net of dividends for the first 6 months paid previously). Current practice is to pay dividends once a year based on the Company’s annual performance.
Basis for dividends calculation: Free cash flow (FCF ) representing the IFRS operating cash flow net of CAPEX is proposed to be used as a new basis for calculating dividend payments. When calculating dividend payments, company’s leverage will also be considered.
The minimum dividend payout ratio: The Supervisory Board has also approved the proposal to formalise the recent practice by setting a minimum dividend payout ratio at 50% of IFRS net income paid in case the actual and or estimated Net Debt / EBITDA ratio is below 1.5x.
The new version of the dividend policy with the parameters approved by the Supervisory Board on 21 June 2018 including a more detailed description of the methodology for calculating the the amount of free cash flow to be paid as dividends will be submitted for Supervisory Board approval in September 2018.
Sergey Ivanov, Chief Executive Officer – Chairman of the Executive Committee at ALROSA:
“In recent years, the Company has been delivering strong financial performance while retaining its global industry leadership both in profitability and financial health. As a public company, ALROSA is committed to improving its transparency and ensuring a clear and reasonable dividend policy that strikes a balance between shareholders’ interests, financial resilience at any market conditions, and capability to ensure sustainable development of our business.
Low leverage coupled with a prudent investment strategy, focus on development of only our core assets, and a consistent approach to operational efficiency improvements delivers positive free cash flow, which will be used to pay dividends.
To ensure optimal leverage in the mid- and long-term, we plan to keep the target Net Debt / EBITDA ratio between 0.5x and 1.0x.”
#Alrosa’s 15 members of the new board are:
- Nikolay Alexandrov, the first deputy head of Suntarsky Ulus municipal district of the Republic of Yakutia
- Yegor Borisov, the adviser to the government of Yakutia
- Maria Gordon, a member of the Moscow Exchange supervisory board (as an independent member)
- Evgeniya Grigoryeva, The minister of property and land relations of the Republic of Yakutia
- Kirill Dmitriev, Chief Executive Officer, The Russian Direct Investment Fund Management Company
- Ilya Yelizarov, head assistant “Federal Agency for State Property Management” (Rosimushchestvo)
- Sergey Ivanov, CEO, Alrosa
- Dmitry Konov, chairman of the management board, SIBUR Holding (as an independent member)
- Valentina Lemesheva, former chair of the State Committee for Pricing Policy — Regional Energy Commission of the Republic of Yakutia (as an independent member)
- Sergey Mestnikov, CEO, NCO Fund for Future Generations of the Republic of Yakutia
- Alexey Moiseev, Russian deputy minister of finance
- Anton Siluanov, first deputy chairman of the Russian government and minister of finance
- Oleg Fedorov, member of the board of directors of IDGC of Center and Volga Region, IDGC of the Northwest (as an independent member)
- Evgeny Chekin, chairman of government of Yakutia.
- Alexey Chekunkov, Chief Executive Officer (CEO), Far East and Baikal Region Development Fund