Moscow, 7 August 2018 – The Supervisory Board of ALROSA, the world’s largest diamond producer, on 6 August 2018 approved Financial Policy, the new Dividend Policy, and made a preliminary recommendation for the General Meeting of Shareholders to pay 6M’18 interim dividends.
Payment frequency: In line with the new dividend policy, dividends will be 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). Previuosly, dividends were paid once a year based on the Company’s annual results.
Calculation base: The Company has decided to use free cash flow (FCF) representing the operating cash flow net of capital expenditure as a new basis for calculating dividend payments.
The Supervisory Board, when recommending dividend payout, shall be guided by the level of Net Debt2 / EBITDA3 ratio:
• 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;
• 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;
• 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: The Supervisory Board has also decided to set a minimum dividend payout ratio at 50% of IFRS net income for the respective period paid in case the actual and target Net Debt / EBITDA ratio is below 1.5x.
6M 2018 interim dividends
The Supervisory Board made a preliminary recommendation for the General Meeting of Shareholders to pay dividends based on the Company’s 6M 2018 results of at least RUB 5.93 per share, or 70% of free cash flow based on the IFRS financials planned to be published on 24 August 2018.
- ALROSA’s Financial Policy outlines key approaches to short-, medium- and long-term liquidity management.
• Pursuant to the Financial Policy, the Company plans to keep the target Net Debt / EBITDA ratio between 0.5x and 1.0x in the medium- and long term.