Alrosa may pay 100% of FCF in H1 dividends - CFO
MOSCOW. Aug 19 (Interfax) - Alrosa's low debt burden allows the company to pay out all of its free cash flow in dividends, the company's CFO and deputy CEO, Alexei Filippovsky, was quoted as saying in a press release.
At the end of Q2, the company's net debt/EBITDA ratio was 0.3x, which "enables the management to submit a proposal to the Company's Supervisory Board to pay up to 100% of H1'19 free cash flow, or RUB 28.3 bn, in dividends for the first half of 2019," Filippovsky said.
In Q2, Alrosa cash flow remained positive, coming to 2.4 billion rubles. This is a nearly 91% reduction over Q1 results of 26 billion rubles. This reduction was prompted by a reduction in operating cash flow, seasonal investment growth and increased working capital to 11.9 billion rubles, up 15% compared to January-March.
At the end of June, Alrosa approved changes to its dividend policy, which clarify the methodology for determination of dividend payment volumes. Now, if the value of the net debt/EBITDA ratio as of the end of H1 of the full year is in the 0.0x-0.5x range (not including 0.5x), then the volume of H1 dividends will total 100% of FCF for that 6M period. If leverage is in the 1.0x-1.5x range, the company will pay from 50% to 70% of FCF for the half-year.
Alrosa paid shareholders 70% of FCF as interim dividends for H1 2019, reasoning that possible expenditures could possibly soon go towards the restoration of the Mir mine (a decision on restoration has not yet been made, and no design project has been proposed). Full-year dividends totaled 100% of FCF for H2.
With account for interim dividends, total dividend payments for 2018 came to 10.04 rubles per share, or 73.9 billion rubles. This is nearly twofold more than for 2017, when Alrosa paid shareholders 5.24 rubles per share or 38.5 billion rubles overall.
The state owns a 33% stake in Alrosa via the Russian Federal Property Agency (Rosimushestvo), with Yakutia holding another 25% plus one share. 8% of shares belong to Yakutian districts (Ulusy). The free float is aroudn 34%. The funds East Capital and Genesis, which control an overall 2% of Alrosa shares, are among the leading minority shareholders.