Page 68 - RusRPTOct19

representatives. Currently Novatek pays 30% of adjusted net profit under IFRS in dividends. Once the financing plans for $21.3bn Arctic-2 LNG plant will be drawn, Novatek could increase the payout, according to Aton. In August Novatek proposed distributing RUB43.2bn ($654mn) of its first-half profits as dividends to shareholders. While considerably more than Novatek’s interim dividend payout last year of RUB28bn, the proposed sum only amounts to 9.6% of its net income for January to June, compared with 37% a year earlier. It corresponds to RUB14.23 per ordinary share and RUB142.3 per global depository receipt (GDR). The company, under the control of Russian businessmen Leonid Mikhelson and Gennady Timchenko, saw net profits climb almost six-fold year on year to RUB451bn in the first half.
● Banks
Russia’s largest bank state-controlled VTB Bank confirmed a dividend payout of 50% of net income, according to reports by Interfax and Tass citing the head of the bank Andrei Kostin. Kostin reiterated the 50% payout ratio and pledged that should the dividends pressure compliance with capital requirements rations, VTB would still choose dividends over growth. BCS Global Markets on September 5 welcomed the announcement as positive and estimated that it implies a dividend yield of 9%. To remind, in May 2019 VTB made a surprise pledge to upgrade dividend payout to 50% of IFRS net profit as it updated its strategy for investors and analysts. The bank also confirmed its guidance and pledged to bridge the digital development gap with Russia's largest Sberbank.
Russia's largest bank state-controlled Sberbank will pay 50% of net profit as dividends as of 2020, CEO of the bank German Gref said at a meeting with the President Vladimir Putin. "I believe in the nearest future we will reach the capital adequacy ration of 11.5% and plan to start paying 50% [of net profit] as of 2020," Gref is quoted as saying by Reuters on September 10. This confirms Sberbank's dividend strategy and brings the transition to 50% payout closer, as it was previously pledged for 2021. Under current dividend strategy of Sberbank for 2018-2020, the bank pays 43.5% of IFRS net profit in dividends for 2018, which was still shy of the 50% mandated by the Ministry of Finance for all state-owned enterprises. As reported by bne IntelliNews, the CEO of Russia's second-largest bank VTB Andrei Kostin also confirmed the 50% payout ratio and pledged that should the dividends pressure compliance with capital requirements rations, VTB would still choose dividends over growth.
● Metal & Mining
Russian aluminium major United Company Rusal (UC Rusal) could pay a dividend for 3Q19 and 2019 depending on the financial results, Interfax reported citing En+ independent board member Andrei Sharonov, which is the controlling shareholder. As reported by bne IntelliNews, after the US sanctions were lifted from the company in 2018, Rusal was expected to deliver solid results starting with 2Q19. Rusal posted 21% quarter-on-quarter growth in sales in 2Q19 on the back of inventory release and improvements in the product mix.
The PhosAgro BoD approved a new dividend policy that links dividend payouts to FCF (instead of net income, as before) and introduces clear payout ranges that depend on the level of financial leverage. PhosAgro's dividends will now be determined based on the following guidelines: If net debt/EBITDA is below 1.0, dividends can be more than 75% of FCF for a particular quarter. If net debt/EBITDA is in between 1.0 and 1.5, dividends can be 50-75% of FCF for a particular quarter. If net debt/EBITDA is above 1.5, dividends should be less than 50% of FCF for a particular quarter. The floor for dividends is 50% of adjusted net income for a particular quarter.
● TMT
68 RUSSIA Country Report October 2019 ww.intellinews.com