Page 62 - RusRPTJune18

UK-registered Russian gold miner Highland Gold has proposed to its shareholders to choose between receiving cash or equity in the next dividend payment , Vedomosti daily reported on May 14 citing the memos for the upcoming May 24 annual shareholder meeting of the miner. Allowing the board to pay the dividends using shares instead of money would be a first for a Russian company. Unnamed sources told Vedomosti that the idea to pay so-called “paper dividends” came from several British investment funds working with Highland Gold. Analysts surveyed by the daily confirmed that the practice of paying dividends with shares is indeed more widespread in the UK and is often used by such majors as Shell and BP, as a measure to support liquidity and weather periods of low commodity prices or other headwinds. Most recently Highland Gold was part of the billionaire's Roman Abramovich's mining assets reshuffle , and now has 37.41% of its shares controlled by affiliates of Abramovich and its associate Evgeny Shvidler. The company assumed a 20% of free cash flow payout and paid $48.3mn of dividends in 2017.
Alrosa on May 5 issued a press release saying that its Supervisory Board had recommended 2017 dividends of R5.24 per share , which corresponds to 50% of IFRS net income, as had been recommended by the government. Additionally, the Supervisory Board requested that the management present an updated dividend policy by June 29. The new policy should include a recommendation about the size and frequency of payments. Overall, the 2017 dividend should be around $625mn at the current USD/RUB exchange rate, which corresponds to a yield of around 6.1%, bang in line with market expectations. Although Alrosa's current dividend policy stipulates an annual payout of at least 35% of net income, it has been paying 50% of net income for the last two years. Since its leverage is low (as is that of NLMK and Severstal), we believe that the new policy may stipulate a 50% of FCF floor to be paid at least semiannually. Marked to market, the 2018 dividends imply a yield of around 7-8%.
62 RUSSIA Country Report June 2018 www.intellinews.com