Page 93 - RusRPTOct21

Norilsk Nickel’s formula for 2021 interim dividends is unlikely to change. Interfax reported. Norilsk Nickel is likely to calculate interim dividends for 2021ased on the formula in the shareholder agreement (i.e., 60% of EBITDA annually and at least 30% of annual estimated EBITDA as interim dividends). The dividend formula in Norilsk Nickel’s shareholder agreement, which is valid until 2022, assumes payments at 60% of EBITDA. Other options to return capital to shareholders like a buyback are noting discussed yet. In addition, Interros and UC Rusal agreed to spin off the project this spring, a share of which UC Rusal expects to sell to Interros for $570mn.
Norilsk Nickel’s dividend policy is at the center of attention yet again after the company’s CEO and majority shareholder Vladimir Potanin, who controls 34.6% via Interros, said that MNOD’s dividend policy should reflect thealanceetween dividends, capex and taxation, Interfax reported yesterday, 29 September. Over the next few years, MNOD plans to raise its annual capex to $3-4bn (vs. $1.8bn in 2020), while the current shareholding agreement, which expires in 2023, is likely to govern the company’s dividend policy, we consider. We expect this year toe the last one in which the company sticks to its current dividend policy of paying out 60% of EBITDA in dividends before it switches to FCF-based dividends after 2021. Given RUSAL’s share in MNOD (25.5% via En+), we see the probability of another buyback as unlikely.
● Other
Acron'soD has recommended a dividend payment of RUB 30/share (0.4% DY), in line with the first payment this year. The company is committed to pay USD 200+mn every year, so we see the remaining payments (incl. that were announced) providing a DY of 4.8-5.6%. The stock has performed strongly of late (+15% over the last 2 weeks) in anticipation of a large payment announcement, we think. Half of it was gained on the day when Acron set 7-Sep as the date of theoD's recommendation.
InterRAO CEO Boris Kovalchuk announced that the company is comfortable with the current dividend policy, and reiterated InterRAO's ability to maintain the payments despite the investment requirements. "We are saying the following: in the next ten years we will be paying this money [25% of net profit - VTBC], without any recall of funding. We are sticking to this logic," Interfax reported Kovalchuk as having said. The sub-optimal capital structure, with excessive cash reserves and a moderate dividend policy – which results in below market average dividend yield – are the key obstacles to further share price rerating for InterRAO, in our view. Taking into consideration the long-term nature of the ongoing investment projects, which will start contributing to profit only post 2025, this leaves only one route for InterRAO shareholders to a higher dividend yield: acquisitions of profitable assets. We found the CEO’s statements that the current payout policy would stay for the next 10 years outright negative for InterRAO.
Rosseti CEO Andrey Ryumin said in a letter to Prime Minister Mikhail Mishustin raising the issue of including the estimated entrepreneurial profit into the tariff for electricity transmission services in the amount of
93 RUSSIA Country Report October 2021 www.intellinews.com