PJSC Tatneft. Annual report 2017
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PJSC Tatneft. Annual report 2017

Dividend policy

«An objective indicator of the Company's economic efficiency is profitability and dividend policy. In the reporting year, a decision was made to significantly increase the target level of dividend payments and bring it to a level of at least 50% of net profit. » Rustam Minnikhanov President of the Republic of Tatarstan, Chairman of the Board of Directors of TATNEFT

The dividend policy of the Company is based on the strict observation of rights and legal interests of shareholders and corresponds to the mission and strategic goals of the Company aimed to raise capitalization of the Company and increase dividend yield on invested capital through the effective management of shareholders’ assets.

THE DIVIDEND POLICY IS BASED ON THE FOLLOWING PRINCIPLES

  • The Company acknowledges dividends as one of the key indicators of investment appeal of the Company and strives to increase amount of dividends by way of steady profit growth.
  • The Company creates environment that helps ensure the involvement of the management and shareholders in improving the Company’s profitability (increase in net profits) and long-term value.
  • The Board of Directors of the Company determines the amount of dividends recommended for the General Shareholders’ Meeting on the basis of financially sustainable approach to profit distribution while ensuring balance between the short-term (profit) and long-term (development of the Company) interests of the shareholders.
  • The Company provides equal conditions for all shareholders, regardless of the size of their stock and location, as well as equal treatment by the Company in the exercise of their right to participate in the Company’s profits in form of dividends.
  • The Company provides maximum transparency in its dividend policy.

Decision regarding the payment of dividends, amount of dividends, and form of their payment shall be made by the General Shareholders’ Meeting of the Company with reference to recommendations of the Board of Directors.

Information about decisions made by the General Shareholders’ Meeting of the Company regarding payment (announcement) of dividends, their amount, and payment procedure shall be published on the official website of the Company at tatneft.ru in Russian and in English, as well as on the website of the information agency authorized to disclose information of the Company.

Rules and conditions of adopting resolution regarding the payment (announcement) of dividends, procedure for determining the amount, and the payment of dividends are set out in the Regulation on the Dividend Policy of TATNEFT approved by the Board of Directors of the Company (Minutes No. 9, Decision No. 7 dated January 30, 2018). The Regulation is based on the observation of shareholders’ rights set out in applicable legislation of the Russian Federation and best practices of corporate governance.

The Company acknowledges dividends as one of the key indicators of investment appeal of the Company and strives to increase amount of dividends by way of steady profit growth. In determining the size of the dividends (per share) recommended to the General Shareholders’ Meeting, the Board of Directors of the Company assesses the net profits and follows the rule that funds assigned for payment of dividends must be at least 50% of net profits as reported under Russian Accounting Standards (RAS) or IFRS, whichever is larger.

The Company adheres to a progressive dividend policy, acknowledging dividends as one of the key indices of the Company’s investment appeal to shareholders, and strives to increase the amount of dividends on the basis of consistent growth in profits.

The Board of Directors of the Company, in determining the amount of dividends recommended to the General Shareholders’ Meeting (per share), proceeds from the amount of the Company’s net profit under the Russian Accounting Standards (RAS) or International Financial Reporting Standards (IFRS), depending on the availability of financial statements published for the relevant period, and assumes that the target level of the aggregate funds allocated for the payment of dividends should not be less than 50% of the net profit determined by RAS or IFRS, whichever is bigger.

In 2017, TATNEFT shareholders accrued dividends for the first 9 months of 2017 in the amount of 75% of net profit. According to the results of 2017, the Board of Directors recommends that the General Meeting of TATNEFT shareholders adopt a resolution on payment of dividends per each preferred and common share (3.994% of the par value of each share) with due account for the dividends previously paid based on 9-month results.

The dividend yield from the calculation of the market value of common shares at the end of 2017 was 4.76%, that of preferred shares — 6.25%.

HISTORY OF DIVIDEND PAYMENTS FOR THE LAST 5 COMPLETE FISCAL YEARS
year for 2012 for 2013 for 2014 for 2015 for 2016 for the first 9 months of 2017
Type of shares % of the nominal value Size of dividends % of the nominal value Size of dividends % of the nominal value Size of dividends % of the nominal value Size of dividends % of the nominal value Size of dividends % of the nominal value Size of dividends
Total amount of dividends (RUB billion)
20.012
19.2
24.6
25.5
53.06
64.6
Ordinary Shares
860%
8.60
823 %
8.23
1058%
10.58
1096%
10.96
2281%
22.81
2778%
27.78
Dividends (% of net profits)
30%
30%
30%
30%
50.6%
75%
Date of decision on payment of dividends
Annual General Shareholders' Meeting to review 2012 results, which took place on June 28, 2013
Minutes No. 20 dated July 2, 2013
Annual General Shareholders' Meeting to review 2013 results, which took place on June 27, 2014
Minutes No. 21 dated July 2, 2014
Annual General Shareholders' Meeting to review 2014 results, which took place on June 26, 2015,
Minutes No. 22 dated July 30, 2015
Annual General Shareholders' Meeting to review 2015 results, which took place on June 24, 2016,
Minutes No. 23 dated July 29, 2016
Annual General Shareholders' Meeting to review 2016 results, which took place on June 23, 2017,
Minutes No. 24 dated July 28, 2017
Extraordinary General Shareholders' Meeting on results of first 9 months of 2017, which took place on December 12 2017,
Minutes No. 25 dated December 14, 2017
The date on which persons that have (had) the right to receive dividends are (were) determined
May 13, 2013
July 16, 2014
July 15, 2015
July 8, 2016
July 7, 2017
December 23, 2017
Date of actual payment
August 27, 2012
August 26, 2013
To the nominal holder: July 29, 2015 To the shareholders registered in the register of shareholders: August 19, 2015
To the nominal holder: 22.07.2016
to the Shareholders registered in the register of shareholders: 12.08.2016
To the nominal holder: 21.07.2017
to the Shareholders registered in the register of shareholders: 11.08.2017
To the nominal holder: 15.01.2018
to the Shareholders registered in the register of shareholders: 5.02.2018
 
Dividends paid to the shareholders of the company RUB billion
2016 53.006
In June 2017, the level of dividend payments was approved in the amount of 50% of net profits (as of the end of 2016), and the level of dividend payments as of the end of the first 9 months of 2017 was 75% of TATNEFT’s net profits under RAS. For purposes of setting amount of dividends for the first 9 months of 2017, the Board of Directors assessed the Company’s performance during the term in question, the implementation of the Strategy of the TATNEFT Group 2025 and forecast net cash flow. In accordance with the resolutions of the meetings of shareholders, RUB 53 billion was allocated for payment of dividends as a result of profit distribution for 2016, and RUB 64.6 billion for the 9 months of 2017.