Hotline of power engineering specialists:
2 February 2018, a meeting of the Board of Directors of IDGC of Centre, PJSC (hereinafter – the Company) was held, which approved the Regulations on Dividend Policy of the Company as amended (hereinafter – the Dividend Policy). The document has bees aligned with Instruction of the Russian Federation Government dated 29.05.2017 № 1094-r and the Articles of Association of the Company. In addition, the amended document included provisions of the Federal Property Management Agency guidelines and the Corporate Governance Code, recommended by the Bank of Russia. The dividend policy determines the main principles for ensuring the transparency of the mechanism for determining the amount of dividends and their payments, informing shareholders and other interested parties about the Company’s dividend policy, as well as defining the procedure for making a decision to pay (declare) dividends, the terms of their payment and the procedure for calculating the amount of dividends.
One of the principles of the Dividend Policy is to determine dividends in the amount of at least 50% of net profit defined according to financial statements, including consolidated, compiled in accordance with International Financial Reporting Standards. At the same time, the calculation of the base for dividends does not take into account incomes and expenses associated with revaluation of shares of subsidiaries floating on the securities market, actual investments made at the expense of net profit received from the regulated activity in the framework of the implementation of the investment program approved by the Ministry of Energy of the Russian Federation, and profit from grid connections with the exception of actually received funds from the sale of services from grid connections without taking into account VAT. The previous edition of the Dividend Policy envisaged, as one of the priorities, ensuring the payment of dividends at the level of at least 25% of net profit. The new version of the document also introduced an article on taxation of dividends to provide a clear mechanism to shareholders for determining the size of dividends and the specifics of their taxation.
The recommended amount of dividend payments is determined by the Board of Directors on the basis of the Company’s financial performance, and the final decision on the amount of dividends is taken by the General Meeting of IDGC of Centre’s shareholders. According to the current legislation of the Russian Federation, the Company is not liable for the violation of dividend payment obligations if registered persons do not have the correct and complete data required to pay dividends in the shareholders’ register. Issues related to the payment of dividends to the Company’s shareholders that are not regulated by the current legislation of the Russian Federation, the Company’s Articles of Association and the Dividend Policy will be settled on the basis of the need to ensure the rights and legitimate interests of the Company’s shareholders. The dividend policy enters into force from the moment of its approval by the Board of Directors of the Company.
"The new edition of the Dividend Policy of IDGC of Centre is created in accordance with the best standards of corporate governance and is aimed at ensuring the stability, long-term and predictable level of dividend payments to shareholders to improve the Company’s investment case and increase its market capitalization," stressed Deputy General Director for Corporate Governance of IDGC of Centre Sergey Sharapov.
Example of calculating dividend payments based on 2016 results:
Data in thous. RUB
|
Item #, calculation procedure |
Indicator |
Fact for 2016 |
|
1 |
Net profit (loss) under RAS1, including |
1 866 675 |
|
1.1 |
from electrical energy transmission3 |
785 704 |
|
1.2 |
from grid connection3 |
705 922 |
|
2 |
Net profit (loss) under IFRS2, including |
4 762 293 |
|
2.1 |
from grid connection |
705 922 |
|
3 |
Mandatory deductions to the reserve and other funds in accordance with the Company’s Articles of Association |
0 |
|
4 |
Balance of income and expenses from revaluation of shares of subsidiaries circulating on the securities market and related profit tax |
0 |
|
5 |
Depreciation under RAS3 (reference) |
9 867 630 |
|
6 |
Depreciation under IFRS2 |
8 696 131 |
|
7 |
Depreciation used for investment3 |
8 980 053 |
|
8 = ((7)-(6))>0 |
Excess of depreciation on investment over IFRS depreciation |
283 922 |
|
9 |
Use of net profit from electrical energy transmission for investment3 (fact) |
0 |
|
9.1 |
Use of net profit from electrical energy transmission for investment in accordance with the investment program approved by the Ministry of Energy of Russia3 (plan) |
0 |
|
10 |
Proceeds from the sale of grid connection services3, excluding VAT |
1 704 407 |
|
11 = (2) - min((9);(9.1)) - (8) - (2.1) + min((2.1);(10)) |
Net profit (basis for calculation) IFRS |
4 478 371 |
|
12 = min((11)*50%;
|
Dividends (50% of the base under IFRS, but not more than net profit under RAS) |
1 866 675 |
|
13 = (1) - (4) - min((9);(9.1)) - (1.2) + min((1.2);(10)) |
Net profit (basis for calculation) RAS |
1 866 675 |
|
14 = (13)*50% |
Dividends (50% of the RAS base) |
933 337 |
|
15 = max((12); (14)) |
Dividends (maximum value) |
1 866 675 |
[1] Russian Accounting Standards, link to reporting;
[2] International Financial Reporting Standards, link to reporting;
[3] Data according to The report on the implementation of Investment programs of IDGC of Centre, PJSC for 2016, link to reporting (only in Russian).
The Dividend Policy as amended can be read on the website at: https://www.mrsk-1.ru/en/investors/dividend/dividend_policy/