The board of directors of Chelyabinsk Pipe Plant, or ChelPipe, has approved a new dividend policy, which envisages payments at least twice a year, tied to the net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio as a balancing mechanism for financial sustainability.
The company will pay dividends of no less than 100% of the net profit, calculated under International Financial Reporting Standards (IFRS), if its net debt to EBITDA ratio is below 1.5x, and at least 70% of the IFRS net profit, or at least 100% of net cash flow, if the ratio is within the range of 1.5-2.5x.
The ratio of 2.5-3.5x will result in dividends of at least 50% of the IFRS net profit, or 75% of net cash flow, and the board will make additional decision if the rate is above 3.5x.
The new policy will be effective for 2019 dividends and beyond. For 2017 and 2018, ChelPipe paid dividends of 4.7 billion rubles and 5.5 billion rubles, respectively, once a year. For 2019, it paid the dividends twice, and the total sum amounted to 7.7 billion rubles.
ChelPipe is considering various options of entering the stock market. It may list its shares on the Moscow Exchange, the company also said.
The board of directors also approved a development strategy until 2024, under which it plans to reduce non-resource costs by at least 2.5% annually and decrease the debt burden to the net debt ratio to below 1.5x.
The board proposed two new independent directors, the company also said. (Prime/Ukrainian metal)