MMK Board of Directors approves changes to Dividend Policy, calls EGM for 12 December 2014
OJSC Magnitogorsk Iron and Steel Works ("MMK" or "the Company") (LSE: MMK) announces that the Board of Directors approved changes to the Company's Regulations on the Dividend Policy at a meeting on 27 October.
The current version of the Dividend Policy stipulates that payment of dividends is dependent on the company recording a positive consolidated net profit. The Company's options for paying dividends to shareholders could thus be limited by one-off factors affecting MMK's net profit (such as currency losses, write-downs, etc.). The new version of the Dividend Policy expands the range of options available to the Company's Board of Directors to include consolidated free cash flow (in line with current global practice) or MMK's net profit under Russian Accounting Standards as the basis for calculating the recommended dividend.
MMK's Deputy CEO for Finance and Economy Sergei Sulimov said: “A fair distribution of profit among our shareholders is one of the Company's core priorities. The changes we have made to the Dividend Policy will expand MMK's options for paying dividends by using not just consolidated net profit but also the Group's consolidated free cash flow or its net profit under Russian Accounting Standards. This is aimed at making the Company more attractive to investors, as our dividend payments will become more regular and predictable. I would also note that MMK is the first Russian metals company to enshrine the use of free cash flow as a basis for calculating a recommended dividend in its corporate documentation.”
The Board of Directors has also called an Extraordinary General Meeting of shareholders (EGM) with absentee voting on payment of a dividend for the first nine months of 2014. The cut-off date for acceptance of voting returns is the end of the working day on 12 December 2014.
The cut-off date for eligibility to vote at the EGM is 7 November 2014.
The Board of Directors has recommended that shareholders at the EGM approve a dividend for the first nine months of 2014 of 0.58 rubles per common share (before taxes), and has recommended that the EGM set the cut-off date for eligibility to receive the dividend as the end of the working day on 23 December 2014.
MMK is among the world's largest steel producers and is one of the leaders of Russia's steel industry. The company's operations in Russia include a large steel producing complex encompassing the entire production chain, from preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel products with a predominant share of higher value added products. In 2013 MMK Group produced 11.9 mln tons of crude steel and 11 mln tons of commercial steel products. The MMK Group's revenue in 2013 totalled USD 8.190 bln, with EBITDA at USD 1.223 bln.
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