“Rosneft” will pay to shareholders 35% of the profits

The government has allowed “Rosneft” to direct on dividends of 35% of net profit according to IFRS standards, said two Federal officials and a source close to the company. Later this was announced by the company itself.

The annual meeting of shareholders of “Rosneft” will be held June 22, 2017 in Sochi. The list of persons entitled to participate therein, will be made on may 28.

In 2016, the company received 181 billion RUB of net profit; thus, the dividends will amount to 63.4 billion rubles, RUB, or 5.98 per share.

The norm is to pay shareholders 35% of the profits recorded in the dividend policy of Rosneft, but the government for the second year in a row trying to force state companies to pay shareholders 50% of net profit. Last year Rosneft also made exceptions for themselves, paying 35% of the profits (124.5 billion rubles., or of 11.75 RUB per share)

The exception is made only for “Rosneft”, which is not formally a state-owned company: it is controlled through Rosimushchestvo, Rosneftegaz, and not directly with the other state-owned companies will pay 50% of net profit according to IFRS, reported Vedomosti, citing sources.

Previously, the Sberbank Supervisory Board recommended to pay shareholders 25% of net profit. But Sberbank is controlled by the Central Bank and is not specified in the list of companies that the Finance Ministry is waiting for the budget in 2017, dividends in the amount of 50% of the profits. The dividends of the Bank, the Central Bank shall transfer to the budget before 1 August.

The Ministry of Finance insisted on the payment of 50% of net profit. “In the current conditions when the state does not increase the tax burden, we can demand at least half of the profit, which is subject to distribution” — said Finance Minister Anton Siluanov said April 11 at the conference Higher school of Economics (quoted by “Interfax”). Lobbying a smaller amount payout, the top managers of state-owned companies questioned their effectiveness, says the Minister. “If we say that we have all of the investment program financed solely by profits instead of borrowing, then the question arises about the quality of such programs, why can’t they be implemented on a loan basis, at the expense of borrowed funds. Therefore, such programs do not discourage the cost of those loans, which could be involved,” argued the President.

Deputy Prime Minister Igor Shuvalov allowed exceptions for individual companies. “Proposals are such that the maximum should be, with whom you can take, take 50%. And where this is not possible, must be a good reason, and it should be a complex procedure of adoption of such decision”, — he said (quoted by “Interfax”). For the individual approach and supports the government, said its head Dmitry Pristanskov last week.

In April, the Agency and the Ministry of energy has proposed two different draft Directive on dividends “Rosneft”, wrote “Interfax” with reference to sources. The government proposed a rate of 50% (90,5 billion rubles), the Ministry of energy is 35% (63.4 billion rubles), it was confirmed by the Federal official. Financial indicators “Rosneft” — free cash flow of $ 302 billion and the net debt/EBITDA of 1.5 provide direction on dividends 90,5 billion rubles, according to the Agency. The energy Ministry also pointed out that “Rosneft” will not be able to repay in 2017 short-term debt 1.7 trillion in cash on the accounts 1.2 trillion and investment of 880 billion rubles, wrote “Interfax”.