NLMK. Dividends: The Joy of Passive Income

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Breaking-even companies incentivize shareholders with profit payouts. NLMK's dividends are regularly credited to investors' accounts. Even in difficult years for the economy - 2008 and 2014 - the company's management decided to share with shareholders.

Securities

According to the Charter posted on the company's website, the capital of the Novolipetsk Metallurgical Plant is divided into 5 billion 993 million 227 thousand 240 ordinary book-entry shares. Of this volume, 84% belongs to the Cyprus offshore company Fletcher Group Holding. The remaining 16% are freely traded on the Moscow and London stock exchanges.

Starting in 2006 on the Moscow floor of the MICEX with a price of 64 rubles, the stock experienced ups to 133 in June 2008 and to 151 in January 2011; a sharp drop to 15 in November 2008 and a long descent to 36 in March 2014. The asset has been in a growth phase for three years now. In mid-January 2018, the price reached 154 rubles, which is slightly higher than the high of 2011

On the London Stock Exchange, NLMK IOUs in terms of rubles equaled the price of shares circulating in Moscow: at noon on January 15, the pricewas equal to 154 rubles. 79 kopecks

Payment history

The company's charter provides for the payment of remuneration to shareholders from net profit. Until 2014, NLMK shares received dividends once or twice a year. Since 2015, the shareholders have made a decision once a quarter at extraordinary meetings on the use of the net profit of the PE and the free cash flow of the FCS to the shareholders' income.

Formally, the dividend policy reads:

1. If the quotient of the "Net debt/EBITDA" division does not exceed 1, 0, then the amount is assigned within the limits of 1/2 NP and 1/2 FFS.
2. If the result of the Net Debt/EBITDA operation is greater than 1, 0, then dividends are accrued within the limits of 30% PR and 30% FCF.

In fact, NLMK allocated free cash flow in the amount of:

• In 2016 - 80%.
• In 2017 - 100%.

EBITDA is earnings before taxes and depreciation.

Net debt is the segment of total debt that cannot be repaid by property sales. Calculated as the difference between the amount of short-term and long-term debt and the value of liquid assets.

Free cash is cash that is not burdened with the obligation to pay taxes and invest.

For a detailed study of the parameters "Net income" and EBITDA, it is useful to go to the issuer's website in the "Regulatory disclosure" section and read multi-page financial statements.

Payouts

Decision on accrualdividend NLMK accepts the meeting of shareholders, taking into account the recommendation of the board of directors. Quarterly rewards for commitment and patience are considered at EGM - Extraordinary Gatherings. Annual accruals are approved at the AGM. According to established practice, if the board of directors proposes, then the meeting approves the proposal.

Dividends, according to the Charter, are transferred in money to the account of the owner of the securities. It is possible to pay remuneration with property.

First, the meeting of shareholders approves the date of closing the register of shareholders. By law, the cut-off is made within 10-20 calendar days from the date of approval of the decision of the meeting on payment.

For example, on December 22, 2017, the EGM was held, where it was decided to distribute money based on the results of the 3rd quarter. For the cutoff, in this case, the interval 2017-31-12 – 2018-10-01 was formed. By decision of the meeting, the cut-off date was set to 2018-09-01.

The term for payment of the accrued capital is 25 working days from the date of closing the register of shareholders to receive funds from the issuer's profit. In this example, the deadline will be 2018-12-12.

If by the specified date there is no transfer to the current account of the shareholder, then the person has the right to claim the payment of remuneration until 2021-09-01

Upcoming date

Placement of information on the results of 2017, including for the 4th quarter, according to the financial calendar, is expected in March.

NLMK's next dividend payout should be expected in June:

• for the first quarter of 2018d by decision of the EGM;
• for the 4th quarter of 2017 by decision of the AGM.

A person who decides to receive passive income from the results of investing in securities of Russian issuers needs to decide: a high interest rate with a high risk or a low interest rate with a low risk.

Enterprises tend to work not only at a profit, but also at a loss, and go bankrupt. Therefore, small percentages of dividends, comparable to a bank deposit, are prudently preferable to high-risk investments.

NLMK's interim results are as follows:

• 1st Quarter - 2.24%; 2, 35 rubles, taking into account the cost on June 14 104, 81 rubles
• 2nd quarter - 2.41%; 3.20 rubles from the price on October 12 132.58 rubles
• 3rd quarter - 3.69%; 5.13 rubles as applied to the exchange rate as of January 09, 149.25 rubles

Percentages are appended to the closing price on the cut-off day.

Information about the issuer

NLMK is the leader in production among steel companies in the global economy. The group includes a dozen enterprises and organizations. Participants produce rolled steel sheets and sections.

NLMK is used in the power industry, for example, transformer rolled products; in automotive and shipbuilding; on railways and for the manufacture of mining equipment.

Production facilities of the corporation are located in the Russian Federation:

• 100% commodity segment;
• 94% steel sector;
• 58% rolling production.

Products are boughtconsumers from 70 countries. Inside Russia, the group sells 37% of the goods.