According to the new dividend policy:
the total amount of dividends equals at least 100% of the Company's adjusted free cash flow;
the adjusted free cash flow is determined as net cash provided by operating activities less capital expenditures, interest paid, repayment of lease obligations, and expenses for purchase of Company's stock;
dividends, as before, are paid twice a year with the amount of interim dividends calculated based on half-year results.
The approved principles apply starting from the interim dividends for 2019.
Our view
The recommended dividend per share is twice the dividend for 9M2018, which, given solid cash position and low debt burden of the company, is clearly positive for the shares price.
Linking dividend payments to the adjusted FCF indicator in comparison with the previous minimum guaranteed level of 25% of net profit is also a more comfortable condition for investors. Correction of FCF due to the repurchase of shares in the amount of $3bin to 2022 may be significant, but due to the high CFO of Lukoil, as well as the reduction in the number of shares outstanding due to buyback, the dividend per share, according to our forecasts, will maintain an upward trend.
