ALROSA Sets New Dividend Benchmark with Record Payout for FY2018

MOSCOW, Russia – April 24, 2019 – ALROSA, the world leader in diamond mining, has once again demonstrated its unwavering commitment to shareholder value by announcing a recommendation for an unprecedented dividend payout for the full fiscal year 2018. Following a critical meeting of its Supervisory Board held on April 23, 2019, the company revealed a proposal that, if approved, will mark the highest annual dividends ever distributed to its shareholders, reinforcing its position as a compelling investment in the global commodities market. This significant decision underscores ALROSA’s robust financial performance and its dedication to returning substantial value to its investor base, reflecting a period of strategic operational efficiency and strong market presence.

Supervisory Board Greenlights Record FY2018 Dividends

The pivotal Supervisory Board meeting focused extensively on the agenda for the upcoming Annual General Meeting (AGM), with a primary emphasis on the dividend recommendations for the fiscal year ending December 31, 2018. The meticulous deliberation by the Board members culminated in a unanimous recommendation that is set to delight investors. This proactive approach to shareholder returns is a hallmark of ALROSA’s corporate governance, ensuring that the company’s success translates directly into tangible benefits for those who have invested in its future. The proposed dividend distribution is a clear indicator of the company’s robust financial health and its ability to generate significant free cash flow even amidst varying market dynamics within the global diamond industry.

The Board specifically recommended that ALROSA shareholders approve a substantial payout for the second half of 2018. This recommendation proposes distributing 100% of the company’s free cash flow generated during H2 2018. This bold move translates into a remarkable figure of RUB 30.3 billion, which equates to RUB 4.11 per ordinary share. Such a high percentage of free cash flow distribution highlights ALROSA’s strong liquidity and its confidence in its operational stability and future earnings potential. For investors, this translates into immediate and substantial returns, making ALROSA an attractive option for income-focused portfolios and those seeking exposure to the resilient diamond market.

An Unprecedented Payout: Total FY2018 Dividends Reach Historic Levels

When combined with the dividends already paid for the first half of 2018, the total dividend for the entire fiscal year 2018 reaches an astonishing RUB 73.9 billion. This record-breaking sum translates to RUB 10.04 per share, establishing a new benchmark in ALROSA’s history of shareholder distributions. The H1 2018 dividends previously amounted to RUB 43.7 billion, or RUB 5.93 per share, setting a strong precedent for the year. This comprehensive annual payout signifies a period of exceptional financial performance for the company, driven by efficient production, effective sales strategies, and a favourable market environment for rough diamonds. It reflects ALROSA’s strategic focus on maximizing operational efficiencies and ensuring that these gains are shared directly with its ownership base.

This unprecedented level of annual dividends is not merely a number; it is a powerful statement of ALROSA’s financial strength and its unwavering commitment to its shareholders. It signals robust profitability, disciplined capital management, and a transparent approach to distributing earnings. For investors, a record dividend payout often implies a healthy balance sheet, sustainable business operations, and a management team dedicated to creating long-term shareholder value. This decision positions ALROSA as a leader not only in diamond production but also in corporate governance and investor relations within the global mining sector.

Understanding the Significance of Free Cash Flow in Dividend Policy

ALROSA’s dividend policy, particularly its decision to distribute 100% of its H2 2018 free cash flow, offers crucial insights into its financial philosophy. Free cash flow (FCF) is a critical financial metric that represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. It is essentially the cash available to pay down debt, pay dividends, buy back stock, or invest in future growth. Distributing a high percentage of FCF underscores ALROSA’s confidence in its operational efficiency and its capacity to fund future growth organically, without unduly relying on retained earnings that could otherwise be distributed. This approach is highly valued by investors, as it indicates a strong, self-sustaining business model that prioritizes direct returns.

The transparency and consistency of ALROSA’s dividend policy, which often links payouts directly to free cash flow generation, provide predictability and attractiveness for investors. Such a policy not only rewards current shareholders but also attracts new ones looking for stable and significant income streams. In an industry subject to commodity price fluctuations, a robust and clear dividend strategy can act as a stabilizing factor for investor sentiment, reinforcing confidence in the company’s long-term viability and profitability.

Key Dates for Shareholders: Ensuring Timely Payouts

To ensure clarity and smooth execution of the dividend distribution process, the Supervisory Board also determined the record date for those shareholders entitled to the H2 2018 dividends. This crucial date has been set for July 15, 2019. Shareholders registered in the company’s records on this specific date will be eligible to receive the declared second-half dividends. Investors are advised to take note of this date to ensure their shareholdings are properly accounted for. Efficient communication and clear timelines for dividend payouts are integral to maintaining strong investor relations, reflecting ALROSA’s commitment to corporate transparency and operational excellence in all its financial dealings.

ALROSA’s Position in the Global Diamond Market and Future Outlook

This record dividend announcement comes at a time when the global diamond industry continues to navigate evolving consumer preferences and macroeconomic conditions. As the world’s leading diamond mining company by volume, ALROSA plays a pivotal role in supplying rough diamonds to the international market. Its strategic assets, including highly productive mines in Russia, provide a stable foundation for its operations. The company’s ability to achieve record dividends in 2018 is a testament to its operational resilience, effective cost control measures, and its capacity to adapt to market demands while maximizing shareholder value. ALROSA’s robust performance in 2018 highlights the enduring appeal and demand for natural diamonds, a market segment where the company holds a dominant and influential position.

Looking ahead, ALROSA remains focused on its long-term strategy of sustainable development, operational efficiency, and responsible mining practices. The commitment to returning substantial value to shareholders, as evidenced by the FY2018 dividend payout, is expected to continue shaping investor confidence and the company’s market valuation. By balancing strategic investments in exploration and development with a strong emphasis on shareholder returns, ALROSA aims to solidify its leadership in the diamond industry and continue delivering exceptional value for all its stakeholders. This forward-looking approach, combined with a strong financial foundation, positions ALROSA favourably for sustained success in the years to come, making it a cornerstone investment for those seeking exposure to the precious gems sector.

Conclusion: A New Era of Shareholder Rewards

The recommendation by ALROSA’s Supervisory Board for a record-breaking FY2018 dividend payout signifies a landmark achievement for the company and its investors. At RUB 73.9 billion, or RUB 10.04 per share, this unprecedented distribution reflects ALROSA’s exceptional financial health, its efficient operational management, and its steadfast dedication to creating and sharing wealth with its shareholders. As the company prepares for its Annual General Meeting to formally approve these recommendations, the message is clear: ALROSA is not only a leader in diamond production but also a champion of shareholder value, setting new standards for returns in the global mining industry. This strategic move is poised to strengthen investor confidence and further solidify ALROSA’s reputation as a top-tier investment opportunity in the international market.