UPDATE: Transneft seeks to pay 25–40% of IFRS net profit in 2018 divs

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MOSCOW, Apr 5 (PRIME) -- Russian oil pipeline monopoly Transneft expects to pay 25–40% of net profit calculated under International Financial Reporting Standards (IFRS) in dividends for 2018, CEO Nikolai Tokarev told reporters on Friday.

“You know our options, I’ve talked about them several times, but eventually the decision will be made by the government,” he said.

“We have our own dividend policy, you know it. But we expect that from 25% to 40%, somewhere in this range,” he said.

In 2018, the company’s IFRS net profit rose 17.5% to 225.4 billion rubles.

First Vice President Maxim Grishanin said the company’s board of directors will give its recommendations on dividend payments for 2018 at the end of April.

The company’s management will recommend dividends for 2018 based on an adjusted IFRS net profit estimated at 169–170 billion rubles, he said.

He also said Transneft will have to borrow funds to support the dividend payments or their growth if payments are not partially or fully priced in in tariffs.

The company paid 16% of adjusted IFRS net profit in dividends for 2016 and already 50% in dividends for 2017, Grishanin said.

“We understand that our main shareholder, the Federal State Property Management Agency, expects the same dynamics from the company. The company’s management also understands the need for interaction with the shareholder so that dividends are predictable, expected and in line with our financial results. However, we always say that since Transneft does not have other sources of revenue besides tariffs, the government should decide on partial or complete inclusion of dividend payments in our required tariff revenue, which is calculated every year,” he said.

Grishanin also said that Transneft’s management expects that the board of directors will approve the company’s buyback program in April. The company said earlier it plans an up to 20 billion ruble 3-year buyback program in coming years.

(65.3281 rubles – U.S. $1)

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