Mining and Metallurgical Norilsk Nickel : Nornickel’s Board of Directors recommends not to pay dividends for FY 2022 to shareholders 28 april 2023 0.2 MB

PRESS RELEASE

Public Joint Stock Company "Mining and Metallurgical Company "NORILSK NICKEL" (PJSC "MMC "Norilsk Nickel", "Nornickel" or the "Company")

NORNICKEL'S BOARD OF DIRECTORS RECOMMENDS NOT TO PAY DIVIDENDS FOR

FY 2022 TO SHAREHOLDERS

Moscow, 28 April 2023 - Nornickel, the world's largest producer of palladium and high-grade nickel and a major producer of platinum and copper, announces that in a majority vote the Board of Directors resolved to make a recommendation for the Annual General Meeting of Shareholders (AGM) not to pay dividends for the financial year 2022.

The Board of Directors has recommended not to pay dividends for FY 2022 owing to a number of reasons:

• Growing geopolitical risks have already had a negative impact on the Company's financial performance, having posed new challenges for operations, sales and completion of a number of strategic projects. In 2022, the Company faced a combination of falling revenues and rising costs. Traditional logistics routes degraded, whereas investment projects had to be substantially revised. As result, in 2022, Nornickel generated USD 437 mln in free cash flow, posting a ten-fold reduction y-o-y.
• The Company is passing the peak of its capital expenditure cycle in 2022-2023 with USD 4.3 bn spent in 2022 and USD 4.7 bn earmarked for 2023, respectively. Nornickel's capital expenditure programme includes a number of strategic projects, including the flagship environmental project Sulphur Programme 2.0, aiming to drastically cut sulphur dioxide emissions and reduce environmental impact.
• The previous year dividends (for FY 2021) were funded by debt. Delivery on its commitment on shareholder returns led to the Company's net debt position doubling from USD 4.9 bn as of year-end 2021 to USD 9.8 bn by the end of 2022, with net debt / EBITDA ratio also doubling to 1.1x.
• The tax burden and debt servicing costs are expected to increase this year.
• Other potential risks faced by Nornickel include possible further increase in the sanctions' pressure as well as weakening commodity prices due to the slowdown of the global economy.

The Company emphasizes that its Regulations on Dividend Policy prescribe that a "cyclical nature of the markets for metals produced by the Company and a need for preserving its creditworthiness at a high level" should be taken into account, when calculating the amount of dividends.

In the current highly uncertain environment, the management believes that maintaining financial stability and high level of creditworthiness should be unconditional priorities for the Company, which will enable meeting the obligations to all of its stakeholders such as the government, the employees, the local communities, and the shareholders.

The management is looking with caution into 2023. Should the Company generate a positive cash flow, while maintaining a comfortable level of debt, measured as a net debt / EBITDA ratio, the Board of Directors may be offered to consider paying an interim dividend.