Regular meeting of TATNEFT’s board of directors
Members of the Board of Directors were informed on the Company's actions to prevent the spread of the coronavirus infection, steps taken to support the region’s healthcare system and the provision of social assistance in the context of self-isolation measures.
The Board reviewed the results of PJSC TATNEFT’s budget execution for the first quarter of the current year and approved the budget for May 2020.
The information was presented to the Board of Directors on PJSC TATNEFT’s status of receivables and payables for 2019.
The meeting participants were presented the results of TATNEFT Group’s activities for 2019. Despite the fact that the Company’s operations were carried out in the conditions of volatility in the oil markets, the restrictions on crude oil production under the OPEC+ agreement and the transformation of the tax system, the key production figures for the Group were higher than the prior year. The volume of crude oil production amounted to 29,798 thousand tonnes (+0.9% to the level of 2018); petroleum products output amounted to 10,788 thousand tonnes (+15% versus the level of 2018).
The Board of Directors reviewed the financial results of TATNEFT Group in accordance with IFRS based on the results of 2019. The value of the Group's consolidated assets under IFRS increased by 3.1% in 2019 and amounted to RUB 1,238 billion. The changes in the assets’ structure resulted from the current financial and economic activities, as well as the acquisition of the petrochemical business in Togliatti and the retail network operations in St. Petersburg. Consolidated sales revenue and other income from non-banking activities net of export duties and excise taxes amounted to RUB 932 billion in 2019, while the net profit of the Group's shareholders for 2019 amounted to RUB 192 billion. Compared to its peer group, the Group has been demonstrating a high level of profitability and a low level of debt (based on debt to EBITDA ratio) for several years.
During the meeting, the Board of Directors discussed and approved initiatives for further introduction of international standards as part of implementing TATNEFT Group’s strategy for the compliance with the management system standards in the area of industrial safety, labor and the environment protection ISO 14001:2015 and ISO 45001:2018. The main strategic objectives of the Group in this area provide for ensuring trouble-free production activities, safe working conditions at the facilities, rational use of natural resources, as well as minimizing the negative impact on the environment. Inter alia, the main tasks of the Group include: changes within the framework of the system of goal-setting and monitoring indicators for business planning process to minimize the production and environmental risks; raising the awareness and the involvement of personnel in the compliance with ISO requirements; improving the quality, systematization of audits and assessments of compliance with ISO requirements.
The Board of Directors considered the dividends for 2019. In accordance with the resolutions of the shareholders’ general meetings for the six and nine months of 2019, the Company has paid the dividends to the holders of preference and ordinary shares in the amount of 6447% of their par value (64 rubles 47 kopecks per share). The Board of Directors recommended to the annual general meeting of shareholders not to pay additional dividends based on the results of 2019 to the holders of ordinary shares and, as required by the Company’s Charter, to pay the holders of preference shares of PJSC TATNEFT the dividends based on the results of 2019 in the amount of 100% of the par value (1 ruble per each preference share) in addition to the interim dividends already paid for the 6 and 9 months of 2019. In reaching its decision on the recommended dividends for 2019, the Board of Directors took into account the current situation in the crude oil and oil products markets, which is associated with a significant drop in demand amid quarantine measures around the world, affecting the projected free cash flow as the source of the dividends payment, as well as the need to mobilize financial resources to ensure the Company’s normal operation in the current environment. The Company’s management plans to submit proposals to the Board of Directors on the interim dividends payment for the first half of 2020 in accordance with the dividend policy of the Company after the publication of its financial statements for the respective period. The Board of Directors recommended to the annual general meeting of shareholder to set June 30, 2020 as the date for determining the persons entitled to receive the dividends based on the results of 2019.
In accordance with the measures aimed at containment of the spread of coronavirus infection and as permitted by the federal law, it was proposed to hold the annual general meeting of shareholders of PJSC TATNEFT on June 17, 2020 by absentee voting.
The Board of Directors also considered a number of other issues.