5.0Business development

PAO TMK SECURITIES ARE LISTED ON RUSSIAN AND INTERNATIONAL STOCK EXCHANGES.

As at December 31, 2018, 34.8971%
of PAO TMK shares were free float,
with approximately 45% of them traded
as GDRs on the London Stock Exchange.

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As at December 31, 2018, the share capital of PAO TMK was comprised of 1,033,135,366 fully paid-up ordinary shares, each with a nominal value of RUB 10. PAO TMK has not issued any preferred shares, either outstanding or authorized. Authorized capital totals RUB 10,331,353,660.

In September 2018, TMK’s Board of Directors approved a program to repurchase the Company’s shares including depositary receipts (GDRs) representing such shares in the open market (the “Buyback Program”) for an aggregate amount of up to $30 million. The Buyback Program started in October 2018 and is to be carried out in 2019.

PAO TMK shareholdings as at December 31, 2018

%
TMK Steel Holdings (including affiliates)* 65,0584
PAO TMK’s subsidiaries 0,0445
Free float 34,8971
Total: 100,0

* The main beneficiary is Dmitry Pumpyanskiy.

The maximum number of shares and depositary receipts to be repurchased under the Buyback Program will not exceed 29,270,000 ordinary shares, or 7,317,500 GDRs. The precise number of shares and/or GDRs will depend on the share price performance and market conditions for the duration of the Buyback Program.

The share purchases on behalf of the Company under the Buyback Program will be made by a professional broker – VTB Capital Broker – on regulated stock exchanges in accordance with applicable laws and regulations. The repurchased shares and GDRs will be held on TMK Group’s balance sheet. The decision with regards to the repurchased securities will be made before the completion of the Buyback Program.

REG.S 144A
CUSIP: 87260R201 87260R102
SEDOL: B1FY0V4 B1G3K21
ISIN: US87260R2013 US87260R1023

As at December 31, 2018, 34.8971% of PAO TMK shares were free float, with approximately 45% of them traded as GDRs on the London Stock Exchange. PAO TMK’s Board of Directors and Management Board jointly held a total of 379,957 shares, or 0.03678% of the Company’s authorized capital.

PAO TMK securities are listed on Russian and international stock exchanges.

Shares are listed on the Moscow Exchange under the TRMK ticker (Bloomberg: TRMK:RM / Reuters: TRMK.MM) and are included into the A1 quotation list of the Moscow Exchange.

GDRs are listed on the London Stock Exchange under the TMKS ticker (Bloomberg: TMKS:LI / Reuters: TRMKq.L) in the Main market in the International Order Book, each GDR representing four ordinary shares of PAO TMK. The Bank of New York Mellon Corporation (BNY Mellon) acts as the depository bank.

TMK’s dividend policy is governed by the principles of balanced capitalization growth and higher dividends, based on the net profit for a relevant period and factoring in the Company’s operational needs and investment requirements.

PAO TMK’s Board of Directors generally recommends the General Meeting of Shareholders to pay dividends on the outstanding shares in amounts equal to at least 25% of the Company’s IFRS consolidated net profit.

Key priorities of TMK’s dividend policy include increasing the Company’s capitalization and investment appeal, wealth creation and balancing the interests of all shareholders. The dividend policy is set out in the Dividend Policy Regulations (www.tmk-group.ru/media_ru/files/51/Polozhenie_o_dividendnoy_politike_2018.pdf) which seek to build a transparent and effective mechanism for determining the amount of dividends and the dividend payout procedure, and outlining the Board of Directors’ strategy in preparing recommendations on dividends payable on shares, and the terms and procedure for dividend payouts.

Dividends accrued and paid out by the Company from 2012 to 2018

Dividend period Total dividends, RUB million Dividend per share, RUB Announcement date Payment date set by the General Meeting
6M 2012 1,406.38 1.5 02/11/2012 28/12/2012
2012 787.57 0.84 25/06/2013 23/08/2013
Total dividends accrued in 2012: RUB 2,193.95 million
6M 2013 975.09 1.04 11/11/2013 10/01/2014
2013 731.32 0.78 19/06/2014 10/08/2014
Total dividends accrued in 2013: RUB 1,706.41 million
6M 2014 393.79 0.397 25/12/2014 15/02/2015
6M 2015 2,400.41 2.42 12/10/2015 29/11/2015
6M 2016 2,004.283 1.94 29/09/2016 14/11/2016
2016 2,024.945 1.96 08/06/2017 26/07/2017
Total dividends accrued in 2016: RUB 4,029,228 million
2017 2,355.549 2.28 21/06/2018 06/08/2018

PAO TMK makes every effort to ensure that shareholders can exercise their rights as set out in the Company’s Articles of Association:

  • Holds annual General Meetings of Shareholders and complies with the respective Russian Corporate Governance Code Recommendations (see paragraphs 1.1.1–1.1.5 of the Appendix to this Report); starting from 2019 the Company plans to provide shareholders with remote access to General Meetings through teleconference
  • Holds extraordinary General Meetings of Shareholders, if so resolved by shareholder(s) owning at least 10 percent of shares or the Board of Directors, or if requested by the Revision Committee or auditor
  • Ensures that shareholders owning at least two percent of shares can put forward proposals as regards the agenda for the Annual General Meeting, propose nominees to, and candidates for, the Board of Directors, the Revision Commission, and the Counting Commission, as well as convene meetings of the Board of Directors
  • Adopted the Dividend Policy (updated in 2018) (www.tmk-group.ru/Documents, www.e-disclosure.ru/portal/files.aspx?id=274&type=1) and builds a strong dividend trackrecord (see the Shareholder Information section of this Annual Report)
  • Complies with all recommendations on material corporate actions which safeguard the rights of shareholders and ensure equal treatment of shareholders (execution by the Company of major transactions or other actions that could lead to material changes in the rights of shareholders or damage their interests)
  • Prepares and discloses financial (accounting) statements of the Company and selects an internationally recognized auditor to review the statements
  • Ensures timely disclosure of material facts relating to the Company’s operations, internal regulations, charter documents and guidance
  • Maintains an ongoing dialogue with minority shareholders by updating its website page at www.tmk-group.ru/ir; page on its website; publishes financial reports, press-releases, and presentations; holds Capital Markets Days, conference calls, answers individual queries, etc.
  • Regularly updates shareholder details jointly with the registrar
  • The registrar’s website offers the Shareholder’s Personal Account service whereby persons on the shareholder register, including clients of nominee holders, can obtain materials for Annual General Meetings, vote online, as well as view personal account balance, shareholder details, dividends accrued, and taxes withheld

TMK’s information policy is based on the principle of improving transparency and maintaining continuous interaction with shareholders and investors.

In 2018, TMK’s Regulations on the Information Policy were fully aligned with the Russian Corporate Governance Code (www.tmk-group.ru/media_ru/files/51/Polozhenie_ob_ informacionnoy_politike_2018.pdf). TMK is committed to full compliance with disclosure regulations and listing rules, and going beyong the examples set by leading international companies, consistently implementing best practices in information disclosure, and improving our information distribution channels and methods.

Since TMK’s securities are listed on the Moscow Exchange and the London Stock Exchange, information is disclosed in Russian and in English at www.e-disclosure.ru/portal/company.aspx?id=274, www.tmk-group.ru, www.tmk-group.com, www.londonstockexchange.com/exchange/pricesand-markets/stocks/summary/company-summary/ US87260R2013USUSDIOBE.html

In addition to mandatory disclosures, TMK publishes on its website quarterly IFRS consolidated financial statements (www.tmk-group.com/Financial_results, www.tmk-group.ru/Financial_results) and press releases describing its operating and financial performance, presentations, and organizes conference calls with the Company’s senior executives for investors, analysts, and media to improve stakeholder awareness.

In line with the international best practices, TMK holds Capital Markets Days where the Company’s top managers report on TMK’s results, report on strategy implementation and discuss the Company’s prospects. Live audio webcasts and recordings of the Capital Markets Days are available on the Company’s website. The website’s investor section at www.tmk-group.ru/ir features an IR calendar, materials used for events, presentations for investors and analysts, press releases on events that may influence an investment decision, information on the Company’s share capital and outstanding debt securities, dividend policy, dividend history, etc.

In addition, TMK arranges site visits to the Company’s facilities for investors and analysts, to give them first hand experience of TMK’s production process and products.

The Company has rules in place coordinating information disclosure by its business units and entities. We have units dedicated to monitoring compliance with these rules, insider laws and regulations, and the development and implementation of a uniform information policy.

CORPORATE GOVERNANCE REPORT