May 25, 2017, Moscow. - PJSC Aeroflot (Moscow Exchange ticker: AFLT) announces the results of the meeting of the Board of Directors held on May 25, 2017. The meeting was chaired by Kirill Androsov.
The following issues were discussed during the meeting:
Aeroflot’s annual report for FY 2016. The report states that Aeroflot Group achieved high operational and financial results despite the challenging economic situation in the passenger transportation market. The results are reflected in the excellent assessments of the expert community, in addition to several prestigious awards and high rankings in industry ratings. Further development of the Aeroflot Group multi-brand platform, development of the Group’s IT infrastructure and digitalisation of business processes were milestones during the year. Operational results were above the Russian market average, which excluding Aeroflot declined an even faster pace due to a decrease in passenger traffic on international flights. In this situation, Aeroflot Group achieved a significant increase in profitability, due to its focus on efficiency and cost control, despite the impact of external economic factors. Aeroflot Group’s increasingly strong position on the Russian air transportation market stands in contrast to its foreign competitors. Further development of Aeroflot’s own budget transportation offering has had a positive effect both for the Russian economy and for the growth of the Company's shareholder value. It was decided to preliminarily approve and recommend that the upcoming Annual General Meeting of PJSC Aeroflot’s shareholders be held on June 26, 2017, to approve the annual report of PJSC Aeroflot for 2016.
Non-aviation/Ancillary revenues. The trend of increasing additional income has been noted among the world's largest airlines and Aeroflot Group. The range of Aeroflot’s ancillary revenues is similar to the main European airlines and should expand in 2017 as part of the implementation of planned activities. Aeroflot’s potential for increasing additional sources of income has been noted. It was concluded that diversification of revenue sources is one of the key conditions for the implementation of the Group's strategy.
Strategy implementation of Aeroflot Group. Aeroflot Group has demonstrated growth of main financial and operational indicators against the stagnating backdrop of the Russian aviation market, indicating the possibility of further successful development. Long-term strategic aims of reaching the top-five European and top-20 global air carriers by 2025 are realistic. Compliance with the principles of network development for each of the Group’s airlines will help minimise competition within Aeroflot Group. The continuous development of Aeroflot’s service is foreseen at every point of the client’s route, which allows Aeroflot to compete successfully for leadership in the global market. A priority role in business development is also given to digital technologies, including Big Data. Aeroflot Group’s passenger numbers are expected to reach 72.8 million passengers by 2022. The number of aircraft in the Group's aggregate fleet should be 402 units by the same date. The fleet development strategy involves an increase in the share of domestic planes due to the beginning of operation of 50 Sukhoi Superjet 100 and 50 MC-21 aircraft. Also, the introduction into service of 28 Airbus A350-900 and an additional six Boeing 777-300ER aircraft is scheduled by 2025. One of Aeroflot’s key success factors is the development of Sheremetyevo airport as a base. The work of government agencies to increase the attractiveness of the Russian Federation for foreign passengers, as well as to develop low-cost transportation within the country, is also recognised as important. It was decided that the updated Strategy of the Aeroflot Group for the period 2018-2022 would be approved.
Work with shareholders and the investment community. In Q1 2017 PJSC Aeroflot’s share price grew by 9.9% (15% from the beginning of the year through April 28). Key factors influencing the share price are strong operational results of Aeroflot Group, which support growth of the Group’s market share; strong financial results in accordance with IFRS; market expectations on dividends for 2016. The consensus of analysts’ evaluations confirm a positive view of the Company. In Q2 2017, active interaction with representatives of the investment community continued in accordance with the previously approved plan for investor relations.
Consideration of information and opinions of the Audit Commission of the Company and the Audit Committee of the Board of Directors on the results of FY 2016.
The Audit Commission concluded that the annual report and accounting statements of PJSC Aeroflot for 2016 reliably reflect in all material respects the financial state of the Company as of 31 December 2016, the results of its financial and economic activities and cash flow for 2016 in accordance with Russian laws for the preparation of financial statements. It was confirmed that Aeroflot fully implemented the decisions of the previous Annual General Meeting of shareholders, held in June 2016, and ensured fulfillment of the instructions of the President and the Government of the Russian Federation.
PJSC Aeroflot’s motivation system. It was decided to:
Approve and recommend that the forthcoming Annual General Meeting of PJSC Aeroflot’s shareholders, to be held on June 26, 2017, approve a new version of the Regulations on Remuneration and Compensations payable to members of the Board of Directors of PJSC Aeroflot.
Approve a new version of the Regulation on PJSC Aeroflot’s long-term motivation programme.
Payment of remuneration to members of the Board of Directors and the Auditing Commission of PJSC Aeroflot. The decision was made to approve and recommend to the upcoming Annual General Meeting of shareholders on June 26, 2017, that they confirm the size of the personal payment of fixed remuneration for members of the Board of Directors of PJSC Aeroflot, according to the regulations on remuneration and compensation paid to members of the Board, as well as the size of the remuneration fund and of payments through the long-term motivation programme. In the calculation, a significant rate of increase in capitalisation of PJSC Aeroflot was partially taken into account. The decision to approve and recommend to the upcoming meeting of shareholders that they confirm the size of remuneration of members of PJSC Aeroflot’s Auditing Commission was also made.
Distribution of profits, including the payment (and declaration) of dividends and company losses during the 2016 financial year as well as the size, timing and form of the payment of dividends on PJSC Aeroflot’s stock by the end of the 2016 financial year, along with fixing the deadline for determining the persons entitled to receive dividends. Net profit in 2016 was fully distributed. Dividend payments from 2016, calculated at 50% of Aeroflot Group’s net profit and consolidated statements in accordance with IFRS, come to a total of RUB 19,413 million. The decision was made to approve and recommend to the upcoming Annual General Meeting of PJSC Aeroflot’s shareholders on June 26, 2017, that they:
Confirm the distribution of net profit, including payment (and declaration) of dividends from the 2016 financial year;
In accordance with this, pay in in the period up to and including August 18, 2017, in observance of the Russian Federation’s relevant legislation, dividends on shares of PJSC Aeroflot from the 2016 financial year, to the sum of RUB 17.4795 per share in cash and to the sum of RUB 19,413,018.00 thousand in total.
It was decided that it should be proposed to the upcoming Annual Meeting of Shareholders that they fix July 14, 2017, as the record date for establishing the right to receive dividends from PJSC Aeroflot’s shares.
PJSC Aeroflot’s auditors in 2017. The decision was made to approve and recommend to the upcoming Annual General Meeting of PJSC Aeroflot’s shareholders on June 26 that they confirm:
Auditing firm CJSC HLB Vneshaudit as the auditor for the annual accounting (financial) statements of PJSC Aeroflot in 2017, prepared in accordance with RAS;
Auditing firm JSC Price Waterhouse Coopers Audit as the auditor of the consolidated financial statements of PJSC Aeroflot (Aeroflot Group) for 2017, prepared in accordance with IFRS.
Preparations for holding the next Annual General Meeting of PJSC Aeroflot's shareholders. Decisions were made on a number of preparation issues, including:
Confirming the agenda of the upcoming Annual General Meeting of PJSC Aeroflot’s shareholders on the basis of proposals made by shareholders and the Board of Directors up to February 13, 2017;
Determining June 5, 2017, as the date of compiling the list of persons entitled to attend the next Annual General Meeting of shareholders.
At the meeting of the Board, the leasing of four new Sukhoi Superjet 100 aircraft was approved, to be provided to the company by VEB-leasing.