The Portuguese company will have a base dividend with a variable component, dependent on debt and cash flow.
Galp Energia believes its portfolio will allow it to increase cash flow, essential to remunerate the company’s shareholders. The goal will be to maintain a base dividend of €0.50, with a variable component that will depend on the level of debt.
The Portuguese company will invest between €800 million and €1 billion per year, starting in 2021 and ending in 2025. This year, the investment target was maintained at between €500 and €700 million, and Galp Energia estimates an EBITDA of over €2 billion. In terms of cash flow, it expects a figure of more than €1.7 billion.
It is this cash flow that enables the company to announce its intention to maintain a competitive shareholder’s remuneration framework. According to the statement Galp sent to CMVM on Wednesday, the remuneration framework “considers a base dividend of €0.50 per share and an additional variable component.”
This variable component will be “triggered by net debt to EBITDA ratio being below 1.0x, with total distributions of up to 1/3 of CFFO [Cash Flow From Operations].” Galp further states that cash flow will increase by “around 35% by 2025 to over €2.3 billion, driven by upstream growth and downstream transformation.”
“The baseline dividend is expected to be paid semi-annually,” the company explains, adding that “the variable component, should there be one, is expected to be paid after approval at Annual Shareholders Meeting, together with the baseline second tranche.”
“Based on this remuneration structure and on the company’s current assumptions, for the year 2021, Galp plans to distribute an interim dividend in the third quarter of 2021, anticipating the existence of a variable component to be paid together with the remaining base in the next,” it reveals.