The Board of Directors of Aspo has decided to propose to the next year's Annual Shareholders’ Meeting that dividends be distributed twice a year. This change would enter into force in 2017. Aspo’s dividend policy will remain unchanged: the company distributes approximately at least half of its annual profit in dividends.
The payment of dividends in several installments during the year is a common habit in many countries, and it benefits both shareholders and the company.
One of the key benefits is the more stable value appraisement of the share. The ex-dividend date will not have as major an impact as before on the value of shares, as the value will be more clearly determined according to the development of the company's profit and its profit-making potential. This is a good thing for committed shareholders who value steady development. This is equally important to us because Aspo's vision is to increase the value of the company in the long term from one generation to the next.
Seasonal variation reflected in the cash flow
For Aspo, this change makes cash management easier, in particular. Due to seasonal variation, we produce two thirds of our profit during the second half of the year, and the differences between the first and second half are even more distinctive considering our cash flow. Therefore, a more balanced distribution of dividends helps our cash management and financing.
There are highly practical reasons for the seasonal variation in Aspo's operations. The first quarter is usually the poorest. The vessels of our shipping company operate in ice conditions and this reduces their speed and increases fuel consumption. In addition, there is a two-week holiday season in eastern markets, a significant market area for Aspo, in early January.
The second half of the year is better because many of our customer industries place focus on the latter half. For example, stocks are increased in the energy industry before winter and the Christmas season is vital for customers of Leipurin. Furthermore, many customers of Telko face significant variation within the year. Among customers of Kaukomarkkinat, IT procurement, for example, is allocated to the latter half.
Dividends still based on profit from the previous year
Even though dividends will be paid in several installments, it is important to note that they will still be based on profit from the previous year. In other words, dividends paid in 2017 are determined on the basis of profit made in 2016.
Dividends paid in spring will be decided at the Annual Shareholders’ Meeting. At the same time, the shareholders’ meeting will decide on the maximum amount of dividends paid in fall, and it will authorize the Board of Directors to decide on a detailed schedule for fall dividends.
According to the Finnish Limited Liability Companies Act, the wording “if company's financial situation so permits” must be entered in the authorization of the Board of Directors regarding dividends paid in fall. According to the act, the Board of Directors is always obligated to ensure that the company has the capacity to pay dividends and that the payment of dividends does not damage the company.
The distribution of dividends in several installments is the result of extensive planning. It is also the direct wish of many investors. We wanted to announce this change well before its entry into force so that the shareholders whose finances are based on a one-off payment of dividends have sufficient time to prepare for the new situation.
Throughout its history, Aspo has been the first in many things – both in business operations and in investment markets. Now, we are in the vanguard, about to start distributing dividends twice a year. The first feedback and market comments have been positive.
Aspo is regarded as a good and stable dividend payer. In 2006–2015, our historic dividend yield has been 6.4% on average, clearly exceeding the average of 3.7% at the Helsinki Stock Exchange. Distributing dividends twice a year will make us an even more stable payer of dividends.
Aki Ojanen
April 2016