Decisions by the Management Board of Cognor Holding S.A. (“Company”) concerning recommendations for the General Meeting with regard to dividend payments and dividend amounts will be made after the end of each financial year. Each time, such a decision will take into account, most importantly, the level of cash flows and net profit presented in the Company’s consolidated annual financial statements, the Group’s (“Group”) investment needs as well as the Company’s capacity to raise debt financing, and its cost, together with amounts that can be used for the payment of a dividend taking into account restrictions resulting from existing rules of law and agreements regulating matters related to the Group’s debt, including credit agreements.
At the date of adoption of this Dividend Policy (“Dividend Policy”), in accordance with legislation in force, given the structure of the Company’s equity, in particular the amount of uncovered losses from previous years of PLN 193 million, the Company is unable to pay out a dividend. The Management Board plans to include a resolution on the use of supplementary capital to cover prior-period losses on the agenda of the Ordinary General Meeting approving the financial statements of the Company and the Group for financial year 2017, which would enable the Company to pay out dividends in the future provided that it generates profits. Subject to the above, the Management Board intends in the future to recommend to the General Meeting the payment of a dividend amounting to approx. 25% of consolidated net profit. However, dividend payments and dividend amounts ultimately depend on decisions by shareholders at the Ordinary General Meeting and in this regard the shareholders are not bound by any recommendations from the Management Board.
The dividend policy adopted by the Management Board may be subject to reviews and amendments by the Management Board, and decisions in this matter will be made taking into account a number of different factors concerning the Group, including its future perspectives, future earnings, demand for cash, financial situation, liquidity, expansion plans and legal requirements in this area.
Significant restrictions concerning dividend payments resulting from the Group’s financial agreements
In accordance with financial documentation related to the issue in 2014 by Cognor International Finance PLC, a subsidiary of the Company, of secured preferred bonds, the Company may pay out a dividend only up to the limit of EUR 5 million. However, in accordance with current report 6/2017 of 29 March 2017, the Company has decided to re-finance the Group’s debt arising from the aforementioned bonds.
In addition, on 30 June 2017, an agreement for a term credit facility and revolving credit facility (“Credit Agreement”) was executed between Cognor S.A. (“Borrower”) as borrower, the Company and other companies from the Group (“Guarantors”) as guarantors and mBank S.A. and Bank Polska Kasa Opieki S.A. (“Lenders”), as communicated by the Company via current report 21/2017 of 30 June 2017. The Credit Agreement provides for certain financial and operational restrictions, including restrictions concerning dividend payments and other share capital-related payments. Pursuant to the Credit Agreement, dividend payments and such other payments may be made to the Borrower or Guarantors that are subsidiaries of the Borrower. In the case of dividend payments or such other payments to entities other than the Borrower or Guarantors that are subsidiaries of the Borrower, all of the following three conditions must be met: (i) there must be no breach of the Credit Agreement at the time of such a payment; (ii) no breach of the Credit Agreement may arise from such a payment; and (iii) such payments are made from cash surpluses after Credit prepayments in accordance with the Credit Agreement.
The Management Board’s intention is for the Dividend Policy to be applied from the allocation of the Company’s net profit for the financial year ended on 31 December 2017.
Poraj, 22 September 2017