Annual Report 2015



4. Equity

Accounting policies

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

The Company’s own issued equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration received upon any subsequent sale is recognised in equity.


Share capital

As of 31 December 2015 and 2014, the Company had 100,000,000,000 authorised ordinary shares with a par value of 0.1 Rubles, of which 595,700,967 were issued and outstanding and 24,299,033 were issued treasury shares (held through its wholly owned subsidiary, MegaFon Investments (Cyprus) Limited).

Annual dividend payment


On 30 June 2015 the Annual General Meeting of Shareholders of the Company approved the payment of dividends for the 2014 financial year in the amount of 9,609, or 16.13 Rubles per ordinary share (or GDR). Such dividends were paid in full in August 2015.

On 11 December 2015 an Extraordinary General Meeting of Shareholders of the Company approved an additional 38,428 dividend payment, equivalent to 64.51 Rubles per ordinary share (or GDR), which was fully paid in December 2015.

Accordingly, the total amount of dividends distributed in 2015 is 48,038, or 80.64 Rubles per ordinary share (or GDR).

Other capital reserves

The disaggregation of other capital reserves and changes of other comprehensive income by each type of reserve in equity is shown below:

  Foreign currency translation reserve Cash flow hedge reserve Share-based compen-sation reserve Transac-tions with non-con-trolling interests Reserve fund Total other capital reserves
As of 1 January 2014   (123)  (125)  799  (23)  15  543
Foreign currency translation  (968) — — — —  (968)
Change in fair value of cash flow hedges (Note 3.4.3) —  297 — — —  297
Share-based compensation (Note 5.1) — —  689   — —  689
As of 31 December 2014  (1,091)  172  1,488  (23)  15  561
Foreign currency translation  (792) — — — —  (792)
Change in fair value of cash flow hedges (Note 3.4.3) —  (2) — — —  (2)
As of 31 December 2015  (1,883)  170  1,488  (23)  15  (233)

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations.

The cash flow hedge reserve is used to record the accumulated impact of derivatives designated as cash flow hedges (Note 3.4.3).

The share-based compensation reserve is used to recognise the value of equity-settled share-based payment transactions provided to employees, including key management personnel, as part of their remuneration (Note 5.1).

The reserve on transactions with non-controlling interests is used to record differences arising as a result of transactions with non-controlling interests that do not result in a loss of control.

The reserve fund has been established according to the requirements of Russian law and is used to cover the Company’s losses, redemption of its bonds and re-purchase of its own shares in the absence of other capital resources.