TNK-BP Holding to spend nearly 85% of 2011 earnings on dividends
MOSCOW. June 28. (Interfax) - Shareholders in TNK-BP Holding (TBH) accepted a dividend of 9.96 rubles on each ordinary and preferred share for 2011 at their annual meeting, the oil company said in a statement.
The overall payout will be 153.851 billion rubles. The recommended dividends are additional to the interim dividends of OJSC TNK-BP Holding in an amount of 3.41 rubles per common and preferred share, totaling 52.7 billion rubles, for the first half 2011s.
In other words, the company will pay a total of 206.511 billion rubles for 2011. That is nearly 85% of net profit to Russian Accounting Standards (RAS), which was 243.912 billion rubles.
TNK-BP usually pays high annual dividends: it allocated 183.7 billion rubles or almost all profit for 2010.
The company has 14,996,968,366 issued ordinary shares and 450 million preferred shares, par value 1 ruble each.
TNK-BP Holding's principal shareholder is Novy Investments Ltd., a TNK-BP Group entity. Minority shareholders own approximately 5%. TNK-BP always says that dividends distributed to Novy Investments Ltd will not necessarily be paid to the shareholders in the parent company TNK-BP Ltd, which is 50% held by BP and 50% held by the AAR Consortium (Alfa Group, Access Industries, and Renova). It is expected that most dividends paid to Novy Investments will be used to fund capex by TNK-BP in Russia and for settlements between TNK-B group members.
TBH minority shareholder Konstantin Litvinov said at the AGM that TNK-BP was developing along positive lines and alerted management to the situation at subsidiaries "from the point of view of those who produce the oil."
"Some doubt arises. If the subsidiaries saw a tendency for oil production to grow before 2005, then this is now falling, moreover by up to 50% at some companies, for example Varyeganneftegaz . It turns out that TNK-BP is not investing enough in growth at the subsidiaries. The management functions that TNK-BP has assumed aren't going down very well either - production at the subsidiaries is falling, while administrative costs have risen 4-5-fold. Profit at the subsidiaries is being shifted to TNK-BP, and this isn't fair because the wages of some employees [at the subsidiaries], including at Varyeganneftegaz, are falling," Litvinov said.
He also said shares in subsidiaries ought to be swapped for shares in TNK-BP Holding. "It was promised in 2006 that shares in Varyeganneftegaz would be bought, instructions were even given to specific people. Six years have gone by and nothing's happened," he said.
The shareholders present at the meeting applauded Litvinov.
Jonathan Muir, CFO, said in response that production decline was industry-wide but that TNK-BP was doing all it could to support production growth, including the use of new technologies, and was tapping tight oil reserves. He said expenditures by subsidiaries ought to be discussed on an individual basis.
Muir recalled regarding the share swap that this procedure had been carried out a few years ago and there was some interest in it. He suggested raising the issue again if interest among minority shareholders had been rekindled.
Asked how relations between TNK-BP's core shareholders AAR and BP were unfolding, Muir said only that it would be logical to ask the shareholders themselves. Management was concentrating on routine operations, he said.
The AGM elected a new board of directors: Anatoly Akimenko, Jacques Bourdon, John Murphy Brame, Pavel Nazarian, Rene Denis Robin, David Brian Skidmore, Igor Cheremikin, Peter Anthony Cherow and Denis Shumilin.
Members of the TBH board will be remunerated for between $12,000 and $60,000 for work performed in the period from June 30, 2011 to June 28, 2012.
Independent director David Rodolphe Lasfargue will receive $60,000 - the same amount he was granted for the previous period. At their annual meeting, TBH's shareholders also voted in favor of paying Lasfargue 100,000 euro in remuneration for the period from June 28, 2012 until the next annual general meeting.
Alfa-Access-Renova (AAR) consortium representatives - Vice President of Access Industries Anatoly Akimenko, Executive Director of Alfa Finance Holdings SA Pavel Nazarian, Director for Strategic Planning at CTF Consultancy Limited (Alfa Group) Alexei Savchenko and Director for Legal Issues at JSC Renova Management AG Igor Cheremikin - will get $12,000 each for their work on the board from June 30, 2011 to June 28, 2012. For the last period, they got $18,300 each.
BP's representatives are not remunerated, since membership on the board is part of their official duties.
Shareholders also approved CJSC PricewaterhouseCoopers Audit as TBH's auditor for 2012.
