pay off in very real cash
Novatek shareholders know how to pull off remarkable deals with Gazprom Novatek’s owners have learned how to make astonishingly lucrative deals with Gazprom: a Chelyabinsk gas trader bought last year for 1.55 billion rubles brought in 1.3 billion rubles in profit In* November, Novatek bought 100% of Gazprom Mezhregiongaz Chelyabinsk LLC from Gazprom for 1.55 billion rubles — and gained the entire market of a region that ranks among Russia’s ten largest gas consumers. Last year’s supplies by Gazprom Mezhregiongaz Chelyabinsk accounted for one-fifth of all Novatek sales. In its IFRS reporting, Novatek disclosed the 2011 figures for the new subsidiary: revenue of 12.1 billion rubles and pre-tax profit of 1.3 billion rubles. At the time of the deal, the trader’s accounts payable for supplies stood at 2.4 billion rubles, all other liabilities at 0.6 billion rubles, accounts receivable at 2.1 billion rubles, and cash in its accounts at nearly 0.7 billion rubles. Ta**king all components into account, Gazprom Mezhregiongaz Chelyabinsk should have been sold for roughly one year’s revenue — almost 8 times more, says UBS analyst Maxim Moshkov. Denis Borisov of Nomos Bank estimates that the trader is worth 6 times more than Novatek paid. ** Putting a fair value on traders is always difficult — their entire business is contracts, Moshkov acknowledges. But the Chelyabinsk Region is Novatek’s most profitable region if you look at the scale of the business and the ratio between the local sale price and the distance from production sites. Novatek’s plan for total sales in the Chelyabinsk Region was 16.4 billion cubic meters in 2012 and 16.6 billion cubic meters in 2015 (according to a December Novatek presentation). Until the end of last year, Gazprom Mezhregiongaz Chelyabinsk sold Gazprom gas, but since January 2012 purchases under the previous contracts have no longer been made, Novatek’s report says. In 2011, Novatek signed an agreement to purchase dry stripped gas from an affiliated company, Sibur Holding, including for sale in the Chelyabinsk Region, Moshkov notes. The purchase of the Chelyabinsk trader is not the first remarkable deal involving the owners of Novatek and Gazprom. For example, in December 2010, Gazprom sold 9.4% of Novatek itself to Gazprombank for 57.5 billion rubles (*almost 30 billion below the market price at the time), and the bank then sold them for about 80 billion rubles to structures controlled by Leonid Mikhelson and Gennady Timchenko. ***http://www.vedomosti.ru/companies/news/1531030/okupilsya_za_god Carousel voting and ballot stuffing (forms of election fraud) are a great investment and pay off extremely well: According to*** Forbes estimates, Timchenko’s fortune nearly doubled over the year, from $5.5 billion to $9.1 billion. *Timchenko’s official representative declined to comment on that figure. ***As a Gazprom shareholder, I will be appealing to the board of directors. I would like to understand why my investment in Gazprom pays off so slowly, while Timchenko gets pieces that pay for themselves in a single year. We should also contact Rosimushchestvo (Russia’s Federal Agency for State Property Management): ask whether they are concerned that the dividend yield on the state’s Gazprom stake hovers around 1% annually and even under the most optimistic forecast will amount to 4%, while Finnish citizen Timchenko is “persuading” the company to part with an asset yielding 100% a year.
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