OGK-1 Shareholders Decided to Spend Net Profit on Investments
OREANDA-NEWS. On 16 July 2009 was announced, that the shareholders of OGK-1 arrived at a number of key decisions.
- Approval of OGK-1 annual statement, annual accounting statement including profit and loss statement as well as distribution of profit and loss as of financial year of 2008
The shareholders approved the annual statement of OGK-1, annual accounting statement including profit and loss statement. The shareholders distributed the profit received for the financial year of 2008.
The annual statement contains the information on the key OGK-1 business activities. The annual statement was composed in compliance with the FFMS (Federal Financial Markets Service) requirements and recommendations of the auditor, rating agencies and exchanges. The annual statement contains the information on financial activities, production activities, energy supply, investment and purchasing activities of OGK-1.
According to the accounting statement, the revenue of OGK-1 for the year of 2008 was 46.569 billion Russian rubles, sales profit was 2.530 billion Russian rubles and net profit was 1.086 billion Russian rubles.
- Payment of dividends
Shareholders of OGK-1 decided not to pay dividends for the year of 2008. The net profit of 1.086 billion Russian rubles is to be transferred to the reserve fund (54.314 million Russian rubles) and accumulation fund (1.032 billion Russian rubles). A large-scale investment programme of OGK-1 and lack of planned monetary funds which were to be provided by the strategic investor are the reasons behind the decision to invest most of the net profits
Investment programme is a key factor for increasing capitalization of OGK-1.
- Election of the members of the Board of Directors of OGK-1
The shareholders elected the new Board of Directors:
1. Mikhail Tuzov – Vice-President of JSC FGC UES
2. Andrey Demin – Vice-President of JSC FGC UES
3. Yuriy Goncharov – Head of the Corporate Management Department of JSC FGC UES
4. Evgeniy Dod – President of JSC INTER RAO UES
5. Anatoliy Ballo – Vice-President of GK “Vneshekonombank”
6. Nikolay Shulginov – First Deputy President of JSC SO UES
7. Boris Kovalchuk – Deputy CEO for Organization Development of the State Corporation for Atomic Energy Rosatom
8. Sergey Yushin – Member of Administration, Executive Director for Economics and Finance of JSC RusHydro
9. Sergey Terebulin – Head of the Corporate Finance Department of JSC RusHydro
10. Yuliya Smirnova – Head of the Corporate Management Department of JSC RusHydro
11. Dmitriy Shtykov – CEO of the Fund Institute of Professional Directors
- Election of the members of the Audit Committee of OGK-1
5 members of the Audit Committee are:
Andrey Goncharov– Head of the Sales and Price Setting Department of JSC RusHydro,
Artem Lukashov – Senior Expert of the Capital Management Department of JSC MC RusHydro,
Denis Gataulin – Vice Head of the Capital Management Department of JSC RusHydro,
Darya Dranishnikova – Senior Expert of the Corporate Finance Department of JSC FGC UES,
Marina Lelekova – Head of the Financial Control and Internal Audit Directorate of JSC FGC UES.
- Appointment of the auditor of OGK-1
In compliance with the Russian and international standards ZAO “PricewaterhouseCoopers Audit” was appointed as the auditor of the accounting statement of the Company. ZAO “PricewaterhouseCoopers Audit” has been providing auditing services to the Company since 2005.
- Approval of the new edition of OGK-1 Articles of Association
The annual meeting approved the new edition of the Articles of Association of OGK-1. The structure of the Articles of Association was optimized: all amendments contained in the appendixes to the Articles of Association were included in the main text of the Articles of Association and grouped according to the contents. The appendix to the Articles of Association contains only the information on the branches of OGK-1. Moreover, the outdated provisions of the Articles of Association, for example, provisions relating to RAO UES of
Moreover, the list of the places to hold general shareholders’ meeting was expanded – all the branches of OGK-1 were included in the list.
The jurisdiction of the Administration of the OGK-1 was expanded under the new Articles of Association. For instance, Administration of OGK-1 manages associated and affiliated companies which earlier were managed by the Board of Directors. The Administration also deals with a number of issues related to the investment projects of OGK-1 (the Administration defines the selection criteria and approves the primary contractor for the investment programme, approves the independent engineering expert, approves the reports of the independent engineering expert, etc.).
- Payment of compensation and bonuses to the members of the Board of Directors
The shareholders decided not to pay additional bonuses to the members of the Board of Directors as of 2008. The decision was due to the cost cutting integrated programme implemented by OGK-1
- Transferring the power of the sole executive body of OGK-1 to the managing company – JCS INTER RAO UES
The shareholders decided to transfer the power of the sole executive body of the Company to the managing company – JSC INTER RAO UES. The power will be transferred upon signing the statement of transfer and acceptance of the stamp and paperwork of OGK-1. The power is to be transferred no later than July 7, 2009.
The power is transferred as part of the business integration process between OGK-1 and INTER RAO UES for the purpose of financing a large-scale investment programme of OGK-1.
We should mention that INTER RAO UES obtained the trust management of the rights under 61.9% of the ordinary shares of OGK-1, which were in possession of JSC FGC UES and JSC RusHydro. The duration of the trust management is 5 years and may be extended for the same period of time.
- The shareholders approved the loan agreements between JSC INTER RAO UES and JSC OGK-1 as interrelated interested party transactions. The shareholders also approved the security and pledge agreement between JSC INTER RAO UES and JSC OGK-1 as an interested party transaction.
In the absence of the planned monetary funds which should have been provided by the strategic investor, OGK-1 finances its large-scale investment programme with its own and borrowed funds. As of beginning of this year the credit portfolio of OGK-1 was 10.150 billion Russian rubles. That includes short-term credit and borrowings of 6.150 billion Russian rubles and long-term investment credit of 4 billion Russian rubles. As part of the optimization of the credit portfolio its structure was improved during the first six months. As of today, the credit portfolio amounts up to 9.450 billion Russian rubles, including short-term credit and borrowings of 4.150 billion Russian rubles and long-term investment credit of 5.300 billion Russian rubles. At the beginning of the year the ratio of the long-term to the short-term credit in the portfolio was close to 40/60. Now the ratio has been shifted towards long-term credit and is close to 55/45. The credit burden was also lowered compared to the credit burden at the beginning of the year.
The structure of the credit portfolio was improved through the investment credit of 1.3 billion Russian rubles provided by GK “Vnesheconombank” and a loan of 700 million Russian rubles provided by INTER RAO UES for funding the current loan indebtedness of OGK-1.
For the purpose of optimizing financial expenses and for the purpose of financing current and investment activities OGK-1 and INTER RAO UES agreed on the possibility of increasing the volume of loans provided by INTER RAO UES up to 1.7 billion Russian rubles. The loans will be collateralized by the unfinished construction projects of Urengoyskaya GRES which is the property of OGK-1, and by the leasehold of the land lots of Urengoyskaya GRES.
Since these scheduled transactions for providing the loan funds and collateralized property for the loan funds are interested-party transactions, these transactions were approved at the annual shareholders meeting of OGK-1.
- Approval of the supplementary agreement to the sale and purchasing Contract for electric energy signed on March 16, 2009, which is an interested-party transaction.
The shareholders approved the supplementary agreement to the sale and purchasing Contract of electric energy signed on March 16, 2009, which is an interested-party transaction.
As part of business integration process between OGK-1 and INTER RAO UES, and, in particular, as part of expansion of the joint trading line, the companies signed an agreement on March 16, 2009. Under the agreement OGK-1 is to supply electric energy to INTER RAO UES for the amount of 800 million Russian rubles during the year of 2009.
For the purpose of establishing long-term and mutually beneficial relations between the companies, it was decided to extend the duration of the contract for up to 4 years and to increase the supplies for up to 1.7 billion Russian rubles.
This long-term agreement between OGK-1 and INTER RAO UES will allow scheduling the inflow of funds from sales of electrical energy into the Company’s budget in precise and long-term manner.
The price of the agreement is a market price. The market operator (JSC NP ATS) determines the price under the competitive bid procedure conducted in compliance with the rules and regulations of the wholesale market of electrical energy.
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