RAO “UES OF RUSSIA” ANNUAL REPORT 2006

34 Corporate Governance System
Corporate Governance System 35
2 0 0 6 ANNUAL REPORT OF RAO “UES OF RUSSIA”
Dividend Policy
The corporate governance system at RAO UES
Holding Company ensures that the rights of
In 2006, OAO RAO “UES of Russia” paid
RUB2,757.6 million in dividends for 2005,
which was in line with the dividends paid for
Standards amounted to RUB745,088 million.
Such amount of net income was due to the revaluation
of investments in shares of subsid-
Dividends Declared by the SDCs of RAO "UES of Russia", millions of RUB
2004 2005 2006
shareholders of the Parent Company and its
2004. At the same time, the dividends made
iaries and dependent companies of RAO “UES
Dividends
Total for 2003 for 2004* Total for 2004 for 2005* Total for 2005 for 2006*
subsidiaries and dependent companies in res-
13.2 percent of the Company’s net income for
of Russia” caused by the increased market
pect of dividend payments are protected in
2005, up 1.7 percent on the figure for 2004. Of
prices of the companies’ shares, and was not
Total 11,781 5,909 5,872 10,118 5,738 4,380 14,239 8,641 5,598
a sector reform environment.
RAO “UES of Russia” is guided by the Dividend
Policy Principles approved by the Board
of Directors.
The dividends are calculated in accordance
with the Revised Methodology for Dividend
that amount, RUB1,294 million was paid to
the state, and the remaining part to the Company’s
minority shareholders.
Dividends Paid to Shareholders
of OAO RAO “UES of Russia” for 2006
supported by any actual cash flows.
As provided by Article 5.3 of the Company
Charter, the total amount of dividends payable
on preferred shares should be at least 10 percent
of the Company’s net income divided by
the number of preferred shares, which make
including:
dividends paid
to OAO RAO “UES of Russia”
dividends payable to other
shareholders
8,179 3,749 4,430 5,241 2,544 2,697 10,014 5,464 4,550
3,602 2,160 1,442 4,877 3,194 1,683 4,225 3,177 1,048
Calculation of the Company approved by the
In 2006, the net income of OAO RAO “UES of
up 25 percent of the Company’s capital. How-
*interim dividends
Board of Directors in 2005.
Russia” according to the Russian Accounting
ever, the dividend amount per preferred share
RAO UES Dividend Payment History, thousands of RUB
should not be less than the dividend amount
per ordinary share.
pletely undermine the Company’s investment
programme and adversely affect the financial
Thus, the dividend amounts paid by the
SDCs of RAO “UES of Russia” (taking into ac-
In order to resolve that issue, it was pro-
position of OAO RAO “UES of Russia”.
count the interim dividends declared in 2006)
posed to shareholders at the EGM to make
In light of that, the Board of Directors of
increased 1.4-fold compared to 2005 (taking
YEAR Ordinary dividends Preferred dividends TOTAL
amendments and additions to the Company
RAO “UES of Russia” recommended that the
into account the interim dividends declared in
Charter which would make it possible not to
Annual General Meeting of shareholders vote
2005) to RUB14,239 million.
1994 (for 1993)* 66,626,224 3,368,749 69,994,973
take into account the paper profit from revalu-
to omit the dividend for 2006.
1995 (for 1994)* 133,252,448 6,737,498 139,989,946
1996 (for 1995)* 205,208,770 10,375,747 215,584,517
1997 (for 1996)* 205,208,770 10,375,747 215,584,517
ation of equity investments when determining
the amount of preferred dividends.
Such decision required a three-thirds majority
of votes of all preferred shareholders of
RAO “UES of Russia”. However, the proposed
Dividend Payments by SDCs
of RAO "UES of Russia"
In 2006, the SDCs of RAO “UES of Russia”
1998 (for 1997) 205,209 19,029 224,238
amendments were not supported by the pre-
continued to pay interim dividends. This was
1999 (for 1998) 255,608 31,542 287,150
ferred shareholders.
In light of the need to ensure reliable and
due to the possibility that, in connection with
the restructuring and the organizational con-
2000 (for 1999) 537,647 76,158 613,805
uninterrupted electricity supply and ensure
straints and legal constraints, the companies
2001 (for 2000) 820,835 153,146 973,981
balance of capacity in the UES of Russia, the
Company needs to bring more generating
faced the risk of default in payment of their
final dividends for 2006 (WGCs, AO-power
2002 (for 2001) 1,067,086 245,905 1,312,991
capacity on line, which requires to increase
plants, and regional generation companies).
2003 (for 2002) 1,383,107 605,114 1,988,221
investments in new generation construction
projects on an annual basis. Implementation
The amount of interim dividends declared
by the SDCs of RAO “UES of Russia” for Q1,
2004 (for 2003) 1,924,858 473,757 2,398,615
of the investment programme is one of the key
H1 and 9M 2006, including the taxes, to-
2005 (for 2004) 2,294,234 463,381 2,757,615
drivers of the Company’s capitalization growth.
This means that the dividend payment out of
talled RUB5,597.6 million, which includes of
RUB4,549.7 million payable on the shares
2006 (for 2005) 2,355,797 402,371 2,758,168
the Company’s net income not fully supported
owned by OAO RAO “UES of Russia”.
* scale of prices prior to 1 January 1998.
by actual receipts of funds would almost com-