Results of the Board of Directors Meeting
JSC RusHydro (ticker symbol: RTS, MICEX, LSE: HYDR; OTCQX: RSHYY) announces that on July 29th, 2011 a meeting of the Board of Directors of RusHydro was held in absentia.
The Board of Directors approved a decision on additional share issue and Prospectus of the issue. The placement method is public offering. The shares can be paid for with either cash or non-cash assets. The list of non-cash assets to be used to pay for securities includes:
1) shares of the following joint stock companies:
- JSC Irkutskenergo;
- JSC RAO East Energy Systems;
- JSC DEK;
- JSC SEK;
- JSC AK Yakutskenergo;
- JSC Boguchanskaya HPP;
- JSC Geoterm;
- JSC Zaramagskiye HPPs;
- JSC KamGEC;
- JSC Kolymaenergo;
- JSC Pavlodolskaya HPP;
- JSC Trest Hydromontazh;
- JSC Ust-Srendekanskaya HPP.
2) hydropower engineering facilities - dams of the hydropower plants of the Angara Cascade: the Bratskaya HPP, the Irkutskaya HPP and the Ust'-Ilimskaya HPP.
The pricing parameters of placement of additional shares (including for execution of pre-emptive right to buyout shares) will be approved by the Board of Directors prior to the placement of securities.
In addition, in accordance with the Federal Law "On the 2011 Federal Budget and the 2012-2013 Planning Period", the Russian government will provide RUR 3,133 mln from the federal budget as payment for shares.
The Annual General Meeting of shareholders of RusHydro approved an increase of the Company's authorized share capital by issuing 89,000,000,000 additional ordinary shares with a par value of RUR 1 per share on June 30th, 2011.
The Board of Directors approved a contract between RusHydro and JSC System Operator of UES (SO UES), which is an interested party transaction.
According to the contract, RusHydro shall provide services to SO UES on reactive power control without power production using power generating equipment at the Volzhskaya, Votkinskaya, Zhigulevskaya, Zelenchukskaya, Kamskaya, Nizhegorodskaya, Ezminskaya and Gizeldonskaya hydropower plants, as well as at the Zagorskaya pumped storage plant. The Board of Directors approved the pricing procedure for services under this contract.
In accordance with Russian Government Regulation No. 117 from March 3, 2010, SO UES will select power plants that provide services to ensure system reliability conclude contracts with them and coordinate the actions of participants in the system services market.
On June 17th, 2011, RusHydro received notification from SO UES on carrying out selection via a proposals request. RusHydro agreed to participate in the selection process and submitted a proposal to propose services on reactive power control related to hydro-power generating equipment (hydro-power generators).
A favorable decision made by SO UES Commission on selecting power engineering facilities is the basis for concluding a contract between RusHydro and JSC SO UES on providing services on reactive power control without electric power generation.
The Board of Directors approved the conclusion of Additional Agreement to the contract between RusHydro and JSC Power Machines to modernize hydro-power units at the Zhigulevskaya HPP.
The Additional Agreement provides for inclusion of the following scope of work in the Contract: the delivery of additional hydropower units, automated control equipment for hydro-power units, updating current working documentation on new hydro turbine affixment, the development of working documentation for a new cross-beam, design and survey work, workplace arrangement, stator winding restoration, preparation of mounting sites, zones for equipment installation, cross-beam use for rotor transfer, construction and mounting works and commissioning work.
The installation of new turbines with nominal power of 129 MW each will make it possible to increase nominal power of each hydropower unit at a rated head of 10.5 MW (from 115 MW to 125.5 MW). Following the modernization of fourteen hydropower units at the Zhigulevskaya HPP, total capacity of the plant will increase by 147 MW.
The Board of Directors also approved an interested party transaction between RusHydro and JSC Federal Grid Company.
The purpose of the contract is delivery of equipment and to reconstruction of the 220 kV outdoor switchgear electric protection, the 220 kV lines of the Mainskaya hydropower plant to upgrade power supply reliability to consumers and the efficiency of the Mainskaya HPP operation.
The Board of Directors approved a new version of the Provisions on the Information Policy.
The new version of the document is developed to update information disclosure standards, distribution and submission by the Company. In particular, the new version contributes to developing and upgrading corporate management. It also takes into account the latest requirements of Russian legislation and key international documents (Great Britain's Combined Code on Corporate Governance and Fair Disclosure Rules and Transparency from Great Britain's Financial Services Agency).
The Board of Directors approved a new version of the Provisions on Insider Information.
The document was developed in accordance with requirements of the Federal Law on Preventing the Misuse of Insider Information and Market Manipulation and corresponding amendments to a number of Russian legislative acts, enacted in 2010. The new version outlines the rules and procedures for access to insider information, protection rules, mechanisms to control for the observance of insider information legislation and other handling issues.
The Board of Directors approved the Procedure for establishing advantages in favor of certain groups of suppliers/contractors during competitive product procurement to meet RusHydro's needs.
This document was developed to upgrade the transparency of the procurement control system and the efficiency of RusHydro Group's procurement activities control system following the instructions from the Russian agency of the state property management (Rosimushestvo) and the Russian Ministry of Energy, as well as instructions from Deputy Russian Prime Minister Igor Sechin, on the necessity of giving preference to domestic producers of power generating equipment and to foreign companies that have local production.
The Board of Directors took note of a report on the execution of RusHydro Group's 2010 Consolidated Business Plan.
For RusHydro Group income growth compared to the 2010 plan was RUR 47,009 mln (or 30.7 %). Income growth can be attributed to increased electric power price on the day-ahead market and an increase in electric power net sales under free bilateral contracts.
Based on 2010 results, net profit for RusHydro Group is RUR 55,277 mln, which is RUR 22,970 mln more than net profit considered by the Board of Directors as part of the Group's 2010 Business Plan. Net income growth was mainly the result of income from financial investments reevaluation as well as net income growth due to electric power sales.
RusHydro Group's business plan was consolidated in accordance with Russian Accounting Standards (RAS).
The Board of Directors approved holding by Evgeny Dod, Chairman of the Management Board of RusHydro, of the following overlapping positions:
- Member of the Board of Directors of JSC INTER RAO UES;
- Member of the Board of Directors of JSC Irkutskenergo;
- Member of the Supervisory Board of JSC RRDB;
- Member of the Supervisory Board of NCP Hydro-power Engineering in Russia;
- Member of the Governing Board of the Independent Non-profit Organization ISEDC.
In addition, the Board of Directors approved the holding of the overlapping positions by the following members of the Management Board:
- Rakhmetulla Alzhanov, RusHydro's Deputy Chairman, as a member of the Supervisory Board of the NCP Counsel for Power Engineering Veterans;
- Alexey Maslov, RusHydro's Deputy Chairman, as Chairman of the SRO Board of NCP EnergoStroyAlyans;
- Stanislav Savin, member of RusHydro's Management Board, as member of the Supervisory Board of the Chamber of Representatives of Electric Power Suppliers of the Market Council.
The information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of RusHydro. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might," the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially from these statements. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to RusHydro and its operations.
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