MESSAGE TO SHAREHOLDERS FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS OF RAO "UES
RUSSIA"
Dear shareholders,
During
the year 2000 RAO "UES of Russia" continued with the difficult but extremely
important work of reinforcing the observance of financial discipline by consumers of
electricity and improving the quality of settlements. The Board of Directors acknowledged
the positive results of the Company's efforts to monitor and regulate the energy sales
activities of its subsidiary and dependent regional energy systems and noted the
effectiveness of the programme for eliminating unpaid deliveries of electricity and heat
energy. The management of the Company faced the tasks of totally excluding the
distribution of electricity and heat energy without payment, raising the level of payments
made in cash to at least 100 per cent of useful product supplied by the end of the year
2000,inventorising and reducing debts receivable from defaulting customers and eliminating
all forms of non-cash settlement from payments as of 1 January 2001.
It is now fair to say that these goals were achieved to a decisive
degree .As a result of the Company's strict policy in relation to full settlement,
payments made to the Federal Budget in cash more than tripled (to 18.1 billion roubles)
and cash payments to local state budgets more than quadrupled (to 14.3 billion
roubles).The results for the year 2000 demonstrate that the company's balance sheet is
satisfactory and it is financially sound.
Thanks to a policy of financial rehabilitation and normalization ,in
contrast with previous years RAO "UES of Russia" was able to pay dividends due
for 1999 at the precise time set by a general shareholders' meeting. At 574,737,000
roubles the total amount of dividends paid was more than twice that of 1998.
In order to ensure the transparency of the Company's business and
financial activities and provide the shareholders with more complete information, RAO
"UES of Russia" for the first time drew up a full set of intermediate
consolidated accounts in accordance with the International Accounting Standards (IAS) for
the first six months of the year 2000.
The Board of Directors paid special attention to the problem of
restoring the energy economy of the Chechen Republic and managing the operation of AO
“Grozenergo ”. The electricity supply has now been restored to almost all areas of
Chechnya and power companies are being established. It was accepted as reasonable to cover
expenditure on restoring the energy facilities of the Chechen Republic from a special
allocation within the subscription charge for services provided by RAO "UES of
Russia" in organising the operation and development of the Unified Energy System of
Russia.
In order to improve the efficiency of management in the regional energy
sector, the economic efficiency of dependent energy systems and their readiness to operate
in market conditions, the Board of Directors decided that RAO "UES of Russia"
would participate in OAO “Mid-Volga Inter-Regional Energy Management Company” and also
approved the development of a programme for reducing the expenditure of subsidiaries. The
Board of Directors considered it necessary to continue with the reform of the regional
AO-Energos, including optimising management practices, inventorising property rights and
registering them with the state and introducing a system of separate accounting for
different types of activity.
Last year the keynote was set by the intense discussions focusing on
the Concept for the Restructuring of RAO "UES of Russia". Discussion of the
document itself was sometimes stormy, but the eventual outcome was a constructive
dialogue, which means we shall be able to devise a document which will take into account
the interests of all parties concerned and support the successful development of Russia's
electric power sector.
The Board of Directors also accepted the rationality of drafting and
approving a Corporate Management Code for the Parent Company and its subsidiaries or
dependent companies, which should provide a more precise formulation of the rules
governing relations between management and shareholders.
Our efforts are directed towards creating the conditions for the stable
development of Russia's electric power sector and maximising the income of the Company's
shareholders. I am convinced that only by working together will we be able to transform
RAO "UES of Russia" into an efficient market-oriented organisation adequate to
the requirements of the present day.
Alexander VOLOSHIN
Chairman of the Board of Directors
