Investor/Shareholder Relations Policy
Amid uncertainty within the Company in 2012 in connection with the transfer of its sole executive body’s functions, the promptness and accessibility of information disclosed turned out to be an issue determining investor preferences in the highly volatile market. One of management’s goals was to make the Company more attractive to investors, but the previous drivers of growth had already ceased to work. It was necessary to identify the threats seen by investors in the Company’s business profile and find the ways to raise the Company’s attraction to investors.
The following events associated with the Company’s operations were significant for shareholders and investors in 2012:
- the financial statements of the Company for 2011 were published within four months after the end of the reporting year as required by the Financial Services Authority;
- the functions of the Company’s sole executive body were transferred to FGC UES;
- the Russian President signed the Decree “On Joint Stock Company Russian Grids”;
- additionally issued shares were placed.
The LSE listing caused the Company to take on additional obligations with respect to the transparency of its business. For instance, the Company prepared the first Management Report in 2012 for submission to the London Stock Exchange. On April 27, 2012, the financial statements of the Company and the Management Report were presented to the investor community via a conference call and disclosed through LSE information resources.
To streamline Russia’s grid infrastructure, the Company entered into an agreement to transfer the functions of its sole executive body to FGC UES in July 2012. On the one hand, the joint administration of transmission and distribution grids made it possible to synchronize the capex programs and improve the efficiency of regulating the issues of tariff-based revenues received by grid companies. On the other hand, a large number of investors had a negative opinion about the transfer of the sole executive body’s functions and doubted that the transfer would be practical. It was necessary to provide the target audiences with timely information within the shortest time possible in order to keep the investor base loyal and stable.
The IR department made every effort to clarify the shareholder rights and the regulatory framework for the Company’s reorganization.
The importance of the high-quality level of the Company’s strategic function—building investor communications—was raised by the publication of the Russian President’s Decree “On Joint Stock Company Russian Grids.” It was necessary to provide and maintain continuity of the dialog with investors, analysts, and rating agencies and ensure compliance with disclosure rules and procedures and global best practices. Failing to do so would expose the market to the risk of uncertainty and could impair the Company’s appeal for investors and its reputation, eventually resulting in a considerable decrease in the Company’s value.
Understanding the importance of keeping intact the interests of investors, which was crucial to successful business development, the Company’s management gave much attention to one-on-one meetings with investors as part of Russian and international investment forums and to roadshows.
In the reporting year, analysts of major investment banks continued to note the willingness of the Company senior executives to maintain constant dialog with the investor community. One of the main tools for enhancing the Company’s transparency and attraction to investors – the Annual Report – was a prizewinner of the 9th annual contest of annual reports organized by the Krasnodar Territory administration as part of the 11th International Investment Forum in Sochi. The Company won in the category “Best Electronic Annual Report.” This prize proves a high opinion of the quality of the IR department’s work.
The Company intends to continue in 2013 to maintain constant dialog with existing and potential investors, widen the range of IR tools, and expand analyst coverage.